Last summer, Alamos Gold announced the acquisition of Argonaut Gold and its past-troubled Magino mine in northern Ontario in an all-share deal valued at US$325 million to become Canada’s third-largest gold producer.
Alamos Gold was formed in 2003 through the merger of Alamos Minerals and National Gold. The company seized on key acquisitions during the gold price trough from 2015 to 2017, securing Young-Davidson in Ontario, Lynn Lake in Manitoba, and Island Gold.
The acquisition gives Alamos a fourth long-life producing asset in addition to its two mines in Ontario — Young-Davidson and Island — and Mulatos in Mexico. The company also has the Lynn Lake development project in Manitoba, which received federal environmental approval in 2023, as well as others in Turkey and Oregon.
From the transaction, Alamos hopes to create US$515 million in cost-savings over about two decades of production from Island Gold and Magino mines. Alamos plans to use Magino’s larger mill and tailings facilities instead of Island’s.
“Through our acquisition of Argonaut, we have further enhanced our unique positioning as a Canadian focused, intermediate gold producer, with growing production and declining costs. The integration of Magino and Island Gold is expected to unlock significant synergies using shared infrastructure. Together, they will create one of the largest and lowest cost gold mines in Canada with significant longer-term expansion potential supported by their long mine lives and ongoing exploration success,” said John McCluskey, president and CEO of Alamos Gold.
Mr. McCluskey explained that after the addition of Magino mine, the company did not have to build a new mill for the phase 3+ expansion. There was also no need for tailings lift for the existing tailings facility, which saved about US$20 million in costs.
In 2024, the company invested $19 million for exploration at Island Gold, up from $14 million in 2023. The company’s goal was to define new mineral reserves and resources in proximity to existing production horizons and infrastructure.
Combined with lower costs, the company achieved a record free cash flow of $106.9 million in the second quarter (Q2) of 2024, up more than 300% from the first quarter of the same year.
Soaring gold prices helped Alamos deliver a record revenue of $332.6 million in Q2, a 27% year-on-year increase. “We remain well-positioned to achieve full-year guidance and deliver significant production growth at declining costs over the next several years,” said McCluskey.
The third quarter (Q3) marked the first reporting period with the Magino mine under Alamos ownership. During Q3 of 2024, Alamos delivered record production of 152,000 oz. of gold. The company attributed the production boost to the Magino gold mine as well as the added production from the Mulatos mine in Mexico.
Alamos Gold plans to release its fourth quarter and year-end 2024 financial results after market close on Feb. 19, 2025.
The Island Gold District is comprised of the adjacent Island Gold and Magino mines, two long-life operations with a large mineral reserve and resource base and significant exploration upside. Island Gold is an underground mine and one of Canada’s highest grade and lowest cost gold mines. Magino is a large open pit mining operation located within 300 metres of the Island Gold deposit. The combination of Island Gold and Magino will create one of the largest and lowest-cost gold mines in Canada.
Phase 3+ expansion also continues in the Island Gold project. The company reported recent progress on the shaft sink, with the shaft past a depth of 800 metres in Nov. 2024, doubling its depth from the end of the second quarter. This is more than halfway from its goal of 1,373 metres. Completion of the shaft will drive production higher, costs significantly lower, and allow Alamos to unlock additional high-grade resources at depth.
According to Mr. McCluskey, completion of the phase 3+ expansion in 2026 is expected to push the company’s annual production rate closer to 700,000 oz. per year and decrease the all-in sustaining costs to $1,150 per oz.
“The addition of Magino mine compliments the company’s strong growth profile and has enhanced our strong outlook, increasing our near-term production rate by approximately 20% to 600,000 oz. per year, and providing longer-term growth opportunities through expansions of the Island Gold District. We are making excellent progress on our growth projects with the phase 3+ expansion more than halfway complete,” McCluskey said.
Island Gold has established itself as one of the highest-grade and fastest growing deposits in the world, with the main structure open laterally and down-plunge, and significant high-grade results being intersected within emerging and yet to be defined zones in proximity to the main structure.
Over the past year, the drilling program at Island Gold has been one of the most successful in terms of the magnitude of high-grade intercepts across the lateral extent of the main deposit and within the numerous newly defined hanging wall and footwall zones. In 2024, company drilling teams completed 50,416 metres of underground exploration drilling in 185 holes, relative to a goal of 41,000 metres. Alamos also completed 9,849 metres of surface exploration drilling in 11 holes. McCluskey expects this to drive a ninth consecutive year of growth in combined mineral reserves and resources, with grades also increasing over that time frame.
