Jamie Porter - CFO John McCluskey - President and CEO Peter Macphail - COO.

Mike Parkin - Desjardins Alex Watt - Scotiabank Don MacLean - Paradigm Capital Kerry Smith - Haywood Securities Anita Soni - Credit Suisse.

Good afternoon. I would now like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead..

Thank you, operator and thanks to everyone for attending Alamos' First Quarter 2016 Conference Call. In addition to myself we have on the line today John McCluskey, President and Chief Executive Officer; and Peter Macphail, Vice President and Chief Operating Officer.

I would like to remind everyone that our presentation will be followed by a Q&A session. On this call we will be making forward-looking statements. Please refer to the disclaimer on forward-looking statements in our News Release and MD&A as well as the risk factors set out in our annual information form.

All forward looking statements on this call are qualified by these cautionary statements. There can be no assurance that our forward looking statements even though considered reasonable by management and based on information on hand will prove to be accurate. Future results and events could differ materially.

Technical information in this presentation has been reviewed and approved by Chris Bostwick, our VP of Technical Services, and a qualified person. Also please bear in mind that all of the dollar amounts mentioned in this conference call are in United States dollars unless otherwise noted. Now, John will provide you with an overview..

Thank you, Jamie; and good afternoon, everyone. We had a good start to the year on the several fronts. Operationally we produced 94,600 ounces of gold at significantly lower all-in sustaining cost of $986 per ounce, a decrease of over $100 from 2015.

Combined with the higher gold price and lower rate of capital spending, our operations were effectively breakeven in first quarter, well ahead of schedule. In fact at current gold prices, we expect all of our operations to generate positive free cash flow in 2016.

Full year production and cost guidance is unchanged at 370,000 to 400,000 ounces at all-in sustaining cost of $975 per ounce. With the solid first quarter and stronger production in lower cost expected in the second half of the year, we are confident in achieving our targets.

Our core focus remains on completing the ramp up at Young-Davidson and developing the La Yaqui and Cerro Pelon deposits at Lassos and we made good progress on both fronts this quarter. At Young-Davidson we completed commissioning of the MCM shaft and fully transitioned to a 100% for a developments. Both are driving ongoing cost savings.

Underground mining rates are roughly flat in the fourth quarter due to some unscheduled maintenance but rebounded in April to average over 5300 tons per day. We remain on track to achieving our year-end target 7000 tons per day.

We received approval of the environmental impact assessment for construction of the road to the La Yaqui earlier this week and we submitted the final project EIA in April. We remain on track for additional production from La Yaqui in mid 2017.

We continue to aggressively drill at La Yaqui and Cerro Pelon holding up on the highly successful 2015 drill campaign which grew the combined reserves and resources by 150%. We are encouraged by the early results of our 2016 program.

We currently have 12 rigs focused on both these targets and are increasing the exploration budget at Mulatos by 60% to $60 million. We believe we are just starting to unlock the potential of Mulatos District especially at La Yaqui with such a large system of operation.

We expect calls and capital to continue to trend lower over the next few years driven by the ramp up of the Young-Davidson and low cost production growth from La Yaqui and Cerro Pelon. We expect this to drive significant free capital growth which we’ll use to fund development of our growth process.

We remain focused on Kirazli and Lynn Lake this year, two of our most attractive projects.

With growing North American production, declining costs, one of the best portfolio of growth projects and a strong balance sheet to support the growth, Alamos remains among the best position companies to continue to deliver long-term sustainable shareholder value.

With that, I will give our CFO Jamie Porter opportunity to comment on our first quarter financial performance..

Thank you, John. We sold 91,000 ounces of gold in the first quarter and average realized price of $1,146 per ounce, for revenues of $104 million. Our sales were approximately 4000 ounces below production in the quarter with a portion of Gold sales form Mulatos occurring just after quarter end.

It is simply a timing issue which will reverse in the second quarter with those sales occurring in early April. Our consolidated total cash cost of $782 per ounce was slightly below full year guidance, driven by a strong improvement in cost in Mulatos.

All-in sustaining costs of $986 per ounce were in line for full year guidance and down nearly $90 per ounce from the fourth quarter, reflecting sharp reductions at both Young-Davidson and Mulatos. With stronger results expected in the second half of 2016, we expect all-in sustaining costs to trend lower throughout the year.

We've reported earnings of $9.7 million in the first quarter or $0.04 per share which included a $19 million foreign exchange gain recorded within deferred tax.

Our operating cash flow before changes in working capital was $27.6 million or $0.11 per share up from $17 million in the fourth quarter reflecting the higher gold price and a strong improvement in costs.

With the increase in operating cash flow and decrease in capital spending, our operations were free cash flow neutral in the quarter earlier than expected. As John mentioned, we expect all three operations to generate positive free cash flow through the remainder of the year at current gold prices.

Capital spending in the first quarter totaled $33.3 million consisting of $10.5 million of sustaining and $22.8 million of growth capital. This was down from $40.7 million in the fourth quarter and consistent with the 20% decrease in total capital spending works we are expecting in 2016.

Amortization expense was $28.4 million in the first quarter or $312 per ounce consistent with the fourth quarter. Our corporate G&A expense in the first quarter was $3.9 million, we are expecting a full year G&A expense to total $16 million among the lowest in our peer group.

In the first quarter we entered into an amended $150 million revolving line of credit, replacing the previous facility. The company is in a far stronger financial position and as a result we were able to negotiate much more favorable terms.

We have no current plans to draw the facility but the improved terms will save us approximately $0.5 million annually in standby fees. Just an another example, the synergies we are realizing through the merger. We designed our 2016 budget so that each of our operations was free cash flow neutral at a gold price of $1100 per ounce.

While we are expecting our debt service exploration and corporate G&A spending to be financed from our balance sheet. With the increase in gold prices to over $1,200 per ounce, we now expect to generate meaningful free cash flow from each of our operations and forecast and in 2016 with a similar cash balance to what we have currently.

At the end of March we had cash and available for sales securities of $283 million giving us one of the strongest balance sheet of our peer group.

Combined with growing free cash flow over the next two years driven by the ramp up at Young-Davidson and production growth from La Yaqui and Cerro Pelon, we remained well positioned to execute on our near and long-term growth plans. At this point, I'll turn the call over to Alamos's CEO, Peter Macphail for providing overview of operations..

Thank you, Jamie, and good afternoon everyone. We achieved two key milestones at Young-Davidson to start the year, having completed commissioning of MCM shaft and the transition to owner-underground development.

The commissioning of the MCM shaft allows us to transport our workforce and materials to the various levels of the underground mines in minutes, whereas previous access was only to the ramp. In addition to driving significant productivity improvements in the near term, this will also be our primary means of waste hoisting starting in 2017.

The transition to owner development is now complete -- driving significant savings at our per meter development costs. Underground development remains on track with another 3,500 meters completed in the quarter. This will pick up through the year with the commencement of development from the bottom of the MCM shaft.

Underground mining rates averaged 5,800 tons per day in the quarter. This was down slightly from the fourth quarter, reflecting a five-day shutdown for unplanned maintenance to the underground crusher. Excluding the down cut time, underground mining rates sort of averaged 6,100 tons per day.

The maintenance was completed by the end of the quarter and our mining rates increased to average over 6,300 a day in April. We remained on track to achieve our year-end target of 7,000 tons per day.

Given mining cost of CAD42 per ton were in line with plan and are expected to come trend lower through the year consistent with our full year guidance of CAD39 per ton. Underground grade mines were 2.57 grams per ton consistent with the fourth quarter.

Underground grades are expected to increase for the remainder of the year consistent with our full year guidance of 2.68 grams per ton. Mill throughput averaged 73,140 tons a day grade of 2.08 grams per ton. Throughput was up from a year ago, but below annual guidance of 7,800 tons per day.

During the quarter, we had some challenges with freezing in the fine ore bins ahead of the mill. We were able add liquid calcium to get bit slowing again and we'll be proactive on that next winter.

I would like to note that the only ore displaced by this large throughput was low-grade stockpiles and represents less than a 1,000 ounces of delayed production. On a very positive note, mill recoveries were 90% for the quarter, up from 86% in Q1 2015. We made some changes to the process chemistry in the mill.

We can now say with certainty that we've solved the winter recovery issue that is produced in the past years. We produced 39,100 ounces at Young-Davidson in the first quarter at significantly lower all-in sustaining cost of $846 per ounce, down more than $130 an ounce from the fourth quarter of 2015.

We expect the ongoing ramp up to drive production higher and cost lower through the year and we remain on track to achieve full year guidance. At El Chanate, we produced 18,000 ounces in the quarter at all-in sustaining cost of $1,095 per ounce, consistent with full year guidance.

Despite of the mine sequence, we are mining more waste, less ore in the first half of the year. This is expected to normalize in the second half with higher stacking rates to the past consistent with annual guidance.

Mulatos had a strong quarter with production of 37,600 ounces at substantially lower all-in sustaining cost of $878 per ounce, marking a $170 ounce decrease from 2015 levels.

Crusher throughput averaged 18,000 tonnes per day in the first quarter, slightly below the full year guidance to de-schedule maintenance of the primary crusher and overland conveyor. We took advantage of the down time to mine more waste, which contributed to the higher strip ratio in the quarter.

Our strip ratio is expected to come down through the rest of the year. Grade stack averaged 0.82 grams per ton and were in line with the plan for the quarter. Higher grades are expected to be stacked in the second half of the year consistent with the full year guidance of 0.89 grams per ton.

Mill throughput averaged 430 tons per day at an average grade of 14.9 grams per ton, while the current reserve grade -- the higher grade stockpile is processed. We'll continue to process the remaining stockpiles in conjunction with the underground production through the rest of the year.

Development of the higher grade La Yaqui and Cerro Pelon deposits remains on track. As John mentioned, we received EIA approval for the road construction at La Yaqui earlier this week. With the project EIA submitted in April, we are expecting a six-month turnaround time followed by construction and initial production from La Yaqui mid-2017.

Jamie and I were down to Mulatos earlier this month reviewing the exploration program. We both came back very encouraged about our exploration potential in general and the opportunity to add ounces at both Yaqui and Pelon.

Based on that visit and the enthusiasm we see from our team there, we are increasing our 2016 exploration budget in Mulatos by 60% to $16 million. We'll keep those 12 groups, 12 rigs busy. With that, I'll turn the call back to John..

Thank you Peter. That includes the formal presentation. I'll now turn the call over to the operator who will opens it up for your questions..

[Operator Instructions] The first question is from Mike Parkin of Desjardins. Please go ahead..

Sounds like things are going pretty well.

Just on that exploration budget increased can you give me a breakdown of what would be capitalized verses what would be the expanses for the remainder of the year?.

Mike, its Jamie here. The majority of that will be capitalized..

Thanks. That's it for me. I talked to Scott earlier already..

The following question is from Alex Watt of Scotiabank. Please go ahead..

Mike actually asked the exact question I was going to ask.

So maybe I'll just clarify it a bit more that increase fits into the $138 million to $158 million CapEx guidance for the year?.

No, that's exclusive. So we provided our guidance back in January. The $6 million increased our exploration budget is incremental..

Okay, great. That's all for me now..

Thank you. The following question is from Don MacLean of Paradigm Capital. Please go ahead..

I was just going to ask you what you're spending money on? It'd be nice to know what it is that's giving you so much encouragement to have that many drill rigs active, if you could provide any kind of color. We all know actions speaker louder than words, but it would be nice to hear some more details about the encouragement that you are getting..

Don, its Peter. We're going to be spending that money on drilling..

Really, take your time..

And lot of it, you know we drilled along and now you would have seen our release for our reserve resource upgrade and the exploration that we had at Yaqui and Pelon. And you're able to see the ridge that run about the kilometer up to the North West of Yaqui. So - and our resource increases that we talked to in that release.

So it's - some of that's installing in around the Yaqui, some of it's - a lot of its is step out along that ridge and down that ridge. The alteration that we're finding continues quite substantively along under that silica cap. So we've rather changed that quicker than slower and that's about it. We're going after to see how big this thing is..

I think in the discussions of both the drilling that have done or earlier, and one of the encouraging factors was the ratio of holds that actually found gold in mineralization to the holes that didn't, which was - it was a very high at rate. With the step-outs that are going on, Peter, are you continuing to be encouraged that way..

Yes, I'd say we haven't -- yes, absolutely. We continue to be encouraged that we're -- the zone is there and there is mineralization in it. So we're just going to follow it to see where it takes us and move out sooner than later..

Yes, the -- it's Jamie here. The majority of the additional spending is on drilling at La Yaqui and I think we're tripling that the meters that we are applying to drill this year..

I totally understand the reluctance stick your necks out very far given -- we've seen in the past sometimes some pretty interesting things take place at Mulatos and the kind of fizzle.

So your reluctance have stick your necks out too far this point is understandable?.

Yes. This is fuggy silica oxide, mineralization like we see in the main Mulatos game. So it's not high-grade, stringer stuff. This is the main game kind of stuff. And it's a big system, the Mulatos campus -- I've been told that the six largest high sulphidation gold epithermal camp in the world.

So you add up all the ounces that we've identified and you add the ounces that Agnico have at La India. So -- and land access has been a challenge for us in the past and that's opening up for us now. And we're starting to explore the property more than we've been able to in the past. So - I don't know.

Our team down there is a pretty excited and it's rubbed off on us. How's that..

I wouldn't say that there is any danger of this sizzling at all. I mean, first of all, we have work body there already and it's clear to us that it's growing. And we have the reluctance at all.

We are sitting on the - just a limited number of drill holes where we have hefty information back and it's not enough to start making references to additional reserves and resources. That's not quite where we are, but with the amount of drill rates we have active, we won't take a along with -- I guess we have about 8 rigs on La Yaqui right now.

It won't take long press to build up a body of data where we can make a meaningful statement to the market. And we're just not going to start making references to how the ore body is evolving until we get more data.

But we're obviously seeing the kind of results that would lead any reasonable exploration team to want to do additional drilling and step up further.

I mean if there is one encouraging thing that we see geologically that we could see in the call but we moved from where geographic mineralization seems to more structurally hosted into an area where it looks to be more strata form in nature.

And from that point of view, they feel that additional drill rigs will help to identify more quickly and also - the target lends itself more readily to more drill rigs going to work on it.

So that more or less explains a little more clearly, why we're sort of putting things the way we are rather than - we're not - it simply isn't meaningful given the market capitalization of our company to sort of tease the market with dribbling out drill hole here and there. We're not going to do that.

We're going to wait until we build up a significant body of information and provide that to the market all-in-one gold..

I totally get that, John. And hopefully, I wasn't trying to infer that if this was going to fizzle out. Because we all know you've just increased the budget and added a pile more rigs, so it's obviously not fizzling out.

The question was more, when do you think you'll have that body of knowledge to a level that you will feel confident to open the [indiscernible] and this is what looks like we're finding and where we stand..

I guess when we have enough that's – the deal was is material and we won't talk about it..

I'm pretty sure by the time it's certainly by the end of the summer. We're going to have a really clear indication of where the things are going and that -- that would be the timeframe I would look forward..

Great. Yes. These things will come together next time for sure. Congrats. It's great to see you guys find a good acceleration target that's worthy of that much effort..

Thank you. The next question is from Kerry Smith of Haywood Securities. Please proceed..

Peter, just with the drilling at La Yaqui as it goes under the silica cap, I know the cap is relatively big, does it look like based on what you know so far that there would be way to not have a super large pre-strip there if you were to - to be able to develop the portion of what you're drilling or would just be a pre-strip that you have drill with?.

It's too early to say. You've seen the results that we put out and you can kind of take that and do your numbers and see that it's - that there's some stripping to be done.

Does it come to the surface on to the west and dip and allow us to get out of it quicker, these are some indication of that, but it's too early to really to tell anything down there..

Okay. And you talked about the improved recovery in the mill –.

Yes..

Is your expectation now that possibly the recoveries could be better than 90%, because I think it was higher than that in the old line. It could be a bit better or if you think you kind of even to get..

Well the fact that we've got 90% of the winter months which is typically been more challenging time bodes well for the entire year, we'll see does that process chemistry that we've changed help us as well in the summer months.

I wouldn't count on it, so 90% still a good number, but there are quarters at 91%, we done 92% for quarters as all certainly had the months there. I think the all time has got around 92% so we're pretty close to where they were..

Right. Okay just didn't have the benefit of technology that was -.

I don't know, the just the fundamental chemistry hasn't changed..

And just one last question.

Probably for Jamie, the fuel costs in Mexico are they still kind of sticky or have they come down little bit?.

The fuel cost in Mexico have actually come down a little bit Kerry, we're seeing a small benefit there, I thinks it’s about 4% reduction, so that is helping us..

Okay.

And did you have that benefit in Q1 then?.

We did..

Okay. So that hard numbers start of the year. Okay, great. Thanks very much..

Thank you. The next question is from Anita Soni of Credit Suisse. Please proceed..

Good afternoon guys. My question is with regard to the recovery rate Young-Davidson.

I'm just wondering could you explain to me where that recovery - like at what point you're taking that recovery rate, I'm asking because if I take the gold production number of 39,000 ounces of production over your contained milled, I only get to about an 87% recovery rate for this quarter.

In the prior year that same calculation would have yielded a higher recovery rate than what you recorded, so I'm just wondering what the variances there?.

Yes, so the answer is there's it in part balancing there, because what we’ve produced - what we count as production is actually what we've poured, what we calculate our recovery on is a produced number. So the produced and poured differ due to either gains or reductions in inventory of the billings circle.

Over the course of a year it'll be exactly right, but month-by-month and quarter-by-quarter move around..

Thank you..

[Operator Instructions] The next question is from [Natasha Koshy] [ph] indiscernible] Industries. Please proceed..

Hi, good afternoon guys, thank you for that information, it sounds like an exciting time at the company right now. Just wondering if there are plan for any capital projects or optimization projects at your producing mines..

Its Jamie here, I’ll take that question. Yes, we've got a fairly significant number of capital programs ongoing. We're spending between $111, $138 million on capital projects this year spread out between our three operations. I guess the answer would be yes, I'm not sure if there's a specific question about any other projects that any one of our minds.

Some of that capital would be sustaining capital or some of that is growth capital..

Understood.

Where would you see most of that money being spent?.

Young-Davidson in Canada..

Okay. Thank you..

Thank you. There are no further questions registered. If you have any further questions that have not been answered because of time limitations, please feel free to contact Mr. Scott Parsons at 416-368-9932, extension 439 or at 1866-766-8801. Thank you. The conference has now ended. Please disconnect your lines at this time.

We thank you for your participation..