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

Thank you, operator, and thanks, everyone, for attending Alamos' Fourth Quarter 2018 Conference Call. In addition to myself, we have on the line today both John McCluskey, President and Chief Executive Officer; and Peter MacPhail, Vice President and Chief Operating Officer.

In addition to address any questions with respect to our reserve resource update, we have Chris Bostwick, our Vice President of Technical Services on the line. I'd like to remind everyone that our presentation will be followed by Q&A session. On this call, we will be making forward-looking statements.

Please refer to the disclaimer on the 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 the 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 Vice President of Technical Services and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call today are in U.S. dollars unless otherwise noted.

Now I'll pass over to John to provide you with an overview..

Thank you, Jamie and good morning, everyone and welcome to the call. We delivered on a number at of our strategic objectives in 2018. We met our production guidance for the fourth consecutive year with record production of 505,000 ounces.

This was driven by strong performance at Island Gold and Mulatos where we increased production guidance twice in 2018. We also achieved our revised consolidated cost guidance with total cash costs of $802 per ounce and all-in sustaining costs of $989 per ounce.

We closed this year on a high note with a strong performance from Young-Davidson and record production from Island Gold in the fourth quarter. Young-Davidson had a challenging start of the year.

But a much better finish with the operation delivering its highest production and lowest costs of the year in the fourth quarter reflecting higher underground mining grades.

We also made good progress on our various internal growth initiatives including advancing the lower mine expansion at Young-Davidson, while obtaining a scheduled Schedule 2 amendment for a new tailing facility securing the capacity for the current remaining mine life.

We completed the Phase I expansion at Island Gold, achieved a new record for production, and added nearly 1 million ounces of reserves and resources over the past year. Which will support future expansions. Island Gold has exceeded expectations on all fronts.

More than validating the quality of the asset and the potential we saw when we acquired it in November of 2017.

Island Gold was the driver of another successful global mineral reserve and resource update given the exploration success over the past year between the additions of Island Gold and Lynn Lake we effectively replaced completion and significantly increased inferred resources in both size and quality.

All of this support, all of this supports a very bright outlook. In 2019 we expect a similar level of production with lower costs driving stronger margins and profitability. Looking to the second half of 2020 we expect strong company-wide free cash flow growth falling completion of the lower mine expansion at Young-Davidson.

We believe we have a deeply discounted share price. We initiated a share buyback in December and have been active [Technical Difficulty] We also announced the doubling of our dividend, which speaks to our confidence in the outlook and coming free cash flow growth. Which we expect will support further dividends increases.

I'll now turn the call over to our CFO, Jamie Porter to review our fourth quarter 2018 financial performance..

Thank you, John. We sold a record 131,161 ounces of gold in the fourth quarter at an average realized gold price of 244 per ounce, $17 above the London PM Fix for revenues of $163 million. For the full-year revenues increased to a new record of $652 million.

Total cash costs and all in sustaining costs declined in the fourth quarter 770 per ounce and 983 per ounce respectively, reflecting improved performance at Young-Davidson. We expect to further decline in cost in 2019 driven by low-cost production growth from Island Gold.

Operating cash flow before change to the non-cash working capital was $53 million or $0.14 per share in the fourth quarter and $212 million or $0.54 per share for the year. All of our mines generated free cash flow net of all capital and exploration spending for a combined mine site free cash flow of $56 million in 2018.

We reported a net loss of $72 million or $0.18 per share in the fourth quarter which included one-time adjustments for an after-tax $50 million non-cash inventory impairment at El Chanate, unrealized foreign exchange losses recorded within both deferred taxes and foreign exchange of $60 million and other items totaling $10 million.

Excluding these one-time items adjusted net earnings were $4 million or $0.01 per share. The write-down at El Chanate followed a review of the heap leach pad inventory as the operations transitioned to residual leaching in the fourth quarter.

This review included an analysis of the number of ounces stacked on the pad and included inventory that are expected to be recovered economically. This resulted in the write-down of approximately 52,000 ounces, leaving approximately 16,000 ounces in inventory which are expected to be recovered in 2018.

There may be opportunities to recover additional ounces beyond that, but we'll be carefully monitoring cost along the way to ensure that we are doing so profitably. Amortization expense was $42 million for the fourth quarter and $167 million for the year or $321 and $327 per ounce respectively both consistent with guidance.

Corporate G&A expense of $3.5 million for the quarter and $17 million for the year was also consistent with guidance and remains among the lowest in our peer group. Capital spending totaled $52 million in the fourth quarter and $222 million for the full year in line with the revised guidance.

Total capital spending is expected to increase to a range of $290 million to $315 million in 2019, reflecting full-scale construction of two new mines Kirazli and Cerro Pelon. As John mentioned, we initiated a share buyback in December and have been active.

Today we purchased and cancelled 2.4 million shares at a cost of $10 million or $0.04 per share or $4.07 per share. We also announced the doubling of our annual dividend to $0.04 per share paid quarterly. This increase is well supported by our balance sheet, higher gold prices and a bright outlook with much stronger free cash flow on the horizon.

As John noted, we expect further increases in the dividend as we generate stronger levels of free cash flow. With our first quarterly dividend to be paid in March, Alamos has now paid dividends for 10 consecutive years returning a total of $142 million to shareholders through dividends and share buybacks.

We remain debt-free and possess one of the strongest balance sheets in our peer group. At the end of 2018 we had $206 million of cash and cash equivalents and more than $600 million of total liquidity combined with our underarm revolver. We are in excellent shape to fund our internal growth initiatives.

At this point I'll turn the call over to Alamos s, Chief Operating Officer, Peter MacPhail to provide an overview of operations..

Thank you, Jamie. Young-Davidson delivered the strongest performance in the fourth quarter producing 50,900 ounces reflecting higher underground mining rates and grades. For the full year the operation produced 180,000 ounces in line with the revised guidance. Total cash cost for the quarter were $764 per ounce, a 7% decrease over the previous quarter.

Mine-site all-in sustaining costs also decreased 5% to $974 per ounce. We faced some challenges at Young-Davidson during the first half of 2018, but have taken steps to ensure better performance going forward and have seen the benefits in the second half of the year.

Remain focused on maximizing efficiency of the upper mine, while completing develop and construction of the lower mine.

We expect gold production at Young-Davidson to increase slightly in 2019 to between 180,000 to 190,000 ounces with total cash costs and mine site all-in sustaining cost expected to decrease approximately 6% from 2018 driven by higher underground mining rates and grades.

Following the completion of the tie-in of the upper and lower mines, underground mining rates are expected to ramp up 7,500 tons per day in the second half of 2020 towards our long-term target of 8,000 tons per day in 2021.

We expect this to drive production higher, costs lower and combined with lower capital spending we expect strong free cash flow growth. Island Gold continues to impress producing a record 29,000 ounces in the fourth quarter and a record 105,800 ounces for the year meeting the midpoint of guidance which was increased twice over 2018.

Underground mining rates averaged 1,116 tons per day in the fourth quarter and we're 30% - 37% higher than the third quarter as mining rates increased to match the expanding milling capacity. Mill throughput increased to 1,146 tons per day in the fourth quarter with the completion of the mill expansion.

As part of a Phase II2 expansion, we’re in the process of permitting an increase to 1,200 tons per day to match the existing capacity of the mine and the mill. Production at Island Gold is expected to increase 32%, to between 135 000 and 145,000 ounces in 2019 reflecting higher grades and throughput.

Costs are also expected to decrease driving strong free cash flow growth even with that an aggressive ongoing exploration program. Exploration [ph] continues to be a key part of the Island Gold story with the pace of mineral reserve and resource growth exceeding our expectations.

Since the acquisition of Island Gold in 2017 we've seen combined mineral reserve and resources increase by nearly 1.2 million ounces. With the deposit open across all three main areas of focus we think there is more to come.

Mulatos produced 35,600 ounces in the fourth quarter and 175,500 ounces over the year meeting the midpoint of guidance which like Island Gold was increased twice in 2018. Mine-site all-in sustaining costs were $881 per ounce in the quarter and $855 per ounce for the year. The later [ph] below the annual guidance of $900 per ounce.

In 2019 production is expected to return to the previously guided long-term rate of 150,000 to 160,000 ounces. Construction has commenced at the high grade Cerro Pelon project and we expect to complete permitting for La Yaqui Grande during 2019. Production from these higher grade projects is expected in 2020 and 2021 respectively.

We reach the end of mine life at the high grade San Carlos Underground deposit in 2018 but see good potential for additional sources of high grade ore. This will be the focus of near mine exploration in 2019.

El Chanate produced 10,100 ounces in the fourth quarter and 43,700 ounces for the year with mine-site all-in sustaining costs averaging 317 per ounce. Mining activity ceased at El Chanate in the fourth quarter and we have since transitioned to residual leaching.

At Lynn Lake we've added to the reserve base and will be incorporating this and other value engineering initiatives into an optimized feasibility study to be released in the second quarter.

At Kirazlı, we're expecting to ramp up full scale construction activities this year following receipt of the operating license, putting initial production on track for the latter part of 2020. This is expected to take our annual production to over 600,000 ounces per year starting in 2021, while further reducing our costs given its low cost profile.

With that, I'll turn the call back to John..

Thank you, Peter. That concludes our formal presentation. I'll now turn the call back to the operator and we will open the call for your questions.

Operator?.

Thank you. [Operator Instructions] And the first question is from Michael Sroba from Macquarie. Please go ahead..

Good morning John and team, a couple of questions from me.

First, can you please let us know what the unit costs were at Island and Mulatos?.

Hey, Mike – Mick, just searching for those numbers here.

Unit costs you mean mining costs?.

Yes, mining and processing?.

Mining and processing. I haven't got those at my fingertips. We'll look them up and get back to you as you ask your second question..

Okay. Thank you. And.

Following the write down at El Chanate, do we have any idea of the expected cash in all-in sustaining costs there for 2019?.

Yes. So, it's Jamie. Our guidance remains the same. Our anticipated all-in sustaining costs that we’ll report for El Chanate production is $1,200 an ounce. But what's important to note is that that is not all cash. About half of that is the actual cash processing costs associated with getting those ounces off the pad.

The other half is the inventory cost which represents cash that we've spent in the past. So Despite the $1,200 all-in sustaining cost we do anticipate generating $6 million to $7 million free cash flow at El Chanate this year..

Okay. Thanks for that. And it looks like there have been a few wins at Lynn Lake.

Can you please let us know what the criteria will be for an investment decision there in terms of IRR or payback period?.

Yes. So as you'll recall we publish the feasibility study back in December of 2017 and had an IRR and after-tax IRR of 12.5% to the $1,250 gold price. So I think at a minimum we want to get to 15% but we're targeting closer to 20..

Okay. Thanks for that. That's all for me..

Yes. Just getting back to you, Mick on the unit costs at Mulatos we are at 1,275 per ton mining – sorry, $275 per ton mining, but $8 per ton processing. At Island mining was CAD 140 Canadian per ton, CAD 30 processing per ton..

Okay. Excellent. Thank you very much for that..

Thank you. The next question is from Kerry Smith from Haywood Securities. Please go ahead..

Thanks, operator. Peter, in the commentary in YD for the new tailings facility, you made a comment there that it would lower your operating costs.

Just curious what the magnitude of that cost reduction might be and exactly why it's lowering your costs?.

Yes, the numbers are in our -I think the deck there. From memory, when you say operating costs, it's more the capital costs of constructing dams than operating cost, so it's lower kind of sustaining capital costs considerably.

Currently with the facility, the cost is in the range of $5 per ton and the guys are pulling up the numbers here, in the range of $5 a ton in capital cost to construct our current facility. And it's less than half of that or around half of that - what have we got here? Here we are.

So in our presentation it shows capital cost of the current facility to store a historic ton – a ton is $CAD 4.24, capital costs. And the new facility it's U.S., sorry, I apologize, It's U.S. dollars 424 and new facility is $1.43 so a third.

And the reason for that was the second part of your question, the reason for that is just taking advantage of the natural topography what the existing facility is kind of in an area raised up, the new facility obviously we need to a Schedule 2 amendment. Schedule 2 amendment is because the area used to be a lake.

It was used by the old-timers, in the 50a and - 40s and 50s as a tailings facility already, so it's full of tailings but it still had been classified as a lake. We are now going to re-purpose that as a tailings facility as it was in the past and actually reclaim what the old-timers have done..

Okay. I interpreted the commentary to mean as lowering your operating costs, and that's what was confusing at the end, I appreciate the clarity. And Jamie, just on Chanate, the charge, the $64 million, is that - that's on that 52,000 ounces, that's over 1,200 an-ounce. Why is it that high? I wouldn't have expected it to be that high..

Kerry, if you look at our guidance for 2019 we forecast production from El Chanate between 15 000 and 25,000 ounces. We've written down the inventory balance to about 16,000 remaining ounces. And that's based on conservative assessment comparing the revenue from those incremental ounces to the cost of cyanide.

That inventory balance has been whittled down over time I think on the time of the merger with AuRico it was 140,000 ounces, got down to 70,000 ounces currently and we decided to take it a conservative view as to what we'll be able to residual leach there. So 16,000 ounces is what we anticipate for 2019.

If we’re able to get more, this year, or in the future, those will be free ounces..

Okay. And just while I've got you there, any plans for anymore hedging? I know you got about I guess 20% of your production hedged now with these collars.

Is there a plan that you might do more of that or has the board kind of said 20% is as much as we'd like to have?.

So, In fact, 20% is about as high as we're going to per year. That's what I was about to say annualized. And we have - it's a rolling hedging program, so we have hedges coming off quarter-by-quarter, and we can actually decide quarterly whether we want to continue to add hedges to keep us – or whether we don't..

Yes, so we're up to 100,000 ounces currently, Kerry, and the range I think is pretty attractive with the flooring around 1,289 and a ceiling close to 14, north of 1,430. So we're comfortable with our range and will continue to monitor it. But we've had tremendous success with our hedging.

Over the course of the past two years we’ve generated $15 million in incremental cash flow between our gold and FX hedging. So it's a testament to our treasury group. We've done a good job and we’ll continue to do that..

And. Just the last question on Kirazl, the $75 million that you've got budgeted for CapEx this year.

When would you need to get the operating permit by in order to effectively deploy that amount of capital this year?.

By the end of the first quarter, Kerry..

End of Q1, okay. Okay, great. Thanks very much..

Thank you. The next question is from Mike Harkin from National Bank. Please go ahead..

Hi, guys. Just circling back to one of the answers there on mining costs at Island being CAD140 and I recall back from Richmont days, there's always a bit of a fairly significant price difference between whether you're mining for stoping or development.

Do you have the breakdown of roughly what the mix-up was?.

Yes, Mike, I don't have it at my fingertips, but it would have been - it's a pretty steady mix any given quarter, so I wouldn’t expect that to drive anything dramatically..

Okay. Similar rates kind of going forward..

Yes..

Okay….

Yes. Mike our budget for this year is 135, so not too far off where we ended up, where we were in the fourth quarter..

Okay. Sounds good. Yes, my other questions were answered at the end of the last set. So that's it for me. Thanks very much..

Thank you. [Operator Instructions] And your next question is from Thurman Willis, private investor. Please go ahead..

Thank you for taking my call. I'm sorry, John, There's a lot of – usually about the consolidation in the gold industry. And with you trading at such discount to your peer group - that mighty attractive on a takeout basis. And the second part of that question is, with the consolidation I continue to read that there could be a gold shortage upcoming.

Could you comment on both those items, please?.

Good morning. It's John McCluskey speaking. We didn't quite hear the second part of your question very clearly because of the line, but in terms of the first part of your question, there is certainly a lot of talk of M&A in the industry right now. Alamos has been very active in M&A for five years.

Five years ago this was a single mine company with 140,000 ounces of production. By 2018, we're producing from for four mines and generating 500,000 ounces of production and we're continuing to drive that growth.

And while we went through some very low shares [ph] price periods over the course of 2018, especially late 2018, the shares have been recovering quite significantly over the last number of months. And I would submit that our valuation is ultimately on the ways of normalizing with its peer group.

Nobody is going to force us into M&A if that's what you're implying. I don't see that happening. I really see another thing happening in the industry right now, which is CEOs getting together and talking about strategic mergers that improve both companies.

And frankly, if the terms were right and somebody approached us with something that made a lot of sense, we'd be open to discussion.

But given that we've done so much over the last number of years to drive our value, and we have so much in the way of improvement coming over the next 12 months to 18 months, I highly doubt that we are going to hear a story attractive enough to match what we are about to achieve on our own..

Good. And the second part of my question that you did not - or was not able to understand was, I commend you on the repurchase program of 10%, and especially the good acquisition, the good pricing at 4.07 [ph].

Do you think we will still be active at these levels, considering we are getting closer to our peers, be as aggressive in buying back our shares at these levels?.

Jamie, why don't you take that question I'll let Jamie Porter answer that question for you..

Sure. I mean, the challenge with any normal course issuer bid is that you are subject to regular blackout periods. So we’re blacked out. Now, given our earnings and frankly, we're frankly we are blacked out more often than we're not.

We do still think that our share price is deeply discounted relative to the potential that we have and the growth that we're going to see in cash flow over the next 12 to 18 months. So Without outlining exactly what our price parameters are, we do still think we're trading at an attractive price where we want to buy back stock..

And the window opens two days after earnings, is that correct?.

It does. It does, absolutely..

All right. And then again I apologize for this, but some of the reading I've done said that with the M&A activity, that we could wind up seeing some gold shortages - for forthcoming which may be pressuring the price of gold up.

How does management feel about any shortages in the commodity as you look into your crystal ball?.

Thurman, as our thesis some time ago that the industry was going to be very short of gold projects. And it's not just a question of finding them, which frankly we're having some difficulty in doing, if you can compare the rate at which the industry was finding new gold reserves and resources over the 80s, and 0s and how it's been since 2000.

There's a different -there's a definite trail off in that curve. So it's an issue. It really is an issue for the industry.

And we effectively addressed it through fairly aggressive M&A, merging with companies where we saw opportunities to grow reserves, and even acquiring non-producing assets that we felt made excellent future additions to our production pipeline. So that's how we've addressed it. How the industry addresses it in general, I don't know.

I think the logical answer is boost exploration. And I think that will come with rising gold prices. The problem over the last five years has been the gold price has been very weak.

The majors that generally drive exploration expansion through their exploration teams, they just haven't been funding those schemes as aggressively as they have in the past. So I think that's what we're going to have to do as an industry. We're going to have to explore more and employ better techniques.

Technology is improving all the time, and we can see that in many industries, and I think we're going to see that ultimately in the gold space as well. And frankly companies like ours are investing in that very kind of thing right now. But other than saying that, I think what ultimately we're going to see is higher gold prices.

There's a shortage of gold reserves, and there's peak gold production which you're hearing discussed in the media quite a lot right now. I think the ultimate outcome of that market pressure will be higher gold prices..

Thank you for taking my questions. I'm sort of new to the company in the last 90 days to 6 months, but I've been an active acquirer of the stock, and the research management will and I applaud all of you for doing such an excellent job.

And I'm not trying to cheerlead you, I'm just trying to tell you my 40 years experience tells me that this is a first-class operation..

Thank you very much. We appreciate that..

Thank you. [Operator Instructions] There are no further questions at this time. This concludes today's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at 416-368-9932, extension 5439. Thank you for your participation. The call has now ended..