Good morning, ladies and gentlemen. I would now like to turn you over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead..

Thank you, Operator, and thanks, everyone, for attending Alamos' First Quarter 2019 Conference Call. In addition to myself, we have on the line today both John McCluskey, President and CEO; and Peter MacPhail, Vice President and COO. 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 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 are in U.S. Dollars unless otherwise noted. Now, John will provide you with an overview..

Thank you, Jamie. We have a strong start of the year, producing 125,300 ounce in gold in the first quarter, a significantly lower cost from 2018. All of our sites performed well, lead by Island Gold which achieved records for both quarterly production and free cash flow.

Consolidated total cash cost was $732 per ounce and all-in sustaining cost of $957 per ounce were both better than budgeted and represented a 5% and 3% decrease from the fourth quarter respectively.

We're expecting production in total cash costs to be in the similar range in the second quarter, followed by the further improvement in our cost in the second half of 2019. With a strong start to the year, we are well on-track to achieving our full year production and cost guidance.

We continue to advance our various internal growth initiatives and are nearing the turning point where we will see the benefit in the form of significant free cash flow growth. At Young-Davidson, we met budgeted underground mining rates for the quarter while continuing to work on the lower mine expansion.

If you haven't already done so, I would encourage you to take a look at our website where we recently added virtual tours of both the Young-Davidson and Island Gold mines. There are some great photos of the lower mine construction at Young-Davidson which helped illustrate the impressive scale of the operation.

The work on the lower mine expansion and the tie-in of the upper and lower mines remains on-track to be completed during the first half of 2020. Island Gold continues to shine with higher grades and throughput, driving new record of the operation for both production and free cash flow.

We believe there are many more records to come at this operation through Phase 2 and Phase 3 expansions. We're also seeing good ongoing results from our large exploration program of Island Gold -- some of which we will be including in an exploration update we plan to release later next week.

Alamos produced its two millionth ounce of gold in March, a significant milestone which also marked the end of a 5% royalty that the operation had been paying since the start of the production in 2005. At current gold prices and production rates, this will save us approximately $10 million per year.

We also celebrated the completion of the voluntary relocation of the town of Mulatos in March. As part of the relocation, we invested in several projects including the construction of 21 new homes, a new education center, a community hall, a church and a medical clinic.

We're proud of these investments and the long term benefits these new facilities will provide for the community. Last, but certainly not least, we received the operating permit for Kirazli in March and now have all the major permits required to start our full-scale construction.

We will be ramping up construction activities through the year and expect initial production at Kirazli in the latter part of 2020, contributing to the strong production and free cash flow growth in 2021. I'll now turn the call over to our CFO, Jamie Porter to review our financial performance.

Jamie?.

Thank you, John. Gold revenue from the first quarter of 2019 were $156 million, based on the sale of approximately 120,000 ounces at average realized price of $13.04 per ounce. Gold production in the first quarter was 5,600 ounces, more than what we sold with those ounces benefiting our second quarter financial results.

Overall, we had an excellent first quarter with global gold production cost and capital, in-line with guidance.

Total cash cost of $732 per ounce and all-in sustaining cost of $957 per ounce were in-line with guidance and ahead of what we budgeted for the first quarter, reflecting higher cost to the Young-Davidson, offset by substantially lower costs at Mulatos.

We are expecting similar consolidated total cash costs in the second quarter, while all-in sustaining costs are expected to increase, reflecting a catch-up of sustaining capital expenditures. Operating cash flow before changes in non-cash working capital was $62 million or $0.16 per share.

A reported net earnings of $17 million or $0.04 per share included unrealized foreign exchange and other gains totaling $6.5 million. Excluding these gains, our adjusted net earnings were $10 million or $0.03 per share. Amortization expense was $39 million in the quarter or $329 per ounce, slightly below full year guidance of $345 per ounce.

Corporate G&A expense of $5.5 million was consistent with guidance and remains amongst lowest in our peer group. Capital spending totaled $53 million in the first quarter including $15 million of sustaining capital, $34 million of growth capital and $3 million of capitalized exploration.

This was lower than budgeted with some spending at both Mulatos and Island Gold deferred into the second and third quarters of the year. Combined with ramp-up of spending at Kirazli, we expect higher capital spending in the next few quarters and maintain our full-year guidance of between $290 million to $315 million for the year.

We were active under our share buyback program during the first quarter, repurchasing a total of 2.6 million shares at an average price of $4.40 per share, for a total cost of $11 million. We also paid a quarterly dividend of $4 million or $0.01 per share in March after announcing the doubling of the annual dividend at February.

In total, we returned a record $15 million to shareholders through our share buyback and dividend program in the first quarter. We closed the quarter with no debt and $181 million of cash and cash equivalent with our balance sheet.

Additionally, we have approximately $18 million in equity securities having recently closed sales of various non-core royalties for $8 million. We remain in the period of substantial investment in growth capital to expand our operations for Young-Davidson, Island Gold and in Turkey.

We expect the transition to a period of strong free cash flow growth starting in the second half of 2020. In the interim, we are fully budgeted for our account growth initiatives with existing cash and cash flow. I'll now turn the call over to our COO, Peter MacPhail to provide an overview of operations..

Thank you, Jamie. Our sites performed well across the board in the first quarter with each on-track to achieve annual guidance. At Young-Davidson, underground mining rates of 6,500 tons per day and gold production of 45,000 ounces were both consistent with the annual guidance.

Mill throughput of 6,800 tons per day was below the first-half guidance of 7,800 tons per day as we deferred processing of frozen, low-grade surface stock pileups to the warmer months. We expect mill throughput to increase through the spring and summer months until the low-grade stockpiles are depleted sometime in the third quarter.

Total cash cost of $839 per ounce and mine site all-in sustaining costs of $1,068 per ounce were higher than annual guidance due to planned lower grades to mine and higher underground maintenance costs. Costs are expected to decrease through the year, reflecting higher grades at a lower sustaining capital spending, consistent with annual guidance.

Work on the lower mine expansion continues and we remain on-track to complete the tie-in of the upper and the lower mines in the first half of 2020. As previously guided, this tie-in will require approximately three months of downtime at the North Gate shaft, which will impact throughputs and production rates.

Once completed, we expect mining rates to increase to about 7,500 tons per day in the second half of 2020 and toward 8,000 tons per day in 2021. Island Gold produced a record 35,600 ounces during the first quarter, up 23% from the previous record of 29,000 ounces in the fourth quarter of 2018.

The increase was driven by a higher mine grade of 11.4 grams per ton, higher mining and milling rates, which both averaged around 1,100 tons per day in the quarter, consistent with our annual guidance. Total cash costs of $497 per ounce were consistent with guidance and down 15% from 2018 levels.

Mine site all-in sustaining costs of $649 per ounce were lower than annual guidance, reflecting the timing of sustaining capital spending.

Looking ahead, we expect to permit the Phase 2 expansion of the operations to 1,200 tons per day by the end of this year and are working on a study of how to best approach the Phase 3 expansion of the operation beyond 1,200 tons per day.

We've seen above-average rainfall at both Young-Davidson and Island Gold in the past several weeks as you may have seen in the news. To alleviate any concerns, this has not impacted our operations, nor do we expect it to.

Mulatos had a strong quarter producing 38,900 ounces and total cash cost of $743 per ounce and mine site all sustaining costs of $809 per ounce. Production was consistent with annual guidance. All costs were well below plan reflecting a higher grade of stack, a lower weight to order ratio and the recovery of 2,000 ounces and concentrate in the mill.

Total cash costs and mine-site all-in sustaining costs are expected to return to guidance levels from the end of the year. At we'd like [ph], we are working to finalize and updated feasibility study on the project incorporating the reserve growth over the past year, as well as other value engineering initiatives designed to improve the economics.

We expect to have the updated study completed mid-year. After receiving the operating permit for Crowley [ph] in March, we finalized several key contracts including the mining services and Earth's Works contract expected to begin pre stripping the open pit within the next month, with construction activities ramping up through the year.

We remain on-track for initial production towards the end of 2020 which we think will consolidate the productions over 600,000 ounces per year in 2021 while significantly lowering the cost profile. With that, I'll turn the call back John..

Thank you, Peter. I'm now going to ask the operator to open the lines and started the Q&A session..

[Operator Instructions] Our first question is from Fahag [ph] from Credit Suisse. Please go ahead. Your line is now open..

Just a few questions from me. First, on the buybacks, can you provide some more guidance on maybe the rest of the year? Are the Q1 level of the buyback, call it 2.5 million shares.

Is that kind of a cadence or that what we should be expecting for the rest of the year every quarter?.

Our buyback approach can be opportunistic. There are downturns in the share price and we can buy at a discount. We're going to continue to do that, but we're certainly not providing guidance on our buyback program. I don't know anybody who would do that..

Let me rephrase then. The level of buy backs in Q1, was that opportunistic or is that something -- like some companies will do it more on a scheduled basis. Is that something....

No, we're not scheduling our buyback. That's the point I'm trying to make. We're going to buyback when we see opportunities to buyback in. It's not on some sort of plan or a schedule or anything else. We might by zero shares, in other words, between now and the end of the year or we might buy a lot. It should be guided by our view of the market..

Just switching gears; on Island Gold, any color on the Phase 3? I know it's early stages, but what level of throughput is kind of in the work that like order of magnitude away from the 1200 tons per day?.

Our Phase 2 expansion is really just permitting exercise to started with that. The mill is capable of doing 1200 times a day as mine is currently capable of doing 1200 tons a day. We're looking at -- and so, that's a simple one and will cost us anything.

But for Phase 3, we're looking at the various options that come to mind with the mind like this just keep extending the ramp, do you do a shot? Each of those have different ultimate throughputs.

I think we said in the investor day that we had earlier this year that certainly somewhere around 1500 tons a day would be a reasonable sort of a target that we'd be approaching with this and depending on the options it could be more..

Thank you. Our next question is from Cosmos Chiu from CIBC. Please go ahead..

Thanks, John, Jamie, Peter and team. Thanks for the conference call. Maybe first off on the Young-Davidson here. Looking at it, there was some frozen stockpiles in Q1.

I just want to get a better understanding here in terms of for the rest of the year, given that the stockpiles and lower grade stoppiles will get processed in Q2 and Q3 at the mill, we're going to be expecting higher throughput but potentially lower grade given that a part of that will be comprised of the lower grades stockpiles.

So, that's going to happen in Q2 and Q3 and Q4 you're going to go back to sort of the mill throughput matching the underground throughput, but with higher grades?.

Yes, that's right. 6,500 tons a day from the underground will be processed at the grades that we got Q -- really the low grade stockpiles that are around or they're both -- we top up the mill with that material and we do that through the year. But really it adds maybe a couple thousand ounces to our output on any quarter.

It doesn't really move the needle at all. .

Yes, for sure. And then Peter you talked about gaining efficiencies in the upper mine and that's been a target in the past quarter and certainly last year as well.

What have you learned in the upper mine you can certainly apply to your lower mine when that connection happens in 2020?.

I mean the lower mine is, as you would have seen in our Investor Presentation and the video and the animation we have on our website is quite a different animal, it's designed to be at 8,000 tons a day, it's 50% rigorous [indiscernible] are greater, will be conveying or more than trucking or figure skip capacity. The bins are also big.

That wouldn't be the biggest thing that we've learned with the upper mine as well and it's top of all of that. I mean we do have kind of limited bin capacity in the upper mine, which kind of limits us to that 6,500 to 7,000 tons range with a lower mine we're going to have two days of horse guards in front of us at all times..

Maybe switching gears a little bit here, going to Island Gold, Peter, you talked about getting the permit to get up to 1,200 tons per day. Right now you're limited to 1,100 tons per day.

Could you maybe remind me how things work again because in Q1 you averaged about 1,133 tons per day at Island Gold?.

So, we have an annual permit that limits us to about 100 tons per day. That's how it works. .

So, does that mean that sometime in Q3 and Q4 you'll need to be under 1,100 per day unless the permit's retroactive? Given that in your Q1 you were slightly over. .

I think our efforts here will be to get that permit security and in time that we don't have to be under 1,100 tons per day at any time during the year..

Okay, I got it. And maybe a quick question for Jamie here. Looking at Carozzi and Turkey, certainly you look at the Turkish lira [ph], it's been all over the place.

I'm just wondering how you're mitigating that risk in terms of foreign exchange and what have you put in place?.

So, I mean our guidance for this year, I think it's $75 million spending a crossly. We only just started that in the first quarter so we're ramping up spending now. But the vast majority of our spending this year is actually U.S. seller base that we have been negotiating a mining contract that's been in U.S.

dollars with no real clause where we're exposed to the Turkish lira [ph]. So, our TL exposure this year it's about 20 million. And we're looking at ways to manage that in terms of edge again. .

And maybe one last question, jumping back to Peter here, sorry about that. In Mulattoes, 66% recovery in Q1, you're looking to target 70% recovery in 2019.

Could you maybe talk about that in terms of how you can improve on that recovery? Is it just a mix of different sources of oil coming from the different pits?.

Yes, it's really just timing. We stacked our better grades towards the end of the quarter and those houses will come out in Q2. .

Thank you. Our next question is some Kerry Smith from Haywood Securities..

Peter, just on your tailings facility in Northern Ontario, the two that you've got; have you had any issues with all the rain? I know some of the companies have had to shut their mills down temporarily while they deal with all the excess water. I'm just wondering how your facilities are set up..

Yes. No, Kerry, we haven't had any issues at all really. Our tailing facilities are designed for the kind of weather that we see from time to time in northern Ontario.

They're both operating at levels well within their defined parameters and we don't expect that to -- not all of the snow has melted yet either but we still don't -- we're in good shape there from a water level perspective at both sites..

Okay. Okay, great. And then just for Jamie, a second question on Kirazli. I know you let the mining contract and you've ordered a few other contracts.

Are the costs that you've awarded in those contracts kind of in line with what you had in your feasibility numbers or are they a little bit better or a little bit worse? I'm just trying to get a flavor for how the costs are coming in..

Yes, I'd say they're in line, Kerry..

They're in line. Okay. Great. Thanks very much..

Thank you. Our next question is from Mike Parkin from National Bank Financial. Please go ahead..

Great. One question with the tie-in on Young-Davison.

Do we have a sense of will it be concentrated in Q1 of next year, kind of equally split between Q1 and Q2, or when could we expect more definitive timing on it?.

We'll probably provide some more definitive guidance toward the end of this year as it comes closer but it'll be basically three months at some point in H1 of next year..

Thank you. Our next question is from John Tumazos of John Tumazos. Please go ahead..

Thank you very much for taking my question.

Whenever the Kirazli mine turns from a cash consumer to a cash generator, maybe the middle of next year, per your guidance, how long will be the time window when Alamos is flowing cash before the next major project, either Lynn Lake or Agi Dagi or a different one, starts to go into construction to use cash?.

Yes, this is John McCluskey speaking. I don't think we're going to pin ourselves down to a specific date. We're going to be watching the gold price. Generally, the gold price will tell you what the market is looking for. If prices are very high and our operations are generating really strong free cash flows, then we'll approach it more aggressively.

But if the gold price is very weak and we want to just produce free cash and slow down the growth, we can do that. So, we're in a fortunate position where we can actually time our production pipeline. We can time our growth pipeline. And we're going to take full advantage of that.

We're not going to go rushing headlong into something in a weak gold price environment. The idea is to remain flexible..

There's always different large and small gold companies putting things up for sale but sometimes the things that are up for sale have their own issues. Just as an example, AngloGold is selling something in Columbia, something in Argentina that the open pit is going underground, and 41% of something in Mali.

Probably those kind of things are irrelevant to Alamos. Could you just review what your acquisition criteria are with regard to geography, size, so we might get a flavor as to how relevant or irrelevant some of the other companies' divestitures might be..

I would say they're largely irrelevant to us right now. And that's mostly because we have absolutely no intention of doing any acquisitions. We were very active between 2014 and 2017. I think that was the ideal time in the market to be acquiring things. The last time we acquired something, gold was sub-$1,200 an ounce. That's Richmond Mines.

And even in those market conditions, having bought something that was -- it's proving to be tremendously valuable -- the acquisition was not well-received. In other words, it's really tough, even when you've got a good idea and a good value.

It's really tough to get shareholder support and market support when you go to make those kinds of things, deals like that. I feel that what you're getting at is do we have an acquisition strategy. And, in fact, you can see what our acquisition strategy is just by looking at the deals that we've done over the last five years.

And it's been acquiring things in safe jurisdictions, things that have relative size to make a relative impact on our production and on our growth, and things that ultimately are going to be first quartile costs. So, that would just about fit every mining company's profile.

They're all trying to find really good assets, a lot of life, safe location, low cost. Everybody's talking from the same song sheet there. But the bottom line is we've got five years of track record that shows that we've been doing just that..

Thank you. Our next question is from Howard Finker from Finker and Company. Please go ahead..

Thanks. I have a question and a comment. The question is in all-in sustaining costs and CapEx, are those Canadian dollars or U.S. dollars.

I didn't hear clearly?.

Those are U.S. dollars..

Both?.

Yes..

And as to acquisitions, sometimes your perspective is more profitable in the long run and clearer than those of investors. So, just to what you think is right and what will make you a good rate of return in the long run, not necessarily by tomorrow morning.

And by a good rate of return, I don't mean what's a good rate of return in the gold mining business, where managers often cheer their profits and it comes out to a 5.5% rate of return. Just keep doing what you think is right. And in the end, it'll work out. If you listen to short-term investors, you can't run your business. That's my only comment..

Well, we appreciate that. Thank you..

You're welcome..

Thank you. [Operator Instructions].

I think if there's no further questions.

Operator?.

We do have another question from Thurman Willis [ph], a private investor. Please go ahead..

Well, thank you for taking my question. Good quarter. I was listening to some comments by the IAG president and CEO yesterday and he made comments that he expected massive consolidation in the mid-peer group.

And with us selling at such a discount relative to our peer group, does that not cause you concern? But how do you feel about consolidation, as he stated? And, again, we're so far under our peer group where, at one time, we were above our peer group.

So, could you comment on that please?.

Well, I guess I could comment on it. I feel that we've done a very good job over the last couple of years, literally transforming ourselves from a single asset producer with roughly 150,000 ounces of production and a strong balance sheet into a real mid-tier mining company with in excess of 500,000 ounces of production and very good growth.

It was a very contrarian approach to take. That's, frankly, the way you make money in a commodity-based business where you've got real cyclicality underpinning the whole business. Most of the industry was not active. Only a very few companies were active in regards to making acquisitions. And so there is a need for a number of companies out there.

They're looking at reductions in their reserves. They're looking at a lack of growth. And there's going to be a need on their part to merge or acquire. And I would say, in large measure, we're not that interested. We think that we're trading at a pretty significant discount to our net asset valuation. Our net asset valuation continues to grow.

And with the very exciting developments that we have in the company that are coming up over the next two years, we're really looking forward to our valuation normalizing..

And one follow-up there; are we roughly trading at about 0.7 to our peer group's 1.15? I mean, are we trading at that much of a discount? I mean, what I'm trying to say is the discount, considering your prospects, appears to me to be overdone.

Are my figures of about 0.7 to the peer group about in line?.

I think so. Just on the research reports that I've read over the last couple of months, I think your estimates are fairly accurate..

Thank you for taking my questions and continue -- I agree with the caller -- continue with what you're doing and you'll serve the shareholders well..

We appreciate that. Thank you very much..

Thank you. There are no further questions at this time. This concludes this morning'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. The conference call ha now ended.

Please disconnect your lines at this time and we thank you for your participation..