This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.:.

00:38 Good morning. I would now like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead, Mr. Porter..

00:48 Thank you, operator, and thanks to everyone for attending Alamos’ Fourth Quarter and Year-End 2021 Conference Call. In addition to myself, we have on the line today, John McCluskey, President and CEO; Peter MacPhail, Chief Operating Officer; and Scott R.G. Parsons, our Vice President of Exploration.

To address any questions with respect to our reserve and resource update, we also have on the line today, Chris Bostwick, our Senior Vice President of Technical Services. 01:11 We will be referring to a presentation during the conference call that's available to the webcast and on our website.

I would also like to remind everyone that our presentation will be followed by a question-and-answer session. As we will be making forward-looking statements during the call, please refer to the cautionary notes included the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form.

01:31 Technical information of 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 the dollar amounts mentioned in this conference call are in United States dollars unless otherwise noted.

01:45 With that, I'll turn over to John to provide you with an overview..

01:49 Thank you very much, Jamie, and good morning, everyone, and thank you for attending the call. Starting with Slide 3. We closed 2021 with strong performances at our Canadian operations. Young Davidson had a record year achieving record mining rates, and generating 100 million of free cash flow.

02:11 Island Gold had another strong year operationally, generating 53 million of free cash flow even with the ramp up in spending on our Phase 3 expansion. This offset a challenging year at Mulatos, with the operation working through a temporary period of lower production and higher costs until La Yaqui Grande comes on in the third quarter.

02:33 With a stronger fourth quarter, we met revised full-year guidance producing 457,000 ounces of gold at a cash cost, of $794 per ounce and all-in sustaining costs of $1,135 per ounce.

02:50 Our production increased 7% from a year ago, and combined with a higher gold price and strong operating margins, we generated record operating cash flow of $411 million for the year. 03:04 We had a strong year from an exploration perspective as detailed in our reserve and resource update earlier this week.

Reserves increased at all three of our operations driving a 4% increase in our global reserves to 10.3 million ounces. Grades also increased 5% as we continue to increase the quality of our overall reserve with higher grade additions at Island Gold and Mulatos.

03:32 Island Gold continues to grow and achieve the key milestone with high grade reserves and resources increasing 8% to 5.1 million ounces net of depletion.

Since we acquired Island, in 2017, reserves and resources have increased 3.2 million ounces net of depletion, including 1.4 million ounces since the publication of the Phase 3 expansion study in 2020, highlighting this significant ongoing growth and upside to this operation.

04:08 This growth will be incorporated into an updated Phase 3 mine plan to be released mid-year and we expect that this will demonstrate a significantly more valuable operation. 04:21 Now, turning to Slide 4.

As outlined in our inaugural three-year guidance release in January, we expect stronger production at substantially lower costs in the years ahead. We are expecting similar production of approximately 460,000 ounces in 2022 with a temporary increase in all-in sustaining costs to approximately $1,215 per ounce.

We expect La Yaqui Grande to drive lower costs in the second half of 2022. 04:55 By 2024, La Yaqui Grande, excuse me. Just bear with me for a second. By 2024, La Yaqui Grande and higher grades at Island Gold are expected to drive a 4% increase in production and an 18% decrease in all-in sustaining costs to $1,000 per ounce.

05:28 Combined with a 23% decline in capital spending at our operating mines in 2023 with development of La Yaqui Grande completed, we expect growing profitability from our operating mines over the next three years. 05:43 Turning now to Slide 5. Looking beyond 2024, we expect a further increase in production and decrease in costs.

Between the completion of the Phase 3 expansion at Island Gold, and development of Lynn Lake, we have the capacity to increase our rate of production to approximately 750,00 ounces at substantially lower all-in sustaining costs of $800 per ounce by 2025.

06:12 With our strong balance sheet, and ongoing cash flow generation, we can fund all this growth internally, all the while providing solid ongoing returns to shareholders. Between our dividend and share buyback, we returned $51 million to shareholders in 2021.

06:31 While we remained focused on our long-term growth objectives, we also expect to deliver on several key catalysts in 2022. Mid-year, we expect to provide an updated mine plan for the Island Gold operation that will showcase a significantly more valuable operation that was outlined in the Phase 3 study.

06:54 La Yaqui Grande remains on track to achieve commercial production and start driving our costs lower in the third quarter. Finally, we look forward to the Lynn Lake EIS approval and subsequent construction decisions in the second half of the year. 07:12 I'll now turn the call over to our CFO, Jamie Porter, to review our financial performance.

Jamie?.

07:19 Thank you, John. Moving on to Slide 6, we sold 458,000 ounces of gold for record revenues of 824 million in 2021. As John noted, Young-Davidson had an excellent year generating a record 100 million in mine-site free cash flow.

With the operation consistently operating at its expanded design capacity, we look forward to similar free cash flow generation over its 15 year reserve life and beyond. 07:45 Fourth quarter revenues were 203 million from sales of 113,000 ounces at an average realized price of 1,798 per ounce.

As previously guided, total cash cost of $843 per ounce in all-in sustaining costs of $1,237 per ounce both increased from earlier in the year, reflecting the temporary increase in cost of Mulatos. 08:07 For the full-year, total cash costs and all-in sustaining costs were in-line with revised guidance.

Operating cash flow before changes in non-cash working capital was $92 million or $0.23 per share in the fourth quarter. This was down 27% year-over-year, primarily reflecting lower gold price and lower gold sales.

08:25 For the full-year, operating cash flow before changes in non-cash working capital was a record $411 million or $1.05 per share, a 7% increase from the prior record set in 2020.

Our reported net earnings of $30 million in the fourth quarter or $0.08 per share included an unrealized foreign exchange loss of 3 million recorded within deferred taxes and foreign exchange and other losses of $4 million. 08:50 Excluding these items, our adjusted net earnings were $37 million or $0.09 per share.

Our full-year adjusted net earnings were $162 million or $0.41 per share representing a 3% increase relative to 2020. 09:04 Capital spending totaled $92 million in the fourth quarter, including $32 million of sustaining capital, $51 million of growth capital, and $8 million of capitalized exploration.

For the full-year capital expenditures and advances of $358 million were at the lower end of our guidance. 09:20 Free cash flow was negative $4 million in fourth quarter and effectively flat for the year, reflecting higher capital spending given the construction of La Yaqui Grande and the Phase 3 expansion Island Gold.

We expect lower capital spending in the second half of this year with the completion of construction of La Yaqui Grande, combined with lower cost, we expect stronger free cash flow starting in the third quarter of this year.

09:43 In the fourth quarter, we also repurchased the net profits interest royalty for 16 million, which applied to the majority of the reserves and resources at Island Gold.

Given the significant growth of the deposit over the last several years and ongoing growth potential, the repurchase of this royalty has significantly enhanced the long-term value of the operation. 10:03 We’ve returned 51 million to shareholders 2021, including 39 million through dividends and 12 billion by share buybacks.

These returns were up 53% from 2020 and represent a combined yield of 1.8% at our current share price. We expect similar returns in 2022 to be underpinned by our ongoing dividend, which amounts to an annual rate of $0.10 per share. We will continue to look for opportunities to be active on our share buyback.

10:30 We remain debt free and ended the year with 173 million cash, 24 million of equity securities and 500 million of undrawn credit capacity. Strong ongoing cash flow generation combined with our solid balance sheet positions us well to fund our high return growth projects internally.

10:46 With that, I'll turn the call over to our Chief Operating Officer, Peter MacPhail to provide an overview of our operations..

10:53 Thank you, Jamie. Moving to Slide 7. Young-Davidson is performing to its potential and had a strong finish to the year producing 51,900 ounces and generating near record mine site free cash flow of 30 million in the fourth quarter.

Full-year production totaled 195,000 ounces in-line with guidance, generating record mine-site free cash flow of 100 million. 11:18 Mining rates averaged a record 8,240 tons per day in the fourth quarter and 7,900 tons per day for the year.

The operation is demonstrating, it can consistently operate at its design rate of 8,000 tons per day, and we expect this to continue. 11:35 Both cash costs of $775 per ounce in mine-site all-in sustaining cost of $1,017 per ounce in the fourth quarter continued to decrease through the year, reflecting higher grades and lower unit mining costs.

On a full-year basis, costs were in-line with revised guidance. 11:54 As previously guided, we expect similar production in 2022 of between 185,000 and 200,000 ounces with total cash costs in mine-site on sustaining costs increasing 3% and 7% respectively.

The cost increase primarily reflects cost inflation, partially offset by operational improvements.

12:12 We expect sustaining and growth capital spending to decrease 27% to approximately $60 million in 2022 with a big part of that decrease coming through the completion of construction of our new life of mine tailings facility in the fourth quarter of last year.

We expect Young-Davidson to generate 100 million of free cash flow in 2022 and annually over the long-term. 12:34 Over to Slide 8, Island Gold had another solid quarter, producing 37,500 ounces. A total cash cost of $575 per ounce and mine-site on sustaining cost of $871 per ounce.

Full-year production of 141,000 ounces was in-line with the initial guidance and total cash costs and all-in sustaining costs were in-line with revised guidance.

12:55 The operation generated 16 million of mine-site free cash flow in the quarter and 53 million for the full-year, net of significant ongoing exploration spend and the ramp up in spending on Phase 3 expansion.

13:09 Looking forward to 2022, we expect our own goal to produce 125,000 to 135,000 ounces consistent with what we outlined in the Phase 3 study. As with Young-Davidson we are expecting an increase in costs from 2021, primarily reflecting cost inflation and slightly lower planned grades.

13:28 Work on the Phase 3 expansion is expected to continue to ramp up in 2022 with a corresponding increase in capital spending as outlined in the study, permitting is expected to be completed in the first half of the year with construction activities focused on surface works and preparation for the [indiscernible] expected to start mid-year.

13:46 We're also working on an updated mine plan to be released mid-year, which will incorporate the significant increase in reserves and resources since the Phase 3 study was completed.

This updated mine plan will include an optimization of the mining sequence given the higher grade additions in the Island East in proximity to the current infrastructure and the plant shaft.

14:06 Moving on to Slide 9, Mulatos produced 23,100 ounces in the fourth quarter as the operation continue to be impacted by longer leach times for stockpiled ore stacked and lower production from Cerro Pelon, which was depleted in the quarter. As a result, full-year production of 121,300 ounces was lower than revised guidance.

14:20 Costs were up sharply in the quarter as previously guided and we are in-line with revised guidance on full-year basis. Mulatos is expected to produce 130,000 to 145,00 ounces in 2022 with approximately 65% coming in the second half of the year at substantially lower costs with the start of low cost production from La Yaqui Grande.

14:47 We expect all-in sustaining cost to decrease 30% from the first half of the year to $1,175 per ounce in the second half with continued improvement in 2023 reflecting a full-year from La Yaqui Grande. 15:01 Over to Slide 10, as you can see from these photos, La Yaqui Grande construction is progressing very well and remains on schedule.

Capital spending was 26 million in the fourth quarter, bringing the full-year spend to 102 million. All required major components are now on-site, pre-stripping is well advanced. The Heap Leach facility is at 85% completion, and the Crusher circuit is more than 90% complete.

15:25 We expect to begin commissioning the circuit and staffing more in the second quarter with the operation on track to achieve commercial production in the third quarter of this year.

As we saw with La Yaqui Phase 1, this is a higher grade and significantly lower cost project that will dramatically improve the production in cost profile of Mulatos starting in the second half of this year. 15:45 I'll now turn the call over to Scott Parsons, our VP Exploration to discuss the reserve and resource update..

15:51 Thank you, Peter. On Slide 11, we had another excellent successful year with respect to exploration. Reserves were more than replaced at each of our three operations, driving a 4% increase in global reserves to 10.3 million ounces, net 582,000 ounces of depletion.

The overall quality of this reserve also improved with grades increasing 5%, reflecting higher grade additions at Island Gold and Mulatos.

16:15 The growth was driven by a 5% increase in reserves at Young-Davidson, extending its reserve life to 15 years, a 2% increase in Island Gold with grades increasing 4% and a 14% increase in Mulatos with grades increasing 32%.

The higher grade additions in Mulatos reflect a new underground reserve as PDA, which is located adjacent to the main Mulatos pit.

16:38 Global measured and indicated resources decreased to 4.5 million ounces from 6.9 million ounces, reflecting the conversion to mineral reserves at PDA and Young-Davidson and a reduction of non-constrained resources from the Mulatos Mine-Site.

Global Inferred Resources were relatively flat at 7 million ounces with grades increasing 6% reflecting high grade additions at Island Gold. 17:01 On Slide 12, Island Gold continues to grow and achieved a key milestone with combined reserves and resources increasing 8% to 5.1 million ounces of high-grade gold.

Reserves increased for the ninth consecutive year to 1.3 million ounces, net of depletion. With grades also increasing 4% to over 10 grams per ton. The additions were achieved through both the discovery and conversion of resources in the gap of between the high grade reserve and resources is an upper and middle portions of Island East.

17:30 This new reserve block contains over 200,000 ounces creating 12.6 grams per ton. Given this [proximity, the existing] [ph] underground infrastructure, there is potential to bring this higher grade ore into the mine plan in the next three years, providing further near-term production upside.

17:47 Over to Slide 13, our primary focus on Island Gold continues to be on expanding mineralization and defining new near-mine resources. And this is where we are having the most success. Inferred Resources increased 8% to 3.5 million ounces with grades decreasing slightly to 13.6 grams per ton.

18:00 The majority of this increase came at a lower portion of Island East, where we added 424,000 ounces to high grade and inferred block, that now became 2 million ounces grading 15.5 grams per ton. All of this in proximity to the planned shaft.

18:21 We also added a new inferred resource block totaling 39,000 ounces, 130 meters down [indiscernible] in this large high grade inferred resource block. This also extended high grade resources more than 270 meters to a depth of 1,750 meters.

This high grade block is part of the same [indiscernible] zone and remains open laterally and up and down plunge, which highlights a significant potential for further resource growth at Island Gold.

18:47 On Slide 14, combined reserves and resources at Island have nearly tripled from the 1.8 million ounces at the time of acquisition to now total 5.1 million ounces. This includes the 1.4 million ounce or 37% increase since the release of the Phase 3 expansion study, which will be incorporating to an updated mine plan to be released mid-year.

We expect this will demonstrate a further increase to the value of the operation. 19:11 These are high margin, high-grade ounces, we're are adding in a very attractive discovery cost, which is averaged $11 per ounce over the last three years.

In our ongoing exploration success, we see excellent opportunities for this to continue, with $40 million budgeted for exploration in 2022, more than half of which is allocated to Island Gold. 19:30 With that, I'll turn the call back over to John..

19:34 Thanks very much, Scott. That concludes our formal presentation, and I'll now turn the call back to the operator who will open the lines for your questions..

19:44 Thank you. [Operator Instructions] The first question is from Kerry Smith from Haywood Securities. Please go ahead. Your line is open..

20:39 Thanks, operator.

Maybe first question for Peter, just on the new mine plan for Island that's mid-year, I'm assuming you're going to still have that 2,000 ton a day mill in that plan where you just basically can be bringing forward some better grade that you're finding in the Island uses, is that correct?.

20:58 Yes. That would – we're looking at that, Kerry, we’re also looking at, does it make sense to bump it up slightly. So, we're looking at all those things..

21:14 Okay.

And just on Mulatos on PDA, what is the status that’s bringing that underground reserve into the mine plan, like what would the timing on that be Peter?.

21:26 Yes, that's probably three years away. Some further study work to do on it and to get that going..

21:40 Okay. And you had pretty good mine costs at YD in the quarter, but you had pretty good mining rates as while you're well over 8,200 tons a day.

Is that $42 a ton Canadian? Is that kind of the number you think you could do at 8,000 tons a day or what would the going forward number look like?.

22:02 I'm not sure – I think we probably provided guidance on that. It's, I think if you go back three years when we did that, kind of learn in on YD in person there. I think we were predicting an 8,000 tons a day to be in the low-40s. I think with some inflation right now that creeps up to like the mid-40s, that's where it is expected to be..

22:30 Okay. Okay, that's helpful.

And just remind me the CapEx for Lynn Lake from [27 feasibility] [ph], can you remind me what that number was?.

22:44 I don't have it in front of me..

22:46 Kerry, it was roughly $350 million..

22:51 350, okay.

And will you update that number when you make construction decision or how will you sort of look at that?.

23:03 Of course, yes..

23:05 We put out an updated technical report on making a positive construction decision, and we would certainly provide an updated capital cost estimate..

23:18 Okay. Okay. That's great. I think just maybe one last question, if I could, the exploration budget is basically down 10 million from this year versus last year.

And that seems like most of that, I guess is probably in our Island, but is that just a function of your ability to spend the dollars or is it like the budget might be a bit higher than this year?.

23:42 Kerry, it’s Scott, I can take that. The main difference from last year is the Island, we ramped up the number of service directional rigs we have. Because we’ve removed the underground directional drilling from the 2022 budget.

So, that put a $10 million delta between the 2021 budget is the switching over to surface drilling from the underground directional drilling and continuing with underground conventional drilling as planned..

24:09 Okay. Okay, that's great. Thank you..

24:14 Thank you. [Operator Instructions] There are no further questions registered. Thank you. The call has now ended. Please hang up your lines. Thank you for your participation..