Alamos Gold (NYSE:AGI) said it is targeting a doubling of annual gold production to approximately 1 million ounces by 2030, supported primarily by expansions at its Island Gold District in Ontario and the development of the Lynn Lake project in Manitoba.
Speaking at an investor conference, Scott K. Parsons, Alamos Gold’s senior vice president of corporate development and investor relations, described the company as a diversified intermediate producer with current annual output of slightly more than 500,000 ounces. He said the company expects its all-in sustaining costs to decline from approximately $1,825 per ounce this year to roughly $1,250 per ounce by 2028 as higher-grade, lower-cost production is added.
Island Gold Expansion Drives Growth Plan
The Island Gold District is expected to be the largest contributor to Alamos’ planned production growth. Parsons said the company expects the district to produce an average of about 534,000 ounces annually once a shaft expansion and larger Magino mill expansion are completed. Mine-site all-in sustaining costs are projected at slightly more than $1,025 per ounce over the initial 10 years, according to Parsons.
The shaft expansion is expected to be completed in the first half of 2027, followed by completion of the mill expansion to 20,000 tonnes per day in 2028. The expanded operation is planned to process approximately 3,000 tonnes per day of high-grade underground ore from Island Gold, with the balance coming from the Magino open pit.
Parsons said the Island Gold deposit has grown from fewer than 2 million ounces of reserves and resources when Alamos acquired it in 2017 to just under 7 million ounces currently. Reserve grades have increased to approximately 10.5 grams per tonne from about 9 grams per tonne, he said.
The company is also evaluating further high-grade opportunities within trucking distance of the expanded Magino mill, including Island West Up Plunge, Island West, North Shear and the past-producing Cline Pick & Edwards area. Parsons said drilling at Cline Pick & Edwards has returned intercepts including 178 grams per tonne over 3.5 meters and 68 grams per tonne over 3 meters.
He added that commissioning the shaft would allow more drilling from underground, reducing the length and cost of exploration holes compared with surface drilling and improving the company’s ability to target mineralization at depth and in the hanging wall and footwall areas.
Lynn Lake and PDA Advance
Construction is underway at Lynn Lake, which is expected to begin initial production in 2029. The Manitoba project is projected to add close to 200,000 ounces annually over its first 10 years, with all-in sustaining costs below $1,000 per ounce, Parsons said. He said average annual output during the first decade is expected to be about 186,000 ounces, though early-year production could be higher as the operation processes higher-grade material.
Lynn Lake’s initial plan includes the MacLellan and Gordon open pits, with Burnt Timber and Linkwood expected to enter the mine plan later. Alamos is also conducting exploration across more than 80 kilometers of strike, including at the Maynard and Tulune targets.
At the Mulatos District in Mexico, Alamos is building the Puerto Del Aire, or PDA, underground project and a 2,000-tonne-per-day mill. Parsons said PDA is intended primarily to extend the mine life of Mulatos rather than drive major production growth. Construction is underway and completion is expected around the middle of 2027.
The new mill could also allow the company to process sulfide mineralization from additional district targets, including Cerro Pelon, La Yaqui Grande and Halcón, Parsons said.
Young-Davidson Event Cuts Near-Term Output
Parsons acknowledged that the company’s recent operating performance has been affected by challenges at the Young-Davidson mine. A seismic event in June damaged an access point on the 9410 level, temporarily reducing underground mining rates from more than 7,500 tonnes per day to approximately 5,000 tonnes per day through the second half of the year.
The affected level had supplied about 2,500 tonnes per day and included higher-grade stopes. Parsons said no reserves were sterilized and Alamos plans to restore access after rehabilitation work and installation of enhanced ground support.
Rather than pursuing a rapid return to previous mining rates, the company is developing an updated mining sequence intended to reduce stress within the orebody. Parsons said mining rates are expected to improve in 2027, but the company does not expect an immediate return to rates above 7,000 tonnes per day.
He also said previous challenges at the Magino mill, acquired through the Argonaut Gold transaction, have largely been addressed. Magino milling rates reached the planned 10,000 tonnes per day during the third quarter after replacement of problematic components and other modifications, according to Parsons.
Free Cash Flow and Shareholder Returns
Alamos reported generating approximately $250 million in free cash flow during the first half of the year after investment in growth projects. Parsons said the company expects free cash flow to grow as Island Gold, PDA and Lynn Lake advance, potentially exceeding $1.5 billion annually at current gold prices once Lynn Lake is operating.
The company used first-half free cash flow to support a 60% dividend increase in the first quarter, $50 million of share repurchases and the retirement of inherited Argonaut Gold hedges. Parsons said Alamos has retired nearly 300,000 ounces of the 330,000 ounces of hedges inherited in the acquisition, leaving approximately 50,000 ounces extending into the first half of 2027.
Looking beyond 2030, Parsons said capital allocation would remain focused on organic growth opportunities, potential complementary acquisitions and increased shareholder returns through dividends and buybacks.
About Alamos Gold (NYSE:AGI)
Alamos Gold Inc is a Canadian-based gold producer engaged in the acquisition, exploration, development and operation of gold mines. The company’s activities include mining, processing and selling gold, as well as advancing exploration and development projects in established mining regions.
Alamos Gold’s principal operations are located in Ontario, Canada, and include the Young-Davidson and Island Gold mines, along with the Magino mine. The company also operates the Mulatos mining district in Sonora, Mexico, which includes the Mulatos mine and related deposits and exploration properties.
Founded in 2003, Alamos Gold has expanded through mine development, exploration and acquisitions in North America.
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