TORONTO, July 29, 2020 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter ended June 30, 2020.

“The second quarter of 2020 will be remembered as one of the most challenging times in our history given the COVID-19 pandemic. We started the quarter with two of our operations being temporarily suspended, but we adapted well and by June both Island Gold and Mulatos had safely returned to normal operating levels,” said John A. McCluskey, President and Chief Executive Officer.

At the same time we made good progress on several catalysts that form key parts of what is a transformational year for Alamos. These include the completion of the lower mine expansion at Young-Davidson earlier this month, the announcement of a Phase III expansion of Island Gold, and a construction decision on the La Yaqui Grande project. These have greatly enhanced the long-term outlook for each of our operating mines. We look forward to creating additional value for our stakeholders in the second half of 2020 with higher production and lower costs expected to drive strong free cash flow growth,” Mr. McCluskey added.

Second Quarter 2020
•Produced 78,400 ounces of gold, with production impacted by the previously guided downtime of the Northgate shaft at Young-Davidson and temporary suspension of operations at Island Gold and Mulatos due to COVID-19. Mulatos and Island Gold resumed operations in May with both returning to normal operating levels in June
•Mulatos produced 35,900 ounces of gold and generated mine-site free cash flow1 of $19.3 million, with the operation benefiting from the ongoing recovery of gold from the leach pad during the temporary suspension
•Island Gold produced 19,400 ounces of gold and generated mine-site free cash flow1 of $9.2 million. Production was lower than previous quarters due to the temporary suspension of operations which began the last week of March. After a phased ramp up in May, mining and milling rates increased to average more than 1,200 tpd for the month of June
•Advanced the tie-in of the upper and lower mines at Young-Davidson, successfully commissioning the Northgate shaft and new lower mine infrastructure in July. Underground mining rates increased to 6,500 tpd by the end of July and are expected to ramp up to 7,500 tpd by the end of 2020
•Sold 74,605 ounces of gold at an average realized price of $1,692 per ounce for revenues of $126.2 million
•Generated cash flow from operating activities of $49.6 million ($44.7 million, or $0.11 per share, before changes in working capital1)
•Consolidated total cash costs1 of $933 per ounce and all-in sustaining costs ("AISC")1 of $1,276 per ounce were both temporarily higher, due to higher costs at Young-Davidson during the lower mine tie-in. AISC were higher than usual as a result of the impact of the 79% increase in the Company’s share price on the revaluation of outstanding stock-based awards. In addition, sustaining capital was allocated to lower ounces of gold sold given the above noted temporary suspensions. Total cash costs and AISC are expected to decrease significantly in the second half of 2020
•Realized net earnings of $11.7 million, or $0.03 per share
•Reported adjusted net earnings1 of $9.8 million, or $0.03 per share1, which includes adjustments for unrealized foreign exchange gains of $10.3 million recorded within deferred taxes, partially offset by COVID-19 costs of $6.5 million related to the suspension of operations at Island Gold and Mulatos, and other one-time losses of $1.9 million
•Ended the quarter with cash and cash equivalents of $201.3 million and equity securities of $30.2 million
•Paid a quarterly dividend of $5.9 million and repurchased 527,100 common shares at a cost of $2.6 million, or $5.05 per share, under the Company's Normal Course Issuer Bid ("NCIB"). To date in 2020, the Company has returned $17.3 million to shareholders in the form of dividends and share repurchases

Subsequent to the Second Quarter:
•Reported results of the positive Phase III Expansion Study conducted on Island Gold, which is expected to drive a 72% increase in average annual production to 236,000 ounces and a 30% decrease in mine-site AISC to $534 per ounce at the operation
•Announced a construction decision on the high-return La Yaqui Grande project, which generates a 58% after-tax internal rate of return ("IRR") at a $1,750 gold price and is expected to significantly reduce Mulatos District AISC starting in 2022

(1) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.

Highlight Summary

Three Months Ended June 30,
Six Months Ended June 30,

2020 2019 2020 2019
Financial Results (in millions)
Operating revenues $ 126.2 $ 168.1 $ 303.1 $ 324.2
Cost of sales (1) $ 103.3 $ 131.1 $ 223.6 $ 258.1
Earnings from operations $ 12.1 $ 28.2 $ 58.3 $ 46.9

Earnings before income taxes $ 6.0 $ 27.1 $ 46.5 $ 47.7
Net earnings (loss) $ 11.7 $ 23.6 ($ 0.6 ) $ 40.4
Adjusted net earnings (2) $ 9.8 $ 17.7 $ 39.2 $ 28.0
Earnings before interest, depreciation and amortization (2) $ 40.9 $ 69.1 $ 117.6 $ 129.6
Cash provided by operations before working capital and cash taxes(2) $ 44.7 $ 68.6 $ 126.4 $ 131.2
Cash provided by operating activities $ 49.6 $ 72.3 $ 106.2 $ 114.7
Capital expenditures (sustaining)(2) $ 14.4 $ 19.6 $ 31.9 $ 35.7
Capital expenditures (growth) (2) (3) $ 38.8 $ 47.2 $ 80.1 $ 81.3
Capital expenditures (capitalized exploration) (4) $ 1.4 $ 4.3 $ 5.9 $ 7.4
Operating Results
Gold production (ounces) 78,400 125,200 189,300 250,500
Gold sales (ounces) 74,605 128,457 186,459 248,162
Per Ounce Data
Average realized gold price $ 1,692 $ 1,309 $ 1,626 $ 1,306
Average spot gold price (London PM Fix) $ 1,711 $ 1,309 $ 1,647 $ 1,307
Cost of sales per ounce of gold sold (includes amortization) (1) $ 1,385 $ 1,021 $ 1,199 $ 1,040
Total cash costs per ounce of gold sold (2) $ 933 $ 699 $ 829 $ 715
All-in sustaining costs per ounce of gold sold (2) $ 1,276 $ 926 $ 1,117 $ 941
Share Data
Earnings (loss) per share, basic and diluted $ 0.03 $ 0.06 $ 0.00 $ 0.10
Adjusted earnings per share, basic and diluted(2) $ 0.03 $ 0.05 $ 0.10 $ 0.07
Weighted average common shares outstanding (basic) (000’s) 391,076 389,218 391,208 389,475
Financial Position (in millions)
Cash and cash equivalents (5) $ 201.3 $ 182.8
Long-term debt (5) $ 100.0 $ —

(1) Cost of sales includes mining and processing costs, royalties, and amortization expense. For the three months and six months ended June 30, 2020, cost of sales also includes COVID-19 costs of $6.5 million
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures
(3) Includes growth capital from operating sites and excludes the Island Gold royalty repurchase of $54.8 million in March 2020
(4) Includes capitalized exploration at Mulatos and Island Gold
(5) Comparative cash and cash equivalents and Long-term debt balance as at December 31, 2019


Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Gold production (ounces)
Young-Davidson 23,100 45,000 51,800 90,000
Mulatos 35,900 36,300 78,500 75,200
Island Gold 19,400 39,500 58,200 75,100
El Chanate (1) — 4,400 800 10,200
Gold sales (ounces)
Young-Davidson 22,440 44,665 51,345 88,661
Mulatos 33,605 40,116 77,427 76,205
Island Gold 18,560 39,300 57,687 72,885
El Chanate (1) — 4,376 — 10,411
Cost of sales (in millions) (2)
Young-Davidson $ 46.2 $ 57.1 $ 90.0 $ 114.0
Mulatos $ 37.5 $ 35.8 $ 83.5 $ 69.6
Island Gold $ 19.6 $ 32.4 $ 50.1 $ 61.0
El Chanate (1) $ — $ 5.8 $ — $ 13.5
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $ 2,059 $ 1,278 $ 1,753 $ 1,286
Mulatos $ 1,116 $ 892 $ 1,078 $ 913
Island Gold $ 1,056 $ 824 $ 868 $ 837
El Chanate (1) $ — $ 1,325 $ — $ 1,297
Total cash costs per ounce of gold sold (3)
Young-Davidson $ 1,564 $ 822 $ 1,299 $ 830
Mulatos $ 750 $ 725 $ 785 $ 734
Island Gold $ 501 $ 473 $ 468 $ 484
El Chanate (1) $ — $ 1,234 $ — $ 1,210
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)
Young-Davidson $ 1,809 $ 1,077 $ 1,490 $ 1,073
Mulatos $ 890 $ 815 $ 929 $ 812
Island Gold $ 781 $ 631 $ 706 $ 639
El Chanate (1) $ — $ 1,257 $ — $ 1,220
Capital expenditures (sustaining, growth and capitalized exploration) (in millions) (3)
Young-Davidson $ 29.6 $ 26.7 $ 56.6 $ 49.0
Mulatos(5) $ 5.1 $ 19.2 $ 12.5 $ 31.8
Island Gold (6) $ 15.9 $ 18.0 $ 38.0 $ 30.4
Other $ 4.0 $ 7.2 $ 10.8 $ 13.2

(1) El Chanate transitioned to the reclamation phase of the mine life in the fourth quarter of 2019. Incremental production is a result of rinsing the leach pad. Gold sales from El Chanate in 2020 are not included in revenue and cost of sales.
(2) Cost of sales includes mining and processing costs, royalties and amortization.
(3) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(4) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(5) Includes capitalized exploration at Mulatos of $0.2 million and $0.7 for the three and six months ended June 30, 2020 (spending of $nil for the three and six months ended June 30, 2019).
(6) Includes capitalized exploration at Island Gold of $1.2 million and $5.2 million for the three and six months ended June 30, 2020 (for the three and six months ended June 30, 2019 - $4.3 million and $7.4 million), and excludes the royalty repurchase of $54.8 million.

Management's Response to the COVID-19 Pandemic

The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The Company responded rapidly and proactively to COVID-19 and has implemented several initiatives to help protect the health and safety of our employees, their families and the communities in which we operate.

Specifically, each of our operating mine sites has activated established crisis management plans and developed site-specific plans that enable them to meet and respond to changing conditions associated with COVID-19. The Company is adopting the advice of public health authorities and adhering to government regulations with respect to COVID-19 in the jurisdictions in which it operates.

The following measures have been instituted across the Company to prevent the potential spread of the virus:
•Medical screening for all personnel prior to entry to site for symptoms of COVID-19
•Testing of personnel at Mulatos and Island Gold prior to starting their rotation at the camp
•Training on proper hand hygiene and social distancing
•Remote work options have been implemented for eligible employees
•Social distancing practices have been implemented for all meetings, huddles and transportation
•Mandatory use of personal protective equipment for employees where social distancing is not practicable
•Rigid camp and site hygiene protocols have been instituted and are being followed
•Elimination of all non-essential business travel
•Required 14-day quarantine for any employees returning from out of country travel

Impact on Operations

In order to protect nearby communities and align with government requirements, two of the Company's mines were temporarily suspended, but resumed normal operations during the second quarter.

At Island Gold, operations were suspended on March 25, 2020 given the unique set up of the operation with a large portion of the workforce operating on a fly-in, fly-out basis and being housed within a camp located directly within the local community. The Company restarted operations in a phased approach at the beginning of May 2020 and ramped up to budgeted mining and milling rates of 1,200 tpd in the month of June. The Company incurred $4.5 million in COVID-19 costs at Island Gold in the quarter, mainly related to labour costs for idle employees and additional transportation and lodging costs.

Operations at Mulatos were suspended in early April following a mandate by the Mexican government to suspend all non-essential businesses in response to the COVID-19 crisis. The suspension period was lifted in May and mining, crushing and stacking ore on the leach pad was restarted. Although mining activities were suspended for part of the quarter, the Company continued to recover gold from the leach pad given the significant amount of contained ounces stacked in the first quarter. The Company incurred $2.0 million in COVID-19 costs at Mulatos in the quarter mainly related to labour costs for idle employees and additional transportation costs.

To date, operating activities at Young-Davidson have not been significantly impacted with mining and processing activities and construction and commissioning of the lower mine ongoing throughout the quarter. Completion of the lower mine expansion was delayed slightly but was completed on July 8, 2020.

Revised 2020 Guidance

Revised
2020 Guidance Previous
2020 Guidance
Gold production (000's ounces)
Young-Davidson 135 - 145 145 - 160
Mulatos 140 - 150 150 - 160
Island Gold 130 - 140 130 - 145
Total gold production 405 - 435 425 - 465

Cost of sales per ounce of gold sold (includes amortization)(4)
Young-Davidson $1,490 $1,360
Mulatos $1,135 $1,085
Island Gold $840 $840
Total $ 1,160 $ 1,103

Total cash cost per ounce of gold sold(1)
Young-Davidson $990 - $1,030 $910 - $950
Mulatos $840 - $880 $840 - $880
Island Gold $480 - $520 $480 - $520
Consolidated total cash cost per ounce of gold sold $780 - $820 $757 - $797

Mine-site all-in sustaining costs per ounce of gold sold(1)(3)
Young-Davidson $1,180 - $1,220 $1,110 - $1,150
Mulatos $940 - $980 $940 - $980
Island Gold $740 - $780 $740 - $780
Consolidated all-in sustaining costs per ounce of gold sold (1) $1,030 - $1,070 $1,007 - $1,047

Capital expenditures (sustaining) (1)
Young-Davidson $30 - $35 $30 - $35
Mulatos $15 - $20 $15 - $20
Island Gold $35 - $40 $35 - $40
Total Capital expenditures (sustaining) $80 - $95 $80 - $95

Capital expenditures (growth) (1)
Young-Davidson $45 - $50 $45 - $50
Mulatos $15 - $20 $5
Island Gold $35 - $40 $15 - $20
Other(2) $10 $10
Total Capital expenditures (growth) $105 - $120 $75 - $85

Capital expenditures (capitalized exploration) (1)
Young-Davidson $1 $1
Island Gold $15 $19
Other(2) $4 $5
Total capital expenditures (capitalized exploration) $ 20
$ 25

Total consolidated capital expenditures and capitalized exploration (1) $205 - $235 $180 - $205

(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this MD&A for a description of these measures.
(2) Includes growth capital and capitalized exploration at the Company's development projects (Turkey, Lynn Lake, Esperanza and Quartz Mountain
(3) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of guidance.

The Company is providing revised 2020 production, cost, and capital guidance. Guidance was withdrawn in April 2020 following the temporary suspension of operations at Island Gold and Mulatos in response to COVID-19. With operations at Mulatos and Island Gold having both been suspended for more than a month and the completion of the lower mine expansion at Young-Davidson delayed into July due to COVID-19, consolidated 2020 production guidance has been revised to 405,000 to 435,000 ounces. This represents a 6% decrease from the mid-point of previous guidance. Total cash cost guidance has also been revised to $780 to $820 per ounce and all-in sustaining cost guidance to $1,030 to $1,070 per ounce, a 3% and 2% increase, respectively. This reflects higher costs at Young-Davidson in the second quarter due to the COVID-19-related delay in the completion of the lower mine expansion. With Island Gold and Mulatos both returning to normal operating levels in June and the lower mine expansion completed at Young-Davidson in July, the Company expects higher production at significantly lower costs in the second half of 2020.

Consolidated 2020 capital guidance of $205 to $235 million has increased by $25 to $30 million with all of the increase related to the Phase III Expansion at Island Gold and the La Yaqui Grande project following the recently announced construction decisions, partially offset by lower exploration spending.

At Young-Davidson, full year production guidance has been revised to between 135,000 and 145,000 ounces and cost guidance increased due to the previously announced COVID-19-related delay in the completion of the lower mine expansion. Despite the full year revisions, the second half outlook remains strong with the lower mine expansion completed in July. Production is expected to increase in the second half of 2020 at significantly lower costs, with total cash costs expected to decrease to a range of $800 to $840 per ounce and mine-site all-in sustaining costs to a range of $990 to $1,030 per ounce.

Despite the operation being suspended for more than one month, production guidance at Island Gold has narrowed slightly to 130,000 to 140,000 ounces while total cash cost guidance of $480 to $520 per ounce and mine-site all-in sustaining cost guidance of $740 to $780 per ounce remain unchanged. Growth capital guidance has increased $20 million, reflecting planned spending associated with the Phase III Expansion in the second half of 2020. Given the temporary suspension of exploration programs at Island Gold, the full year exploration budget has been reduced from $19 million to $15 million.

At Mulatos full year production guidance has been reduced by 10,000 ounces to 140,000 to 150,000 ounces reflecting the suspension of operations in April and May. Lower stacked tonnes during the second quarter is expected to affect gold production slightly in the second half of 2020. Total cash cost and mine-site AISC guidance remains unchanged. Growth capital guidance has increased by between $10 and $15 million to advance the La Yaqui Grande project following the construction decision earlier this week.

Outlook and Strategy

2020 Updated Guidance
Young-
Davidson Island Gold Mulatos Other (2) Total Previous
Guidance
Gold production (000’s ounces) 135 - 145 130 - 140 140 - 150 405 - 435 425 - 465
Cost of sales, including amortization (in millions) (4) $209 $113 $165 — $ 487 $ 491
Cost of sales, including amortization ($ per ounce) (4) $1,490 $840 $1,135 — $ 1,160 $ 1,103
Total cash costs ($ per ounce) (1)(5) $990 - $1,030 $480 - $520 $840 - $880 — $780 - $820 $757 - $797
All-in sustaining costs ($ per ounce) (1)(5) $1,030 - $1,070 $1,007 - $1,047
Mine-site all-in sustaining costs ($ per ounce) (1)(3)(5) $1,180 - $1,220 $740 - $780 $940 - $980 —
Amortization costs ($ per ounce) (1) $480 $340 $275 — $ 365 $ 340
Capital expenditures (in millions)
Sustaining capital(1) $30 - $35 $35 - $40 $15 - $20 $ — $80-$95 $80-$95
Growth capital(1) $45 - $50 $35 - $40 $15 - $20 $10 $105 - $120 $75-$85
Capitalized exploration(1) $1 $15 $ — $4 $ 20 $ 25
Total capital expenditures and capitalized exploration(1) $76-86 $85-95 $30-40 $14 $205-$235 $180-$205

(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and associated MD&A for a description of these measures.
(2) Includes growth capital and capitalized exploration at the Company's development projects (Turkey, Lynn Lake, Esperanza and Quartz Mountain).
(3) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of guidance.
(5) On March 16, 2020, the Company updated previous total cash cost and AISC guidance to reflect the repurchase and cancellation of a royalty at Island Gold.

The Company’s long-term strategic objective is to generate increasing returns for its shareholders through low-cost production and free cash flow growth from its portfolio of operating mines and development projects. Year-to-date, the Company has made excellent progress with the completion of the lower mine expansion at Young-Davidson, the announcement of a Phase III expansion of Island Gold, and a construction decision on the La Yaqui Grande project.

All are key parts of a transformational year for Alamos and provide the foundation for the Company's strong outlook. With mining rates ramping up at Young-Davidson, and Mulatos and Island Gold returning to normal operating levels during the second quarter, the Company expects to deliver strong company-wide free cash flow growth in the second half of 2020.

Production of 78,400 ounces and total cash costs of $933 per ounce in the second quarter of 2020 were impacted by the planned downtime of the Northgate shaft at Young-Davidson to complete the final step in the lower mine expansion, and temporary suspensions at Mulatos and Island Gold due to the COVID-19 pandemic. Production is expected to increase sharply in the third quarter at significantly lower costs.

Young-Davidson's production and costs were impacted by the previously guided downtime for the entire second quarter to complete the tie-in of the upper and lower mines. During this planned downtime, ore was trucked to surface from the upper mine at a rate of 2,700 tpd. The lower mine expansion and associated infrastructure was completed on July 8, 2020 with mining rates ramping up to 6,500 tpd by the end of July. Mining rates are expected to continue to increase to a rate of 7,500 tpd by the end of 2020.

The completion of the lower mine marks the end of a multi year expansion at Young-Davidson and is a step change for the operation. The transition to the highly productive lower mine infrastructure is expected to drive production higher and costs lower in the second half of 2020, driving strong free cash flow growth.

After temporarily suspending operations at Island Gold on March 25, 2020 due to COVID-19, the Company began a phased restart in early May. Mining rates increased through May and returned to normal levels in June, averaging over 1,200 tpd for the month. Mining rates are expected to remain at approximately 1,200 tpd for the remainder of 2020. Combined with higher grades, this is expected to drive production significantly higher.

The Phase III expansion of Island Gold announced earlier this month has outlined a bigger, more profitable, long-life operation. The expansion is expected to take throughput rates 67% higher to 2,000 tpd, driving production significantly higher, at industry low costs over a mine life that has doubled to 16 years. This has driven a substantial increase in value with the expanded operation having an estimated after-tax NPV of $1.02 billion at a 5% discount rate and base case gold price of $1,450 per ounce. At a gold price of $1,750 per ounce, the after-tax NPV is $1.45 billion, more than double the acquisition cost.

Exploration programs at Island Gold were also temporarily suspended in March with surface and underground diamond drill programs resuming by early June. The 2020 program remains focused on continuing to define new near mine Mineral Resources across the two-kilometre long Island Gold Main Zone which remains open laterally and down-plunge across multiple areas of focus.

Mulatos began ramping up full operations in the latter part of May 2020 after mining was declared an essential activity by the Mexican government. This followed the suspension of mining activities in early April as mandated by the government due to COVID-19. Given the significant leach pad inventory at the end of the first quarter and ongoing leaching activities, production in the second quarter of 2020 was not significantly impacted by the suspension. Lower contained ounces stacked in the second quarter is however expected to have a slight impact on production in the second half of the year.

As announced earlier this week, the Company is proceeding with development of the high-return La Yaqui Grande project located within the Mulatos District. With an after-tax IRR of 41% and after-tax NPV of $165 million (assuming a $1,450 gold price), La Yaqui Grande represents the next low-cost source of production at Mulatos. Construction activities on La Yaqui Grande are expected to ramp up during the second half of 2020 and take approximately 24 months to complete with initial production in 2022. Given its lower costs, La Yaqui Grande is expected to drive combined costs across the Mulatos District significantly lower.

In the second quarter, the Company submitted its Environmental Impact Statement ("EIS") for the Lynn Lake project, which begins an anticipated two-year permitting process. In Turkey, the Company continues to pursue renewal of the mine concession for the Kirazli project.

The Company's liquidity position remains strong, ending the quarter with $201.3 million of cash and cash equivalents and no debt other than $100.0 million drawn on its $500.0 million revolving facility. The Company expects to transition to strong free cash flow generation in the second half of 2020 and remains well positioned to fund its internal growth initiatives.

Second Quarter 2020 Results

Young-Davidson Financial and Operational Review

Three Months Ended June 30,
Six Months Ended June 30,

2020 2019 2020 2019
Gold production (ounces) 23,100 45,000 51,800 90,000
Gold sales (ounces) 22,440 44,665 51,345 88,661
Financial Review (in millions)
Operating Revenues $ 37.7 $ 58.6 $ 83.4 $ 116.0
Cost of sales(1) $ 46.2 $ 57.1 $ 90.0 $ 114.0
Earnings from operations ($8.5 ) $ 1.5 ($6.6 ) $ 2.0
Cash provided by operating activities $ 6.5 $ 23.6 $ 14.6 $ 46.5
Capital expenditures (sustaining) (2) $ 5.5 $ 11.2 $ 9.7 $ 21.2
Capital expenditures (growth) (2) $ 24.1 $ 15.5 $ 46.9 $ 27.8
Mine-site free cash flow (2) ($23.1 ) ($3.1 ) ($42.0 ) ($2.5 )
Cost of sales, including amortization per ounce of gold sold (1) $ 2,059 $ 1,278 $ 1,753 $ 1,286
Total cash costs per ounce of gold sold(2) $ 1,564 $ 822 $ 1,299 $ 830
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $ 1,809 $ 1,077 $ 1,490 $ 1,073
Underground Operations
Tonnes of ore mined 244,382 612,231 634,749 1,200,847
Tonnes of ore mined per day 2,686 6,728 3,488 6,635
Average grade of gold (4) 2.50 2.42 2.30 2.48
Metres developed 2,894 2,877 6,095 5,777
Mill Operations
Tonnes of ore processed 395,289 683,946 860,033 1,293,873
Tonnes of ore processed per day 4,344 7,516 4,725 7,148
Average grade of gold (4) 1.85 2.26 1.89 2.36
Contained ounces milled 23,511 49,661 52,361 98,176
Average recovery rate 93 % 91 % 92 % 91 %

(1) Cost of sales includes mining and processing costs, royalties and amortization.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").

Young-Davidson produced 23,100 ounces of gold in the second quarter of 2020, a decrease from the same period in 2019 due to lower tonnes mined and processed. This reflects the planned downtime of the Northgate shaft starting in early February to complete the tie-in of the lower mine. Ore was trucked to surface from the upper mine during the downtime, which resulted in lower tonnes mined during the quarter and the first half of the year.

Underground mining rates averaged 2,686 tpd in the second quarter, slightly above budgeted rates of 2,500 tpd. Similar to the first quarter, mining activities focused on remnant stopes in the upper part of the mine to facilitate trucking up the ramp. The average mined grade was 2.50 g/t Au in the quarter. With the completion of the lower mine expansion in July, mining rates are expected to ramp up to 7,500 tpd by the end of 2020.

Mill throughput was 4,344 tpd in the second quarter, a decrease from the same period of 2019 due to the lower mining rates. Mill throughput was supplemented by lower grade stockpiles, which were exhausted at the end of the quarter. Mill throughput is expected to equal underground mining rates moving forward. Mill recoveries averaged 93% in the quarter, in line with budget.

Lower Mine Construction and Tie-In

The lower mine expansion and associated infrastructure was completed on July 8, 2020 with mining rates ramping up to 6,500 tpd by the end of July. Mining rates are expected to continue to increase to a rate of 7,500 tpd by the end of 2020. With the completion of the lower mine, capital spending for the second half of 2020 is expected to decrease substantially from the $56.6 million spent in the first half of the year. The transition to the highly productive lower mine infrastructure is expected to drive production higher and costs lower in the second half of 2020, driving strong company-wide free cash flow growth.

Photos accompanying this announcement are available at:

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