Alamos Gold Inc. (AGI) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Annual General and Special Meeting of Shareholders of Alamos Gold. My name is Rob Prichard. I have the honor of serving as Chair of the company, and I'll also serve as the Chair of this meeting. We're delighted that all of you have joined us. The Annual and Special Meeting of the shareholders is being held entirely online through the Lumi virtual platform. This permits a greater number of shareholders to participate. This platform allows Alamos shareholders and duly appointed proxy holders to participate, submit questions and vote on the matters before us today. [Operator Instructions] Management will address any questions unrelated to the formal portion of the meeting following Mr. McCluskey's corporate presentation after we've completed the formal business of the meeting. I declare that voting is now open, and I will explain the voting procedure for this virtual meeting. If you've already voted or sent in a proxy, there is no need for you to vote during this meeting. Registered shareholders and duly appointed proxy holders who have not already voted in advance of the meeting may cast their votes today by using the voting panel on the screen. You may choose to submit your votes immediately after each item of business or you may choose to wait until each resolution has been read prior to casting your vote. Voting will remain open throughout the meeting until the last item of business has been put to a vote, and I declare the voting closed. In the interest of time, I've asked fellow shareholders, Greg Fisher, who's our distinguished Chief Financial Officer; and Khalid Elhaj, Vice President for Business Development and Investor Relations, to move and second motions where that is required. The purpose of today's meeting is eightfold in terms of formal business. First, to receive and consider the consolidated financial statements of the company for the financial year ended December 31, 2024, and the auditor's report thereon; second, to elect 11 directors who will serve until the next Annual Meeting of Shareholders; third, to reappoint auditors that will serve until the next Annual Meeting of Shareholders and to authorize the directors to set their remuneration. Fourth, we will approve the unallocated awards under the company's long-term incentive plan. Fifth, we will approve the unallocated entitlements under the company's employee share purchase plan. Sixth, we will seek approval of the company's amended and restated shareholder rights plan. Seventh, we will consider and if deemed appropriate, pass with or without variation a nonbinding advisory resolution on the company's approach to executive compensation. And finally, eight, we will seek a vote on the shareholder proposal to amend bylaw #1 of the company. Each and all of these matters are detailed in the company's management information circular, which was dated April 9, 2025, and is made available to our shareholders on SEDAR+ and on EDGAR. I will now call the meeting to order. Ward Sellers, Alamos' Vice President and General Counsel, will act as Secretary of the meeting, and I appoint Computershare Trust Company of Canada to act as our scrutineers. The notice and proxy materials for the meeting were mailed to shareholders, and we have affidavits of Computershare and Broadridge confirming that mailing. Unless anyone objects, the reading of the notice will be dispensed with. I've received no notice of objection, so we will dispense with the reading. The preliminary report of the scrutineers indicates that a quorum is present. The results of the final scrutineer report will be incorporated in the press release filed on SEDAR+ and EDGAR promptly following today's meeting. The first order of business of this meeting is the receipt of the audited consolidated financial statements of the company and the auditor's report for the fiscal year ended December 31, 2024, with comparative figures relating to the previous fiscal period ended December 31, 2023. I propose that the reading of these financial statements be dispensed with. If anyone has any question regarding the financial statements, I ask that they submit them now, and we will deal with them either now or during the general question period at the end -- after this meeting. At this point, I've received no questions, so we will continue. Before I proceed with the election of directors, I'd like to note that David Gower will not be standing for reelection this year. And I want to take this opportunity to express our most sincere thanks to David for his outstanding contributions and dedication to the Board's work. I speak for all members of the Board when I say how grateful we are to have worked with him. His wise counsel and advice over the years was invaluable. The company was the beneficiary of his wealth of knowledge and expertise as a director as he chaired our Technical and Sustainability Committee. We look forward to keeping in touch with David, and we thank you, David, for your distinguished service. I'm also happy to note that 3 directors, Alex Christopher, Chana Martineau and Rick McCreary will stand for election as directors of Alamos for the first time today. Mr. Christopher is a professional geologist and recently retired from Teck Resources after an outstanding 40-year career with Teck. Ms. Martineau is currently the Chief Executive Officer of the Alberta Indigenous Opportunities Corporation, and she has an extensive and diverse background in the financial services sector. Mr. McCreary is the former Deputy Chair, Investment Banking at TD Securities and come to Alamos with over 35 years of experience in capital markets and mining. For this item of business, the election of directors, each of management's proposed nominees has consented to act as a director of the company. We have not received any further nominations in accordance with the company's bylaws. As the scrutineers have advised that each of the persons nominated has received sufficient votes in order to be elected, I declare that the following individuals have been elected as directors of the company: Alexander Christopher, Elaine Ellingham, David Fleck, Tony Giardini, Claire Kennedy, Chana Martineau, John McCluskey, Richard McCreary, Monique Mercier, Shaun Usmar and myself, Rob Prichard. I'd like to thank the nominees for agreeing to stand for election of directors of the company, and I look forward to working with each and every one of them over the year ahead. We'll next go to the -- next order of business is the approval of KPMG LLP as auditors of the company for the following year. I move that KPMG be appointed auditors for the company for the ensuing year at a fee to be fixed by the directors, and I ask Khalid Elhaj to second the motion.

I second the motion.

Thank you, Khalid. I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on their screen now. The results of this meeting item will be tabulated and announced at the end of this meeting. Please cast your vote. The next order of business of this meeting is the approval of the unallocated awards under the company's long-term incentive plan. In order to be adopted, the resolution must be approved by a majority of votes cast by shareholders present or by proxy. Does anyone have any questions with respect to the resolution approving the unallocated awards under the company's long-term incentive plan? I have received no questions at this stage on the plan. And I therefore move that the resolution approving the unallocated awards under the company's long-term incentive plan as set forth in the circular be passed as a resolution of Alamos. May I have a seconder for the motion, please?

I second the motion.

Thank you, Khalid. Again, I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on their screens. The results of this item will be tabulated and announced at the end of the meeting, along with all the other resolutions. Please cast your votes. The next order of business is the approval of the unallocated entitlements under the company's employee share purchase plan, amendments to the previously approved employee share purchase plan and the full text of the employee share purchase plan is set forth in the circular. In order to be adopted, the resolution must be approved by a majority of votes cast by shareholders present or represented by proxy at this meeting. Does anyone have any questions with respect to this resolution approving the unallocated entitlements under the company's employee share purchase plan? I've received no notice of any questions. So I will move that the resolution approving the unallocated entitlements under the company's employee share purchase plan as set forth in the circular be passed as a resolution of Alamos. May I have a seconder for the motion, please?

I second the motion.

Thank you, Khalid. I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on the screen. The results of this meeting item will be tabulated and announced at the end of the meeting along with all the other resolutions. Please cast your votes. The next order of business of this meeting is the approval of the company's fifth amended and restated shareholder rights plan. The full text of the company's fifth amended and restated shareholder rights plan resolution is set forth in the circular. The shareholder rights plan is the same as was adopted and approved by shareholders in 2022. In order to be adopted, the resolution must be approved by a majority of votes cast by shareholders present or represented by proxy at this meeting. Does anyone have any questions with respect to the resolution approving the restatement of the company's fifth amended and restated shareholder rights plan? I received no notice of any questions on this plan. As a result, I move that the resolution approving the fifth amended and restated shareholder rights plan as set forth in the circular be passed as a resolution of Alamos. May I have a seconder for the motion, please?

I second the motion.

Thank you, Khalid. I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on their screens now. The results of this meeting item will be tabulated and announced at the end of this meeting, along with all the other resolutions. Please cast your votes. The seventh order of business of the meeting is the approval of the company's approach to executive compensation. Details of this advisory resolution regarding the company's approach to executive compensation are set forth in the circular. The advisory resolution must be approved by a majority of votes cast by shareholders present or represented by proxy at this meeting. I move that the advisory resolution approving the company's approach to executive compensation as set forth in the circular of the company be passed as a nonbinding advisory resolution of Alamos Gold. I ask Khalid to second the motion.

I second the motion.

Thank you. I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on their screen now. The results of this meeting item will be tabulated and announced at the end of the meeting, along with all the other resolutions. And this brings us to the eighth and final item of business, which is the shareholder proposal to amend bylaw #1 of the company. Details of this shareholder proposal are set forth in the circular. The resolution must be approved by a majority of votes cast by shareholders present or represented by proxy at this meeting. Does anyone have any question? Or is there any discussion with respect to this shareholder proposal? We received no notice of questions or discussion with respect to this shareholder proposal. And I, therefore, will move that the shareholder proposal seeking to amend bylaw #1 of the company as set forth in the circular of the company, be denied as a resolution of Alamos Gold, and I ask Khalid Elhaj to second the motion.

I second the motion.

I ask those shareholders and duly appointed proxy holders who have not yet voted to submit their votes using the voting buttons on their screens now. I will take a brief pause here to give you time to submit your votes, after which I will declare the voting closed on all voting items. So this is the time to cast your votes on any of the items of business before the meeting before we close voting, and we'll pause here to give you time to vote. [Voting]

That's sufficient time for all of you to cast your votes. Thank you very much for voting. And I now declare that voting on all items of this meeting is now closed. Because we received a large advanced vote, I'm able to report that based on the votes submitted, I can confirm there are sufficient number of votes submitted in favor of each of the resolutions presented at this meeting for such resolutions to be passed other than the shareholder proposal resolution, which was defeated. The scrutineers will tabulate the results of the meeting, and a final report on the vote will be furnished by the scrutineers subsequent to this meeting. The results will be incorporated into a press release and posted on SEDAR+ and EDGAR promptly following today's meeting. That completes the formal business for today's meeting. If there's no further business to be brought before the meeting, I will thank all of you for having attended the formal meeting, and I ask Khalid Elhaj and Greg Fisher for a motion to terminate.

I move that the meeting terminate.

I second the motion.

Thank you both. That motion is carried. I thank you for your attention, and I declare the formal meeting of shareholders terminated. I would now like to take this opportunity to congratulate Mr. John McCluskey, our CEO, and the management team for a transformative year of progress in 2024 and for continued significant successes thereafter. 2024 was a record year operationally and financially for Alamos with the acquisition of Argonaut Gold's Magino mine site and 2025 has already witnessed the construction decision to advance the Lynn Lake project in Manitoba and the advancement of the construction of the Puerto del Aire project in Mexico. The Board is looking forward to another strong year by our outstanding management team. With that, I will hand the meeting over to our leader, John McCluskey, President and Chief Executive Officer of Alamos, to make a presentation to you. John, congratulations, and over to you.

Thank you very much, Rob. I'd like to turn your attention to the presentation available through this webcast. And turning to the first slide. Note that this presentation is predicated upon these cautionary notes that you find in advance of the presentation itself as is customary. And I'm sure you'll all take the time to review those cautionary notes. 2024 was a year of significant achievements for Alamos. We delivered strong operational performance across our sites. We set records on many fronts, including record production and mine site free cash flow. We completed the acquisition of the Magino mine adjacent to our high-grade Island Gold operation, a key step towards creating one of Canada's largest and lowest cost gold operations. We continue to advance our growth initiatives and have a clear path to grow production to 900,000 ounces a year by 2028 with further potential to reach 1 million ounces a year through further expansion at Island Gold. Alamos' outlook has never looked stronger with one of the best growth profiles in the sector. Turning to the next slide. Our strong performance extends across our ESG practices where we continue to be a leader across key metrics. Our GHG emissions per ounce of gold produced are less than half the industry average. A number of initiatives underway across our sites, including the P3+ Expansion and connecting the Magino mill to grid power, we expect our emission intensity to decrease even further. Safety is one of the core values of the company and an area where we are always striving for continuous improvement. Over the past 5 years, we reduced our lost time injury frequency by 44%, and we expect this to decrease further. We invest in the long term, and we invest for the benefit of our shareholders, our communities where we operate, First Nations communities, and we continue to be recognized for this commitment. Additionally, we are continuously reviewing our governance practices to ensure alignment with our shareholders and industry best practices. Turning to Slide 6. We thought '24 was a record year for both operationally and financially. Production met guidance and increased 7% year-over-year to a record 567,000 ounces. Costs were also in line with guidance and continue to be well below the industry average. We delivered record cash flow from operations of $726 million, and we generated record free cash flow of $272 million, net of funding the Phase 3+ Expansion and a large exploration program. Turning to Slide 7. All of our operations performed exceptionally well in 2024, and that contributed to the overall outstanding results. Island Gold produced a record 155,000 ounces of gold. Young-Davidson delivered record free cash flow of $141 million, the fourth consecutive year the operation has generated over $100 million in free cash flow and production from the Mulatos District exceeded full year guidance, contributing a record free cash flow of $240 million. Turning to Slide 8. We had tremendous exploration success in 2024. We more than replaced a record amount of gold produced in 2024 with a 31% increase in reserves to 14 million ounces by year-end. While the addition of Magino contributed to the growth, excluding Magino, reserves grew 12%, driven by continued additions at Island Gold and an initial reserve at Burnt Timber and Linkwood in Manitoba. 2024 marks the sixth consecutive year of growth with reserves increasing 44% over that same time frame. Our success in exploration has been a key driver of our growth as a company and one of the ways that we are creating value across our assets. Over the past 6 years, we've delineated mineral resources of over 8 million ounces at an average discovery cost of only $30 per ounce. We expect that trend to continue and have a record exploration budget this year of $72 million. Turning to Slide 9. M&A is another key driver of our growth. And we've had another year of creating value through M&A. We started with Mulatos more than 20 years ago and have been able to replicate that success across our assets, most recently with Island Gold and Magino. We acquired Island Gold in 2017 for $600 million. By the end of 2023, it had grown to a value of $2.1 billion based on consensus estimates. Today, with the addition of Magino, now has a value of over $4.6 billion. Across all of our operating mines and the Lynn Lake project, we have created $6.9 billion of value since their respective acquisitions. And given the outlook at all of these assets, we expect that value to continue to grow. Turning to Slide 10. Let's look a little deeper now at the acquisition of Magino. It demonstrates our ability to create value in the near term and for the long term. The combination of the 2 operations will create one of the largest and lowest cost gold mines in Canada once we complete the Phase 3 Expansion (sic) [ Phase 3+ Expansion ] of Island Gold. The transaction was accretive across all key metrics given the attractive price and more than $500 million of synergies we expect to realize given the proximity of the 2 operations. The combined operation also unlocks significant longer-term upside opportunities through further expansions of the Magino mill and the Island Gold mine. We're going to continue outlining those upside opportunities in the expansion study of the Island Gold District to be announced later this year. Next slide. Our outlook has never been stronger with 3 growth initiatives underway, which underpin our sector-leading growth profile. Ongoing exploration success has been fundamental to this growth and ultimately of their future development. Given the type of exploration potential we see across our asset base, we see excellent potential for further organic growth over the long term. Turning now to Slide 12. We're starting construction now on our PDA project in Mexico, having achieved a significant permitting milestone in January with the approval of the amended environmental permit. We expect initial production in 2027 with the operation to extend the Mulatos mine life to at least 2036 with excellent potential to extend that further. In January, we announced the start of construction at Lynn Lake, putting it on track for initial production during the first half of 2028. Over its 10 years, production is expected to average 180,000 ounces per year at first quartile all-in sustaining costs. We are well over 2/3 complete on the Phase 3 expansion with 75% of the total capital spent or committed to date. Turn to Slide 13. Phase 3 Expansion remains on track for completion in the first half of 2026. The shaft sink reached a depth of 1,154 meters at the end of April, about 84% of the ultimate plan depth of 1,373 meters. Once completed, this will be a significant driver of low-cost production growth and free cash flow generation. Slide 14. Our high-return growth projects are advancing according to plan with a clear path to increase production. We started 2024 at a rate of 500,000 ounces of gold a year. With the addition of Magino, we now expect to produce close to 600,000 ounces a year. We expect the Phase 3 Expansion to increase production to 700,000 ounces by 2027, while driving our all-in sustaining costs 8% lower. With the start of the Lynn Lake project in the second half of 2028, we expect our consolidated production to increase to 900,000 ounces a year. Through a further expansion of the Island Gold District, we see excellent potential to increase production again to somewhere in the range of 1 million ounces a year. We have one of the best growth profiles in the sector, and all of this growth is in Canada. It's low cost and it's fully funded. Next slide. We were once again a strong performer in 2024 with our share price up 37%. This is a continuation of our strong outperformance over the past 3 years with our share price increasing 240%, significantly outpacing the price of gold, the gold ETFs and the S&P 500. This outperformance is driven by a number of attributes that collectively are unique to Alamos with the capacity to double our rate of production in a span of approximately 5 years while generating increasing cash flow from operations with that same time frame, we expect our strong performance to continue as we execute on our growth plans. That concludes our formal presentation. I'll now turn the call over to Scott Parsons, SVP of Corporate Development and Investor Relations for any questions that you may have. And with that, Scott, take it away.

Thank you, John. No questions have been submitted at this time. So I will return the meeting back to yourself for your closing remarks.

Thank you, Scott. In closing, I'd just like to thank everybody who attended the meeting. This was the first meeting where our new Chairman, Rob Prichard, has chaired the meeting. He did an exemplary job. We have a great year ahead in 2025. We are certainly going to face some challenges. Some of you online may have picked up in the news that there's extensive fires in Manitoba right now in excess of 100 fires are burning there. Very unusual climatic conditions have led to this situation. One of those fires, in fact, is threatening the town of Lynn Lake. I just want to say all of our hearts go out to the people who live there. And many of you would know that there was an evacuation notice yesterday, and I would like to say that we've been informed that everybody is out of harm's way, everybody from the town and all of our employees as well. We also -- I should mention our team up there contributed to -- as best we could to helping the firefighters and supporting them in every way while we were there and ultimately helped with the evacuation of the town. And this is something that none of us like to see. It's unclear at the moment just where things are going to go. We're going to stay on top of that, and we'll definitely keep all of our investors informed as the information is provided to us. With that, I do want to conclude by saying we expect great things for that Lynn Lake operation, and we think ultimately, it's going to be a tremendous benefit to that community. And as we pointed out through our formal presentation, there is some great things to expect from the company over the course of 2025 and looking ahead to those 5 years in the future where we ultimately see doubling our production. So with that, thank you very much for your attendance, and that concludes the meeting.