Alamos Gold

احدث اجدد واروع واجمل واشيك Alamos Gold

Alamos Gold is moving up from a Junior to a mid-tier gold producer. The company was formed in 2003, with their main project being Mulatos. Mulatos is the only mine that Alamos currently has in production, but it's a very solid, extremely low cash cost mine, and Alamos shareholders have been greatly rewarded.

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Mulatos – Mexico

Mulatos is an open pit- heap leach operation. In April 2006, the mine achieved commercial production. For 2010, production guidance is 160,000 to 175,000 ounces at a total cash cost of $338 per ounce of gold. Mulatos currently has a mine-life of 11.5 years, with 2.39 million ounces in reserves.

Construction of the mine began in 2004 and Phase I of the mine was completed in January 2006 at a cost of approximately $74 million. In 2005, an expansion budget of $20 million was approved to increase the scale of mining operations from the 2004 Feasibility Study level of 10,000 tonnes of ore per day to between 13,000 and 15,000 tonnes of ore per day, the range of mine's current throughput.

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Alamos plans to install a new screening plant this year. The project is expected to be completed before the end of the third quarter of 2010. A recently completed scoping-level study indicated that the additional screening should result in a 13% to 20% increase in crusher throughput. The primary benefit of additional screening is that it should allow the Alamos to maintain its current production profile at Mulatos in response to rising gold prices, which has resulted in low-grade ore becoming economic to mine.

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Escondida Mill

In 2005, Alamos discovered very high- to bonanza-grade gold mineralization within the Escondida deposit, which is located approximately 500 metres north of the Mulatos Pit where the Company is currently mining. In order to take advantage of this high grade ore, the company is going to construct a 500 tonne ore per day mill to process it. The initial capital cost is $17.5-million. Now, according to a report by the engineering firm Alamos hired, the mill will only produce about 100,000 oz of gold, but the payback is so great that Alamos thinks its worth it. Also of note:

"John McCluskey, President & CEO of the Company, remarked that "if we consider the findings of the KDE Report and our internal estimates of the grade of the Escondida high-grade ore, then gold production from the mill could be two or three times greater than what the KDE Report has forecast." Mr. McCluskey added that "although the KDE Report estimates a short operation to start, the investment in the mill yields a tremendous return for shareholders and provides the opportunity for Alamos to process ore from additional high-grade discoveries."

So the bottom line is, the mill is going to be constructed, but the total production that will result could vary widely. If Alamos is correct in their assumptions, then that would be extremely positive for the company. Production from the mill should start up by late 2011/early 2012.

Agi Dagi and Kirazli

Since Alamos only has one mine in production, it only makes sense for them to look at acquisitions. In late 2009, Alamos Gold Inc. purchase 100% of the Agi Dagi and Kirazli gold projects in Turkey from Fronteer Development Group Inc. and Teck Resources Limited. Under the terms of the agreement, Alamos paid US$40 million cash plus issued an aggregate of 4 million Alamos common shares on closing to Teck (as to 60%) and Fronteer (as to 40%) in total consideration for acquiring these two projects.

Agi Dagi and Kirazli are advanced-stage gold exploration projects. They are low grade, but according to Alamos:

"The relatively low grade of the projects is off-set by favourable engineering characteristics, including the shallowness and low waste-to-ore ratios of the deposits, the ore's excellent metallurgical characteristics, and close proximity to infrastructure"

Here are some of the highlights of the project:

Total gold production of 1.139 million ounces at an average total cash cost of $314 per ounce(1), with silver treated as a by-product credit(2).
Average annual production of approximately 135,000 ounces of gold and 621,600 ounces of silver over the first eight years of production, or 145,500 gold-equivalent(1)(3) ounces.
A mine-life of over eight years with a low waste-to ore ratio of 1.24:1.
Total initial and sustaining capital costs are estimated to be $234.7 million, which includes a 27% contingency.
Production is planned to commence in the first quarter of 2013 at Kirazli, followed by Agi Dagi in the first quarter of 2014.go to
https://sites.google.com/site/goldandsilver2012/company-reviews-by-goldstocksdaily-com/alamos-gold

Production and Financials

Q2 2010 highlights:

Revenues of $47.5 million on gold sales of 39,688 ounces.
Reported earnings of $12.1 million, or $0.11 per share.
Reported Adjusted Earnings of $17.2 million, or $0.15 per share.
Operating cash flows after working capital changes totalled $20.9 million, or $0.18 per share.
Cash operating costs of $283 per ounce of gold sold ($275 YTD).
Total cash costs of $341 per ounce of gold sold ($328 YTD).
Paid an inaugural dividend of $0.03 per share.

Alamos Gold has a very strong balance sheet, with $170 million in cash and no debt. Future projects should be able to be funded by their current cash flow and cash balance.

123 million shares fully diluted.

Production is expected to dip slightly this year attributed to downtime associated with the integration of the new closed-circuit crushing system at Mulatos.

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Conclusion

Alamos seems to be on very solid ground. They have a low cash cost gold mine in Mexico, and another mine in Turkey that is in development which could boost their overall gold production by 150,000 oz per year. In my opinion, the real thing to watch out for is what happens with this new mill they are constructing at Mulatos. The economics might get better and better, so instead of only 100,000 oz of high grade gold being pushed out of the mill, it might be 200,000-300,000 oz. We will just have to see.

Currently, Alamos seems to have a rich multiple compared to other mining stocks. I'm not saying it's overvalued here, just that it's probably fairly valued. But mining companies with low cash cost operations always trade at a premium, since their margins are so high.

There are a lot of acquisitions now taking place in the sector, and I feel that Alamos might be high on the list as a possible target. I wouldn't be surprised if the company is snapped up here pretty soon by Eldorado Gold or some other major gold company.

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http://goldstocksdaily.com/2010/06/06/alamos-gold/