Alamos Gold Announces Updated Feasibility Study for the Lynn Lake Project Outlining Larger, Longer-Life, Low-Cost Operation in Canada with Attractive Economics and Significant Exploration Upside

TORONTO, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; :AGI) (“Alamos” or the “Company”) today reported results from the updated Feasibility Study (“2023 Study”) conducted on the Lynn Lake project (“Lynn Lake”), located in Manitoba, Canada. The 2023 Study replaces the previous Feasibility Study completed in 2017 (“2017 Study”) and incorporates a 44% larger Mineral Reserve and 14% increase in milling rates to 8,000 tonnes per day (“tpd”) supporting a larger, longer-life, low-cost operation.

The 2023 Study has been updated to reflect the current costing environment, as well as a significant amount of additional engineering, on-site geotechnical investigation work, and requirements outlined during the permitting process with the Environmental Impact Statement ("EIS”) granted in March 2023. All amounts are in United States dollars, unless otherwise stated.

2023 Study Highlights:

Higher production: average annual gold production of 207,000 ounces over the first five years and 176,000 ounces over the initial 10 years

• The 10-year average represents a 23% increase over the annual average of 143,000 ounces in the 2017 Study

Low-cost profile: average mine-site all-in sustaining costs of $699 per ounce over the first 10-years and $814 per ounce over the life of mine

• Average mine-site all-in sustaining costs decreased 6% from the 2017 Study over the initial 10-years with economies of scale provided by the larger operation, and higher average grades, more than offsetting cost inflation

Larger, longer-life operation supported by 44% larger Mineral Reserve with further upside potential

• 44% larger Mineral Reserve totaling 2.3 million ounces grading 1.52 grams per tonne of gold (“g/t Au”) (47.6 million tonnes (“mt”))
• 17-year mine life, up from 10 years in the 2017 Study
• Life of mine production of 2.2 million ounces, a 46% increase from 1.5 million ounces reported in 2017

Modest increase in capital intensity with larger operation and 46% increase in life of mine production partly offsetting inflation

• Initial capital of $632 million, and life of mine capital including sustaining capital and reclamation of $832 million, increased from the 2017 Study reflecting inflation and scope changes with the larger operation and Mineral Reserve
• Total life of mine capital of $381 per ounce increased 17% from $325 per ounce in the 2017 Study with the larger Mineral Reserve and economies of scale partly offsetting the significant industry-wide capital inflation experienced since 2017

Project de-risked given advanced level of engineering, additional geotechnical work, and EIS approval

• Detailed engineering 55% complete; basic engineering 100% complete
• EIS approval and Provincial licenses received in March 2023 with requirements outlined through the permitting process incorporated into the 2023 Study
• Extensive geotechnical drilling, test pits, and ground penetrating radar employed across the project area including the mill, open pits and tailings locations providing higher degree of confidence around required earthworks, tailings design and mine plan

Attractive economics with significant long-term exploration upside potential

• After-tax net present value (“NPV”) (5%) of $428 million (base case gold price assumption of $1,675 per ounce and USD/CAD foreign exchange rate of $0.75:1)
• After-tax internal rate of return (“IRR”) of 17%
• After-tax NPV (5%) of $670 million, and an after-tax IRR of 22%, at current gold prices of approximately $1,950 per ounce
• Payback of less than four years at the base case gold price of $1,675 per ounce and less than three years at current gold prices

Significant near-mine and regional exploration upside potential

• The Lynn Lake project encompasses most of the east-trending, 125 km long, Lynn Lake Greenstone Belt in northwestern Manitoba, with a total of 58,000 hectares of mineral tenure, representing significant exploration potential, including:
  • Gordon deposit: higher-grade gold mineralization extended outside of Mineral Reserves and Resources in the northeastern extent of the planned Gordon pit, in an area modeled as waste in the 2023 Study
  • Burnt Timber and Linkwood: potential for smaller, higher-grade Mineral Resource that could be trucked and processed at the planned MacLellan mill later in the mine life
  • Regional targets: extensive pipeline of highly prospective exploration targets at various stages of exploration across the Lynn Lake greenstone belt. This includes the Maynard and Tulune targets where ongoing drilling continues to intersect gold mineralization. Both targets are within trucking distance of the MacLellan mill

Low Greenhouse Gas (“GHG”) emission intensity

• 18% decrease in GHG emissions per ounce from the 2017 Study reflecting the incorporation of electric shovels and drills at MacLellan, and productivity improvements with the larger operation
• 58% lower emissions per ounce produced than the industry average. The project will be connected to Manitoba’s electric grid, of which nearly all electricity is produced from clean, renewable power, supporting the company-wide target of a 30% reduction in absolute GHG emissions by 2030

Fully funded growth

• As outlined previously, the Company does not anticipate spending any significant capital on developing the Lynn Lake project until the Phase 3+ Expansion at Island Gold is well advanced
• With $189 million of cash as of June 30, 2023, no debt, strong ongoing free cash flow generation, and significant free cash flow growth expected from Island Gold in 2026 and beyond, the Company is well positioned to fund development of Lynn Lake internally

“The 2023 Study has confirmed Lynn Lake as a long-life, low-cost project in Canada, with attractive economics, and significant upside potential. Good projects are becoming increasingly rare, especially within top jurisdictions like Canada, highlighting the attractiveness of Lynn Lake. We have completed an extensive amount of additional engineering, permitting and other work over the last several years to de-risk the project and assess the exploration potential. We’ve increased Mineral Reserves by 44% since the 2017 Study, and as outlined in the exploration update earlier this week, we see excellent potential for that growth to continue. This includes the Burnt Timber and Linkwood deposits that were not factored into the 2023 Study, and a number of other high-value regional targets where we continue to intersect gold mineralization in proximity to the planned MacLellan mill,” said John A. McCluskey, President and Chief Executive Officer.

“Our current priority is the Phase 3+ Expansion at Island Gold with Lynn Lake an important part of our strong longer-term outlook. Through Lynn Lake, Island Gold, and Young-Davidson, we have three high-quality assets that can support over 650,000 ounces of annual production in Canada, at all-in sustaining costs below $1,000 per ounce over the long-term,” Mr. McCluskey added.

1. Total unit cost per tonne (“t”) of ore includes royalties and silver as a by-product credit
2. Total cash costs and mine-site all-in sustaining costs include royalties and silver as a by-product credit
3. Please refer to the Cautionary Notes on non-GAAP Measures and Additional GAAP Measures

Mineral Reserves and Resources

An updated Proven and Probable Mineral Reserve totaling 47.6 mt, grading 1.52 g/t Au and 3.57 g/t Ag, containing 2.3 million ounces of gold and 5.5 million ounces of silver has been declared at Lynn Lake. This represents a 44% increase from the 1.6 million ounces included in the 2017 Study, reflecting the successful conversion of Measured, Indicated and Inferred Mineral Resources at the Gordon and MacLellan deposits, and 13% increase from the end of 2022 reflecting the higher gold price assumption. Only Mineral Reserves have been incorporated into the 2023 Study mine plan and economic analysis.

Mineral Reserves – Effective as of June 30, 2023

• Mineral Reserves reported are consistent with the CIM Definition Standards for Mineral Resources and Mineral Reserves.
• Mineral Reserves are reported to a cut-off grade of 0.796 Au g/t at Gordon and 0.355 Au g/t for MacLellan.
• The cut-off grades are based on a gold price of US$1,250/oz Au at Gordon, US$1,600/oz Au at MacLellan.
• Silver is not used in the cut-off grade calculation.
• Metallurgical Au recovery is 92.4% for Gordon and a feed grade-based formula for MacLellan.
• Totals may not add up due to rounding.
• Chris Bostwick, FAusIMM, Senior Vice President, Technical Services is the Qualified Person for the Mineral Reserve estimate. Mr. Bostwick is a Qualified Person within the meaning of Canadian Securities Administrator's National Instrument 43-101 ("NI 43-101").

Mineral Resources for the Gordon and MacLellan deposits detailed below have not been included in the mine plan but represent potential upside through their incorporation into the mine plan with higher metal prices and additional infill drilling.

Open Pit Mineral Resources – Effective as of June 30, 2023

• Mineral Resources reported are consistent with the CIM Definition Standards for Mineral Resources and Mineral Reserves.
• The Mineral Resources are reported at an assumed gold price of US$1,600/oz, and an assumed silver price of US$23.00/oz.
• Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves.
• Open pit Mineral Resources are stated as contained within a potentially economic open pit above a 0.355 g/t AuEq cut-off for MacLellan and 0.621 g/t Au for Gordon and includes external dilution at zero grade outside the constraining Au solids.
• Contained Au and Ag ounces are in-situ and do not include metallurgical recovery losses.
• Mineral Resources are exclusive of Mineral Reserves.
• Totals may not add up due to rounding.
• Jeffrey Volk, CPG, FAusIMM, Director of Reserves and Resources for Alamos Gold Inc is the Qualified Person for the Mineral Resource estimate. Mr. Volk is a Qualified Person within the meaning of Canadian Securities Administrator's National Instrument 43-101 ("NI 43-101").

Economic Analysis

Lynn Lake’s estimated base case after-tax IRR is 17% and after-tax NPV (5%) is $428 million assuming a gold price of $1,675 per ounce and USD/CAD foreign exchange rate of $0.75:1. Payback is expected to be achieved in 3.7 years under the base case scenario.

Assuming spot gold prices of approximately $1,950 per ounce, the after-tax NPV (5%) increases to $670 million and after-tax IRR increases to 22%, with the payback decreasing to 2.7 years.

Lynn Lake’s economics were estimated as part of the Feasibility Study process and incorporate only Proven and Probable Mineral Reserves. The project economics are sensitive to metal price assumptions, foreign exchange, and input costs as detailed in the tables below.

Lynn Lake After-Tax NPV (5%) Sensitivity ($ Millions)