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Alamos Gold reacquiring NSR royalty, lowers cost guidance

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(Kitco News) - Alamos Gold Inc. (TSX: AGI; NYSE: AGI) is reacquiring a 3% net-smelter-return royalty on the Island Gold Mine and as a result lowered its cost guidance for 2020, the company announced Monday.

Alamos said it entered into an agreement to acquire and cancel the NSR royalty for $54 million, or C$75 million.

The royalty was acquired from a privately held company and would have been payable on gold production within four patented claims that comprise the majority of currently defined mineral reserves and resources within the Island Gold deposit, the company said.

Alamos also reported a decrease of $40 per ounce, or 7%, in Island Gold’s 2020 total cash cost guidance to between $480 and $520. The company listed a $40-per-ounce decrease in mine-site all-in sustaining cost guidance to between $740 and $780 per ounce.

The company’s consolidated total cash costs – for all operations – were trimmed by $13 an ounce to between $757 and $797, compared to $770 to $810 previously.

“The acquisition of the royalty further reduces costs at what is already a low-cost operation while also increasing our exposure to the tremendous exploration upside,”said John A. McCluskey, president and chief executive officer.

“Since we acquired Island Gold in 2017, the mineral reserve and resource base has doubled with the deposit approaching 4 million ounces across all categories. With the deposit open laterally and down-plunge across several areas of focus, we see excellent potential for this growth to continue at a greatly reduced royalty on future production.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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