Mining News
How Alamos Gold ducked high energy costs that crimped the sector's margins - CEO John McCluskey
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(Kitco News) - Having operations underground helped save on energy costs when diesel prices spiked, said Alamos Gold CEO John McCluskey.
In February, McCluskey was interviewed by Kitco correspondent Paul Harris at the BMO Global Metals, Mining & Critical Minerals Conference.
Alamos Gold (NYSE: AGI) is a Canadian-based gold producer. The company operates three mines – two in Canada and one in Mexico. Alamos Gold was formed in 2003 through the merger of Alamos Minerals and National Gold. The company said it will produce about 500,000 ounces of gold in 2023 at about $1,150 all-in sustaining cost. The long-term potential is for 800,000 ounces annually at a lower AISC.
Despite recent M&A announcements, McCluskey said he doesn't feel pressure to do a deal. In February, the world's top gold miner Newmont announced a $16.9 billion takeover bid for number-seven gold miner Newcrest Gold. Newcrest rebuffed the offer. At the BMO show, Integra Resources announced a friendly at-market merger with Millennial Precious Metals.
"I don't see our shareholders putting any pressure on our shoulders to do more M&A," said McCluskey. "We've got such a strong internal growth profile going forward. By 2026 we're going to have our Island Gold expansion completed and at that point, our free cash flow is going to soar."
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Asked about inflation pressures, McCluskey said Alamos weathered them better compared to Alamos' peers.
"Because the majority of our production is coming from underground mines as opposed to open pit mines, we're far less dependent on fossil fuels," said McCluskey. "That meant that we ducked one of the main drivers of cost increases in the industry last year."
Coverage of the BMO Global Metals, Mining & Critical Minerals Conference was sponsored by First Majestic Silver.
