Canadian miner Alamos Gold has delivered a record performance in the second quarter. Production exceeded the quarterly guidance and, combined with lower costs, the TSX- and NYSE-listed company achieved record free cash flow.

Alamos produced a record 139 100 oz of gold, compared with its targeted 123 000 oz to 133 000 oz, driven by strong performances from Island Gold and La Yagui Grande. With a solid first-half performance, the miner believes it is well positioned to meet its full-year guidance.

Record production and rising gold prices drove record revenue of $332.6-million in the quarter.  This was a 27% year-on-year increase and marked the second consecutive quarter of record revenue. Adjusted net earnings of $96.9-million, or $0.24 a share, were reported for the quarter.

In addition, lower costs generated a significant increase in operating margins, driving operating cash flow and free cash flow sharply higher to new records.

Free cash flow increased to $106.9-million in the second quarter, up more than 300% from the first quarter of 2024 while continuing to fund the Phase 3+ Expansion at Island Gold.

Alamos CEO John McCluskey reported that the expansion was progressing well and remained on track to be completed during the first half of 2026, which would be a significant driver of further free cash flow growth over the longer term through growing production and declining costs.

With the completion of the acquisition of Argonaut in July, the integration of the Magino and Island Gold mines was also well under way. Given their close proximity, the integration of the two operations is expected to create one of the largest and lowest cost gold mines in Canada.

“We expect the integration of the two operations to drive substantial synergies and unlock significant longer-term upside potential supported by the broad-based exploration success we are seeing across the Island Gold district,” said McCluskey. 

Pre-tax synergies of about $515-million are forecast over the life of the mine through the use of shared infrastructure. This includes immediate capital savings with the mill and tailings expansions at Island Gold no longer required, and significant ongoing operating savings through the use of the larger and more efficient Magino mill. This not only derisks the Phase 3+ Expansion, but also creates opportunities for further expansions of the combined Island Gold and Magino operations.

The addition of Magino has increased company-wide gold production to 600 000 oz/y with longer-term production potential of over 900 000 oz/t. Production in the third quarter of 2024 is expected to be between 145 000 oz and 155 000 oz, including ounces produced from Magino from the acquisition date of July 12. Costs will be above the top end of the current guidance range, reflecting higher production costs from Magino.

Alamos’ other growth initiatives continue to advance including preparatory work on the Lynn Lake project ahead of an expected construction decision in 2025, and finalising work on a development plan for the Puerto Del Aire (PDA) project, expected to be released in early September. The PDA development plan is expected to outline another attractive project and significantly extend the mine life of the Mulatos district, in Mexico.