Mining News

Alamos Gold cuts production outlook on Mulatos woes

Canadian miner Alamos Gold (TSX: AGI) has cut production forecast for its flagship Mulatos gold mine in Sonora, Mexico, citing a “challenging” third quarter at the operation, which offset strong performances at the company’s other assets. 

Output at the mine, Alamos Gold’s founding operation, is expected to drop by 15,000 ounces, to between 135,000 ounces to 145,000 ounces. That leaves the company with a lower consolidated guidance of 445,000 ounces to 495 000 ounces for the year. 

“The challenges at Mulatos are temporary with the operation transitioning to low-cost production from La Yaqui Grande in 2022,” president and CEO John McCluskey said in the statement

The $137 million La Yaqui Grande project will replace higher cost production from the main Mulatos pit, keeping combined production at approximately 150,000 ounces per year. The new pit will extend Mulatos life to 2027. 

The Mulatos mine is Alamos Gold’s founding operation. It was acquired for $10 million and has produced over two million ounces of gold and generated more than $400 million in free cash flow since 2005.  

Alamos says the operation continues to be vital to the company, despite producing only 26,700 ounces in the quarter ended September 30 — “well below” expectations. 

The Toronto-based miner said an above-average rainy season in Mexico impacted stacking rates, which together a longer than anticipated leach cycle for stockpiled ore stacked in the quarter, impacted Mulatos’ performance. 

La Yaqui Grande is on track for commercial production in the third quarter of 2022. (Image courtesy of Alamos Gold.)

“With Cerro Pelon winding down, stockpiled ore will represent a larger proportion of stacked ore at Mulatos until production from La Yaqui Grande ramps up in the second half of 2022,” Alamos said. 

The company is also planning key milestones at its earlier stage Esperanza gold-silver project in Mexico’s south-central Morelos state in 2021, with previous studies showing potential production of around 100,000 ounces of gold a year. 

Alamos left production figures unchanged at its Young Davidson and Island Gold mines, in Canada, which are on track to churn out 190,000-205,000 ounces of gold and 130,000-145,000 ounces of the metal respectively. 

Share this article