Canadian miner Alamos Gold is eyeing a 20% increase in its near-term production rate, owing to the addition of the Magino mine and its integration with its Island Gold operation, in Ontario.

The TSX-listed company on Thursday raised its production forecast for 2024 to between 550 000 oz and 590 000 oz, a 13% increase from its January guidance. This increase is driven by the incorporation of the Magino mine, as well as higher output from the Mulatos district, in Mexico.

Magino, which Alamos acquired through the $325-million acquisition of Argonaut, is expected to produce 40 000 oz to 50 000 oz in the second half of 2024

The inclusion of the Magino mine will increase the group’s production by more than 20% in both 2025 and 2026.

“The addition of Magino has enhanced our already strong growth profile, and its integration with Island Gold is expected to drive significant synergies and open up longer-term opportunities,” said president and CEO John McCluskey.

Longer-term, Alamos now has the capacity to grow company-wide production to about 900 000 oz/y, with further upside potential through future expansions of the Island Gold district.

Alamos also updated its cost guidance, increasing its 2024 all-in sustaining cost (AISC) forecast to between $1 250/oz and $1 300/oz, from between $1 125/oz and $1 175/oz.

The AISC guidance has increased 11% on average across the three years, reflecting Magino’s relatively higher costs. Company-wide AISC is expected to remain well below industry average and continue decreasing over the longer-term driven by low-cost production growth at Island Gold, and continued improvements at Magino.

“Our costs remain well below the industry average and are expected to decrease significantly over the next several years as we deliver on our low-cost growth initiatives. Through growing production and declining costs, we expect to deliver substantial free cash flow growth in the years ahead,” said McCluskey.

Meanwhile, Alamos increased its capital spending budget for 2025 and 2026. Next year, the company will spend $425-million to $475-million and in 2026, its capital expenditure (capex) will be $345-million to $390-million. This compares with a capital expenditure budget of between $310-million and $350-million for 2025 and between $175-million and $200-million in 2026.

Alamos explained that the main driver of the increase in capital spending over the next three years was the inclusion of growth and sustaining capital for Magino, as well as growth capital for the development of the Puerto Del Aire project. Both are in support of high-return, lower-risk organic growth initiatives.

Further, Alamos increased the capital estimate for the Phase 3+ Expansion at Island Gold by about $40-million to $796-million. The increase was owing to inflationary pressures and scope changes to the project, partly offset by the Magino acquisition and the weaker Canadian dollar.

As of June 30, $381 million had been spent on the Phase 3+ Expansion, representing 48% of the updated initial capital estimate. The Phase 3+ Expansion remains on track for completion in the first half of 2026 with total remaining initial capital expected to be $415-million.

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