Alamos Gold (AGI) Q4 2025 Earnings Call Transcript

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Date

Thursday, Feb. 19, 2026 at 10 a.m. ET

Call participants

• President & CEO — John A. McCluskey
• Chief Financial Officer — Greg Fisher
• Chief Operating Officer — Luc Guimond
• Vice President, Exploration — Scott R. Parsons

Takeaways

• Annual production -- 545,000 ounces of gold produced, below guidance due to severe December weather and operational challenges in Canada.
• Revenue -- $1.8 billion achieved in 2025, a record high and a 34% increase from 2024.
• Full-year free cash flow -- Over $350 million generated, representing a record, while self-funding growth projects.
• Dividend increase -- 60% dividend increase announced, beginning this quarter, in response to higher free cash flow.
• Production guidance for 2026 -- Management expects a 12% increase, with the ramp-up at Island Gold and higher rates at Young-Davidson cited as key contributors.
• Operational cash flow -- $285 million before non-cash changes in Q4 ($0.68 per share); full year $924 million ($2.20 per share), reflecting a 27% increase.
• Adjusted net earnings -- $228 million ($0.54 per share) in Q4; $587 million ($1.40 per share) in 2025 full year.
• Capital expenditures -- $507 million total in 2025 ($318 million growth capex), primarily to fund expansion projects.
• Cash balance -- 90% increase from previous year to $623 million, with debt reduced to $200 million.
• Shareholder returns -- $81 million returned via $39 million in buybacks (1.3 million shares), and $42 million in dividends, double the 2024 return.
• Hedge reduction -- Eliminated 230,000 ounces of legacy Argonaut Gold hedges (out of 330,000 ounces), expanding exposure to market gold prices.
• Mineral reserves -- 16 million ounces at year end, a 32% increase and seventh consecutive annual growth; Island Gold District reserves nearly doubled to over 8 million ounces.
• Three-year guidance -- Management projects a 46% production increase and 20% lower all-in sustaining costs by 2028.
• Island Gold District expansion -- Expected average annual production of 534,000 ounces for ten years post-2028 at mine site all-in sustaining cost of $1,025 per ounce; after-tax NPV of $12 billion at $4,500 gold price.
• Exploration budget -- $100 million set for 2026, a 37% increase from 2025, targeting further resource growth.

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Risks

• Annual gold production and all-in sustaining costs missed guidance due to "severe weather in late December and other challenges with the Canadian operations."
• Total cash cost and mine site all-in sustaining costs were above annual guidance, attributed to "lower mill throughput at Magino, and lower mining rates at Island Gold."
• Full-year Young-Davidson and Island Gold District production came in "below the low end of revised annual guidance" due to operational disruptions.

Summary

Management delivered record revenue, free cash flow, and shareholder returns in 2025, underpinned by higher realized gold prices and expanded mineral reserves. Capital returns to shareholders doubled year over year, with a notable 60% dividend hike commencing this quarter. Management signaled increased production and lower costs in coming years through the ramp-up of expansion projects and substantial exploration investment.

• Adjusted net earnings for the year reached $587 million, demonstrating significant operational leverage to gold price increases.
• Hedge reduction initiatives have accelerated, with only 100,000 ounces of legacy hedges remaining to be addressed through 2027.
• Major projects such as Island Gold District and PDA remain on track, with the bulk of critical long-lead infrastructure spend completed or committed.
• Exploration success continues to enhance long-term mine life, as the company added nearly 4 million ounces of reserves at Island Gold in 2025.

Industry glossary

• All-in sustaining cost (AISC): Comprehensive per-ounce cost metric including cash operating costs and sustaining capital expenditures at mine sites.
• Phase 3 Plus shaft expansion: Specific underground development at Island Gold District designed to increase mining rates and support production growth.
• Hedge: Forward sale or derivative contract used to fix the realized price of future gold production, often limiting upside to spot price movements.
• PDA project: Magino's high-grade underground expansion at Alamos Gold’s Mulatos District, targeting new production by mid-2027.

Full Conference Call Transcript

Thank you, Scott. I am going to start with Slide 3. Production for 2025 was 545,000 ounces, late below our guidance as a result of severe weather in late December and other challenges with the Canadian operations. Our costs were above annual guidance reflecting the same factors. Despite the setbacks, we delivered a number of financial records, including revenue of $1,800,000,000, record free cash flow of over $350,000,000 while funding our high-return growth projects. Supported by strong free cash flow generation, we doubled our shareholder returns, further strengthened our balance sheet by reducing our debt, and eliminated more of the hedges inherited from the Argonaut Gold transaction, giving us increased exposure to higher gold price.

Looking ahead to 2026, we expect a meaningful improvement in operational performance to drive a 12% increase in production. This will be driven by the ramp-up of mining rates at Island Gold as part of the Phase 3 Plus expansion, as well as higher mining rates at Young-Davidson. We expect further growth in production at lower costs in the coming years as we deliver on the larger Island Gold District expansion by 2028 and bring Lynn Lake into production by 2029. Our longer-term outlook remains firmly on track to nearly double our annual production to approximately over 1,000,000 ounces a year at lower costs.

Now turning to Slide 4, over the past month, we outlined the key drivers of our strong outlook. As detailed in our updated three-year guidance, we expect to deliver a 46% increase in production at approximately 20% lower all-in sustaining costs by 2028. We also provided exploration updates on our mines and exploration projects, highlighting significant upside potential across our portfolio. Our successful exploration program in 2025 contributed to a 32% increase in year-end mineral reserves to 16,000,000 ounces, marking the seventh consecutive year of growth. This included a near doubling of reserves at Island Gold District to over 8,000,000 ounces.

As announced earlier this month, this growth is being incorporated into a larger expansion of the district, which is expected to create one of the largest, longest-life, and most profitable gold operations in Canada. This is a high-return expansion that the Island Gold District can fund on its own, contributing to our increasing free cash flow. Reflecting this strong outlook and growing free cash flow, we were pleased to announce a 60% increase in our dividend commencing this quarter. As outlined in the expansion study, we will be expanding milling rates to 20,000 tonnes per day. The higher rate is supported by increased mining rates per day from the open pit, 3,000 tonnes per day from underground, and 17,000 tonnes.

With the completion of the expansion in 2028, annual production from the Island Gold District is expected to average 534,000 ounces of gold for the initial ten years at lower mine site all-in sustaining costs of $1,025 per ounce. This is more than double the 2025 production and at 30% lower costs. At a conservative $3,200 per ounce gold price, the operation will generate in excess of $800,000,000 of annual free cash flow and have an after-tax net present value of $8,200,000,000, and at a gold price of $4,500 per ounce, the after-tax NPV increases to $12,000,000,000, making the Island Gold District one of the largest and most valuable gold operations in Canada. Now turning to Slide 6.

Our three-year guidance outlined a clear path to reach 800,000 ounces of gold production by 2028 at nearly 20% lower all-in sustaining costs of approximately $1,250 per ounce. Longer term, the completion of the Island Gold District expansion in 2028 and initial production from Lynn Lake in 2029 is expected to drive our production to approximately 1,000,000 ounces per year by the end of the decade, with a further decrease in costs. We have one of the best growth profiles in the sector, and we can fund all our growth internally while we continue to generate increasing free cash flow. I will now turn the call over to our CFO, Greg Fisher, who will review our financial performance. Greg?

Greg Fisher: Thank you, John. Moving to Slide 7, we sold 142,000 ounces of gold in the fourth quarter at an average realized price of $3,998 per ounce for record quarterly revenues of $575,000,000. For the full year, we sold 531,000 ounces at a realized price of $3,372 per ounce for record annual revenues of $1,800,000,000, up 34% from 2024. Our full-year total cash cost of $1,077 per ounce and all-in sustaining cost of $1,524 per ounce were above annual guidance, driven by higher costs in the fourth quarter and the temporary challenges at our Canadian operations. Operating cash flow before changes in non-cash working capital was $285,000,000 in the fourth quarter, or $0.68 per share.

This was reduced by $63,000,000, or $0.15 per share, reflecting the cash utilized to eliminate the legacy Argonaut Gold hedges prior to maturity. For the full year, operating cash flow before changes in non-cash working capital increased 27% to a record $924,000,000 or $2.20 per share. Our reported net earnings were $435,000,000 in the fourth quarter, or $1.03 per share. This included a $227,000,000 after-tax gain on the sale of non-core assets, a loss on commodity hedge derivatives of $35,000,000, and other adjustments of $16,000,000. Excluding these items, our adjusted net earnings were $228,000,000 or $0.54 per share. Our full-year adjusted net earnings were $587,000,000 or $1.40 per share.

Capital spending in the quarter totaled $158,000,000 and included $50,000,000 of sustaining capital, $97,000,000 of growth capital, and $11,000,000 of capitalized exploration. For the full year, total capital expenditures were $507,000,000, including growth capital of $318,000,000. We continue to fund our high-return growth internally while generating strong free cash flow, including a record $157,000,000 of free cash flow generated in the fourth quarter and a record $352,000,000 for the full year. Reflecting our growing free cash flow and strong financial position, we returned $81,000,000 to shareholders in 2025, double the amount returned in 2024. This includes the repurchase of 1,300,000 shares at a cost of $39,000,000 and dividend payments totaling $42,000,000.

With additional free cash flow growth ahead, we expect further increases in our shareholder returns, starting with a 60% increase in our dividend this quarter. We also paid down $50,000,000 of debt and eliminated half the 2026 legacy hedges inherited from Argonaut Gold. To date, we have now repurchased and eliminated 230,000 out of the 330,000 ounces hedged by Argonaut prior to maturity, providing increased exposure to the rising gold price. We will continue to look for opportunities to eliminate the remaining 100,000 ounces subject to hedges across 2026 and 2027. Given our strong free cash flow, our cash position grew 90% from 2024 to $623,000,000 while reducing our debt to $200,000,000.

We expect growing production and declining costs to drive increasing free cash flow over the next several years while we continue to fund our organic growth plans. With that, I will turn the call over to our COO, Luc Guimond, to provide an overview of our operations. Luc?

Luc Guimond: Thank you, Greg. Over to Slide 8. Fourth quarter production from the Island Gold District totaled 60,000 ounces, a 10% decline over the previous quarter due to lower underground mining rates as well as reduced mill throughput. For the full year, production totaled 250,400 ounces, a 33% increase over the previous year, but slightly below the low end of revised annual guidance. During the fourth quarter, underground mining rates of 1,160 tonnes per day were impacted by additional rehabilitation work related to the seismic event that took place in October, as well as downtime in late December due to severe winter weather.

This prevented the delivery of supplies and access to site by personnel and emergency services, thus requiring a three-day stand down of underground operations. The Island Gold mill averaged 1,180 tonnes per day in the fourth quarter, consistent with underground mining rates. The underground rehabilitation work required to ramp up mining rates as part of the Phase 3 Plus shaft expansion is substantially complete. Mining rates are on track to increase to an average of 1,400 tonnes per day in 2026 and gradually increase to 2,000 tonnes per day in the fourth quarter, driving growing production through the year.

Luc Guimond: The open pit portion of the operation continues to perform well with mining rates averaging 16,600 tonnes per day of ore in the fourth quarter and 15,000 tonnes per day for the full year, in line with guidance. The 8,625 tonnes per day in the fourth quarter, a modest improvement over the third quarter but below expectations, in part reflecting weather-related disruptions late in the quarter. With a number of initiatives being implemented through 2026, milling rates are expected to improve substantially in the second half of the year. Total cash cost and mine site all-in sustaining costs were above annual guidance, driven by lower mill throughput at Magino and lower mining rates at Island Gold.

The Island Gold District generated mine site free cash flow of $61,000,000 in the fourth quarter and a record $205,000,000 for the full year, net of significant capital investment related to the Phase 3 Plus shaft expansion and exploration. At current gold prices, the Island Gold District is expected to continue generating strong free cash flow while funding its expansion plans and a robust exploration program. We are expecting a significant improvement from the Island Gold District in 2026, with production expected to increase 24% to between 290,000 and 330,000 ounces, driven by the ramp-up of underground mining rates and improved milling rates at Magino. Moving to Slide 9.

To improve processing rates within the Magino mill, we have added a temporary crusher to provide supplemental crushed ore feed downstream from the existing secondary crusher. This is expected to help sustain the flow of crushed ore into the mill and support higher milling rates of 10,000 tonnes per day by the end of the second quarter. Additional improvements we are implementing include ongoing work with third-party specialists to optimize and improve the reliability of the circuit, and the restructuring of maintenance and mill operating management teams, which will ensure constant senior-level oversight.

Longer term, the addition of the director crusher, new truck dump configuration, and ore bins as part of the larger expansion to 20,000 tonnes per day will support further improvements to the performance of the existing circuit. Moving to Slide 10. Substantially all the capital related to the Phase III Plus expansion has been spent or committed with the shaft infrastructure and paste plant commissioning expected in the fourth quarter. This will be the catalyst to increase mining rates to 2,400 tonnes per day in 2027 and ultimately 3,000 tonnes per day in 2029 as part of the larger expansion. The photo on the right highlights the progress on the 1,350 shaft station.

Once the station is completed, the remaining 29 meters to shaft bottom will be sunk by the end of the first quarter. Over to Slide 11. As John previously noted, the Island Gold District expansion to 20,000 tonnes per day is expected to create one of the largest, lowest-cost, and most valuable gold mines in Canada. Following the completion of the expansion in 2028, production is expected to increase to average 534,000 ounces per year over the initial ten years at mine site all-in sustaining cost of $1,025 per ounce. This represents more than double the production from the district in 2025 at 30% lower all-in sustaining costs.

At a $4,500 per ounce gold price, the expansion has an after-tax IRR of 69% and net present value of $12,000,000,000. The Island Gold District is quickly evolving into one of Canada’s largest, most profitable, and most valuable operations. And as Scott will touch on later, we believe there is more upside to come given the significant exploration potential. Over to Slide 12. As detailed in the photos, the expansion to 20,000 tonnes per day is well underway. As part of the Phase 3 Plus shaft expansion, we already started construction on a new mill building that was sized to accommodate the larger expansion.

The new circuit will process a blend of high-grade underground ore as well as open pit ore at a rate of 10,000 tonnes per day, while the existing circuit will process only open pit ore at also 10,000 tonnes per day. Construction of the open pit truck shop is well underway, which will allow for timely and cost-effective maintenance of the mobile fleet. With all the earthworks and concrete foundations complete, and structural steel already erected, the larger expansion of the operation has already been significantly de-risked. Over to Slide 13, Young-Davidson produced 41,400 ounces in the fourth quarter, a 9% increase over the previous quarter but below expectations.

Mining rates were impacted by severe weather conditions in late December, rehabilitation work required on one of three ore passes, and the failure of a small portion of a paste plug underground. Production for the full year totaled 153,400 ounces, below revised guidance due to lower-than-expected mining rates and grades. With rehabilitation work completed on the impacted ore pass, and an additional ore pass being commissioned this quarter, the total number of ore passes will increase to four, providing additional operational flexibility. This is expected to support improved mining rates of approximately 7,600 tonnes per day in the first quarter, and 8,000 tonnes per day in the second quarter and through the rest of the year.

Cost per ounce were above guidance for the full year due to lower mining rates and grades processed. Despite the temporary challenges, Young-Davidson generated record mine site free cash flow of $250,000,000 in 2025. In 2026, improved mining rates are expected to drive an increase in production from Young-Davidson to between 155,000 and 175,000 ounces, supporting strong ongoing free cash flow at current gold prices. Over to Slide 14. Production from the Mulatos District totaled 40,100 ounces in the fourth quarter, an 8% increase over the previous quarter reflecting higher stacking rates and the recovery of previously stacked ounces on the leach pad.

Production for the full year was 141,600 ounces, in line with annual guidance, which was revised higher in October. For the full year, costs were also in line with guidance. The Mulatos District generated record quarterly mine site free cash flow of $92,000,000 and $222,000,000 for the full year, net of $100,000,000 in cash tax payments. The district remains well positioned to continue generating strong free cash flow while fully funding construction of the PDA project. For 2026, production from the Mulatos District is expected to be between 125,000 and 145,000 ounces at similar costs to 2025. I will now turn the call over to our VP of Exploration, Scott R. Parsons. Thank you, Luc. Over to Slide 15.

We continued our track record of growth with a 32% increase in mineral reserves to 16,000,000 ounces at the end of 2025. This marked the seventh consecutive year of growth over which reserves have increased 64% with grades also increasing 24% as our reserve base continues to grow in both size and quality.

Scott R. Parsons: This year’s growth was mainly driven by the Island Gold District, which added nearly 4,000,000 ounces to reserves in 2025. Measured and indicated resources increased 6% with growth at Young-Davidson, Mulatos District, and Lynn Lake more than offsetting resource conversion at Magino. Inferred resources decreased 63% reflecting the successful conversion of Island Gold District resources to reserves. We recently announced exploration updates at all of our mines and projects, highlighting the significant upside potential across our asset base. This led to an increase in our 2026 exploration budget to nearly $100,000,000, 37% higher than in 2025. Over to Slide 16. The big driver of the year-over-year increase in reserves was the impressive growth at Island Gold District.

Underground reserves more than doubled, increasing 125% to 5.1 million ounces, while open pit reserves increased 56% to 3,100,000 ounces. The increase was driven by a successful delineation drilling program at both deposits, which resulted in the conversion of a large portion of mineral resources into mineral reserves. Despite the focus on delineation drilling, we were successful in increasing our overall mineral inventory at Island Gold for the tenth consecutive year, with mineral reserves and resources increasing to 6,800,000 ounces. Over to Slide 17. Drilling continues to extend high-grade mineralization across the main Island Gold structure, as well as within several hanging wall and footwall structures.

This includes in the Lower Island East area, where reserves have grown to include 1,600,000 ounces grading 15 grams per tonne of gold. This represents one of the highest-grade portions of the ore body, containing some of the deepest and best drill intersections to date. Based on our ongoing success and with the deposit open laterally and at depth, we expect the main Island Gold deposit will continue to grow well into the future. Over to Slide 18. At the regional scale, drilling at the past-producing Cline, Pickle, and Edwards mines continues to extend high-grade mineralization beyond the limits of historic drilling. This included intersecting the highest-grade hole ever drilled at Cline at 178 grams per tonne over 3.5 meters.

These regional targets are located within seven kilometers of the Magino mill and represent potential future sources of higher-grade supplemental feed as part of a larger district expansion. Over to Slide 19. The deepest holes drilled at Cline-Pickle intersected high-grade mineralization at depths of 540 meters. By comparison, drilling at Island Gold has intersected high-grade mineralization down to depths of over 1,600 meters. Both deposits remain open at depth, and with similar deposits in the Canadian Shield extending well beyond depths of 3,000 meters, there is significant potential for further growth and upside to the Island Gold District expansion study.

Additionally, limited drilling has been completed within the seven-kilometer gap between Island Gold and Cline-Pickle and further along strike to the northeast across our broader 60,000-hectare land package, highlighting the district-scale potential. With that, I will turn the call back to John. Thank you, Scott. And I will turn the call over to the Operator, who will open up for your questions.

Operator: At this time, if you would like to ask a question, press star followed by the number 1 on your telephone keypad. Your first question comes from Cosmos Chiu with CIBC.

Cosmos Chiu: Hi. Thanks, John and team. Maybe my first question is on exploration here. Good to see that you are targeting some of the higher-grade mineralization at Young-Davidson.

Cosmos Chiu: And some of the newly defined hanging wall zones. I guess my question is, some of these new targets, are they still associated with the, you know, historic kind of syenite intrusive rock or, you know, are you actually finding stuff in some of the sediment and ultramafic stratigraphy? And if it is still associated with syenite, what makes it so that this is potentially, you know, higher grade?

Scott R. Parsons: Thanks for the question, Cosmos. This is Scott. So to start, I guess, what got us really excited initially about the hanging wall mineralization we are intersecting at YD in 2024 initially was that it was a different style of mineralization. So it is in the hanging wall in a different lithology. So we are seeing this in conglomerates, volcanics, and there are syenite dykes up there as well. With the higher grades we were seeing were associated with the conglomerate units. And that is what we have been focusing on drilling with our hanging wall drift and do see potential for higher-grade mineralization in that conglomerate, highlighted in our press release.

The second hanging wall target that we had upon exploration for 2025 was something called the South Syenite. So it is a similar lithology to what hosts the main reserves at Young-Davidson. But this is offset 300 meters south. So it is a different syenite body, we think, at this time. And we are seeing locally higher grades within that and are working as we speak on drilling that to understand what is controlling the higher grade in that syenite body.

Cosmos Chiu: Good to hear. And then the, I guess, another sort of deposit we do not talk enough about is PDA. And I know you talked about that a little bit, quite a bit, actually, at the Investor Day. But can you remind me, as you mentioned, initial production is targeted for mid-2027. What kind of key deliverables are there in 2026? What are some of the kind of critical path items that you need to target in 2026 in order to get to your mid-2027 initial production?

Luc Guimond: Hi, Cosmos. It is Luc here. I will take that question. So, I mean, there are two key components there, obviously. One is on the mining side, establishing the portal entrances, which is what we are currently working on right now. So there will be two portal entrances into the PDA underground workings.

And then, obviously, over the next—over the life of the mine, but certainly over the next twelve months as we are looking to prepare for—sorry, for the next eighteen months to be able to prepare for commissioning of the mill complex to bring that online will be, you know, development work and stope preparation as far as being able to maintain and sustain our mining rates of 2,000 tonnes per day. So that is the key aspect, is really get the portals commissioned this year, established, and start on the development work over the next eighteen months and the rest of that life of the mine of that operation. The other key component is related to the processing plant.

So we have already—we are well advanced on that as well. Most of the earthworks have been completed for the crushing station locations as well as where the ball mill is going to be located for the mill complex. And we have already procured the long-lead items that we need with regards to that construction schedule. And everything is well advanced to be able to have most of the work completed through the 2026 period. And then by mid-2027, we will be wrapping up some of the construction-related activities related to the processing plant itself. But everything is tracking online, on schedule, and certainly on budget for mid-2027. Great.

Cosmos Chiu: And then maybe one last question, bigger picture here. And, you know, it is certainly good to see that you have increased your dividend by 60%. But I guess my question is, do you feel like you are getting fully rewarded for this dividend by the market? Or do you think you need to target a higher yield before you can get fully rewarded by the market for this dividend? And maybe broader, John, if you can talk about kind of your capital return strategy. We have done, historically, we have paid this dividend going back to 2010. We have always done a combination of dividends and share buybacks.

Last year, we almost returned as much by way of share buybacks as we did through the dividend. And, you know, we are always going to keep that in balance. We are very opportunistic with respect to the share buyback. The dividend itself, I think there is further room for growth. But this is a good indicator of our intentions. And, you know, despite the fact that we are going through a heavy capital spend schedule over the next couple of years as we effectively double our production between now and the end of the decade, the gold prices are strong. We are generating

John A. McCluskey: phenomenal free cash flows. There was room to increase the dividend and we did so, but I think investors should expect more dividends to come.

Cosmos Chiu: Great. Thanks again, John, and team. Those are all the questions I have. Thank you.

Operator: Again, if you would like to ask a question, press star followed by the number 1 on your telephone keypad. There are no further questions at this time. This concludes this morning’s call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott R. Parsons at (416) 368-9932, extension 5439.

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