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Alamos Gold is Building a Canadian Gold Champion

CEO.CA Oct 5, 2026 17:06

Summary

Record gold margins and cash flows let Alamos Gold fund its path to one million annual ounces while raising dividends and buying back stock.

Drilling keeps expanding Island Gold, with reserve blocks over 15 grams per tonne and 3-meter hits at 178 grams per tonne.

Lynn Lake construction in northern Manitoba stays on track for first production by early 2029, targeting roughly 200,000 ounces annually over a 27-year mine life.

Mexico's Mulatos complex, good for about $230 million of free cash flow last year, transitions underground as its main pit ends in early 2027.

The guest argues central bank buying reflects gold's monetary role, as Western investors rediscover gold as a hedge against inflation and currency devaluation.

Key points on Alamos Gold

  • McCluskey says Island Gold underground ore is already being routed to the adjacent Magino mill — about 600 of roughly 1,800 tonnes per day as of the interview — with overall recoveries of 96% or better because almost half the gold is caught in that mill's gravity circuit, and throughput is being doubled to 20,000 tonnes a day by twinning the mill.
  • Exploration is adding ounces across the Island Gold district: drilling below the roughly 1.5-million-ounce high-grade reserve block, about 300,000 ounces delineated in the upper west extension with at least 200,000 more expected before year-end 2026, and a best hole of over 3 metres of true width grading 178 g/t east of the complex. Converting the upper west to reserves and mining it through the open ramp from Q1 could add another 500-1,000 tonnes per day of mill feed, which the CEO says would expand production beyond current forecasts.
  • Lynn Lake is in full-scale construction with the camp complete and the project on track for completion by Q1 2029: a mill of about 9,000 tonnes per day, starting at roughly 200,000 ounces a year over its first five years within a 27-year study mine life.
  • Mulatos generated about $230 million of free cash flow in 2025, but the main La Yaqui Grande pit winds down around Q1 2027, so the company is starting underground production in 2027 and building a 2,000-tonne-per-day mill to develop the high-grade sulfide targets it sees as Mulatos' future growth.
  • With current cash flow the company says it can fund growth and returns at the same time: the dividend was raised in 2026, sizable opportunistic buybacks continued, and all 2026 growth budgets remain on track.

John A. McCluskey's takeaways

  • Top takeaway McCluskey argues strong cash flow has ended the either-or between growth and shareholder returns: in 2026 Alamos raised its dividend, bought back stock opportunistically, and still funded every 2026 growth budget.
  • He calls the Island Gold district an 'embarrassment of riches', pointing to new ounces at depth, in the upper west extension, and in a high-grade eastern district where the best hole ran over 3 metres of true width at 178 g/t.
  • On Lynn Lake, he says he would rather hold production at about 200,000 ounces a year over a shorter 12-15 year reserve life than stretch the studied 27-year life, and plans deeper drilling under the Gordon pit to add underground feed to the mill.
  • He is upbeat on junior explorers: Alamos has invested in a number of them since he judged valuations were at rock bottom in 2023, and he sees permitting in Canada getting easier and faster for drill programs and projects.
  • He points to pronounced central bank gold buying over the past decade, arguing central banks clearly see gold's monetary value, and expects Western investors rediscovering gold as an inflation and currency hedge to keep supporting it for years.