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Platform for Growth Corporate Update | January 2018 TSX, NYSE - - PowerPoint PPT Presentation
Platform for Growth Corporate Update | January 2018 TSX, NYSE - - PowerPoint PPT Presentation
Platform for Growth Corporate Update | January 2018 TSX, NYSE AMERICAN: ALO WWW.ALIOGOLD.COM Forward Looking Statement Certain statements contained herein may constitute forward-looking statements (or forward looking information) and are
Forward Looking Statement
Certain statements contained herein may constitute forward-looking statements (or “forward looking information”) and are made pursuant to the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. Forward-looking statements are statements which relate to future events. Such statements include estimates, forecasts and statements with respect to, among other things, business and financial prospects, financial multiples, accretion estimates, estimated future production and cash costs, future trends, plans, strategies, objectives and expectations, including with respect to costs, capital requirements, availability of financing, production, exploration and reserves and resources, projected production from the San Francisco Mine, the Ana Paula Preliminary Economic Assessment (PEA), including estimated internal rate of return and projected production, exploitation activities and potential and future operations. Information inferred from the interpretation of drilling results and information concerning mineral resource estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when, and if, a project is actually developed. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans, “anticipates”, believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are based on a number of assumptions, including assumptions regarding the value of Alio Gold’s assets; the successful completion of development projects, planned expansions or other projects within the timelines anticipated and at anticipated production levels; the accuracy of reserve and resource, grade, mine life, cash cost, NPV and IRR estimates and other assumptions, projections and estimates made in the technical reports for San Francisco and Ana Paula; that mineral resources can be developed as planned; interest and exchange rates; that required financing will be obtained; general economic conditions; that labour disputes, flooding, ground instability, fire, failure of plant, equipment or processes to operate as anticipated and other risks of the mining industry will not be encountered; the price of gold, silver and other metals; competitive conditions in the mining industry; title to mineral properties; and changes in laws, rules and regulations applicable to Alio Gold. Although management of Alio Gold believes that the assumptions made and the expectations represented by such statements are reasonable, there can be no assurance that a forward-looking statement herein will prove to be accurate. Actual results and developments may differ materially from those expressed or implied by the forward-looking statements contained herein and even if such actual results and developments are realized or substantially realized, there can be no assurance that they will have the expected consequences or effects. Factors which could cause actual results to differ materially from current expectations include changes in market conditions; actual results being materially different than reserve and resource, grade, mine life, NPV, IRR and cash cost estimates and the other projections and estimates made in the technical reports for San Francisco and Ana Paula; variations in grade or recovery rates; risks relating to international
- perations; fluctuations in gold, silver and other metal prices and currency exchange rates; failure to obtain required financing; inability to successfully complete development projects, planned
expansions or other projects within the timelines anticipated; natural disasters; adverse changes to general economic conditions or applicable laws, rules and regulations; changes in project parameters; the possibility of project cost overruns or unanticipated costs and expenses; labour disputes, flooding, ground instability, fire and other risks of the mining industry; failure of plant, equipment or processes to operate as anticipated; the risk of an undiscovered defect in title or other adverse claim; and the risk that results of exploration activities will be different than anticipated. Readers are cautioned not to place undue reliance on forward-looking information due to its inherent uncertainty. Except as required by applicable law, Alio Gold does not intend to update any forward-looking statements to conform these statements to actual results. All figures presented throughout this document are in US$ unless otherwise specified.
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A Future Mid-Tier Gold Producer
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San Francisco Mine
Sonora, Mexico
Status: Operating 2017A: 83,558oz
Ana Paula Project
Guerrero, Mexico
Status: Feasibility PFS May 2017@$1,250/oz Gold NPV US$223m, IRR 34%
Ejutla Project
Oaxaca, Mexico
Status: Exploration Adjacent to Fortuna’s San Jose Project
San Francisco
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Operations
- 2017 guidance range 82,000 to 86,000oz with AISC<$1,000/oz
- 2017 actual production 83,558oz, AISC at 30-Sept-17 $957/oz
Outlook
- Guidance for 2018 expected in early February
- Targeting stable production profile of ~100,000 oz/yr
- Gold Mineral Reserves1 at 1-Apr-17 were 0.93Moz (55Mt at 0.527g/t gold)
- Focus in 2017 was catching up on capital stripping and opening up pit
- Focus in 2018 is cost reduction and improved efficiency
- Short term price protection in place:
- 70% of production hedged for Jan - Jun 2018 using zero cost collars
- $1,250/oz put with corresponding call averaging $1,400/oz
1 For more information on the San Francisco Mine mineral reserves and mineral resources, see the San Francisco technical report
entitled “NI 43-101 F1 Technical Report Updated Resources and Reserves and Mine Plan for the San Francisco Gold Project, Sonora, Mexico”, report date May 25, 2017 which is available on Alio Gold’s SEDAR profile at www.sedar.com.
Ana Paula Project – Located in a Highly Prolific Gold Belt
5 TSX, NYSE AMERICAN: ALO www.aliogold.com El Limon Guajes
Leagold – Los Filos
Torex
Media Luna San Luis Rey David TXG ALO
Ana Paula Project Area
PFS Highlights1,3
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After tax NPV5% $223M After tax IRR 45% Annual average production 116,000 oz Gold 166,000 oz Silver Life of mine 7.5 years Capital Cost $137.2M First Quartile Operating Costs2 By-product: $489/oz AISC3: $524/oz
1 NI 43-101 Preliminary Feasibility Study, Guerrero, Mexico, dated May 16, 2017 which is available on Alio Gold’s SEDAR profile at www.sedar.com 2 Source: WoodMac 2016 total cash costs (including royalties) 3 Gold price assumption US$1,250/oz 4 Excludes 7.7Mt pre-stripping
Robust Economics on a High Grade, High Margin Project
High-Grade 2.36 g/t Gold 5.22 g/t Silver After tax NPV5% $223M After tax IRR 34% After tax payback 2.6 years Annual average production 116,000 oz Gold 166,000 oz Silver Life of mine 7.5 years Strip Ratio4 2.8:1 Capital Cost $137.2M First Quartile Operating Costs2 By-product: $489/oz AISC: $524/oz
Robust Economics on a High Grade, High Margin Project
High-Grade 2.36 g/t Gold 5.22 g/t Silver
Ana Paula Advancing Towards Investment Decision
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- Advancing the Definitive Feasibility Study
- Initiated in July 2017
- Commenced additional metallurgical test work
- Advanced geotechnical and design engineering
- Expected completion in Q2 2018
- Finalizing permitting
- Received Change of Land Use (ETJ) approval in Sept 2017
- Received Environmental Impact Assessment (MIA) approval in April 2017
- Completed major permitting hurdles
- Securing debt financing of between $90 and $100 million
- Received indicative proposals and under review
- Conducting extensive exploration programs in 2018
- Q1 18 - Surface exploration drilling of 6 holes to target high-grade breccia extension
- Q2 18 - North Area drilling targeting open pit resource expansion
- H1 18 - Underground decline being constructed to explore breccia extension & skarn target
- H2 18 - Underground drilling program to commence
- Regional exploration on 56,000 ha land package
2018 Exploration - Targeting Resource Expansion
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PFS Pit Outline P&P Reserves1 = 13.44 Mt @ 2.36 g/t = 1.02 Moz Includes 2.3 Mt @ 5.9 g/t = 436K oz in High Grade Breccia Lower Grade Halo Skarn Target Prior drilling includes2: 14.2 m @ 8.55 g/t 22.0 m @ 5.67 g/t 14.5 m @ 5.87 g/t High-Grade Breccia Target Prior drilling includes2: 55.7 m @ 3.66 g/t 13.5 m @ 29.12 g/t 32.1 m @ 3.21 g/t High-Grade Breccia In-Pit Reserves Proposed Decline
Symbols Lithology Drilling values Au ppm
1 Refer to Appendix F for further mineral reserve and mineral resource information 2 Refer to Alio Gold’s news release dated September 18, 2017 titled ‘Alio Gold to Commence Underground Decline and
Exploration Program at Ana Paula’
Q1 2018 Surface Drilling Targeting Breccia Extension
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Proposed pit Proposed surface drill holes
Q2 2018 – North Area Target
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N
“North” Area target Proposed pit
H2 2018 - Underground Drilling
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Initiated $16M underground decline and exploration program
- Potential to supplement mill feed with
high grade underground ore
- 1,200 meter decline driven from portal
site located in the adjacent valley from the proposed pit Two main underground exploration targets
- Confirm the continuity and shape of the
high grade gold mineralization below the pit design hosted in the complex breccia
- Explore the gold mineralization
indications at depth hosted in the hornfels Skarn
Proposed pit High Grade Breccia Proposed decline Proposed drill holes
Regional Exploration Upside on 56,000 Hectare Land Package
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- Exploration Targets
- Breccia systems similar to Ana Paula
Deposit
- Skarn type mineralization similar to Los
Filos and Torex
- Structural mapping
- Review the existing geophysics data
- Airborne magnetic survey
- Define drill targets
Platform for Growth to Deliver Value for all Stakeholders
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Experienced Team of Mine Builders and Operators Production from San Francisco Mine Underpinning Growth Developing and Exploring at Ana Paula Project Robust financial position
Appendix A - Management Team
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Greg McCunn, P. Eng., MBA CEO, Director
+25 years experience building, operating mines
Colette Rustad, CA CFO & EVP
+15 years experience in senior financial roles in gold mining
Jason Gregg, BBA, MBA EVP Human Resources
+20 years experience in building high performance teams and systems
Paul Hosford, BSc
(Chemical Engineering)
VP Project Development
+30 years experience in engineering consulting, construction, commissioning,
- perations
Jose Hector Figueroa,
BSc (Industrial Engineering)
VP Operations
+30 years experience in
- perations
Miguel Bonilla, CPA Country Manager, Mexico
+20 years experience in finance, CSR, permitting and government relations in the mining industry
Miguel Soto, BSc
(Geological Engineering)
VP Exploration
+35 years experience in prospecting, exploration and development of full feasibility studies up to
- peration
Lynette Gould, BBA, CFA VP Investor Relations
+15 years experience in investor relations and financial roles
Appendix B – Board of Directors
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Bryan Coates
- Ind. Chairman
President Osisko Royalties Former CFO Osisko Mining, IAMGOLD, Cambior
Greg McCunn CEO
Former CFO Asanko, Farallon Operations Teck, Placer Dome
Stephen Lang Independent
Chairman Centerra Former CEO, COO Centerra Operations Barrick, Kinross
Paula Rogers Independent
Former CFO Castle Peak Finance Goldcorp, Wheaton Precious Metals
George Brack Independent
Chairman Capstone Director, Wheaton Precious Metals Geologist, Investment Banking
Mark Backens Director
Past Interim CEO Geologist, Investment Banking Placer Dome, Meridian
Jose Vizquerra, Independent
EVP Osisko Mining Former CEO Oban P.Geo – Buenaventura, Goldcorp
Appendix C – Greenfield Exploration | Ejutla, Oaxaca
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- Greenfield exploration site in highly prospective Oaxaca State, Mexico
- Evidence of epithermal gold-silver target
- Initial 5,000m drill program developed
- Potential pipeline project after Ana Paula build commences.
Ejutla Project
Oaxaca, Mexico
Status: Exploration Adjacent to Fortuna’s San Jose Project
Appendix D - San Francisco Mine (Q3 2017)
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Key Operating Statistics Q3 17 Q2 17 Q1 17 2016 Ore Processed (Mt) 1.92 1.93 1.96 7.65 Ore Grade (g/t Au) 0.40 0.47 0.48 0.58 Waste Mined (Mt) 5.2 4.3 3.2 14.9 Strip Ratio (W:O) 3.15 2.60 1.67 2.00 Gold Produced (oz) 19,429 22,011 26,048 100,300 Key Financial Statistics Q3 17 Q2 17 Q1 17 2016 Revenue (US$ M) 25.2 27.1 32.3 123.9 Cash Costs (US$/oz) 886 740 735 734 AISC (US$/oz) 1,104 954 848 853 Earnings (US$ M) 5.20 3.51 6.04 31.74 Cashflow Operations (US$ M) 2.74 2.77 9.74 34.08
Appendix E – Ana Paula Metallurgy
18 TSX, NYSE AMERICAN: ALO www.aliogold.com Used Mill Decommissioned and in Storage
- Refurbishing used equipment already in
storage in Mexico – 6,000tpd
- Additional equipment required: gravity
concentrators, ILR, flotation
- Overall recovery for gold of 85%
- Gold production average of 116koz/yr
Appendix F – Ana Paula Mine Plan | Production Profile
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- Mining:
‒ Using 55t haul trucks – contractor fleet ‒ Mining on 6 meter benches
- Geotechnical basis:
‒ Six different slope sectors based on geotechnical drilling ‒ Inter-ramp slope = 56-58 degrees ‒ Overall slope 48.7-51.3 degrees
- Pre-stripping prior to year 1: 7.22Mt waste, 0.45Mt ore
(@ 1.64 g/t Au)
- Average haul distances: Ore = 1.7km, Waste = 1.5km
- Mining rates limited to 5,000 tpd due to geometry of
the pit
97 96 127 105 153 90 146 54
20 40 60 80 100 120 140 160 180 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
000’s ozs LOM Year
Gold Ounces Produced
Appendix G – Reserves and Resources
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Mineral Resource Estimate for Ana Paula Project (inclusive of Mineral Reserves) Area Category Cut-off Tonnes Au Gold Ag Silver (Au g/t) (g/t) (ounces) (g/t) (ounces) Measured 7,541,000 2.43 590,000 5.1 1,236,000 Indicated 10,491,000 1.79 605,000 4.8 1,629,000 Measured & Indicated 18,032,000 2.06 1,195,000 4.9 2,865,000 Inferred 249,000 1.27 10,000 8.8 70,000 Measured 41,000 2.07 2,800 4.3 6,000 Indicated 2,925,000 2.81 264,000 4.2 398,000 Measured & Indicated 2,967,000 2.80 266,700 4.2 404,000 Inferred 621,000 2.07 41,400 3.9 79,000 Measured 7,582,000 2.43 592,800 5.1 1,242,000 Indicated 13,416,000 2.01 869,000 4.7 2,027,000 Measured & Indicated 20,998,000 2.17 1,461,800 4.8 3,269,000 Inferred 870,000 1.84 51,400 5.3 149,000 Mineral Reserve Estimate for Ana Paula Project Category Tonnes (kt) Gold Grade (g/t) Gold (ounces) Silver Grade (g/t) Silver (ounces) Proven 6,533 2.62 550,000 5.31 1,115,000 Probable 6,907 2.12 471,000 5.13 1,139,000 Total 13,440 2.36 1,021,000 5.22 2,254,000
ANA PAULA PROJECT
Resources amenable to
- pen pit
extraction Resources amenable to underground extraction Total Resources OP 0.6 and UG 1.65 0.6 1.65
Appendix G - Reserves and Resources (cont’d)
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Mineral Resource Estimate for the San Francisco Project (Inclusive of Mineral Reserves) For OP using a Gold Price of US$1,350/oz As of April 1, 2017 Area Cut-off (Au g/t) Category Tons Au (g/t) Gold (ounces) Measured 39,713,000 0.531 678,000 Indicated 20,604,000 0.566 375,000 Measured & Indicated 60,317,000 0.543 1,053,000 Inferred* 483,000 0.596 9,000 Measured 6,918,000 0.550 122,000 Indicated 6,068,000 0.500 98,000 Measured & Indicated 12,986,000 0.527 220,000 Inferred* 231,000 0.488 4,000 Measured 673,000 0.550 12,000 Indicated 558,000 0.616 11,000 Measured & Indicated 1,231,000 0.580 23,000 Inferred* 2,000 0.473 20 Measured 186,000 0.676 4,000 Indicated 92,000 0.628 2,000 Measured & Indicated 278,000 0.660 6,000 Inferred* 5,000 1.240 200 Measured 47,490,000 0.535 816,000 Indicated 27,322,000 0.553 485,000 Measured & Indicated 74,813,000 0.541 1,302,000 Inferred* 721,000 0.566 13,000 *Inferred resource in the tables is within the pit shell of US$1,350/oz La Chicharra Pit North OP Total Resources 0.115 0.115 0.115
SAN FRANCISCO MINE
San Francisco Mine OP 0.121 La Chicharra Mine OP La Chicharra Pit NW OP
Appendix G - Reserves and Resources (cont’d)
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Mineral Reserves within the San Francisco and La Chicharra After mining Recovery and Dilution PIT Classification Metric tonnes Gold (g/t) Contained Gold Ounces Proven 27,048,000 0.578 502,500 Probable 12,083,000 0.579 224,700 Total 39,131,000 0.578 727,200 Proven 2,329,000 0.471 35,200 Probable 5,328,000 0.551 94,300 Total 7,657,000 0.526 129,600 Proven 170,000 0.434 2,400 Probable 363,000 0.431 5,000 Total 533,000 0.432 7,400 Proven 72,000 0.638 1,500 Probable 200,000 0.437 2,800 Total 272,000 0.490 4,300 Proven 29,619,000 0.569 541,600 Probable 17,974,000 0.566 326,900 Total 47,593,000 0.568 868,500 San Francisco Mine Low Grade Stockpile 7,199,000 0.260 60,200 San Francisco Mine Total Pits & Stockpile 54,792,000 0.527 928,700 Total
SAN FRANCISCO MINE
San Francisco Pit La Chicharra Pit La Chicharra Pit NW OP La Chicharra Pit North OP
Important Information Regarding Technical Disclosure
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For more information on the San Francisco Mine mineral reserves and mineral resources, see the San Francisco technical report entitled “NI 43-101 F1 Technical Report Updated Resources and Reserves and Mine Plan for the San Francisco Gold Project, Sonora, Mexico”, report date May 25, 2017 which is available on Alio Gold’s SEDAR profile at www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability. For more information on the Ana Paula mineral reserves and mineral resources, see the Ana Paula technical report entitled “NI 43-101 Preliminary Feasibility Study, Guerrero, Mexico”, dated May 16, 2017 which is available on Alio Gold’s SEDAR profile at www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Cautionary Note to United States Investors Alio Gold is subject to the reporting requirements of the applicable Canadian securities laws, and as a result reports its mineral reserves and resources according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101 (“NI 43-101”). The definitions of NI 43-101 are adopted from those given by the Canadian Institute of Mining, Metallurgy and Petroleum. U.S. reporting requirements are governed by Industry Guide 7 (“Guide 7”) of the Securities and Exchange Commission (the “SEC”). These reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but embody different approaches and definitions. For example, under Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. In particular, Alio Gold reports “resources” in accordance with NI 43-101. While the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are recognized and required by Canadian securities laws, they are not defined terms under Guide 7 and, generally, U.S. companies are not permitted to report resources in documents filed with the SEC. As such, certain information contained in this presentation concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC. In addition, an Inferred Mineral Resource has a great amount of uncertainty as to its existence and as to its economic and legal feasibility, and it cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or
- ther economic studies beyond Preliminary Economic Assessment. It cannot be assumed that all or any part of Measured or Indicated Resources will ever be converted into Mineral Reserves, and it cannot be
assumed that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. In addition, the definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” under NI 43- 101 differ in certain respects from the standards of Guide 7.
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