Alamos boosts exposure to rising gold prices by clearing most of Argonaut’s hedge book

Alamos Gold (TSX: AGI; NYSE: AGI) has taken steps to enhance its exposure to higher gold prices by restructuring its hedge book previously inherited from Argonaut Gold. The company announced today that it has entered into a gold sale prepayment agreement, securing $116 million* in exchange for delivering 49,384 oz. of gold in 2025.

The proceeds from this agreement were used to eliminate gold forward purchase contracts held by Argonaut Gold, amounting to 179,417 oz. scheduled for delivery in 2024 and 2025 at an average price of $1,838 per ounce. This move effectively reduces more than half of Argonaut's hedge book and associated liabilities, providing Alamos with increased potential gains from rising gold prices.

Following its acquisition of Argonaut Gold, Alamos inherited additional forward purchase contracts totaling 329,417 oz. spanning from 2024 to 2027. The average prices for these contracts ranged from $1,821 to $1,860 per ounce. By eliminating the contracts scheduled for 2024 and 2025, Alamos has closed out a significant portion of its short-term hedge commitments.

To fund the termination of these hedges, Alamos secured a gold prepayment agreement under favourable terms, leveraging the current strong gold price environment. The agreement, facilitated by Canadian Imperial Bank of Commerce, Bank of Montreal, National Bank of Canada, and ING Capital Markets LLC, provided $116 million in exchange for delivering 49,384 oz. of gold in 2025. The pricing was based on average forward curve prices of approximately $2,524 per ounce, reflecting advantageous market conditions.

With the majority of the 2024 and 2025 hedges now eliminated, Alamos retains a smaller hedge book consisting of 150,000 oz. scheduled for delivery in 2026 and 2027, expected to account for less than 12% of total production during that period. The company remains open to opportunities to unwind these remaining contracts.

“We expect our growing production and declining costs to drive significant free cash flow growth in the years ahead. With the majority of the Argonaut hedge book now eliminated, we are even better positioned to capitalize on the favourable outlook for gold,” said Alamos’ president and CEO John A. McCluskey.

For more information, visit www.AlamosGold.com. 

*All amounts are in US dollars.