EXCLUSIVE: Alamos Gold CEO Talks Growth, Possible Open-Pit Mine Conflict With Mexican Government

As Alamos Gold, a mid-tier producer of the precious metal, advances toward producing a million ounces yearly, CEO John McCluskey chatted with Benzinga about growing organically, as well as through M&A, and recent anti-mining sentiment in Mexico.

Alamos has been on somewhat of a buying spree lately. In April it closed a deal to buy Orford Mining, and last month, it closed an acquisition of Argonaut Gold.

That latest deal gives Alamos the Magino Mine, which is next to Alamos' Island Gold Mine in Canada. 

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The company's latest guidance of 485,000 to 525,000 ounces this year doesn't include production from Magino. While official guidance is expected in September, the mine brings Alamos's yearly gold production to roughly 600,000 ounces.

Alamos is hoping to grow production at Magino and Island Gold to 250,000 ounces per year. Additionally, it is building a new mine at Lynn Lake in Canada that is expected to add 176,000 ounces a year.

If all goes to plan, that will put Alamos over the million-ounce mark, a milestone McCluskey told Benzinga he hopes to hit by the end of this decade. 

He said he expects to have a full update on Magino plans in the first quarter of next year. By then, Alamos will have owned the mine for six months and will have incorporated new drilling information, he said. 

Alamos also may have an update on the development plan for its Puerto Del Aire expansion project in Mexico in the fourth quarter, he said.

The Puerto Del Aire development is an underground expansion next to its flagship Mulatos open-pit mine in Mexico's Sierra Madre mountains.

Open-pit mining has come under political fire in Mexico.

In February, Mexico President Andres Manuel Lopez Obrador, widely known as AMLO, presented a package of constitutional reforms that included a proposal to ban new open-pit mining concessions. A committee in the nation's lower house approved the open-pit mine ban this month, sending it to the full lower house when it reconvenes in September.

Mexico's President-Elect Claudia Sheinbaum, who was voted in as the nation's first female president in June, said she supports AMLO's stance on open-pit mining.  

Even though such a constitutional change would not affect existing open-pit operations, Mexico's mining industry said such a ban would be bad for the country's economy. 

"I don't think it's their intention to shut down things that are already there," McCluskey said. "I just don't think they're really thinking it through, but they will have to at some point. They will reconsider this."

For people living in remote locations of the Sierra Madre, there is little chance of employment outside of mining, he said. 

Alamos has brought infrastructure, scholarships, housing, a new church, medical clinic and meeting hall to the community there, he said. Representatives from the Morena party, which includes both AMLO and Sheinbaum, have visited Mulatos, he said.

"For communities like that, mining is absolutely vital," he said. "There's a lot of pride there. I think the government sees it."

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