AGI

What is the sensitivity of the project’s economics to changes in key variables such as gold price, exchange rates, and operating cost inflation?

Created August 06, 2025 at 08:31 PM

Answer

The short news release that announced Alamos Gold’s filing of its technical report for the Island Gold District Base‑Case Life‑of‑Mine (LOM) plan does not include the detailed sensitivity tables that are normally part of such a report. Consequently, no specific numbers (e.g., “a $100/oz change in gold price would shift NPV by $X million”) are provided in the excerpt you shared.

Below is what can be gleaned from the information that is available, together with a brief overview of the typical sensitivity analyses that a mining‑sector technical report would contain for a project of this type.

1. What the news item tells us

Item	Detail from the release
Currency	All monetary values are expressed in U.S. dollars unless otherwise noted.
Document filed	A technical report (likely complying with NI 43‑101) that includes the “Base‑Case” LOM plan.
Scope	The Base‑Case LOM plan for the Island Gold District project.
Missing	No explicit sensitivity results to gold price, exchange rates, or operating‑cost inflation are quoted.

Because the filing itself is not reproduced in the news brief, we cannot quote the exact sensitivity numbers that Alamos Gold has calculated.

2. Why those three variables matter (standard industry practice)

Variable	How it typically affects project economics
Gold price	The primary driver of revenue. A higher spot price lifts cash flow, NPV, and IRR; a lower price does the opposite. Sensitivity tables often test price scenarios ranging from $1,500/oz to $2,200/oz (or ± 15–20 % around the base case).
Exchange rate (USD/CAD)	Since many operating costs (labor, supplies, local taxes) are incurred in Canadian dollars while revenue is priced in U.S. dollars, the USD/CAD rate directly influences net cash flow. Typical sensitivity runs might examine a ± 10 % swing in the exchange rate (e.g., from 1.30 CAD/USD to 1.50 CAD/USD).
Operating‑cost inflation	Real cost escalation (fuel, electricity, labor, consumables) erodes profitability. Sensitivity analyses commonly apply a 2–5 % annual inflation assumption versus the base‑case assumption (often 0 % or a small inflation factor).

3. What you can expect in Alamos Gold’s full technical report

Although not disclosed in the news snippet, the Technical Report that Alamos Gold filed would ordinarily include:

Base‑Case Economic Summary – NPV (pre‑tax and post‑tax), IRR, payback period, etc., calculated using a chosen gold price, exchange rate, and cost‑inflation assumptions.
Sensitivity Tables – Showing how NPV, IRR, and cash flow change when each of the three key variables (gold price, USD/CAD, operating‑cost inflation) is varied individually, while holding the others constant.
Scenario Analyses – Possibly “high‑grade”, “low‑grade”, “optimistic” and “pessimistic” cases that combine multiple variable shifts.
Monte‑Carlo or Probabilistic Modeling – Some modern reports go further and present a distribution of outcomes based on joint variation of all key inputs.

If you need the exact sensitivity numbers (e.g., “a $100/oz increase in gold price raises the after‑tax NPV by $120 million”), you will have to consult the full technical report itself (often available on SEDAR or the company’s investor‑relations web page) or request the specific excerpt from Alamos Gold’s investor‑relations team.

4. How to interpret the likely impact (illustrative example)

Below is an illustrative, *non‑company‑specific** example that shows the shape of the sensitivity you would normally see. Do not treat these figures as Alamos Gold’s actual results. They are merely to help you understand the relationship.*

Gold Price (US $/oz)	USD/CAD (CAD per USD)	Operating‑Cost Inflation (annual %)	After‑Tax NPV (US$ million)
$1,700 (‑15 %)	1.35 (base)	0 % (base)	$300
$1,850 (base)	1.35 (base)	0 % (base)	$380
$2,000 (+8 %)	1.35 (base)	0 % (base)	$470
$1,850 (base)	1.45 (+7 %)	0 % (base)	$355
$1,850 (base)	1.25 (‑7 %)	0 % (base)	$410
$1,850 (base)	1.35 (base)	+5 %	$345

Key take‑aways from such a table:

- Gold price typically has the largest single‑variable effect. A $150/oz swing can move NPV by roughly ±$50 million (≈ ± 13 %).

- Exchange rate moves NPV in the same direction as the price of gold when the project’s costs are in CAD and revenue in USD. A 0.10‑point change in USD/CAD can shift NPV by ±$30 million (≈ ± 8 %).

- Operating‑cost inflation usually has a smaller, but still material, impact; a 5 % annual cost inflation can cut NPV by roughly $35 million (≈ ‑9 %).

Again, these illustrative figures are not Alamos Gold’s actual outcomes—they just demonstrate the typical magnitude of sensitivity that investors watch for.

5. What to do next

Locate the full technical report – It should be filed on SEDAR (Canada’s system for public securities filings) under Alamos Gold’s ticker “AGI”.
Search the “Sensitivity Analysis” section – This is where the company lists the exact NPV/IRR changes for each variable.
Contact Alamos Gold Investor Relations – If you cannot find the report or need a concise summary, the IR team can usually provide a one‑page “Economic Sensitivity” sheet.

Bottom line

The news release you referenced does not disclose the specific sensitivity results for gold price, exchange rates, or operating‑cost inflation.
Those sensitivities are almost certainly included in the underlying technical report, which you can obtain from SEDAR or directly from Alamos Gold.
Generally, for a gold‑focused project, NPV and IRR are most responsive to the gold price, followed by the USD/CAD exchange rate, and then to cost‑inflation assumptions.

If you obtain the full technical report and would like help interpreting the actual numbers, feel free to share the relevant tables and I can walk you through them.