PLATFORM FOR GROWTH. BMO Global Metals & Mining Conference. February 25 28, 2018

Transcription

1 PLATFORM FOR GROWTH BMO Global Metals & Mining Conference February 25 28, 2018

2 FORWARD-LOOKING STATEMENT Certain statements contained herein may constitute forward-looking statements (or forward-looking information ) and are made pursuant to the safe harbour 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 operations; 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. 2

3 A FUTURE MID-TIER GOLD PRODUCER San Francisco Mine Sonora, Mexico Status: Operating 2017A: 83,558 oz Ejutla Project Oaxaca, Mexico Status: Exploration Adjacent to Fortuna s San Jose Project Ana Paula Project Guerrero, Mexico Status: Feasibility PFS May $1,250/oz Gold NPV US$223M, IRR 34% 3

4 COMPANY OVERVIEW Key Data 1 (as of Dec. 31, 2017 unless otherwise noted) Shares outstanding 44.7 Warrants ($7.00 strike, May 2018) ($8.00 strike, July 2018) 1.8M 4.0M Options 2.1 Fully diluted shares 52.6M Recent share price 1 Market capitalization 1 Cash balance Major Shareholders Goldcorp Lundin Group Connor Clark & Lunn Inv. Mgmt, Ltd Renaissance Technologies, LLC Dimensional Fund Advisors, L.P 1. Data as of February 21, 2017 (NYSE) Ruffer, LLP AgaNola, AG AMG Fondsverwaltung AG Sun Valley Gold, LLC (US) Aegis Financial Corporation US$2.76 US$120M US$51.6M 4

5 SAN FRANCISCO MINE HIGHLIGHTS Three months ended Years ended Key Operating Statistics Dec 31 Sept 30 Jun 30 Mar Ore processed (Mt) Ore grade (g/t Au) Waste mined (Mt) Strip ratio (W:O) Gold produced (oz) 16,070 19,429 22,011 26,048 83, ,322 Key Financial Statistics (US$ millions unless otherwise noted) Revenue $20.6 $25.2 $27.1 $32.3 $105.2 $123.9 By-product cash costs 1 /oz $1,041 $886 $740 $735 $831 $734 AISC 1 /oz $1,357 $1,104 $954 $848 $1,034 $853 Earnings (loss) $(2.9) $5.2 $3.5 $6.0 $11.9 $31.7 Cash flow from operations $(2.2) $2.7 $2.8 $9.7 $13.0 $ See Appendix C for further information on non-gaap measures 5

6 SAN FRANCISCO MINE FOCUSING IN 2018 ON COST REDUCTION AND IMPROVED EFFICIENCY Increasing recoveries through blasting improvements for better fragmentation Emulsion/Powder Blasting patterns geometry and size Drilling diameter to 7 ½ from 6 Dual cut-off strategy underway Lower grade material trucked to heap leach pad 2018E 1 Production: 90,000oz 100,000oz AISC 1 : $1,000 - $1,100/oz Capital 2 & exploration expenditure: $2.5 - $3.0 million 1. See Appendix C for further information on guidance outlook and non-gaap measures 2. Includes sustaining and expansionary capital 6

7 ANA PAULA PROJECT LOCATED IN A HIGHLY PROLIFIC GOLD BELT Torex Leagold Los Filos San Luis Rey David El Limon El Limon Guajes Guajes Media Luna Media Luna TXG TXG ALO Ana Paula Project Area 7

8 EXTENSIVE EXPLORATION PROGRAM IN 2018 Q Surface exploration drilling of six holes to target high-grade breccia extension underway Q North Area drilling targeting open pit resource expansion to commence H Underground decline under construction to explore breccia extension & skarn target advancing Portal site cleared; explosives magazine site completed; surface infrastructure installed H Underground drilling program to commence in Q Regional exploration on 56,000 ha land package 8

9 2018 EXPLORATION TARGETING RESOURCE EXPANSION Surface drill holes PFS Pit Outline P&P Reserves 1 = g/t = 1.02 Moz Includes g/t = 436 Koz in high-grade breccia High-Grade Breccia In-Pit Reserves Lower Grade Halo High-Grade Breccia Target Prior drilling includes 2 : g/t g/t g/t Proposed Decline Skarn Target Prior drilling includes 2 : g/t g/t g/t Symbols 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. 9

10 REGIONAL EXPLORATION UPSIDE ON 56,000-HECTARE LAND PACKAGE 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 10

11 ADVANCING ANA PAULA PROJECT DEFINITIVE FEASIBILITY STUDY Initiated in July 2017 Additional metallurgical test work ongoing Advancing geotechnical and design engineering Evaluating potential for scope changes to include underground mine component FINALIZING PERMITTING Received Change of Land Use (ETJ) approval in September 2017 Received Environmental Impact Assessment (MIA) approval in April 2017 Completed major permitting hurdles SECURING DEBT FINANCING OF BETWEEN $90 MILLION AND $100 MILLION Received indicative proposals and under review 11

12 PFS HIGHLIGHTS 1,3 ROBUST ECONOMICS ON A HIGH-GRADE, HIGH-MARGIN PROJECT After-tax NPV 5% $223M After-tax IRR 34% After-tax Payback 2.6 years Annual Average Production 116,000 oz Gold 166,000 oz Silver First Quartile Operating Costs 2 By-product: $489/oz AISC: $524/oz Life of Mine 7.5 years Strip Ratio 4 2.8:1 Capital Cost $137.2M High-Grade 2.36 g/t Gold 5.22 g/t Silver 1. NI Preliminary Feasibility Study, Guerrero, Mexico, dated May 16, 2017, which is available on Alio Gold s SEDAR profile at 2. Source: WoodMac 2016 total cash costs (including royalties). 3. Gold price assumption of US$1,250/oz. 4. Excludes 7.7 Mt of pre-stripping. 12

13 IMPROVING THE ECONOMICS AT ANA PAULA BENEFITS OF UNDERGROUND COMPONENT IN DEFINITIVE FEASIBILITY STUDY Increase production to fill the mill Mill previously operated at 6,000tpd; geometry of the proposed pit limits ore production to 5,000tpd Additional ore from underground could enhance production profile and unit costs Reduce strip ratio Mining of proposed open pit is done in three distinct phases with phase 3 requiring significant pushback of the pit walls to allow deeper mining from surface Potential to mine phase 3 more efficiently from underground Eliminate additional surface tailings facilities for the tailings from the ambient oxidation process ( AOX ) Tailings from AOX process could be stored underground as back-fill Inert flotation tailings could be stored on surface in an unlined tailings storage facility 13

14 GREENFIELD EXPLORATION - EJUTLA ORGANIC GROWTH OPPORTUNITY Greenfield exploration site in highly prospective district Evidence of epithermal gold-silver target Exploration team on-site Initial 5,000-metre drill program developed Three extensive northwest-trending mineralized structural corridors on the property will be the key focus of exploration activities Drill program targeted to commence in 2019 Ejutla Project Oaxaca, Mexico Status: Exploration Adjacent to Fortuna s San Jose Project 14

15 PLATFORM FOR GROWTH TO DELIVER VALUE FOR ALL STAKEHOLDERS Experienced Team of Mine Builders and Operators Robust Financial Position Production from San Francisco Mine Underpinning Growth Developing and Exploring at Ana Paula Project 15

16 APPENDIX A MANAGEMENT TEAM 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 PAUL HOSFORD B.Sc. (Chemical Engineering) VP, Project Development 30+ years experience in engineering consulting, construction, commissioning, operations MIGUEL BONILLA CPA Country Manager, Mexico 20+ years experience in finance, CSR, permitting and government relations in the mining industry JASON GREGG BBA, MBA EVP, Human Resources 20+ years experience in building highperformance teams and systems LYNETTE GOULD BBA, CFA VP, Investor Relations 15+ years experience in investor relations and financial roles 16

17 APPENDIX B BOARD OF DIRECTORS Bryan Coates Independent 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 George Brack Mark Backens Jose Vizquerra Independent Former CFO: Castle Peak Finance: Goldcorp, Wheaton Precious Metals Independent Chairman: Capstone Director: Wheaton Precious Metals Geologist, Investment Banking Director Past Interim CEO Geologist, Investment Banking Placer Dome, Meridian Independent EVP: Osisko Mining Former CEO: Oban P.Geo.: Buenaventura, Goldcorp 17

18 APPENDIX C FOOTNOTES 1. Non-GAAP Measure: All-in sustaining cost per gold ounce The Company has adopted an all-in sustaining cost per ounce on a by-product basis performance measure which is calculated based on the guidance note issued by the World Gold Council. Management uses this information as an additional measure to evaluate the Company s performance and ability to generate cash. All-in sustaining costs on a by-product basis include total production cash costs, corporate and administrative expenses, sustaining capital expenditures and accretion for site reclamation and closure costs. These reclamation and closure costs represent the gradual unwinding of the discounted liability to rehabilitate the area around the Mine at the end of the mine life. The Company believes this measure to be representative of the total costs associated with producing gold; however, this performance measure has no standardized meaning. As such, there are likely to be differences in the method of computation when compared to similar measures presented by other issuers. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to Alio Gold s Management s Discussion and Analysis ( MD&A ) for the year ended December 31, 2017, the quarter ended September 30, 2017, June 30, 2017 and March 31, 2017 for a reconciliation of the all-in sustaining cost per gold ounce on a by-product basis to the consolidated financial statements. 2. Non-GAAP Measure: Cash cost per gold ounce and cash cost per gold ounce on a by-product basis Cash cost per gold ounce and cash cost per gold ounce on a by-product basis are non-gaap performance measures that management uses to assess the Company s performance and its expected future performance. The Company has included the non-gaap performance measures of cash cost per gold ounce and cash cost per gold ounce on a by-product basis throughout this document. In the gold mining industry, these are common performance measures but they do not have any standardized meaning. As such, they are unlikely to be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company s performance and ability to generate cash flow. Accordingly, presentation of these measures is to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. 18

19 APPENDIX C FOOTNOTES (cont d) The cash cost per gold ounce is calculated by dividing the operating production costs by the total number of gold ounces sold. The cash cost per gold ounce on a byproduct basis is calculated by deducting the by-product silver credits per gold ounce sold from the cash cost per gold ounce. For a reconciliation of the cash cost per gold ounce and cash cost per gold ounce on a by-product basis to the consolidated financial statements please refer to Alio Gold s Management s Discussion and Analysis ( MD&A ) for the year ended December 31, 2017, the quarter ended September 30, 2017, June 30, 2017 and March 31, Guidance projections used in this document ( Guidance ) are considered forward-looking statements and represent management s good faith estimates or expectations of future production results as of the date hereof. Guidance is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions guidance assumes Au=$1,250/oz, Ag=$18.00oz, $1.30 CAD/USD, MXN/USD. Such assumptions may prove to be incorrect and actual results may differ materially from those anticipated. Consequently, Guidance cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Guidance and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. 19

20 APPENDIX D ANA PAULA METALLURGY Refurbishing used equipment already in storage in Mexico 6,000 tpd Additional equipment required: gravity concentrators, ILR, flotation Overall recovery for gold of 85% Gold production average of 116 Koz/year 20

21 000s oz APPENDIX E ANA PAULA MINE PLAN PRODUCTION PROFILE Mining: Using 55-tonne haul trucks contractor fleet Mining on six-metre benches Geotechnical basis: Six different slope sectors based on geotechnical drilling Inter-ramp slope = degrees Overall slope = degrees Pre-stripping prior to year 1: 7.22 Mt waste, 0.45 Mt ore (@ 1.64 g/t Au) Average haul distances: ore = 1.7 km, waste = 1.5 km Mining rates limited to 5,000 tpd due to geometry of the pit Gold Ounces Produced Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 LOM Year 21

22 APPENDIX F RESERVES AND RESOURCES ANA PAULA PROJECT Mineral Resource Estimate for Ana Paula Project (inclusive of Mineral Reserves) Area Category Cut-off (Au g/t) Tonnes Au (g/t) Gold (ounces) Ag (g/t) Silver (ounces) Resources amenable to open pit extraction Measured 0.6 7,541, , ,236,000 Indicated 10,491, , ,629,000 Measured and Indicated 18,032, ,195, ,865,000 Inferred 249, , ,000 Resources amenable to underground extraction Measured , , ,000 Indicated 2,925, , ,000 Measured and Indicated 2,967, , ,000 Inferred 621, , ,000 Total resources Measured OP 0.6 and 7,582, , ,242,000 Indicated UG ,416, , ,027,000 Measured and Indicated 20,998, ,461, ,269,000 Inferred 870, , ,000 22

23 APPENDIX F RESERVES AND RESOURCES ANA PAULA PROJECT Mineral Reserve Estimate for Ana Paula Project Category Tonnes (kt) Gold Grade (g/t) Gold (ounces) Silver Grade (g/t) Silver (ounces) Proven 6, , ,115,000 Probable 6, , ,139,000 Total 13, ,021, ,254,000 23

24 APPENDIX F RESERVES AND RESOURCES SAN FRANCISCO MINE (AS OF APRIL 1, 2017) Mineral Resource Estimate for the San Francisco Project (inclusive of Mineral Reserves) 1,2 For OP Using a Gold Price of US$1,350/oz Area Cut-off (Au g/t) Category Tonnes Au (g/t) Gold (ounces) San Francisco Mine OP Measured 39,713, ,000 Indicated 20,604, ,000 Measured and Indicated 60,317, ,053,000 Inferred* 483, ,000 La Chicharra Mine OP Measured 6,918, ,000 Indicated 6,068, ,000 Measured and Indicated 12,986, ,000 Inferred* 231, ,000 La Chicharra Pit NW OP Measured 673, ,000 Indicated 558, ,000 Measured and Indicated 1,231, ,000 Inferred* 2, Inferred resource in the tables is within the pit shell of US$1,350/oz. 2. For more information on the San Francisco Mine mineral reserves and mineral resources, see the San Francisco technical report entitled NI F1 Technical Report Updated 24 Resources and Reserves and Mine Plan for the San Francisco Gold Project, Sonora, Mexico, dated May 25, 2017, which is available on Alio Gold s SEDAR profile at

25 APPENDIX F RESERVES AND RESOURCES SAN FRANCISCO MINE (AS OF APRIL 1, 2017) Mineral Resource Estimate for the San Francisco Project (inclusive of Mineral Reserves) For OP Using a Gold Price of US$1,350/oz Area Cut-off (Au g/t) Category Tonnes Au (g/t) Gold (ounces) La Chicharra Pit North OP Measured 186, ,000 Indicated 92, ,000 Measured and Indicated 278, ,000 Inferred* 5, Total Resources Measured 47,490, ,000 Indicated 27,322, ,000 Measured and Indicated 74,813, ,302,000 Inferred* 721, , Inferred resource in the tables is within the pit shell of US$1,350/oz. 25

26 APPENDIX F RESERVES AND RESOURCES SAN FRANCISCO MINE Mineral Reserves within the San Francisco and La Chicharra Pits After Mining Recovery and Dilution Pit Classification Metric Tonnes Gold (g/t) Contained Gold Ounces San Francisco Pit Proven 27,048, ,500 Probable 12,083, ,700 Total 39,131, ,200 La Chicharra Pit Proven 2,329, ,200 Probable 5,328, ,300 Total 7,657, ,600 La Chicharra Pit NW OP Proven 170, ,400 Probable 363, ,000 Total 533, ,400 26

27 APPENDIX F RESERVES AND RESOURCES SAN FRANCISCO MINE Mineral Reserves within the San Francisco and La Chicharra Pits After Mining Recovery and Dilution Pit Classification Metric Tonnes Gold (g/t) Contained Gold Ounces La Chicharra Pit North OP Proven 72, ,500 Probable 200, ,800 Total 272, ,300 Total Proven 29,619, ,600 Probable 17,974, ,900 Total 47,593, ,500 San Francisco Mine Low-Grade Stockpile 7,199, ,200 San Francisco Mine Total Pits and Stockpile 54,792, ,700 27

28 IMPORTANT INFORMATION REGARDING TECHNICAL DISCLOSURE For more information on the San Francisco Mine mineral reserves and mineral resources, see the San Francisco technical report entitled NI F1 Technical Report Updated Resources and Reserves and Mine Plan for the San Francisco Gold Project, Sonora, Mexico, dated May 25, 2017, which is available on Alio Gold s SEDAR profile at 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 Preliminary Feasibility Study, Guerrero, Mexico, dated May 16, 2017, which is available on Alio Gold s SEDAR profile at 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 ( NI ). The definitions of NI 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 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 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 other 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 differ in certain respects from the standards of Guide 7. 28

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