FOURTH QUARTER 2017 RESULTS February 21, 2018
FORWARD LOOKING STATEMENTS 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 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
SAN FRANCISCO MINE OPERATIONS 2017 Results: Gold production: 83,558 ounces AISC 1 $1,034 per ounce Capital spending of $20.9 million, predominantly on waste stripping 2018E Outlook 1 : Gold production: 90,000 and 100,000 ounces AISC: $1,000 and $1,100 per ounce Capital & exploration expenditure 2 : $2.5 - $3.0 million Mining Q4 2017 Q3 2017 Q2 2017 Q1 2017 2017 2016 Ore processed (Mt) 1.7 1.9 1.9 2.0 7.5 7.7 Processed grade (g/t Au) 0.46 0.40 0.47 0.48 0.45 0.58 Waste mined (Mt) 6.2 5.2 4.3 3.2 19.0 14.9 Strip ratio (W:O) 3.55 3.15 2.60 1.67 2.71 2.00 1. See Appendix A for further information on non-gaap measures 2. Includes sustaining and expansionary capital 3
FOCUS ON CASH FLOW GENERATION Pre-stripping Significant waste stripping undertaken Multiple mining faces open within main pit Minimal capitalized stripping in 2018 Optimizing mine plan Implementing dual cut-off strategy Improving blasting techniques Emulsion/Powder Size of blast holes Blasting pattern 4
FINANCIAL PERFORMANCE Balance sheet stable: $51.6 million cash and short-term investments, $61.7 million working capital 1 At San Francisco invested $6.6 million in development capital, $1.6 million in sustaining capital, and $1.0 million in exploration and evaluation projects. At the Ana Paula project invested $8.1 million in Q4 2017. Cash flow from operations impacted by lower earnings from mine operations, increase in inventory and VAT receivable AISC impacted by lower gold ounces sold and higher sustaining capital Key Financial Statistics Q4 2017 Q3 2017 Q2 2017 1. See Appendix A for further information on non-gaap measures Q1 2017 2017 2016 Revenue (US$ M) 20.6 25.2 27.1 32.3 105.2 123.9 Cash Costs 1 (US$/oz) 1,041 886 740 735 831 734 AISC 1 (US$/oz) 1,357 1,104 954 848 1,034 853 Earnings (loss) (US$ M) (2.9) 5.2 3.5 6.0 11.9 31.7 Cashflow Operations (US$ M) (2.2) 2.7 2.8 9.7 13.1 34.1 $M Cash and Working Capital 80 70 60 50 40 30 20 10 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Cash Working Capital 5
ANA PAULA ADVANCING EXPLORATION 6
UNDERGROUND DECLINE PROGRESSING Portal platform sump Portal slope bolting pattern Explosives storage area Portal water tank pedestal construction Office trailers on-site 7
NORTH AREA TARGET MAPPING UNDERWAY 8
EXTENSIVE EXPLORATION PROGRAM IN 2018 Q1 2018 Surface exploration drilling of 6 holes to target high-grade breccia extension underway Q2 2018 North area drilling targeting open pit resource expansion to commence H1 2018 Underground decline under construction to explore breccia extension & skarn target advancing Portal site cleared; explosives magazine site completed; surface infrastructure installed H2 2018 Underground drilling program to commence in Q3 2018 Regional exploration on 56,000 ha land package 9
ANA PAULA - MAJOR ACTIVITY THIS QUARTER Definitive Feasibility Study Advancing additional metallurgical testwork Progressing on geotechnical and design engineering Engineering key offsite infrastructure to a higher level of detail Power Road access Water supply Financing/Royalty Discussions continuing with select lenders on $90 - $100 million debt financing Exercised buy back right of 1% Net Smelter Royalty from Goldcorp 10
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 11
APPENDIX A - 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. Three months ended Dec 31, Years ended Dec 31, 2017 2016 2017 2016 Production costs $ 16,862 18,840 69,818 74,717 Corporate and administrative expenses (1) 3,216 2,340 7,929 7,607 Sustaining capital expenditures (2) 1,790 2,659 8,734 4,301 Accretion for site reclamation and closure 58 22 230 67 Less: By-product silver credits (124) (203) (652) (957) All-in sustaining costs 21,802 23,658 86,059 85,735 Divided by gold sold (ozs) 16,067 26,012 83,211 100,480 All-in sustaining cost per gold ounce on a byproduct basis $ 1,357 910 1,034 853 (1) Corporate and administrative expenses adjusted for the three months and year ended December 31, 2017, to remove termination benefits of $nil and $0.7 million, respectively. (2) Sustaining capital expenditures exclude expansionary capital. Expansionary capital is defined by the Company as deferred stripping costs determined using a life of phase strip ratio, expansionary project expenditures related to power and crusher upgrades, and drilling costs related to improvement of resource estimates. During the three months and year ended December 31, 2017 the Company spent: $6.3 million and $10.9 million for deferred stripping, respectively; $0.3 million and $0.4 million for power and crusher upgrades, respectively; and, $0.9 million and $1.0 million related to the drilling costs, respectively. 12
APPENDIX A FOOTNOTES (cont d) 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. 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 by-product basis is calculated by deducting the by-product silver credits per gold ounce sold from the cash cost per gold ounce. The following table provides 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: Three months ended Dec 31, Years ended Dec 31, 2017 2016 2017 2016 Production costs $ 16,862 $ 18,840 $ 69,818 $ 74,717 Divided by gold sold (ozs) 16,067 26,012 83,211 100,480 Cash cost per gold ounce 1,049 724 839 744 Less: By-product silver credits per gold ounce (1) (8) (8) (8) (10) Cash cost per gold ounce on a by-product basis $ 1,041 $ 716 $ 831 $ 734 (1) Management determined that silver metal revenues, when compared to gold metal revenues, are immaterial and therefore considered a by-product of the production of gold. For the three and nine months ended September 30, 2017, total by-product silver credits were $0.1 million and $0.5 million, respectively (three and nine months ended September 30, 2016 - $0.3 million and $0.8 million, respectively). For further details on the calculation of production costs, refer to the notes to the consolidated financial statements. Cash cost per gold ounce and cash cost per gold ounce on a by-product basis are not necessarily indicative of earnings from operations or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently. 13
APPENDIX A FOOTNOTES (cont d) 3. Working capital is calculated by deducting current liabilities from current assets. 4. 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. 2018 guidance assumes Au=$1,250/oz, Ag=$18.00oz, $1.30 CAD/USD, 18.00 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. 14
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