July 6, 2011 / 10:40 AM / 6 years ago

UPDATE 1-Alamos Gold Q2 production falls on lower output at flagship mine

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July 6 (Reuters) - Canada’s Alamos Gold Inc’s second-quarter gold production fell on lower output at its flagship Mulatos mine in Mexico, but the miner maintained its annual production forecast.

The Mulatos mine produced 36,000 ounces of gold, about 6 percent lower than the year-ago production, at an expected cash operating cost at the lower end of the company’s forecast of $365-$390 per ounce.

Alamos said its primary cyanide supplier experienced flooding at its main production facility in the quarter, which reduced cyanide shipments to the Mulatos mine.

As a result, the company was unable to maintain optimal concentrations of cyanide in solution throughout June. Alamos’ supplier is working to resume regular shipments as soon as possible, the company said.

Alamos, which owns and operates the Mulatos mine, has been able to source an alternative supply to augment its existing contract and expects to begin receiving these shipments in early August.

It expects to recover the deferred production throughout the remainder of the year, the company said in a statement.

The company sold 37,800 ounces in the quarter at an average realized gold price of $1,504 per ounce.

Alamos, which also has exploration and development activities in Turkey, said it is on track to meet its annual production forecast of 145,000-160,000 ounces. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon)

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