This conference is being recorded. All participants, thank you for standing by. The conference is ready to begin. Good morning. I would now like to turn the meeting over to Mr. Scott Parsons, Senior Vice President, Investor Relations. Please go ahead.
Thank you, operator, and thanks to everybody for attending Alamos' first quarter 2023 conference call. In addition to myself, we have on the line today John McCluskey, President and Chief Executive Officer, Jamie Porter, Chief Financial Officer, Luc Guimond, Chief Operating Officer, and Greg Fischer, Senior Vice President of Finance. We will be referring to a presentation during the conference call that is available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a Q&A session. As we will be making forward-looking statements during the call, please refer to cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form. Technical information in this presentation has been reviewed and approved by Chris Bostwick, our Senior VP, Technical Services and a qualified person.
Please bear in mind that all of the dollar amounts mentioned in this conference call are in USD unless otherwise noted. John will provide you with an overview.
Thank you, Scott. I'd like to welcome everyone to our call. I'll start off by thanking Jamie Porter for his invaluable contribution to Alamos for nearly 20 years. Jamie joined Alamos in 2005 and has been our Chief Financial Officer since 2011. He's been an instrumental part of our leadership team, helping oversee our growth from a single operation to a diversified intermediate producer with financial discipline that has allowed us to maintain one of the strongest balance sheets in the sector. Jamie, on behalf of the entire team, we wish you continued success in your future endeavors. I also want to congratulate Greg Fischer on his promotion to Chief Financial Officer. Greg has been an integral part of our senior management team for the past 13 years.
Over that time frame, Greg Fischer has led our finance team and helped instill the same financial discipline that has kept Alamos on the right track throughout its history. We're in excellent hands with Greg Fischer and look forward to his ongoing leadership and financial stewardship as we deliver on our strong outlook. Starting with slide three, we had a strong start to the year with costs in line with annual guidance and production of 128,400 ounces exceeding our first quarter guidance. This was driven by solid performances at all three operations, including an exceptional performance from La Yaqui Grande in its third full quarter of operation. We are well on track to achieve our full year guidance.
Revenues increased to a new quarterly record of $252 million, cash flow from operations increased for the fourth consecutive quarter to $127 million. We also generated $11 million of free cash flow. This marked the fourth consecutive quarter of positive free cash flow. We expect stronger results in the second quarter and on an ongoing basis over the next few years while we fund the Phase III Expansion at Island Gold. Turning to slide four. We continued to advance our various growth initiatives during the first quarter. The Phase III+ Expansion is progressing well, with the hoist house now up and the Galloway to be used for the shaft sink now on site.
We also announced the acquisition of Manitou Gold, which will more than triple our land package adjacent to and a long strike from Island Gold, significantly adding to the regional exploration potential. We achieved a significant permitting milestone at our Lynn Lake project with the approval of its Environmental Impact Statement. We expect to have an updated feasibility study completed on Lynn Lake towards the middle of the year. We also expect to complete a development plan for the Puerto Del Aire deposit in the latter part of the year, which will incorporate results from an expanded exploration program currently underway. We've already defined 1 million ounces of higher grade reserves and resources at PDA over the past two years and see excellent potential for that growth to continue, supporting what we expect will be a significant mine life extension at Mulatos. Turning to slide five.
These projects are all contributors to our strong short and long-term outlook. We are expecting a 9% increase in production this year to approximately 500,000 ounces and a 17% decrease in our all-in sustaining costs to approximately $1,000 per ounce by 2025. The completion of the Island Gold Phase III Expansion in 2026 will be a game changer for the operation and the company and will grow our annual production to over 600,000 ounces per year and further reduce our costs. Longer term, we have the capacity to increase our annual production to approximately 800,000 ounces per year through the development of our Lynn Lake project. Over to slide six. As we continue to demonstrate, we can fund this growth while generating solid ongoing free cash flow.
At current gold prices, we expect to be generating well over $100 million in free cash flow per year while funding the Phase III Expansion. That will grow considerably once the expansion is completed in 2026. I'll now turn the call over to our CFO, Jamie Porter, for the final time to review our financial performance. Jamie?
Thank you, John.
This will be my last quarterly conference call as part of Alamos. Although I'm sad to be leaving the company and the team, I'm very proud of what we've accomplished together. The outlook for Alamos has never been brighter. The team has never been stronger. I look forward to Alamos' continued growth and know the company is in great hands with Greg Fischer as Chief Financial Officer. On to slide seven. We sold 132,700 ounces of gold in the first quarter at an average realized price of $1,896 per ounce, which was $6 per ounce above the 11 P.M. fixed price for record revenues of $252 million.
Total cash costs of $821 per ounce were below the full year guidance range. All-in sustaining costs of $1,176 per ounce were at the top end. We were one of the few companies to meet our cost guidance in 2022 and are on track to do the same in 2023 with a solid start to the year. Our reported net earnings of $48 million in the first quarter, $0.12 per share, included unrealized foreign exchange gains of $4 million recorded within deferred taxes and foreign exchange, partially offset by other losses of $1 million. Excluding these items, our adjusted net earnings were $45 million or $0.12 per share.
Operating cash flow before change in non-cash working capital increased 16% from the fourth quarter and grew for the fourth consecutive quarter to $127 million, $0.32 per share. Capital spending totaled $84 million in the quarter, with a similar run rate expected through the rest of the year, with construction activities on the Phase III+ Expansion well underway. This included $27 million of sustaining capital, $52 million of growth capital, and $5 million of capitalized exploration. Our free cash flow of $11 million in the first quarter was understated, reflecting a temporary buildup of sales tax receivables in Canada. These receivables normalized in April with a collection of $20 million, which will contribute to much stronger free cash flow in the second quarter and through the rest of the year.
Our balance sheet remains strong with no debt, $134 million in cash, $26 million of equity securities, and $500 million of undrawn credit capacity. With stronger production and costs trending lower over the next several years, we remain well positioned to continue generating solid free cash flow while funding our high return growth projects and supporting ongoing returns to shareholders. I'll now turn the call over to our COO, Luc Guimond, to provide an overview of our operations.
Thank you, Jamie. Moving to slide eight. Excuse me. Young-Davidson continues to be a consistent performer with grades and mining rates of 8,000 tons per day, both in line with guidance, driving production of 45,000 ounces. Total cash costs were within the full year guidance range and all-in sustaining costs just above the top end of the range. Grades mined are expected to be in a similar range in the second quarter and increase in the second half of the year, driving production higher, costs lower, and putting the operation on track to meet its full year guidance. Mine site free cash flow totaled $16 million in the first quarter. With stronger free cash flow expected through the remainder of the year, Young-Davidson is on pace to generate another $100 million in 2023 and annually over the long term. Over to slide nine.
Island Gold produced 33,000 ounces in the quarter, with grades, mining rates, and costs all consistent with full year guidance. With the solid start and similar results expected through the year, Island Gold is well-positioned to achieve full year guidance. With the ramp up of construction activities on the Phase III+ Expansion, the operation used $21 million of cash during the quarter. Excluding exploration spending and the delay in collecting sales tax receivables, Island Gold continues to largely self-finance the expansion. Over to slide 10. The Phase III+ Expansion continues to progress with the installation of the 44 kV power line from the existing operation to the shaft area substation. Construction of the hoist house building steel and external cladding completed and fabrication of steel for the headframe and collar house underway.
Detailed engineering for the paste plant is ongoing, as well as basic engineering for the mill expansion and lateral development to support higher mining rates with the expansion. Installation of the hoist and erection of the headframe are expected to start in the second quarter. As you can see in the photo on the lower right corner of the slide, the galloway that will be used in the shaft sinking arrived on site last week. The shaft sink is expected to start in the fourth quarter, putting the expansion on track to be completed in 2026. Once completed, Island Gold will be among the largest, lowest cost, and most profitable gold mines in Canada. Moving to slide 11.
Mulatos District production totaled 50,500 ounces, up slightly from the fourth quarter, with total cash costs and all-in sustaining costs coming in below full year guidance. Mine site free cash flow increased to $37 million, the highest level in 10 years. This was driven by a very strong quarter from La Yaqui Grande, with grades and throughput rates above annual guidance. Production from the Mulatos District will be first half weighted, with the main Mulatos pit, including El Salto, expected to be depleted in the third quarter. Grades stacked at La Yaqui Grande are expected to decrease the rest of the year to be consistent with guide. As with our other operations, Mulatos is well positioned to meet full year guidance given the strong start to the year. Over to slide 12.
La Yaqui Grande delivered exceptional results in its third full quarter of operation, with production increasing to 38,400 ounces. Stacking rates averaged 11,300 tons per day, above design level for the second consecutive quarter, and grades stacked averaged well above reserve grades and guidance, driving the record quarter. Both are expected to decrease to guided levels through the remainder of the year, supporting strong ongoing free cash flow generation. At PDA, we have an expanded drill program plan totaling 35,000 meters during the first half of the year. This follows a 71% increase in higher grade underground reserves and resources announced at PDA earlier this year. The deposit is open in multiple directions, we are continuing to see good results, which we expect will drive further growth.
These results will be incorporated into a development plan for the PDA to be completed in the fourth quarter that we expect will outline a significant mine life extension at Mulatos. With that, I will turn the call back to John.
Thank you, Luc. We've been a strong performer over the past year, which reflects our ongoing operational execution and unique attributes as a company. With long life, high quality assets, high return, fully funded growth, declining costs, driving increasing profitability, and one of the lowest political risk profiles in the sector, we are a uniquely positioned gold producer, and our outlook has never been stronger. We have everything we need to be successful, and we believe all the attributes needed to continue that strong performance. That concludes our formal presentation. I'll now turn the call back to the operator, who will open the lines for your questions. Operator?
Thank you. We'll now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handsets before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. The first question is from Kerry Smith from Haywood Securities. Please go ahead.
Thanks, operator. Luc, for Mulatos, specifically La Yaqui Grande, the grade was significantly higher than even the high end of the guidance, which was 1.45 grams. Was that a function of, you know, the grades in the model actually being better than what you predicted, or you just happened to mine much higher grade in that quarter and the model is still pretty accurate? I'm kind of thinking about, you know, where the grade might average out for the year. I assume it's going to be closer to the high end of that guidance, but just wondering if you'd give any guidance there.
Hi, Kerry. look, to start certainly with Mulatos, it's a little bit of both. I mean, the mining rates have been going a bit quicker than we had initially planned, certainly. you know, from a sequence perspective, we're getting into some higher grade material a little bit quicker. we've also been seeing some positive reconciliation where we've been mining to date as well, with regards to the extraction of the ore body. I mean, moving forward for the rest of the year, you know, we expect to be more in line certainly with the reserve grade of about 1.25.
Okay, that's helpful. Thank you. The second question, just on Phase III+ Expansion at Island. I know you're just kind of getting going there, but so far, is everything kind of tracking on schedule, on budget with what you had expected, or have you had any surprises one way or the other?
No, I would say everything is tracking quite well there, to be honest with you. Certainly, you know, the main focus this year is really around the shaft surface complex and the shaft itself. The shaft surface infrastructure has certainly been progressing quite well with regards to our timeline. I think as I mentioned in my note, speaking notes, we're expecting to start sinking at the end of the year in the fourth quarter, which tracks quite well with our overall timeline and schedule to be up and running at the end of Q1 2026.
Okay. Maybe John can answer this question. Just on this First Nations appeal of the EIS at Lynn Lake, what is the appeal actually pertaining to? I'm just trying to understand what that means.
It's kind of an unusual one. I don't know how well I can illuminate this beyond what's already been said. Generally, when there's an objection to the First Nation, it's got something to do with a lack of consultation. In this particular case, they seem more concerned with the compensation they're receiving under the IBA and whether or not they're getting a fair share of what will ultimately be distributed to First Nations through the IBAs. That's something that has never been brought before the court before, and we're just as interested as everybody else in what kind of stance the court is gonna take in front of this.
It really remains to be seen.
Yeah, Kerry, I can just add a bit more to that as well. I mean, you know, we're building relationships there with two communities, two First Nation communities in Manitoba. One's progressed, you know, very well. I mean, to the point of, we've completed the handshake phase, and we're just kind of working through the legal documents with regards to, you know, finalizing that IBA, Impact Benefit Agreement and having pen to paper. The other community we continue to engage with and have open dialogue with and still working through that process, you know, despite this judicial review.
Okay. And just so I'm clear, is the objection coming from both of the First Nations groups?
No. No. Just the one First Nation, Kerry.
Where you haven't actually got a handshake deal. Okay, I understand.
Correct.
Okay. Okay. That's helpful. Thanks, Luc and John. Then just maybe for Scott R.G. Parsons, I know you did a bunch of drilling in Q1 at Halcon West and Carricito and Refugio. Is there anything there, you know, that you would care to talk about? Have you seen anything interesting?
In fact, Kerry, Scott is not on the call today. We've been getting great results just about everywhere we're drilling, and we'll be publishing a follow-up news release on that in due course.
Okay. Okay. Okay, great. Thanks, guys, and good quarter, and congratulations to Greg on his new appointment, and best of luck to Jamie.
Thanks, Kerry.
Thanks, Kerry.
Thank you. The next question is from Mike Parkin from National Bank. Please go ahead.
Thanks, guys. First question would be with, you know, a bit of a follow-up on La Yaqui Grande. You're obviously, you've already said you're mining at a more elevated rate than budget. Your stacking is benefiting by the 10%. Your grade's good. With all that, and it's supporting an extremely low cost operation, are you seeing... Like, looking at the resources, there isn't a huge amount, but do you see any potential where, you know, with a cutoff grade being able to be tweaked a bit to build in additional tons, or you're still feeling pretty certain that, you know, as we know it today in terms of a reserve base, that's likely to be the end result?
Yeah. Hi, Mike, it's Luc here. I'd say, you know, as far as the reserve base that we have there at La Yaqui Grande is pretty well defined. I mean, certainly as we think, you know, with the timelines we're talking about as far as the mining phase of that project, we're pretty confident with what we've defined already that, you know, we'll obviously complete all of the mining of what's required there and stack that over time. At this point, we're not looking at anything additional.
Okay. Switching over to PDA where certainly the resource and reserve has been growing quite a bit. You've got an old, like, mini mill on care and maintenance. That seems like its scale is, you know, proving to be probably too small for the nearly 1 million ounces of polar resources. Are you guys thinking as this kinda continues to grow, that this could become a more meaningful sized operation when it comes online, and is it still kinda like the San Carlos days where you would use a mill and sell a gold concentrate?
Yeah, we're still working through that process, I mean, certainly based on the reserve base that we have currently, we're looking at something bigger than we've done in the past there with regards to the mining rates from some of the previous underground mining that we've done in the Mulatos district as well as the, you know, the smaller milling operation that we had that basically generated a float con for us, and then we shipped it off-site. We're, you know, we're gonna be working through our mine plan and look to have that completed by the end of the year. You know, accordingly we'll size the milling operation to whatever the mining rates can be supported.
We are looking at something bigger, probably in the neighborhood of, you know, currently we're probably thinking around 1,500 tons per day. Again, we'll have a better handle on that by the end of the year.
Okay, great. That's it for me. Congrats to Jamie in his new job, congrats to Greg in his new bigger role. Thanks again, guys, great quarter.
Thanks, Mike.
Thanks, Mike.
Thank you. As a reminder, you may press star one if you have a question. The next question is from Carmen Perez from Bank of America. Please go ahead.
Hi. Thank you for the update. I think earlier in the presentation, we alluded to, you know, the share price outperformance over the last year, which is obviously extremely impressive. Can you sort of talk about maybe how this might be impacting your capital allocation priorities? What I mean by that is there any change as to whether, you know, you were contemplating buying back stock? Has that changed or, do you view maybe your shares as a acquisition currency perhaps, if M&A opportunities make sense?
Well, the short answer is there's no change to our capital allocation plans. Everything's going to be on track. As far as our purchasing of stock in the market goes, we tend to be very, how should I say, circumspect about that. When we see sort of an unnatural sort of decline in the share price, you know, heavy selling generally accompanied by a lack of investor interest in the sector, at those junctures we tend to be active in buying stock. We're not active at the moment. As far as M&A is concerned, you can argue M&A always makes sense, but it really comes down to the opportunity, you know.
It, you can make good deals in a bad market, and you can make good deals in a good market, and you can make bad deals in those various markets. We've tended to be very active when the market is soft, and we tend to pull back and focus on our growth, internal growth and cash flow generation when the market is stronger. That's what you see us doing now. There's less of an emphasis on M&A. If you recall, a few years ago when the market wasn't so interested in M&A, that's when we were the most active. That contrarian approach is, it's something that has worked for us very, very well.
It doesn't mean you can't make, you can't do an M&A transaction in the kind of market that we're in. You just have to be very particular about what it is you're buying and what you're willing to pay.
That's very clear. Thank you. That's it for me.
Thank you. There are no further questions at this time. This concludes this morning's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at 416-368-9932, extension 5439. Please disconnect your lines at this time. Thank you.