EX-4.4 10 d463097dex44.htm EX-4.4

EXHIBIT 4.4

Third Quarter 2012 Report

September 30, 2012

(Based on International Financial Reporting Standards (“IFRS”) and stated in thousands of United States dollars, unless otherwise indicated)

INDEX

Unaudited Condensed Interim Consolidated Financial Statements

• |  | Consolidated Statements of Financial Position

• |  | Consolidated Statements of Comprehensive Income

• |  | Consolidated Statements of Changes in Equity

• |  | Consolidated Statements of Cash Flows

• |  | Notes to Condensed Interim Consolidated Financial Statements

|  |  |  | THIRD QUARTER REPORT 2012

ALAMOS GOLD INC.

Consolidated Statements of Financial Position

(Unaudited – stated in thousands of United States dollars)

|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
A S S E T S |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | $ 287,042 |  |  |  | $ 169,471 |
Short-term investments |  |  | 29,869 |  |  |  | 53,088 |
Amounts receivable |  |  | 7,697 |  |  |  | 6,147 |
Advances and prepaid expenses |  |  | 2,533 |  |  |  | 2,117 |
Available-for-sale securities (note 4) |  |  | 4,346 |  |  |  | 10,355 |
Other financial assets (note 4) |  |  | 627 |  |  |  | 244 |
Inventory (note 5) |  |  | 46,343 |  |  |  | 33,220 |
Total Current Assets |  |  | 378,457 |  |  |  | 274,642 |
Non-Current Assets |  |  |  |  |  |  |  |
Exploration and evaluation assets (note 6) |  |  | 119,708 |  |  |  | 108,454 |
Mineral property, plant and equipment (note 7) |  |  | 208,571 |  |  |  | 216,128 |
Total Assets |  |  | $ 706,736 |  |  |  | $ 599,224 |
L I A B I L I T I E S |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  |  | $ 21,267 |  |  |  | $ 17,024 |
Dividends payable (note 8) |  |  | 12,062 |  |  |  | - |
Income taxes payable |  |  | 6,371 |  |  |  | 6,125 |
Current portion of other liabilities |  |  | 197 |  |  |  | 363 |
Total Current Liabilities |  |  | 39,897 |  |  |  | 23,512 |
Non-Current Liabilities |  |  |  |  |  |  |  |
Deferred income taxes |  |  | 43,593 |  |  |  | 35,008 |
Decommissioning liability (note 9) |  |  | 5,906 |  |  |  | 6,680 |
Other liabilities |  |  | 465 |  |  |  | 474 |
Total Liabilities |  |  | 89,861 |  |  |  | 65,674 |
E Q U I T Y |  |  |  |  |  |  |  |
Share capital (note 10 a) |  |  | $ 388,606 |  |  |  | $ 355,524 |
Contributed surplus |  |  | 22,956 |  |  |  | 27,861 |
Accumulated other comprehensive loss |  |  | (1,970) |  |  |  | (1,080) |
Retained earnings |  |  | 207,283 |  |  |  | 151,245 |
Total Equity |  |  | 616,875 |  |  |  | 533,550 |
Total Liabilities and Equity |  |  | $ 706,736 |  |  |  | $ 599,224 |
Commitments and Contingencies (note 12) |  |  |  |  |  |  |  |

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

|  | 2 |  | ALAMOS GOLD INC.

|  |  |  | THIRD QUARTER REPORT 2012

ALAMOS GOLD INC.

Consolidated Statements of Comprehensive Income

(Unaudited – stated in thousands of United States dollars, except per share amounts)

|  | For the three-month periods |  |  | For the nine-month periods |
|  | ended September 30, |  |  | ended September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
OPERATING REVENUES |  |  | $ 71,281 |  |  |  | $ 44,991 |  |  |  | $ 222,426 |  |  |  | $ 156,231 |
MINE OPERATING COSTS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mining and processing |  |  | 15,519 |  |  |  | 10,474 |  |  |  | 46,688 |  |  |  | 37,549 |
Royalties (note 12) |  |  | 3,495 |  |  |  | 2,098 |  |  |  | 11,156 |  |  |  | 7,584 |
Amortization |  |  | 12,106 |  |  |  | 4,840 |  |  |  | 32,563 |  |  |  | 16,543 |
|  |  | 31,120 |  |  |  | 17,412 |  |  |  | 90,407 |  |  |  | 61,676 |
EARNINGS FROM MINE OPERATIONS EXPENSES |  |  | 40,161 |  |  |  | 27,579 |  |  |  | 132,019 |  |  |  | 94,555 |
Exploration |  |  | 729 |  |  |  | 2,131 |  |  |  | 5,040 |  |  |  | 6,304 |
Corporate and administrative |  |  | 3,296 |  |  |  | 2,370 |  |  |  | 9,419 |  |  |  | 7,471 |
Share-based compensation (notes 10 b and 10 c) |  |  | 2,830 |  |  |  | 3,040 |  |  |  | 6,758 |  |  |  | 10,265 |
|  |  | 6,855 |  |  |  | 7,541 |  |  |  | 21,217 |  |  |  | 24,040 |
EARNINGS FROM OPERATIONS |  |  | 33,306 |  |  |  | 20,038 |  |  |  | 110,802 |  |  |  | 70,515 |
OTHER INCOME (EXPENSES) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance income |  |  | 731 |  |  |  | 430 |  |  |  | 2,444 |  |  |  | 1,228 |
Financing expense |  |  | (121) |  |  |  | (150) |  |  |  | (388) |  |  |  | (447) |
Foreign exchange gain (loss) |  |  | 2,263 |  |  |  | (5,642) |  |  |  | 847 |  |  |  | (4,868) |
Other income (loss) |  |  | 636 |  |  |  | 660 |  |  |  | 1,277 |  |  |  | (776) |
EARNINGS BEFORE INCOME TAXES FOR THE PERIOD |  |  | 36,815 |  |  |  | 15,336 |  |  |  | 114,982 |  |  |  | 65,652 |
INCOME TAXES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current tax expense |  |  | (11,035) |  |  |  | (6,760) |  |  |  | (26,347) |  |  |  | (21,960) |
Deferred tax recovery (expense) |  |  | 115 |  |  |  | (3,140) |  |  |  | (8,585) |  |  |  | (4,905) |
|  |  | $ 25,895 |  |  |  | $ 5,436 |  |  |  | $ 80,050 |  |  |  | $ 38,787 |
EARNINGS FOR THE PERIOD |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other comprehensive (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Unrealized (loss) gain on securities |  |  | (798) |  |  |  | 928 |  |  |  | (1,285) |  |  |  | (2,042) |
- Reclassification of realized losses on available-for-sale securities included in earnings |  |  | 488 |  |  |  | 1,885 |  |  |  | 395 |  |  |  | 1,885 |
COMPREHENSIVE INCOME FOR THE PERIOD |  |  | $ 25,585 |  |  |  | $ 8,249 |  |  |  | $ 79,160 |  |  |  | $ 38,630 |
EARNINGS PER SHARE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
– basic (note 10 d) |  |  | $ 0.22 |  |  |  | $ 0.05 |  |  |  | $ 0.67 |  |  |  | $ 0.33 |
– diluted (note 10 d) |  |  | $ 0.21 |  |  |  | $ 0.05 |  |  |  | $ 0.66 |  |  |  | $ 0.33 |
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- basic |  |  | 120,062,000 |  |  |  | 117,792,000 |  |  |  | 119,548,000 |  |  |  | 117,060,000 |
- diluted |  |  | 120,915,000 |  |  |  | 119,344,000 |  |  |  | 120,627,000 |  |  |  | 118,437,000 |

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

|  | 3 |  | ALAMOS GOLD INC.

|  |  |  | THIRD QUARTER REPORT 2012

ALAMOS GOLD INC.

Consolidated Statements of Changes in Equity

For the nine-month periods ended September 30, 2012 and 2011

(Unaudited – stated in thousands of United States dollars)

|  |  |  | Number of shares outstanding |  |  | Share capital |  |  | Contributed surplus |  |  | Accumulated other comprehensive loss |  |  | Retained earnings |  |  | Total Equity |
|  | Balance at December 31, 2010 |  |  | 116,340,008 |  |  |  | $ 325,867 |  |  |  | $ 23,316 |  |  |  | $ (1,332) |  |  |  | $ 105,278 |  |  |  | $ 453,129 |
|  | Share-based compensation |  |  | - |  |  |  | - |  |  |  | 9,875 |  |  |  | - |  |  |  | - |  |  |  | 9,875 |
|  | Shares issued on exercise of options |  |  | 1,940,900 |  |  |  | 28,011 |  |  |  | (6,960) |  |  |  | - |  |  |  | - |  |  |  | 21,051 |
|  | Dividends |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (14,114) |  |  |  | (14,114) |
|  | Earnings |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 38,787 |  |  |  | 38,787 |
|  | Other comprehensive loss (tax impact; nil) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (157) |  |  |  | - |  |  |  | (157) |
|  | Balance at September 30, 2011 |  |  | 118,280,908 |  |  |  | $ 353,878 |  |  |  | $ 26,231 |  |  |  | $ (1,489) |  |  |  | $ 129,951 |  |  |  | $ 508,571 |
|  |  |  | Number of shares outstanding |  |  | Share capital |  |  | Contributed surplus |  |  | Accumulated other comprehensive loss |  |  | Retained earnings |  |  | Total Equity |
|  | Balance at December 31, 2011 |  |  | 118,383,008 |  |  |  | $ 355,524 |  |  |  | $ 27,861 |  |  |  | $ (1,080) |  |  |  | $ 151,245 |  |  |  | $ 533,550 |
|  | Share-based compensation |  |  | - |  |  |  | - |  |  |  | 3,745 |  |  |  | - |  |  |  | - |  |  |  | 3,745 |
|  | Shares issued on exercise of options |  |  | 2,232,200 |  |  |  | 33,082 |  |  |  | (8,650) |  |  |  | - |  |  |  | - |  |  |  | 24,432 |
|  | Dividends |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (24,012) |  |  |  | (24,012) |
|  | Earnings |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 80,050 |  |  |  | 80,050 |
|  | Other comprehensive loss (tax impact; nil) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (890) |  |  |  | - |  |  |  | (890) |
|  | Balance at September 30, 2012 |  |  | 120,615,208 |  |  |  | $ 388,606 |  |  |  | $ 22,956 |  |  |  | $ (1,970) |  |  |  | $ 207,283 |  |  |  | $ 616,875 |

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

|  | 4 |  | ALAMOS GOLD INC.

|  |  |  | THIRD QUARTER REPORT 2012

ALAMOS GOLD INC.

Consolidated Statements of Cash Flows

(Unaudited – stated in thousands of United States dollars)

|  | For the three-month |  |  | For the nine-month |
|  | periods ended |  |  | periods ended |
|  | September 30, |  |  | September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
CASH PROVIDED BY (USED IN): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
OPERATING ACTIVITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings for the period |  |  | $ 25,895 |  |  |  | $ 5,436 |  |  |  | $ 80,050 |  |  |  | $ 38,787 |
Adjustments for items not involving cash: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization |  |  | 12,106 |  |  |  | 4,840 |  |  |  | 32,563 |  |  |  | 16,543 |
Financing expense |  |  | 121 |  |  |  | 150 |  |  |  | 388 |  |  |  | 447 |
Unrealized foreign exchange (gain) loss |  |  | (1,878) |  |  |  | 3,037 |  |  |  | (2,074) |  |  |  | 2,761 |
Deferred tax (recovery) expense |  |  | (115) |  |  |  | 3,140 |  |  |  | 8,585 |  |  |  | 4,905 |
Share-based compensation |  |  | 2,830 |  |  |  | 3,040 |  |  |  | 6,758 |  |  |  | 10,265 |
(Gain) loss on sale of securities |  |  | (426) |  |  |  | 968 |  |  |  | (930) |  |  |  | 968 |
Other |  |  | (311) |  |  |  | 61 |  |  |  | (329) |  |  |  | 749 |
Changes in non-cash working capital: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of forward contracts |  |  | 150 |  |  |  | (1,658) |  |  |  | 150 |  |  |  | (1,182) |
Amounts receivable |  |  | (4,915) |  |  |  | (5,185) |  |  |  | (14,723) |  |  |  | (12,568) |
Inventory |  |  | (5,492) |  |  |  | (5,567) |  |  |  | (9,020) |  |  |  | (5,415) |
Advances and prepaid expenses |  |  | 610 |  |  |  | (882) |  |  |  | (417) |  |  |  | (374) |
Accounts payable, taxes payable and accrued liabilities |  |  | 6,710 |  |  |  | 4,746 |  |  |  | 14,424 |  |  |  | 13,373 |
|  |  | 35,285 |  |  |  | 12,126 |  |  |  | 115,425 |  |  |  | 69,259 |
INVESTING ACTIVITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sale (purchases) of securities |  |  | 2,947 |  |  |  | (1,626) |  |  |  | 6,285 |  |  |  | (6,460) |
Contractor advances |  |  | - |  |  |  | (6,607) |  |  |  | - |  |  |  | (16,200) |
Short-term investments (net) |  |  | 15,436 |  |  |  | 4,432 |  |  |  | 23,219 |  |  |  | (12,210) |
Proceeds on sale of equipment |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 889 |
Decommissioning liability |  |  | (384) |  |  |  | - |  |  |  | (1,146) |  |  |  | (136) |
Exploration and evaluation assets |  |  | (5,939) |  |  |  | (3,046) |  |  |  | (11,254) |  |  |  | (6,916) |
Mineral property, plant and equipment |  |  | (8,156) |  |  |  | (12,156) |  |  |  | (29,304) |  |  |  | (34,626) |
|  |  | 3,904 |  |  |  | (19,003) |  |  |  | (12,200) |  |  |  | (75,659) |
FINANCING ACTIVITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares issued |  |  | 9,931 |  |  |  | 13,655 |  |  |  | 24,432 |  |  |  | 21,051 |
Dividends paid |  |  | - |  |  |  | - |  |  |  | (11,950) |  |  |  | (5,834) |
|  |  | 9,931 |  |  |  | 13,655 |  |  |  | 12,482 |  |  |  | 15,217 |
Effect of exchange rates on cash and cash equivalents |  |  | 1,724 |  |  |  | (2,435) |  |  |  | 1,864 |  |  |  | (1,600) |
Net increase in cash and cash equivalents |  |  | 50,844 |  |  |  | 4,343 |  |  |  | 117,571 |  |  |  | 7,217 |
Cash and cash equivalents - beginning of period |  |  | 236,198 |  |  |  | 149,208 |  |  |  | 169,471 |  |  |  | 146,334 |
CASH AND CASH EQUIVALENTS - END OF PERIOD |  |  | $ 287,042 |  |  |  | $ 153,551 |  |  |  | $ 287,042 |  |  |  | $ 153,551 |
Supplemental information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest paid |  |  | $ - |  |  |  | $ - |  |  |  | $ - |  |  |  | $ - |
Interest received |  |  | $ 989 |  |  |  | $ 418 |  |  |  | $ 2,461 |  |  |  | $ 1,037 |
Income taxes paid |  |  | $ 5,618 |  |  |  | $ 865 |  |  |  | $ 13,530 |  |  |  | $ 8,850 |

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

|  | 5 |  | ALAMOS GOLD INC.

ALAMOS GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements

September 30, 2012 and 2011

(Unaudited – stated in United States dollars, unless otherwise indicated)

1. | NATURE OF OPERATIONS

Alamos Gold Inc., a resident Canadian company, and its wholly-owned subsidiaries (collectively the “Company”) are engaged in the acquisition, exploration, development and extraction of precious metals in Mexico and Turkey. The Company owns and operates the Mulatos mine and holds the mineral rights to the Salamandra group of concessions in the State of Sonora, Mexico, which includes several known satellite gold occurrences. In addition, the Company owns the Ağı Dağı, Kirazlı and Çamyurt gold development projects in Turkey.

2. | BASIS OF PREPARATION AND ADOPTION OF NEW ACCOUNTING POLICY

Statement of Compliance

These condensed interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting (“IAS 34”).

The policies applied in these condensed interim consolidated financial statements are consistent with the policies disclosed in Notes 2 and 3 of the consolidated financial statements for the year ended December 31, 2011. These condensed interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2011.

The condensed interim consolidated financial statements were authorized for issue by the Board of Directors on October 23, 2012.

Adoption of Accounting Policy Effective January 1, 2012

International Financial Reporting Interpretations Committee (“IFRIC”) Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine was issued in October 2011, and is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. IFRIC 20 provides guidance on the accounting for the costs of stripping activity in the production phase of surface mining when benefits accrue to the entity from the stripping activity. In addition, IFRIC 20 requires companies to ensure that capitalized costs are amortized over the useful life of the component of the ore body to which access has been improved due to the stripping activity. The Company adopted the amendments in its financial statements for the annual period beginning on January 1, 2012. The Company capitalized $7.2 million of production stripping costs to Mineral property, plant and equipment for the nine-month period ended September 30, 2012.

3. | FUTURE ACCOUNTING POLICY CHANGES ISSUED BUT NOT YET IN EFFECT

The following are new pronouncements approved by the IASB. The following new standards and interpretations are not yet effective and have not been applied in preparing these financial statements, however, they may impact future periods.

(i) IFRS 9 Financial Instruments (Revised) was issued by the IASB in October 2010. It incorporates revised requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from IAS 39 Financial Instruments: Recognition and Measurement. The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in

|  | 6 |  | ALAMOS GOLD INC.

these cases, the portion of the change in fair value related to changes in the entity’s own credit risk is presented in other comprehensive income rather than within profit or loss. IFRS 9 (2010) is effective for annual periods beginning on or after January 1, 2015. The impact of IFRS 9 on the Company’s financial instruments has not yet been determined.

(ii) IFRS 10 Consolidated Financial Statements is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. IFRS 10 replaces the guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities (“SPE’s”). IFRS 10 provides a single model to be applied in the control analysis for all investees, including entities that currently are SPEs in the scope of SIC-12. In addition, the consolidation procedures are carried forward substantially unmodified from IAS 27. Given the nature of the Company’s operations, the Company does not expect the amendments to have a material impact on the financial statements.

(iii) IFRS 12 Disclosure of Interests in Other Entities was released in May 2011 and is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. If an entity applies this standard earlier, it does not need to apply IFRS 10, IFRS 11, IAS 27 (2011) and IAS 28 (2011) at the same time. IFRS 12 contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e. joint operations or joint ventures), associates and/or unconsolidated structured entities. Interests are widely defined as contractual and non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity. The required disclosures aim to provide information in order to enable users to evaluate the nature of, and the risks associated with, an entity’s interest in other entities, and the effects of those interests on the entity’s financial position, financial performance and cash flows. The Company intends to adopt IFRS 12 in its financial statements for the annual period beginning on January 1, 2013. Given the nature of the Company’s interests in other entities, the Company does not expect the amendments to have a material impact on the financial statements.

(iv) IFRS 13 Fair Value Measurement was issued in May 2011 and is effective prospectively for annual periods beginning on or after January 1, 2013. The disclosure requirements of IFRS 13 need not be applied in comparative information for periods before initial application. IFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements to provide information that enables financial statement users to assess the methods and inputs used to develop fair value measurements and, for recurring fair value measurements that use significant unobservable inputs (Level 3), the effect of the measurements on earnings or other comprehensive income. IFRS 13 explains ‘how’ to measure fair value when it is required or permitted by other IFRSs. IFRS 13 does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards. The Company intends to adopt IFRS 13 prospectively in its financial statements for the annual period beginning on January 1, 2013. The impact of adoption of IFRS 13 has not yet been determined.

(v) Amendments to IAS 1 Presentation of Financial Statements was issued in June 2011 and is effective for annual periods beginning on or after July 1, 2012. IAS 1 should be applied retrospectively, but early adoption is permitted. The amendments require that an entity present separately the items of OCI that may be reclassified to earnings in the future from those that would never be reclassified to earnings. Consequently an entity that presents items of OCI before related tax effects will also have to allocate the aggregated tax amount between these categories. The existing option to present the earnings and other comprehensive income in two statements has remained unchanged. The Company intends to adopt the amendments in its financial statements for the annual period beginning on January 1, 2013. The impact of adoption of the amendments has not yet been determined.

|  | 7 |  | ALAMOS GOLD INC.

4. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

a) | Financial Assets and Liabilities

The carrying value of the Company’s financial instruments is classified into the following categories:

|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
|  | ($000) |  |  | ($000) |
Fair value through profit or loss (“FVTPL”) (1) |  |  | 316,911 |  |  |  | 222,559 |
Derivative instruments designated as FVTPL (2) |  |  | 627 |  |  |  | 244 |
Available-for-sale securities (3) |  |  | 4,346 |  |  |  | 10,355 |
Loans and receivables (4) |  |  | 7,697 |  |  |  | 6,147 |
Derivative contracts designated as FVTPL (5) |  |  | (150) |  |  |  | - |
Other financial liabilities (6) |  |  | (39,871) |  |  |  | (23,650) |

(1) | Includes cash of $130.0 million (December 31, 2011 – $44.8 million), cash equivalents of $157.0 million (December 31, 2011 – $124.7 million) and short-term investments of $29.9 million (December 31, 2011 – $53.1 million).

(2) | Includes the Company’s investment in the warrants of a publicly traded company.

(3) | Includes the Company’s investment in the common shares of publicly traded entities.

(4) | Includes amounts receivable. As permitted by Mexican tax law, the Company offset $13.2 million of Mexican value-added tax receivables against its current taxes payable liability for the nine-months ended September 30, 2012 ($16.9 million for year ended December 31, 2011).

(5) | Includes the Company’s foreign currency forward and option contracts and gold option contracts which, for accounting purposes, are not considered to be effective hedges. These are classified within accounts payable and accrued liabilities in the consolidated balance sheet.

(6) | Includes all other accounts payable and accrued liabilities, dividends payable, income taxes payable, and certain other liabilities.

The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies; however, considerable judgment is required to develop these estimates. The fair values of the Company’s financial instruments are not materially different from their carrying values.

b) | Derivative Financial Instruments

The Company may utilize financial instruments to manage the risks associated with fluctuations in the market price of gold and foreign exchange rates. As at September 30, 2012, the Company had outstanding contracts to deliver up to 2,000 ounces of gold at fixed prices. The mark-to-market loss associated with these contracts as at September 30, 2012 was $0.2 million. As at December 31, 2011 the Company had no outstanding gold foward contracts.

At September 30, 2012, the Company had outstanding contracts to deliver $10 million Canadian dollars (“CAD”) in exchange for a fixed amount of USD at future dates up to December of 2012, with CAD:USD rates ranging from of 0.98:1 to 0.99:1. The mark-to-market gain associated with these contracts as at September 30, 2012 was nominal (December 31, 2011 – nil).

|  | 8 |  | ALAMOS GOLD INC.

5. | INVENTORY

|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
|  | ($000) |  |  | ($000) |
Precious metals dore and refined precious metals |  |  | 5,480 |  |  |  | 5,484 |
In-process precious metals |  |  | 20,462 |  |  |  | 11,894 |
Parts and supplies |  |  | 20,401 |  |  |  | 15,842 |
|  |  | $46,343 |  |  |  | $33,220 |

The carrying value of inventory is calculated using weighted average cost. The amount of inventory charged to operations as mining and processing costs during the three and nine-month period ended September 30, 2012 was $16.0 million and $49.3 million (September 30, 2011 – $11.3 million and $40.5 million). The amount of inventory charged to operations as amortization in the three and nine-month periods ended September 30, 2012 was $10.4 million and $27.4 million (September 30, 2011 – $3.9 million and $13.6 million).

6. | EXPLORATION AND EVALUATION ASSETS

The Company classifies the Aği Daği, Kirazlı, and Çamyurt Projects in Turkey as exploration and evaluation assets. Exploration and evaluation assets are not subject to amortization.

The following is a continuity of the Company’s exploration and evaluation assets for the nine-month period ended September 30, 2012.

|  | Total |
|  | ($000) |
Cost as at December 31, 2011 |  |  | 108,454 |
Additions |  |  | 11,254 |
Cost as at September 30, 2012 |  |  | 119,708 |

7. | MINERAL PROPERTY, PLANT AND EQUIPMENT

The Company owns 100% of the Salamandra group of concessions in Mexico. Included within the Salamandra group of concessions is the Mulatos mine which began operations in 2005.

The majority of the Company’s property, plant and equipment in operations is amortized on a units-of-production basis over an estimated nine year mine life. Certain mining and office equipment is amortized on a straight line basis over periods ranging from two to five years.

|  | 9 |  | ALAMOS GOLD INC.

The following is a continuity of the Company’s mineral property, plant and equipment for the nine-month period ended September 30, 2012.

|  | Mining plant and equipment |  |  | Office and computer equipment |  |  | Construction in progress |  |  | Subtotal |  |  | Mineral property and deferred development |  |  | Total |
|  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |
Cost as at December 31, 2011 |  |  | $ 173,393 |  |  |  | $ 2,375 |  |  |  | $ 23,898 |  |  |  | $ 199,666 |  |  |  | $ 126,660 |  |  |  | $ 326,326 |
Additions |  |  | 4, 276 |  |  |  | 564 |  |  |  | 10,754 |  |  |  | 15,594 |  |  |  | 13,710 |  |  |  | 29,304 |
Transfers from construction in progress |  |  | 28,792 |  |  |  | - |  |  |  | (28,792) |  |  |  | - |  |  |  | - |  |  |  | - |
Cost as at September 30, 2012 |  |  | $ 206,461 |  |  |  | $ 2,939 |  |  |  | $ 5,860 |  |  |  | $ 215,260 |  |  |  | $ 140,370 |  |  |  | $ 355,630 |
Accumulated amortization and impairment as at December 31, 2011 |  |  | $ 76,579 |  |  |  | $ 1,274 |  |  |  | $- |  |  |  | $ 77,853 |  |  |  | $ 32,345 |  |  |  | $ 110,198 |
Amortization expense |  |  | 21,053 |  |  |  | 390 |  |  |  |  |  |  |  | 21,443 |  |  |  | 15,418 |  |  |  | 36,861 |
Accumulated amortization and impairment as at September 30, 2012 |  |  | $ 97,632 |  |  |  | $ 1,664 |  |  |  | $- |  |  |  | $ 99,296 |  |  |  | $ 47,763 |  |  |  | $ 147,059 |
Net book value as at September 30, 2012 |  |  | $108,829 |  |  |  | $ 1,275 |  |  |  | $5,860 |  |  |  | $ 115,964 |  |  |  | $ 92,607 |  |  |  | $ 208,571 |

8. | DIVIDENDS

|  | Nine-months ended |
|  | September 30, 2012 |
|  | ($000) |
Paid during the period |  |  | 11,950 |
Declared and payable |  |  | 12,062 |
|  |  | $ 24,012 |
Weighted average number of common shares outstanding |  |  | 119,548,000 |
Dividend per share |  |  | $ 0.20 |

9. | PROVISIONS

Decommissioning Liability

The fair value of a decommissioning liability is recognized in the period in which it is incurred, on a discounted cash flow basis, if a reasonable estimate can be made. The liability accretes to its full value over time through charges to earnings. In addition, the fair value is added to the carrying amount of the Company’s mineral property, plant and equipment, and is amortized on a units-of-production basis over the life of the Mine.

|  | 10 |  | ALAMOS GOLD INC.

A continuity of the decommissioning liability is as follows:

|  | Nine-months ended |
|  | September 30, 2012 |
|  | ($000) |
Obligations at December 31, 2011 |  |  | 6,680 |
Revisions in estimated cash flows and changes in assumptions |  |  | - |
Payments made against the liability |  |  | (1,146) |
Accretion of discounted cash flows |  |  | 372 |
Obligations at September 30, 2012 |  |  | $5,906 |

10. | SHARE CAPITAL

a) | Authorized share capital of the Company consists of an unlimited number of fully paid common shares without par value.

|  | Number of Shares |  |  | Amount |
|  |  |  |  | ($000) |
Outstanding at December 31, 2011 |  |  | 118,383,008 |  |  |  | 355,524 |
Exercise of stock options |  |  | 2,232,200 |  |  |  | 24,432 |
Transfer from contributed surplus to share capital for stock options exercised |  |  | - |  |  |  | 8,650 |
Outstanding at September 30, 2012 |  |  | 120,615,208 |  |  |  | $ 388,606 |

b) | Stock options

The Company has a stock option plan (the “Plan”), originally approved by the Board of Directors (the “Board”) on April 17, 2003, and amended and ratified on May 25, 2007, May 15, 2008, April 7, 2009, June 2, 2010 and May 30, 2012, which allows the Company to grant incentive stock options to officers of the Company. Under the Plan, the number of shares reserved for issuance cannot exceed 7% of the total number of shares which are outstanding on the date of grant. The exercise price, term (not to exceed ten years) and vesting provisions are authorized by the Board at the time of the grant. The plan is subject to shareholder approval and ratification every three years.

Stock options granted under the Plan are exercisable for a five-year period. Incentive stock options granted vest 1/3 on the first anniversary date, 1/3 on the second anniversary and 1/3 on the third anniversary date.

The following is a continuity of the changes in the number of stock options outstanding for the nine-month period ended September 30, 2012:

|  | Number |  |  | Weighted average exercise price ($CAD) |
Outstanding at December 31, 2011 |  |  | 6,405,700 |  |  |  | $12.95 |
Granted |  |  | 840,000 |  |  |  | 16.30 |
Exercised |  |  | (2,232,200) |  |  |  | 10.92 |
Forfeited |  |  | (77,000) |  |  |  | 14.23 |
Outstanding at September 30, 2012 |  |  | 4,936,500 |  |  |  | $14.42 |

The weighted average share price at the date of exercise for stock options exercised in the nine-month period ended September 30, 2012 was CAD$18.93 (for the nine-month period ended September 30, 2011 – CAD$17.35).

For the nine-month period ended September 30, 2012, the Company granted 840,000 incentive stock options at exercise price at CAD$16.30, compared to 2,115,000 stock options granted at an exercise prices ranging from CAD$14.24 per share to CAD$16.39 per share in the nine-month period ended September 30, 2011.

|  | 11 |  | ALAMOS GOLD INC.

The fair value of stock options granted were estimated using the Black-Scholes option pricing model with the following assumptions:

For options granted in the nine-month period ended: |  | September 30, 2012 |  |  | September 30, 2011 |
Weighted average share price at grant date |  |  | $16.30 |  |  |  | $14.30 |
Risk-free rate |  |  | 1.0%-1.2% |  |  |  | 1.7%-2.3% |
Expected dividend yield |  |  | 1.04% |  |  |  | 0.43%-0.58% |
Expected stock price volatility (based on historical volatility) |  |  | 40%-51% |  |  |  | 42%-58% |
Expected life, based on terms of the grants (months) |  |  | 30-60 |  |  |  | 20-60 |
Weighted average per share fair value of stock options granted |  |  | $5.48 |  |  |  | $4.96 |

Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock. Changes in these assumptions can materially affect the fair value estimate, and therefore it is management’s view that the existing models may not provide a single reliable measure of the fair value of the Company’s stock option grants.

As at September 30, 2012, 3,500,500 stock options were exercisable. The remaining 1,436,000 outstanding stock options vest over the following three years.

Stock options outstanding and exercisable as at September 30, 2012:

|  | Outstanding |  |  | Exercisable |
Range of exercise prices ($CAD) |  | Number of options |  |  | Weighted average exercise price ($CAD) |  |  | Weighted average remaining contractual life (years) |  |  | Number of options |  |  | Weighted average exercise price ($CAD) |
$6.00 - $8.00 |  |  | 30,000 |  |  |  | 6.76 |  |  |  | 0.67 |  |  |  | 30,000 |  |  |  | 6.76 |
$8.01 - $10.00 |  |  | 450,000 |  |  |  | 9.80 |  |  |  | 1.69 |  |  |  | 450,000 |  |  |  | 9.80 |
$10.01 - $14.00 |  |  | 100,000 |  |  |  | 13.04 |  |  |  | 2.39 |  |  |  | 100,000 |  |  |  | 13.04 |
$14.01 - $15.00 |  |  | 3,431,500 |  |  |  | 14.61 |  |  |  | 2.80 |  |  |  | 2,845,500 |  |  |  | 14.69 |
$15.01 - $17.50 |  |  | 925,000 |  |  |  | 16.34 |  |  |  | 4.50 |  |  |  | 75,000 |  |  |  | 16.75 |
|  |  | 4,936,500 |  |  |  | $ 14.42 |  |  |  | 2.99 |  |  |  | 3,500,500 |  |  |  | $ 13.99 |

c) | Stock Appreciation Rights (“SARs”)

In 2011, the Company’s Board approved a cash-settled stock appreciation rights plan (“SARs Plan”) to grant incentive SARs to its directors, officers, employees and consultants. Under the SARs Plan, the number of units reserved for issuance cannot exceed 8% of the total number of common shares which are outstanding on the date of grant. The exercise price, term (not to exceed ten years) and vesting provisions are authorized by the Board at the time of the grant.

SARs granted to directors, officers, employees and certain consultants under the SARs Plan are exercisable for a five-year period. SARs granted prior to May 31, 2012 vest 20% on the date of grant, and 20% at each six-month interval following the date of grant. Vesting provisions in the SARs Plan were amended effective May 31, 2012. All grants subsequent to this amendment are subject to vesting of 1/3 on the first anniversary date, 1/3 on the second anniversary and 1/3 on the third anniversary date.

SARs are cash-settled liabilities, which are remeasured at each reporting date and at the settlement date. Any changes in the fair value of the liability are recognized as an expense to share-based compensation in the Statements of Comprehensive Income. As at September 30, 2012, the SARs liability was $4.3 million (December 31, 2011 – $1.6 million) recorded in accounts payable and accrued liabilities in the Consolidated Statements of Financial Position.

|  | 12 |  | ALAMOS GOLD INC.

The following is a continuity of the changes in the number of SARs outstanding for the nine-month period ended September 30, 2012:

|  | Number |  |  | Weighted average exercise price ($CAD) |
Outstanding at December 31, 2011 |  |  | 770,000 |  |  |  | $16.36 |
Granted |  |  | 830,000 |  |  |  | 18.48 |
Exercised |  |  | (45,340) |  |  |  | 15.49 |
Forfeited |  |  | (17,140) |  |  |  | 15.49 |
Outstanding at September 30, 2012 |  |  | 1,537,520 |  |  |  | $ 17.54 |

The fair value of SARs granted were estimated using the Black-Scholes option pricing model with the following assumptions:

For SARS granted in the nine-month period ended: |  | September 30, 2012 |
Weighted average share price at grant date |  |  | $18.48 |
Risk-free rate |  |  | 1.0% - 1.6% |
Expected dividend yield |  |  | 0.65%-1.04% |
Expected stock price volatility (based on historical volatility) |  |  | 41%-64% |
Expected life, based on terms of the grants (months) |  |  | 20-60 |
Weighted average per share fair value of SARs granted |  |  | $6.65 |

Stock appreciation rights outstanding and exercisable as at September 30, 2012:

|  | Outstanding |  |  | Exercisable |
Range of exercise prices ($CAD) |  | Number of SARs |  |  | Weighted average exercise price ($CAD) |  |  | Weighted average remaining contractual life (years) |  |  | Number of SARs |  |  | Weighted average exercise price ($CAD) |
$15.00 - $17.00 |  |  | 457,520 |  |  |  | 15.89 |  |  |  | 3.03 |  |  |  | 101,300 |  |  |  | 15.73 |
$17.01 - $19.00 |  |  | 605,000 |  |  |  | 17.56 |  |  |  | 4.11 |  |  |  | 195,000 |  |  |  | 17.27 |
$19.01 - $20.00 |  |  | 475,000 |  |  |  | 19.11 |  |  |  | 5.00 |  |  |  | - |  |  |  | - |
|  |  | 1,537,520 |  |  |  | $ 17.54 |  |  |  | 4.06 |  |  |  | 296,300 |  |  |  | $ 16.74 |

d) | Earnings per share

Basic earnings per share amounts are calculated by dividing earnings for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period, plus the effects of the dilutive common share equivalents.

|  | 13 |  | ALAMOS GOLD INC.

|  | For the nine-months ended |
|  | September 30, |  |  | September 30, |
|  | 2012 |  |  | 2011 |
Earnings ($000) |  |  | $80,050 |  |  |  | $38,787 |
Weighted average number of common shares outstanding |  |  | 119,548,000 |  |  |  | 117,060,000 |
Basic earnings per share |  |  | $0.67 |  |  |  | $0.33 |
Dilutive effect of stock options outstanding |  |  | 1,079,000 |  |  |  | 1,377,000 |
Diluted weighted average number of common shares outstanding |  |  | 120,627,000 |  |  |  | 118,437,000 |
Diluted earnings per share |  |  | $0.66 |  |  |  | $0.33 |

11. | SEGMENTED REPORTING

The Company operates in one business segment (the exploration, mine development and extraction of precious metals, primarily gold) in three geographic areas: Canada, Mexico and Turkey.

As at |  | September 30, 2012 |  |  | December 31, 2011 |
|  | Mexico |  |  | Turkey |  |  | Canada |  |  | Total |  |  | Mexico |  |  | Turkey |  |  | Canada |  |  | Total |
|  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |
Non-current assets |  |  | 207,290 |  |  |  | 120,457 |  |  |  | 532 |  |  |  | 328,279 |  |  |  | 215,111 |  |  |  | 109,007 |  |  |  | 464 |  |  |  | 324,582 |
Assets |  |  | 354,905 |  |  |  | 131,470 |  |  |  | 220,361 |  |  |  | 706,736 |  |  |  | 395,313 |  |  |  | 117,520 |  |  |  | 86,391 |  |  |  | 599,224 |
Liabilities |  |  | 71,227 |  |  |  | 463 |  |  |  | 18,171 |  |  |  | 89,861 |  |  |  | 61,874 |  |  |  | 1,666 |  |  |  | 2,134 |  |  |  | 65,674 |
|  | Nine-months ended September 30, 2012 |  |  | Nine-months ended September 30, 2011 |
|  | Mexico |  |  | Turkey |  |  | Canada |  |  | Total |  |  | Mexico |  |  | Turkey |  |  | Canada |  |  | Total |
|  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |  |  | ($000) |
Revenues |  |  | 222,426 |  |  |  | - |  |  |  | - |  |  |  | 222,426 |  |  |  | 156,231 |  |  |  | - |  |  |  | - |  |  |  | 156,231 |
Earnings (loss) |  |  | 94,776 |  |  |  | (3,466 | ) |  |  | (11,260 | ) |  |  | 80,050 |  |  |  | 58,801 |  |  |  | (3,325 | ) |  |  | (16,689 | ) |  |  | 38,787 |

12. | COMMITMENTS AND CONTINGENCIES

a) Royalty

Production from certain concessions within the Salamandra district, including the Mine, is subject to a production royalty payable at a rate of 5% of the value of gold and silver production, less certain deductible refining and transportation costs. The royalty is calculated based on the daily average London PM Fix gold market prices, not actual prices realized by the Company. Production to a maximum of two million ounces of gold is subject to royalty. As at September 30, 2012, the royalty was paid or accrued on approximately 943,000 ounces of applicable gold production. Royalty expense for the three and nine-month period ended September 30, 2012 was $3.5 million and $11.2 million (three and nine-month periods ended September 30, 2011: $2.1 million and $7.6 million).

In addition, a third party has a 2% Net Smelter Return Royalty on production from the Company’s Ağı Dağı project. The Company has not recorded an accrual for this royalty at September 30, 2012 as the project is not in production. The Company is also subject to 2% state royality on production in Turkey, subject to certain deductions.

|  | 14 |  | ALAMOS GOLD INC.

b) Mulatos Town Relocation

The Company commenced the planned relocation of the town of Mulatos in 2007 and relocation contracts were signed with over half of the families residing in Mulatos at that time. Property owners and possessors were offered a comprehensive benefits package including compensation for their property at a premium to independent third-party valuations and/or relocation benefits. In certain cases, relocation benefits include deferred monthly payments. Since the start of the Mulatos relocation effort in 2007, the Company has invested approximately $7.3 million in property acquisition, relocation benefits, legal, and related costs. In addition, the Company has recognized a liability of $0.3 million representing the discounted value of expected future payments for relocation benefits to property owners and possessors that had signed contracts with the Company as at September 30, 2012. The discounted value of the liability was capitalized to mineral property, plant and equipment.

During 2008, the Company, through its wholly-owned subsidiaries, entered into a land purchase agreement with the Mulatos Ejido, the local landowners. Pursuant to the land purchase agreement, the Company made a payment of $1.3 million in order to secure temporary occupation rights to specified land. An additional payment of approximately $1.0 million (based on current exchange rates) which has not been accrued as at September 30, 2012, is payable once the land has been vacated and transferred to the Company. The probability and timing of this additional payment is currently uncertain.

In 2010, the Mulatos Ejido filed a complaint with the Unitary Agrarian Court to nullify the 2008 land purchase agreement. In June 2012, the Agarian Unitary Court issued a judgement in which it ruled that the Company’s wholly-owned subsidiary has been completely discharged of all claims made against it in this lawsuit. The Court also confirmed the validity of the 2008 land purchase agreement.

Additional future property acquisition, relocation benefits, legal and related costs may be material. The Company cannot currently determine the expected timing, outcome of negotiations or costs associated with the relocation of the remaining property owners and possessors and potential land acquisitions.

13. | RECLASSIFICATION

The comparative financial statements have been reclassified to conform to the presentation of the current period financial statements.

|  | 15 |  | ALAMOS GOLD INC.