EX-4.2



 EXHIBIT 4.2 
  
 



 
  
  

2011 FINANCIAL REPORT 

December 31, 2011 and 2010 
 (Based
on International Financial Reporting Standards (“IFRS”) and stated in thousands of United States dollars) 
 INDEX

 Management’s responsibility for financial reporting 
 Independent Auditors’ report 
 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 Consolidated Financial Statements 










					
		 	



	 	2011 FINANCIAL REPORT

 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING 
 The consolidated financial statements of Alamos Gold Inc. have been prepared by, and are the responsibility of the Company’s management. 
 The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) and reflect management’s best estimates and judgments based on
information currently available. In the opinion of management, the accounting practices utilized are appropriate in the circumstances and the consolidated financial statements fairly reflect the financial position and results of operations of the
Company within reasonable limits of materiality. 
 Management has developed and maintains a system of internal controls to obtain reasonable
assurance that the Company’s assets are safeguarded, transactions are authorized, and financial information is reliable. All internal control systems have inherent limitations, including the possibility of circumvention and overriding of
controls, and therefore, can provide only reasonable assurance as to financial statement reliability and the safeguarding of assets. 
 The
Board of Directors is responsible for ensuring management fulfills its responsibilities. The Audit Committee meets with the Company’s management and external auditors to discuss the results of the audit and to review the consolidated financial
statements prior to the Audit Committee’s submission to the Board of Directors for approval. The Audit Committee also reviews the quarterly financial statements and recommends them for approval to the Board of Directors, reviews with management
the Company’s systems of internal control, and approves the scope of the external auditors’ audit and non-audit work. The Audit Committee is composed entirely of directors not involved in the daily operations of the Company who are thus
considered to be free from any relationship that could interfere with their exercise of independent judgment as a Committee member. 
 The
consolidated financial statements have been audited by Ernst & Young LLP, Chartered Accountants and their report outlines the scope of their examination and gives their opinion on the consolidated financial statements. 

February 21, 2012 
  

	
	 




  

	John A. McCluskey
	President and Chief Executive Officer

  

	
	 




  

	James R. Porter, CA
	Chief Financial Officer


  

					
	 	 	1  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 INDEPENDENT AUDITORS’ REPORT 
 To the Shareholders of 
 Alamos Gold Inc. 

We have audited the accompanying consolidated financial statements of Alamos Gold Inc., which comprise the consolidated statements of financial position
as at December 31, 2011 and 2010, and January 1, 2010, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2011 and 2010, and a summary of significant accounting
policies and other explanatory information. 
 Management’s responsibility for the consolidated financial statements 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial
Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ responsibility 
 Our
responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 
 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. 
 We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit
opinion. 
 Opinion 
 In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Alamos Gold Inc. as at December 31, 2011 and 2010, and January 1, 2010, and its financial performance and its cash flows for
the years ended December 31, 2011 and 2010 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. 

 
 



 
 Chartered Accountants 
 Licensed Public Accountants 
 Toronto, Canada 

February 21, 2012 

  

					
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	 	2011 FINANCIAL REPORT

  

 ALAMOS GOLD INC. 
 Consolidated Statements of Financial Position 
 (Stated in thousands of United States dollars) 

 

																			
	 	  	Note  
Ref.  	  	  December 31,  
2011	 	  	 	  	  December 31,  
2010	 	  	 	  	  January 1,  
2010	 
	 A S S E T S
	  		  				  		  				  		  			
	 Current Assets
	  		  				  		  				  		  			
	 Cash and cash equivalents
	  		  	 	$ 169,471  	  	  		  	 	$ 146,334  	  	  		  	 	$ 160,682  	  
	 Short-term investments
	  		  	 	53,088  	  	  		  	 	41,846  	  	  		  	 	26,200  	  
	 Amounts receivable
	  	6  	  	 	6,147  	  	  		  	 	5,749  	  	  		  	 	2,369  	  
	 Advances and prepaid expenses
	  		  	 	2,117  	  	  		  	 	3,136  	  	  		  	 	1,058  	  
	 Available-for-sale securities
	  	5  	  	 	10,355  	  	  		  	 	9,380  	  	  		  	 	-  	  
	 Other financial assets
	  	5  	  	 	244  	  	  		  	 	1,094  	  	  		  	 	-  	  
	 Inventory
	  	7  	  	 	33,220  	  	  		  	 	25,225  	  	  		  	 	20,026  	  
	 Total Current Assets
	  		  	 	274,642  	  	  		  	 	232,764  	  	  		  	 	210,335  	  
							
	 Non-Current Assets
	  		  				  		  				  		  			
	 Exploration and evaluation assets
	  	8  	  	 	108,454  	  	  		  	 	99,767  	  	  		  	 	521  	  
	 Mineral property, plant and equipment
	  	9  	  	 	216,128  	  	  		  	 	173,905  	  	  		  	 	144,822  	  
	 Total Assets
	  		  	 	$ 599,224  	  	  		  	 	$ 506,436  	  	  		  	 	$ 355,678  	  
							
	 L I A B I L I T I E S
	  		  				  		  				  		  			
	 Current Liabilities
	  		  				  		  				  		  			
	  
 Accounts payable and accrued
liabilities
	  		  	 	$ 17,024  	  	  		  	 	$ 14,393  	  	  		  	 	$ 11,179  	  
	  
 Income taxes payable
	  		  	 	6,125  	  	  		  	 	3,373  	  	  		  	 	1,988  	  
	 Current portion of other liabilities
	  	11 b)  	  	 	363  	  	  		  	 	428  	  	  		  	 	370  	  
	 Total Current Liabilities
	  		  	 	23,512  	  	  		  	 	18,194  	  	  		  	 	13,537  	  
							
	 Non-Current Liabilities
	  		  				  		  				  		  			
	 Deferred income taxes
	  	13  	  	 	35,008  	  	  		  	 	26,866  	  	  		  	 	22,598  	  
	  
 Decommissioning
liability
	  	11 c)  	  	 	6,680  	  	  		  	 	7,559  	  	  		  	 	5,115  	  
	 Other liabilities
	  	11a) b)  	  	 	474  	  	  		  	 	688  	  	  		  	 	834  	  
	  
  
 Total Liabilities
	  		  	 	65,674  	  	  		  	 	53,307  	  	  		  	 	42,084  	  
							
	 E Q U I T Y
	  		  				  		  				  		  			
	 Share capital
	  	12 a)  	  	 	$ 355,524  	  	  		  	 	$ 325,867  	  	  		  	 	$ 251,752  	  
	 Contributed surplus
	  		  	 	27,861  	  	  		  	 	23,316  	  	  		  	 	12,864  	  
	 Accumulated other comprehensive loss
	  		  	 	(1,080)  	  	  		  	 	(1,332)  	  	  		  	 	-  	  
	 Retained earnings
	  		  	 	151,245  	  	  		  	 	105,278  	  	  		  	 	48,978  	  
	  
 Total Equity
	  		  	 	533,550  	  	  		  	 	453,129  	  	  		  	 	313,594	  
	  
 Total Liabilities and
Equity
	  		  	 	$ 599,224  	  	  		  	 	$ 506,436  	  	  		  	 	$ 355,678	  
							
	 Commitments and Contingencies
	  	16  	  				  		  				  		  			

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

On behalf of the Board 
  

					
	



	 		 	 




  

	John A. McCluskey	 		 	Paul Murphy
	President and Chief Executive Officer	 		 	Director


  

					
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	 	2011 FINANCIAL REPORT

  

 ALAMOS GOLD INC. 
 Consolidated Statements of Comprehensive Income 
 For the years ended December 31, 2011 and 2010

 (Stated in thousands of United States dollars, except per share amounts) 

 

													
	 	  	Note  
Ref.  	  	2011  	 	  	 	  	2010 	 
					
	 Operating Revenues
	  		  	 	$ 227,364  	  	  		  	 	 $ 189,272  	  
					
	 MINE OPERATING COSTS
	  		  				  		  			
	 Mining and processing
	  		  	 	53,868  	  	  		  	 	46,560  	  
	 Royalties
	  	16 b)  	  	 	11,157  	  	  		  	 	9,090  	  
	 Amortization
	  		  	 	23,423  	  	  		  	 	20,486  	  
		  		  	 	88,448  	  	  		  	 	76,136  	  
	 EARNINGS FROM MINE OPERATIONS
	  		  	 	138,916  	  	  		  	 	113,136  	  
					
	 EXPENSES
	  		  				  		  			
	 Exploration
	  		  	 	9,540  	  	  		  	 	7,594  	  
	 Corporate and administrative
	  		  	 	9,613  	  	  		  	 	9,187  	  
	 Share-based compensation
	  	12 b) c)  	  	 	13,525  	  	  		  	 	16,300  	  
		  		  	 	32,678  	  	  		  	 	33,081  	  
	 EARNINGS FROM OPERATIONS
	  		  	 	106,238  	  	  		  	 	80,055  	  
					
	 OTHER INCOME (EXPENSES)
	  		  				  		  			
	 Finance income
	  		  	 	1,717  	  	  		  	 	1,510  	  
	 Financing expense
	  	11 b),c)  	  	 	(598)  	  	  		  	 	(451)  	  
	 Foreign exchange loss
	  		  	 	(188)  	  	  		  	 	(39)  	  
	 Other (loss) income
	  	14  	  	 	(1,234)  	  	  		  	 	9,393  	  
					
	 EARNINGS BEFORE INCOME TAXES
	  		  	 	105,935  	  	  		  	 	90,468  	  
					
	 INCOME TAXES
	  	13  	  				  		  			
	 Current tax expense
	  		  	 	(34,194)  	  	  		  	 	(23,410)  	  
	 Deferred tax expense
	  		  	 	(11,660)  	  	  		  	 	(3,263)  	  
					
	 EARNINGS
	  		  	 	$60,081  	  	  		  	 	$63,795  	  
	 Other comprehensive income
	  		  				  		  			
	 - Unrealized loss on securities
	  		  	 	(1,089)  	  	  		  	 	(1,332)  	  
	- Reclassification of realized gains on available-for-sale securities included in earnings	  		  	 	(280)  	  	  		  	 	-  	  
	 - Impairment of available-for-sale securities
	  		  	 	1,621  	  	  		  	 	-  	  
	 COMPREHENSIVE INCOME
	  		  	 	$60,333  	  	  		  	 	$62,463  	  
					
	 EARNINGS PER SHARE
	  		  				  		  			
	 - basic
	  	12 d)  	  	 	$0.51  	  	  		  	 	$0.55  	  
	 - diluted
	  	12 d)  	  	 	$0.51  	  	  		  	 	$0.55  	  
					
	 Weighted average number of common shares outstanding
	  		  	 	 	 	  		  	 	 	 
	 - basic
	  		  	 	117,375,000  	  	  		  	 	115,183,000  	  
	 - diluted
	  		  	 	118,669,000  	  	  		  	 	116,907,000  	  

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

  

					
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	 	2011 FINANCIAL REPORT

  

 ALAMOS GOLD INC. 
 Consolidated Statements of Changes In Equity 
 For the years ended December 31, 2011 and 2010

 (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 January 1, 2010
	 	 	109,850,108  	  	 	 	$251,752 	  	 	 	$12,864	  	 	 	$0	  	 	 	$48,978	  	 	 	$313,594	  
	 Share-based compensation
	 	 	-  	  	 	 	- 	  	 	 	16,300	  	 	 	-	  	 	 	-	  	 	 	16,300	  
	 Shares issued on exercise of Options
	 	 	2,489,900  	  	 	 	23,485 	  	 	 	(5,848)	  	 	 	-	  	 	 	-	  	 	 	17,637	  
	 Shares issued on acquisition (note 4)
	 	 	4,000,000  	  	 	 	50,630 	  	 	 	-	  	 	 	-	  	 	 	-	  	 	 	50,630	  
	 Dividends
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	-	  	 	 	(7,495)	  	 	 	(7,495)	  
	 Earnings
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	-	  	 	 	63,795	  	 	 	63,795	  
	 Other comprehensive income (tax impact; nil)
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	(1,332)	  	 	 	-	  	 	 	(1,332)	  
	 Balance at December 31, 2010
	 	 	116,340,008  	  	 	 	$325,867 	  	 	 	$23,316	  	 	 	($1,332)	  	 	 	$105,278	  	 	 	$453,129	  
	  	 	Number of
Shares
outstanding	 	 	Share capital	 	 	Contributed
surplus	 	 	  

Accumulated
other
comprehensive
loss
	 	 	Retained 
earnings 	 	 	Total Equity 	 
	 Balance at January 1, 2011
	 	 	116,340,008  	  	 	 	$325,867 	  	 	 	$23,316	  	 	 	($1,332)	  	 	 	$105,278	  	 	 	$453,129	  
	 Share-based compensation
	 	 	-  	  	 	 	- 	  	 	 	11,935	  	 	 	-	  	 	 	-	  	 	 	11,935	  
	 Shares issued on exercise of Options
	 	 	2,043,000  	  	 	 	29,657 	  	 	 	(7,390)	  	 	 	-	  	 	 	-	  	 	 	22,267	  
	 Dividends
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	-	  	 	 	(14,114)	  	 	 	(14,114)	  
	 Earnings
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	-	  	 	 	60,081	  	 	 	60,081	  
	 Other comprehensive income (tax impact; nil)
	 	 	-  	  	 	 	- 	  	 	 	-	  	 	 	252	  	 	 	-	  	 	 	252	  
	 Balance at December 31, 2011
	 	 	118,383,008  	  	 	 	$355,524 	  	 	 	$27,861	  	 	 	($1,080)	  	 	 	$151,245	  	 	 	$533,550	  

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

  

					
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	 	2011 FINANCIAL REPORT

  

 ALAMOS GOLD INC. 
 Consolidated Statements of Cash Flows 
 For the years ended December 31, 2011 and 2010 

(Stated in thousands of United States dollars) 
  

											
	 	  	  2011  	 	  	 	  	 2010   	 
	  CASH PROVIDED BY (USED IN):
	  				  		  			
	  OPERATING ACTIVITIES
	  				  		  			
	  Earnings
	  	 	$60,081  	  	  		  	 	$63,795  	  
	   Adjustments for items not involving cash:
	  				  		  			
	    Amortization
	  	 	23,423  	  	  		  	 	20,486  	  
	    Financing expense
	  	 	598  	  	  		  	 	451  	  
	    Unrealized foreign exchange (gain) loss
	  	 	(3,853)  	  	  		  	 	22  	  
	    Deferred tax expense
	  	 	11,660  	  	  		  	 	3,263  	  
	    Write-down and loss on disposal of assets
	  	 	-  	  	  		  	 	1,598  	  
	    Share-based compensation
	  	 	13,525  	  	  		  	 	16,300  	  
	    Gain on settlement
	  	 	-  	  	  		  	 	(11,565)  	  
	    Gain on sale of securities
	  	 	(783)  	  	  		  	 	-  	  
	    Impairment of securities
	  	 	1,621  	  	  		  	 	-  	  
	    Other
	  	 	954  	  	  		  	 	446  	  
	   Changes in non-cash working capital:
	  				  		  			
	    Fair value of forward contracts
	  	 	(715)  	  	  		  	 	715  	  
	    Amounts receivable
	  	 	(18,218)  	  	  		  	 	(16,635)  	  
	    Inventory
	  	 	(6,572)  	  	  		  	 	(4,630)  	  
	    Advances and prepaid expenses
	  	 	1,019  	  	  		  	 	(1,892)  	  
	    Accounts payable, taxes payable and accrued liabilities
	  	 	23,794  	  	  		  	 	17,294  	  
		  	 	106,534  	  	  		  	 	89,648  	  
	   INVESTING ACTIVITIES
	  				  		  			
	   Purchases of securities (net)
	  	 	(2,213)  	  	  		  	 	(124)  	  
	   Acquisition of Turkish properties
	  	 	-  	  	  		  	 	(40,180)  	  
	   Short-term investments (net)
	  	 	(11,242)  	  	  		  	 	(15,646)  	  
	   Proceeds on sale of equipment
	  	 	889  	  	  		  	 	1,412  	  
	   Decommissioning liability
	  	 	(145)  	  	  		  	 	-  	  
	   Exploration and evaluation assets
	  	 	(8,687)  	  	  		  	 	(7,912)  	  
	   Mineral property, plant and equipment
	  	 	(68,352)  	  	  		  	 	(53,018)  	  
		  	 	(89,750)  	  	  		  	 	(115,468)  	  
	   FINANCING ACTIVITIES
	  				  		  			
	   Common shares issued
	  	 	22,267  	  	  		  	 	17,637  	  
	   Dividends paid
	  	 	(14,114)  	  	  		  	 	(7,495)  	  
		  	 	8,153  	  	  		  	 	10,142  	  
	   Effect of exchange rates on cash and cash equivalents
	  	 	(1,800)  	  	  		  	 	1,330  	  
	   Net increase (decrease) in cash and cash equivalents
	  	 	23,137  	  	  		  	 	(14,348)  	  
	   Cash and cash equivalents - beginning of year
	  	 	146,334  	  	  		  	 	160,682  	  
	   CASH AND CASH EQUIVALENTS - END OF YEAR
	  	 	    $169,471  	  	  		  	 	  $146,334  	  
	   Supplemental information:
	  				  		  			
	   Interest paid
	  	 	$ -  	  	  		  	 	$ -  	  
	   Interest received
	  	 	$1,380  	  	  		  	 	$ 1,300  	  
	   Income taxes paid
	  	 	$12,825  	  	  		  	 	$8,300  	  

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

  

					
	 	 	6  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 Notes to Consolidated Financial Statements 

For the years ended December 31, 2011 and 2010 
 (Stated in United States dollars, unless otherwise stated) 
 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 and Kirazlı gold development projects in Turkey. 
 2. BASIS OF PREPARATION 
 Statement of compliance 

These consolidated financial statements, including comparative figures, have been prepared using accounting policies in compliance with International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The disclosures
concerning the transition from Canadian Generally Accepted Accounting Principles (“GAAP”) to IFRS are included in Note 20. 
 The
consolidated financial statements were authorized for issue by the Board of Directors on February 21, 2012. 
 Use of estimates and
judgments 
 The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Accounts which require management to make material estimates and significant
assumptions in determining amounts recorded include: impairment of tangible and intangible assets, recoverable reserves, inventory recoveries, share-based payments, decommissioning liabilities, units of production amortization, provisions and
contingencies, and recovery of deferred tax assets. 
 Judgments made by management in the application of IFRS that have a significant effect on
the financial statements and estimates with a significant risk of material adjustment in the current and following fiscal years include: determination of functional currency and amortization methods. 

i) Impairment: 
 The Company assesses its
mineral property, plant and equipment and exploration and evaluation assets annually to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is
considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential
and operating performance. 

  

					
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	 	2011 FINANCIAL REPORT

  

 ii) Recoverable reserves: 
 Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Company’s mining properties. The Company estimates its recoverable reserves based on
information compiled by appropriately qualified persons relating to the geological data on the size, depth, shape and grade of the ore body, and requires complex geological judgments to interpret the data. The estimation of recoverable reserves is
based upon factors such as estimates of commodity prices, production costs, future capital requirements, and foreign exchange rates, along with geological assumptions and judgments made in estimating the size and grade of the ore body. Changes in
the reserve or resource estimates may impact the carrying value of exploration and evaluation assets, mineral property, plant and equipment, decommissioning liabilities, and amortization expense. 

iii) Units-of-production (“UOP”) amortization: 
 Estimated recoverable reserves are used in determining the amortization of certain mineral property, plant and equipment. This results in an amortization charge proportional to the depletion of the
anticipated remaining mine life. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditures. Numerous UOP amortization methods are available to choose
from; the Company has adopted a methodology based on estimated recoverable reserves over the life of mine. 
 iv) Inventory (note 7):

 The Company accounts for its in-process precious metals inventory using a process flow for applicable costs appropriate to the physical
transformation of ore through the mining, crushing, leaching and gold recovery process. The Company is required to estimate the ultimate recovery based on laboratory tests and ongoing analysis of leach pad kinetics in order to determine the
recoverable metals from the leach pad at the end of each accounting period. If the Company determines at any time that the ultimate recovery should be adjusted downward, then the Company will adjust the average carrying value of a unit of metal
content in the in-process inventory and adjust upward on a prospective basis the unit cost of subsequent production. Should an upward adjustment in the average carrying value of a unit of metal result in the carrying value exceeding the realizable
value of the metal, the Company would write down the carrying value to the realizable value. 
 v) Share based payments (note 12 b), c)):

 The Company follows accounting guidelines in determining the fair value of share-based compensation. The computed amount is not based on
historical cost, but is derived based on subjective assumptions input into an option pricing model. The model requires that management make forecasts as to future events, including estimates of: the average future hold period of issued stock options
or stock appreciation rights before exercise, expiry or cancellation; future volatility of the Company’s share price in the expected hold period (using historical volatility as a reference); and the appropriate risk-free rate of interest.
Share-based compensation incorporates an expected forfeiture rate. The expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeiture rates, and is adjusted if the actual forfeiture rate differs from
the expected rate. 
 The resulting value calculated is not necessarily the value that the holder of the instrument could receive in an
arm’s length transaction, given that there is no market for these instruments and they are not transferable. It is management’s view that the value derived is highly subjective and dependent upon the input assumptions made. 

vi) Decommissioning liabilities (note 11 c)): 

The Company is required to determine the expected value of the estimated costs of decommissioning liabilities and to recognize this value as a liability
when reasonably determinable. Key assumptions in determining the amount of the liability are: total undiscounted cash outflows, expected timing of payment of the cash outflows and 

  

					
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	 	2011 FINANCIAL REPORT

  

 
appropriate inflation and discount rates to apply to the timing of cash outflows. Because the liability is recorded on a discounted basis, it is increased due to the passage of time with an
offsetting charge to financing expense in the statement of comprehensive income. The Company calculated its estimated mine site closure costs based on a mine closure and reclamation plan prepared by management and reviewed by an independent third
party. The majority of the expenditures associated with reclamation and mine closure will be incurred at the end of the mine life, expected to be approximately 9 years based on expected proven and probable reserves and the current rate of
production. 
 vii) Provisions (note 11): 
 The Company records provisions which include various estimates, including the Company’s best estimate of the future costs associated with settlement of the obligation, and discount rates applied.
Such estimates are necessarily calculated with reference to external sources, all of which are subject to annual review and change. 
 viii)
Recovery of deferred tax assets (note 13): 
 Judgment is required in determining whether deferred tax assets are recognized on the statement of
financial position. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income in future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on
forecasted cash flows and the application of existing tax laws in each jurisdiction. 
 Functional and presentation currency 

These consolidated financial statements are presented in United States dollars (“USD”), which is the functional currency of the Company and all
its subsidiaries. 
 Basis of measurement 
 These consolidated financial statements have been prepared on a historical cost basis, except for certain derivative and available-for-sale financial instruments which are measured at fair value. The
Company prepares its consolidated financial statements, except for cash flow information, using the accrual basis of accounting. 

  

					
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 3. SIGNIFICANT ACCOUNTING POLICIES 
 Summarized below are those policies considered significant to the Company. All accounting policies have been applied consistently to all periods presented in these consolidated financial statements and in
preparing the opening IFRS statement of financial position at January 1, 2010 for the purposes of the transition to IFRS, unless otherwise indicated. References to the Company included herein are inclusive of the Canadian parent company and its
consolidated subsidiaries. 
 Basis of consolidation 
 The consolidated financial statements include the financial statements of the Company and the entities controlled by the Company (its subsidiaries). The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control commences until the date that control ceases. All inter-company balances and transactions have been eliminated. 
 The consolidated financial statements include the financial statements of the parent company, Alamos Gold Inc., and its subsidiaries as listed below: 

 

											
	 	  	Country
of            
Incorporation            	  	Equity Interest	 
	 	  	 	  	2011  	 	  	2010	 
	   Alamos Gold Inc.

 
	  	Canada            	  	 	-   	  	  	 	-   	  
	   Minas de Oro Nacional, S.A. de C.V.

 
	  	Mexico            	  	 	100%	  	  	 	100%	  
	   Servicios Administrativos y Operativos S.A. de C.V.

 
	  	Mexico            	  	 	100%	  	  	 	100%	  
	   Minera Bienvenidos S.A. de C.V.

 
	  	Mexico            	  	 	100%	  	  	 	100%	  
	   Kuzey Biga Madencilik Sanayi Ticaret AS

 
	  	Turkey            	  	 	100%	  	  	 	100%	  
	   Dogu Biga Madencilik Sanayi Ticaret AS

 
	  	Turkey            	  	 	100%	  	  	 	100%	  
	   Alamos Eurasia Madencilik AS

 
	  	Turkey            	  	 	100%	  	  	 	100%	  

 Foreign currency transactions 
 Transactions in foreign currencies are converted to the Company’s functional currency at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities of the Company
which are denominated in foreign currencies are translated into the Company’s functional currency at the exchange rate prevailing at the Statement of Financial Position date. Non-monetary assets and liabilities are translated at historical
exchange rates prevailing at each transaction date. Non-monetary assets and liabilities that are stated at fair value are translated using the historical rate on the date that the fair value was determined. Revenues and expenses are translated at
exchange rates prevailing on the date of the transactions, with the exception of inventory transfers and amortization which are translated at historical exchange rates. All exchange gains and losses are included in the determination of earnings.

 Revenue recognition 
 Revenue
is earned from the sale of gold and is recognized when dore or refined metal is delivered to a purchaser pursuant to a purchase agreement that fixes the quantity and price of the metal for each delivery. Revenue is measured at the fair value of the
consideration received or receivable. 
 Costs incurred or premium income related to forward sales or option contracts are recognized in revenue
when the contract is settled. Changes in the fair value of outstanding forward sales or option contracts are recognized in earnings. 

  

					
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 Inventory 
 Inventory which includes gold-in-process, dore and parts and supplies, is stated at the lower of cost or net realizable value. 

 

	 	(i)	Dore represents a bar containing predominantly gold by value which is generally refined off-site to return saleable metals. Dore inventory is valued at the lower of
average cost to produce the dore and net realizable value. 

  

	 	(ii)	In-process inventory represents costs that are incurred in the process of converting mineralized ores into partially refined precious metals, or dore. Ore represents
material that, at the time of extraction, is expected to be processed into a saleable form. The recovery of gold from ore is achieved through the heap leaching process. Under this method, ore is crushed and placed on leach pads where it is treated
with a chemical solution, which dissolves the gold contained in the ore. The resulting “pregnant” solution is further processed in a plant where the gold is recovered. 


Cost of in-process inventory includes operating costs incurred to that stage of the process plus amortization of mineral property, plant
and equipment relating to that stage of the process. Costs capitalized to in-process inventory include direct and indirect materials and consumables; direct labour; repairs and maintenance; utilities; amortization of mineral property, plant and
equipment; and local mine administrative expenses. Costs are removed from in-process inventory and transferred to dore inventory as ounces are produced based on the average cost per recoverable ounce on the leach pad. Costs are recorded in mining
and processing costs in the statement of comprehensive income on the sale of refined gold, as well as the impact of inventory movement reflected through mining and processing costs in the statement of comprehensive income. Recoverable gold on the
leach pads is estimated based on the quantities of ore placed on the leach pads (based on measured tonnes added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on estimated
ultimate recovery assumptions). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels; as a result, estimates are refined based on actual results over time. The ultimate recovery of gold from leach
pads will not be known until the leaching process is concluded at the end of the mine life. 
  

	 	(iii)	Parts and supplies inventory is valued at the lower of average cost and net realizable value. Provisions are recorded to reflect present intentions for the use of slow
moving and obsolete parts and supplies inventory. 

 Mineral property, plant and equipment 

i) Mineral property acquisition and mine development costs: 
 The Company may hold interests in mineral property in various forms, including prospecting licenses, exploration and exploitation concessions, mineral leases and surface rights. The Company capitalizes
payments made in the process of acquiring legal title to these properties. 
 Property acquisition and mine development costs are recorded at
cost. Pre-production expenditures are capitalized until the commencement of production. Mine development costs incurred to expand operating capacity, develop new orebodies or develop mine areas in advance of current production are capitalized. Mine
development costs related to current period production are charged to operations as incurred. Interest on financing attributable to mine development is capitalized to mine development costs while construction and development activities at the
property are in progress. When the property is placed into production, those capitalized costs are included in the calculation of the amortization of mine development costs. Property acquisition and mine development costs are amortized by the
units-of-production method based on estimated recoverable reserves. 

  

					
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	 	2011 FINANCIAL REPORT

  

 ii) Exploration and evaluation expenditures: 
 Exploration expenditures on non-producing properties, including drilling and related costs, identified as having development potential, as evidenced by a positive economic analysis of the project, are
treated as mine development costs and capitalized. Expenditures incurred on deposits contiguous with a known deposit which has undergone a positive economic analysis are treated as mine development costs and capitalized. Exploration and evaluation
expenditures on properties prior to the establishment of a positive economic analysis are charged to operations as incurred. Drilling costs incurred during the production phase for operational ore control are charged to operations as incurred.

 iii) Mining plant and equipment: 

Plant and equipment is stated at cost less accumulated amortization and accumulated impairment losses. Cost includes all expenditures that are directly
attributable to the acquisition of the asset. Borrowing costs on qualifying assets are capitalized until the asset is capable of carrying out its intended use. Plant and equipment is amortized on a units-of-production basis over estimated
recoverable reserves, or on a straight-line basis over the estimated useful life of the asset, whichever period is lower. 
 Estimates of
residual values, useful lives and methods of amortization are reviewed each reporting period, and adjusted prospectively if appropriate. 
 iv)
Subsequent costs: 
 The cost of replacing part of an item within mineral property, plant and equipment is recognized when the cost is incurred
and it is probable that the future economic benefits will flow to the Company, and the costs can be measured reliably. The carrying amount of the part that has been replaced is expensed. Routine repairs and maintenance are expensed as incurred.

 v) Impairment: 
 The carrying values
of mineral property, plant and equipment are reviewed for indications of impairment at each reporting date. When impairment indicators exist, then the asset’s recoverable amount is estimated. 

If it is determined that the estimated recoverable amount is less than the carrying value of an asset, or its cash-generating unit (“CGU”),
then a write-down is made with a charge to operations. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows that are largely independent
of the cash inflows from other assets or groups of assets (the CGU). Impairment losses recognized in respect of CGU’s are allocated on a pro rata basis to the assets in the unit. 
 The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows of a mine or
development property are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Estimated future cash flows include estimates of
recoverable ounces of gold based on proven and probable reserves. To the extent that economic value exists beyond the proven and probable reserves of a mine or development property, this value is included as part of the estimated future cash flows.
Estimated future cash flows also involve estimates regarding gold prices, production levels, capital, reclamation costs and income taxes. Cash flows are subject to risks and uncertainties and changes in the estimates of the cash flows could affect
the recoverability of long-lived assets. 
 (vi) Reversal of impairment: 
 An impairment loss is reversed if there is indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized. 

  

					
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 Cash and cash equivalents 
 Cash and cash equivalents, which include cash and highly liquid investments with original maturities of three months or less at the date of acquisition, are recorded at cost, which approximates fair
value. 
 Short-term investments 

Short-term investments, which represent highly liquid investments with original maturities of greater than three months at acquisition, are recorded at
cost, which approximates fair value. 
 Income taxes 
 Income tax expense consists of current and deferred tax expense. Income tax expense is recognized in earnings except to the extent it relates to items recognized directly in equity or in other
comprehensive income. 
 Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years. 
 Deferred tax assets and
liabilities are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences do not result in
deferred tax assets or liabilities: 
  

	 	•	 	 the initial recognition of assets or liabilities, not arising in a business combination, that does not affect accounting or taxable profit



  

	 	•	 	 goodwill 


  

	 	•	 	 taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be
controlled by the parent and it is probable that the temporary difference will not reverse in the foreseeable future. 



Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the
liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs except to the extent it relates to items recognized directly in equity or in other
comprehensive income. 
 A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available
against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced to its recoverable amount. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they
relate to the same taxable entity and income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis. 
 Share-based payments 
 The Company grants stock options to buy common shares of the Company
through its stock option plan as described in note 12 b). The Company accounts for share-based payments using the fair value method. Under this method, compensation expense is measured at fair value on the date of grant using the Black-Scholes
option pricing model, and is recognized as an expense or capitalized, depending on the nature of the grant, with a corresponding increase in equity, over the period that the employees earn the options. The amount recognized is adjusted to reflect
the number of share options expected to vest. 

  

					
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	 	2011 FINANCIAL REPORT

  

 In addition, the Company grants stock appreciation rights (“SARs”) as described in note 12 c).
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is determined using the Black-Scholes option pricing model, and is recognized as an expense with a corresponding increase in
liabilities, over the period that the employees unconditionally become entitled to payment. The liability is remeasured using the option pricing model at each reporting date, and at the intrinsic value on the settlement date. Any changes in the fair
value of the liability are recognized as an expense in the statement of comprehensive income. 
 Decommissioning liabilities 

The Company’s mining and exploration activities are subject to various government laws and regulations relating to the protection of the environment.
These laws and regulations are continually changing and are generally becoming more restrictive. The Company has made, and will continue to make expenditures to comply with such laws and regulations. The Company recognizes liabilities for statutory,
contractual, constructive or legal obligations associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development or normal operation of the assets. Decommissioning costs
expected to be incurred in the future are estimated by the Company’s management based on the information available to them. Actual decommissioning costs could be materially different from the current estimates. Any change in cost estimates,
discount rates, or other assumptions should additional information become available would be accounted for on a prospective basis. The Company’s estimates are reviewed annually for changes in planned operations, regulatory requirements,
discount rates, effects of inflation and changes in estimates. 
 The net present value of the future rehabilitation cost estimates arising from
decommissioning of property, plant and equipment is recognized in the period in which it is incurred with an offsetting amount being recognized as an increase in the carrying amount of the corresponding mining asset. This asset is amortized on a
unit-of-production basis over the estimated life of the mine while the corresponding liability accretes to its undiscounted value by the end of the mine’s life (note 11 c). 
 Provisions 
 Provisions are recorded when a present legal or constructive obligation exists
as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The amount recognized as a
provision is the best estimate of the consideration required to settle the present obligation at the statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the liability. 
 Employee future benefits 
 The Company’s Mexican operations are subject to Mexican
statutory laws and regulations governing employee termination benefits. Employee future benefits include statutorily mandated accrued benefits payable to employees in the event of termination in certain circumstances. The net present value of
termination benefits are recognized as an expense and associated liability when the amount can be reasonably estimated at the discounted value of the expected future payments (note 11 a). 
 Financial instruments 
 The Company’s financial instruments consist primarily of
monetary assets and liabilities, the fair value of which approximate their carrying value due to the short-term nature of these instruments. 

The Company may enter into foreign exchange forward contracts to manage the Company’s exposure to fluctuations in the Canadian and United States
dollar and Mexican peso foreign 

  

					
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	 	2011 FINANCIAL REPORT

  

 
exchange rates. The Company may also enter into forward gold sale transactions. These forward contracts are marked-to-market and recognized in the consolidated financial statements at their fair
value. 
 Financial assets 

Financial assets are classified into one of four categories: 
  

	 	•	 	 fair value through profit or loss (“FVTPL”); 



 

	 	•	 	 held-to-maturity (“HTM”); 


  

	 	•	 	 available for sale (“AFS”); and, 


  

	 	•	 	 loans and receivables. 



The classification is determined at initial recognition and depends on the nature and purpose of the financial asset. 

(i) FVTPL financial assets: 
 Financial assets
are classified as FVTPL when the financial asset is held for trading or it is designated as FVTPL upon initial recognition. A financial asset is classified as held for trading if: 

 

	 	•	 	 it has been acquired principally for the purpose of selling in the near future; 



 

	 	•	 	 it is a part of an identified portfolio of financial instruments that the Company manages and has an actual pattern of short-term profit-taking; or



  

	 	•	 	 it is a derivative that is not designated and effective as a hedging instrument. 



Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in earnings. The Company has
classified its cash and cash equivalents, short-term investments and share purchase warrants held in third party companies as FVTPL financial assets, which are included in other financial assets on the statement of financial position. 

(ii) HTM investments: 
 If the Company has the
positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. HTM investments are recognized on a trade-date basis and are initially measured at fair value, including transaction
costs. The Company does not currently have any assets classified as HTM investments. 
 (iii) AFS financial assets: 

Non-derivative financial assets, including investments in securities, are classified as AFS and are stated at fair value. Subsequent to initial
recognition, they are measured at fair value and changes therein, other than impairment losses and foreign exchange differences are recognized in other comprehensive income and presented within equity in accumulated other comprehensive income
(loss). As a result, the assets’ carrying values approximate their fair values. 
 Impairment losses, interest calculated using the
effective interest method and foreign exchange gains and losses on monetary assets, are recognized directly in earnings rather than equity. When an investment is derecognized or is determined to be impaired, the cumulative gain or loss previously
recognized in accumulated other comprehensive income (loss) is included in earnings for the period. 
 The fair value of AFS monetary assets
denominated in a foreign currency is translated at the spot foreign exchange rate at the statement of financial position date. The change in fair value attributable to translation differences on the amortized cost of the asset is recognized in
earnings, while other changes are recognized in equity. 

  

					
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 (iv) Loans and receivables: 
 Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially recognized at the
transaction value plus any directly attributable transaction costs. Subsequently, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. The impairment loss of receivables is based on a
review of all outstanding amounts at period end. Bad debts are written off during the year in which they are identified. 
 (v) Impairment:

 A financial asset, other than those classified as FVTPL, is assessed at each reporting period date for indicators of impairment. A financial
asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated
reliably. 
 Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment
in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. 
 Impairment
losses on available-for-sale investment securities are recognized by transferring the cumulative loss that has been recognized in accumulated other comprehensive income (loss), and presented in unrealized gains/losses on available-for-sale financial
assets in equity, to earnings. The cumulative loss that is removed from accumulated other comprehensive income (loss) and recognized in earnings is the difference between the acquisition cost, net of any principal repayment and amortization, and the
current fair value, less any impairment loss previously recognized in earnings. 
 If, in a subsequent period, the fair value of an impaired
available-for-sale security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized in earnings, then the impairment loss is reversed, with the amount of the reversal recognized in
earnings. However, any subsequent recovery in the fair value of an impaired available-for-sale security is recognized in other comprehensive income. 
 (vi) Determination of fair value: 
 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 Company classifies fair value measurements using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements of the fair value of financial assets and liabilities. 
  

	 	•	 	 Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities; 



 

	 	•	 	 Level 2. Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and 


  

	 	•	 	 Level 3. Inputs for the asset or liability that are not based on observable market data (unobservable inputs). 



The Company has determined that available-for-sale instruments and other financial assets fall within level 1 of the fair value hierarchy, and all other
financial instruments outstanding as at the date of the statement of financial position fall within level 2 of the fair value hierarchy. 

  

					
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 Financial liabilities 
 (i) Other financial liabilities: 
 Other financial liabilities are initially measured at fair
value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The Company has classified accounts payable and accrued liabilities,
dividends payable, and property acquisition liabilities as other financial liabilities. 
 Earnings per share 

Basic earnings per share is calculated by dividing the net earnings available to common shareholders divided by the weighted average number of common
shares outstanding during the year. The diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the year, plus the effects of the dilutive common share equivalents. This method requires that
the dilutive effect of outstanding options and warrants issued be calculated using the treasury stock method. This method assumes that all common share equivalents have been exercised at the beginning of the year (or at the time of issuance, if
later), and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of common shares during the year. 
 Comprehensive income (loss) 
 Comprehensive income (loss) is the change in the
Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that are not included in net profit such as unrealized gains or losses on
available-for-sale investments and gains or losses on certain derivative instruments. The Company’s comprehensive income (loss), components of other comprehensive income, and cumulative translation adjustments are presented, net of tax, in the
consolidated statements of comprehensive income (loss) and the consolidated statements of changes in equity. 
 Future accounting policy
changes 
 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
was issued by the IASB on November 12, 2009 and will replace IAS 39. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple classification options available in
IAS 39. The approach in IFRS 9 is based on how an entity manages its financial impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The impact of IFRS 9 on the Company’s financial
instruments has not 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. The impact of adoption of
IFRS 10 on the consolidated financial statements has not been determined. 
 (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 

  

					
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	 	2011 FINANCIAL REPORT

  

 
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.

 (vi) 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 sets out the criteria for the capitalization of production stripping costs to non-current assets, and states that the stripping activity is recognized
as a component of the larger asset to which it relates. 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 intends to adopt the amendments in its financial statements for the annual period beginning on January 1, 2013. The impact of adoption of IFRIC 20 has not yet been determined. 

  

					
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	 	2011 FINANCIAL REPORT

  

 4. ACQUISITION OF TURKISH PROPERTIES 
 On January 6, 2010, the Company completed the acquisition of the Ağı Dağı and Kirazlı gold projects (the “projects”) through the purchase of certain Turkish
subsidiaries held by Fronteer Development Group Inc. (“Fronteer”) and Teck Resources Limited (“Teck”). 
 The transaction
did not meet the definition of a business combination. Consequently, the transaction was recorded as an acquisition of an asset. 
 The Company
paid a total of USD$40 million cash and issued an aggregate of 4 million common shares to Teck (as to 60%) and Fronteer (as to 40%) in total consideration for the projects. In addition, a third party has a 2% Net Smelter Return Royalty on
production from the Ağı Dağı project. The total purchase price was $91,334,000, including transaction costs of $704,000. 

The purchase price was allocated to the assets acquired and the liabilities assumed based on the fair value of the total consideration on the closing
date of acquisition. All financial assets acquired and financial liabilities assumed were recorded at fair value. The fair value of the net assets acquired was in excess of the consideration paid and was therefore allocated to mineral property,
plant and equipment on a pro rata basis. 
  

					
	   Assets acquired and liabilities assumed
	  	 	($000)	  
	  
   Current
assets
	  	 	260	  
	  
   Mineral property, plant
and equipment
	  	 	91,074	  
		  	  
	  
	 
		  	  
  
	  
 $91,334
	  
   

		  	  
	  
	 

  

					
	   Consideration paid
	  	 	($000)	  
	  
   Cash
	  	 	40,000	  
	  
   Issuance of
shares
	  	 	50,630	  
	  
   Transaction
costs
	  	 	704	  
		  	  
	  
	 
		  	  
  
	  
 $91,334
	  
   

		  	  
	  
	 

 5. 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: 
  

													
	 	  	December 31
2011	 	  	December 31,  
2010  	 	  	January 1,   
2010   	 
	 	  	($000)	 	  	             ($000)	 	  	($000)	 
	  
 Fair value through profit or loss
(“FVTPL”) (1)
	  	 	222,559	  	  	 	188,180	  	  	 	186,882	  
	  
 Derivative instruments designated as
FVTPL (2)
	  	 	244	  	  	 	1,094	  	  	 	-	  
	  
 Available-for-sale securities
(3)
	  	 	10,355	  	  	 	9,380	  	  	 	-	  
	  
 Loans and receivables (Note
6)
	  	 	6,147	  	  	 	5,749	  	  	 	2,369	  
	  
 Derivative contracts designated as
FVTPL (4)
	  	 	-	  	  	 	(715)	  	  	 	-	  
	  
 Other financial liabilities (5)
	  	 	(23,650)	  	  	 	(17,831)	  	  	 	(14,113)	  

  

	(1) 	 Includes cash of $44.8 million (December 31, 2010 - $80.6 million, January 1, 2010 - $101 million), cash equivalents of $124.7 million (December 31,
2010 - $65.7 million, January 1, 2010 - $59.7 million) and short-term investments of $53.1 million (December 31, 2010 - $41.8 million, January 1, 2010 - $26.2 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 the Company’s foreign currency forward and option contracts and gold option contracts which, for accounting purposes, are not designated as
effective hedges. These are classified within accounts payable and accrued liabilities as at December 31, 2010 in the consolidated balance sheets. 



	(5) 	 Includes all other accounts payable and accrued liabilities, income taxes payable, and property acquisition obligations. 



  

					
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	 	2011 FINANCIAL REPORT

  


	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. At December 31, 2011 and 2010, and January 1, 2010, the Company had no outstanding gold
forward contracts. 
 At December 31, 2011, 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 March 2012, with CAD:USD rates ranging of 1.03:1 to 1:02-1. The mark-to-market gain associated with these contracts as at December 31, 2011 was nominal (December 31, 2010 - loss of
$0.7 million, January 1, 2010 - nil). 
  

	c)	Risk Management 

 The Company’s
activities expose it to a variety of financial risks: market risk (including commodity price, foreign exchange and interest rate risk), credit risk and liquidity risk. The Company’s risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. The Company may use derivative financial instruments to hedge certain risk exposures. The Company does not purchase derivative financial
instruments for speculative investment purposes. 
 Risk management is the responsibility of the corporate finance function. The Company’s
corporate finance function identifies, evaluates and, where appropriate, hedges financial risks. Material risks are monitored and are regularly discussed with the Audit Committee of the Board of Directors. 

 

	i.	Commodity Price Risk 

 The Company is
exposed to commodity price risk associated with the volatility in the market price of gold. Gold prices are affected by factors beyond the Company’s control, including investment and physical demand, central bank purchases and sales, producer
hedging activities, the relative exchange rate of the United States dollar with other major currencies and political and economic conditions. Worldwide gold production levels also affect gold prices, and the price of gold can be subject to high
levels of short-term volatility due to speculative activities. The Company may enter into derivative financial instruments to manage the Company’s exposure to commodity price risk. However, at this time, the Company has elected not to actively
manage its long-term exposure to commodity price risk through the use of derivative financial instruments. 
  

	ii.	Foreign Exchange Risk 

 Certain of the
Company’s financial assets and liabilities are denominated in Canadian dollars, Mexican pesos or Turkish Lira. In addition, the Company incurs certain operating costs denominated in Canadian dollars, Mexican pesos or Turkish Lira. Accordingly,
the Company is exposed to financial gain or loss as a result of foreign exchange movements against the United States dollar, and the Company’s operating costs are affected by changes in foreign exchange rates in those currencies. 

The Company has elected to hedge a portion of its exposure to fluctuations in the Canadian dollar by buying $10 million CAD fixed rate forward contracts.
At December 31, 2011, the Company had Canadian-dollar denominated assets of approximately $22 million. At this level of exposure to fluctuations in the value of the Canadian dollar, a 10% increase (decrease) in the value of the Canadian dollar
compared to the United States dollar could result in a foreign exchange gain/(loss) of approximately $1.2 million. 
 In addition, corporate and
administrative costs associated with the Company’s head office in Toronto are mainly denominated in Canadian dollars. A 10% increase/(decrease) in the value of the Canadian dollar compared to the United States dollar could increase/(decrease)
the Company’s reported corporate and administrative costs by approximately $0.9 million annually. 

  

					
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	 	2011 FINANCIAL REPORT

  

 The Company also has exposure to monetary assets and liabilities denominated in Mexican pesos.
Significant cash balances, outstanding amounts receivable, accounts payable or tax liabilities denominated in Mexican pesos could expose the Company to a foreign exchange gain or loss. The Company partially offsets its balance sheet exposure to
changes in the Mexican peso/United States dollar exchange rate by maintaining cash balances in Mexican pesos to offset a portion of its future tax liabilities and taxes payable balances that are denominated in Mexican pesos. As at December 31,
2011, the Company had net Mexican peso-denominated liabilities of approximately $36 million. A 10% increase (decrease) in the value of the Mexican peso compared to the United States dollar could result in a foreign exchange loss/(gain) of
approximately $3.6 million. 
 In addition, transactional foreign exchange gains and losses may result from the Company’s inability to
predict the exact timing of peso cash receipts and cash outflows. Due to the recent volatility in the value of the Mexican peso, transactional foreign exchange gains and losses can be significant. If the Mexican peso strengthens against the United
States dollar, the Company’s operating costs (as reported in equivalent United States dollars) increase. A 10% decrease (increase) in the value of the Mexican peso compared to the United States dollar could decrease (increase) the
Company’s reported mining and processing costs and increase (decrease) reported earnings before income taxes by approximately $4.5 million annually. 
 Finally, the Company has exposure to monetary assets and liabilities denominated in Turkish Lira. Cash balances, outstanding amounts receivable, accounts payable or tax liabilities denominated in Turkish
Lira could expose the Company to a foreign exchange gain or loss. At December 31, 2011, the Company had net Turkish Lira-denominated assets of approximately $5 million. A 10% increase (decrease) in the value of the Turkish Lira compared to the
United States dollar could result in a foreign exchange gain (loss) of approximately $0.5 million. 
  

	iii.	Interest Rate Risk 

 The Company’s
interest rate risk related to interest-bearing debt obligations is not material as the Company has no outstanding debt. As a result of the Company’s minimal exposure to fluctuations in market interest rates, the Company has elected not to enter
into interest rate swaps or other active interest rate management programs at this time. 
  

	iv.	Credit Risk 

 Credit risk arises from cash
and cash equivalents and short-term investments held with banks and financial institutions, derivative financial instruments (including forward gold sales contracts) and amounts receivable. The maximum exposure to credit risk is equal to the
carrying value of the related financial assets. 
 The objective of managing counter-party credit risk is to prevent losses in financial assets.
The Company assesses the quality of its counter-parties, taking into account their creditworthiness and reputation, past experience and other factors. The Company only enters into forward gold sales contracts with large reputable financial
institutions. 
 The carrying value of amounts receivable are reduced through the use of an allowance account (when applicable) and the amount
of any allowance is recognized as a loss and included in operating expenses. When a receivable balance is considered uncollectible, it is written off against the allowance for amounts receivable. The majority of the Company’s receivable
balances consist of Mexican and Turkish value-added tax recoverable claims. The Company is exposed to credit risk in the case that the subject country is unable to reimburse the recoverable taxes owed. As at December 31, 2011, the Company was
owed $3.7 million and $2.3 million from the Mexican and Turkish governments respectively. 
  

	v.	Liquidity Risk 

 Liquidity risk arises
through the excess of financial obligations due over available financial assets at any point in time. The Company’s objective in managing liquidity risk is to maintain sufficient readily available cash reserves and credit in order to meet its
liquidity requirements 

  

					
	 	 	21  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 
at any point in time. At December 31, 2011, the Company had cash and cash equivalents, short-term investments of $222.6 million, accounts payable and accrued liabilities of $17.0 million and
no debt. The Company expects that planned construction and development projects at its current operations will be financed from existing cash balances and future operating cash flows. The total cost and planned timing of acquisitions and/or other
development or construction projects is not currently determinable and it is not currently known whether the Company will require external financing in future periods. 
 6. AMOUNTS RECEIVABLE 
  

													
	 	  	December 31,  
2011 	 	  	December 31,  
2010   	 	  	January 1,    
2010     	 
	 	  	($000)	 	  	($000)	 	  	($000)	 
	  
 Accounts receivable
	  	 	215	  	  	 	1,864	  	  	 	248	  
	 Mexican value-added
tax(1)
	  	 	3,662	  	  	 	2,460	  	  	 	2,121	  
	 Turkish value-added tax
	  	 	2,270	  	  	 	1,425	  	  	 	-	  
		  	 	$6,147	  	  	 	$5,749	  	  	 	$2,369	  

  

	(1) 	 As permitted by Mexican tax law, the Company offset $16.9 million of Mexican value-added tax receivables against its current taxes payable liability in 2011
(December 31, 2010 - $14.2 million, January 1, 2010 - $10.0 million) which is not reflected in the Consolidated Statements of Cash Flows. 


 7. INVENTORY 
  

													
	 	  	December 31,  
2011 	 	  	December 31,  
2010   	 	  	January 1,    
2010     	 
	 	  	($000)	 	  	($000)	 	  	($000)	 
	  
 Precious metals dore and refined
precious metals
	  	 	5,484	  	  	 	5,201	  	  	 	3,565	  
	 In-process precious metals
	  	 	11,894	  	  	 	10,469	  	  	 	7,191	  
	 Parts and supplies
	  	 	15,842	  	  	 	9,555	  	  	 	9,270	  
		  	 	$33,220	  	  	 	$25,225	  	  	 	$20,026	  

 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 year ended December 31, 2011 was $55.8 million (December 31, 2010 - $46.5 million). The amount of inventory charged to operations as amortization in the year ended December 31, 2011 was $19.1
million (December 31, 2010 - $16.2 million). 
 8. EXPLORATION AND EVALUATION ASSETS 

On January 6, 2010, the Company acquired 100% of the Aği Daği and Kirazlı Projects through the purchase of three Turkish companies for
consideration of $91.3 million including transaction costs, consisting of USD$40 million cash and issuance of 4 million common shares. In addition, a third party has a 2% Net Smelter Return Royalty on production from the Aği Daği
project. Exploration and evaluation assets are not subject to amortization. 

  

					
	 	 	22  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The following is a continuity of the Company’s exploration and evaluation assets for the years
ended December 31, 2011 and 2010. 
  

					
	 	  	
    Total          

 
	 
	 	  	($000)	 
	  
 Cost as at January 1,
2010
	  	  
  
	  
 521
	  
   

	  
 Additions
	  	 	99,246	  
	  
 Cost as at December 31,
2010
	  	 	99,767	  
	  
 Additions
	  	 	8,687	  
	  
 Cost as at December 31,
2011
	  	 	  $108,454	  

 Exploration and evaluation immediately expensed are included in exploration expense in the statements of comprehensive
income and totaled $9.5 million for the year ended December 31, 2011 (December 31, 2010 - $7.6 million). 
 9. MINERAL PROPERTY, PLANT
AND EQUIPMENT 
 In 2003, the Company acquired a 100% interest in the Salamandra group of concessions, in consideration for the payment of
CAD$11.2 million. Certain concessions within the acquired properties are subject to a sliding scale net smelter royalty payable at a rate of 5% of the value of gold and silver production (note 16 b). Included within the Salamandra group of
concessions is the Mulatos mine which began operations in 2005. With the achievement of commercial production on April 1, 2006, production, to a maximum of two million ounces of gold from certain concessions, became subject to royalty.

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

Included in mineral property and mine development are the Escondida development, Mulatos relocation and construction-in-progress costs totaling $90.6
million at December 31, 2011 (December 31, 2010 - $46.5 million, January 1, 2010 - $17.4 million) which are not subject to amortization until such time as the related assets are used in operations. 

For the year ended December 31, 2011, approximately $4.6 million was offset against deferred development costs, representing the net operating
income generated from Escondida during the pre-production phase. In accordance with IFRS, the Company has credited the operating income earned on the sale of ore extracted and processed from the Escondida zone against the capitalized development
costs. 

  

					
	 	 	23  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The following is a continuity of the Company’s mineral property, plant and equipment for the year
ended December 31, 2011. 
  

																									
	  	  	       Mining plant
       and
 
      equipment
       ($000)	 	  	  Office and
  computer
  equipment
  ($000)	 	  	    Construction
    in progress
    ($000)	 	  	
    Subtotal     
     ($000)     
	 	  	   Mineral
   property and
   deferred
   
development
    ($000)	 	  	Total  
($000)  	 
	 Cost as at January 1, 2011
	  	 	152,606  	  	  	 	1,733 	  	  	 	6,236 	  	  	 	160,575 	  	  	 	97,697 	  	  	 	258,272	  
	 Additions
	  	 	3,696  	  	  	 	642 	  	  	 	34,984 	  	  	 	39,322 	  	  	 	28,963 	  	  	 	68,285	  
	 Disposals
	  	 	(231)  	  	  	 	- 	  	  	 	- 	  	  	 	(231) 	  	  	 	- 	  	  	 	(231)	  
	 Transfers from construction in progress
	  	 	17,322  	  	  	 	- 	  	  	 	(17,322) 	  	  	 	- 	  	  	 	- 	  	  	 	-	  
	 Cost as at December 31, 2011
	  	 	$173,393  	  	  	 	$2,375 	  	  	 	$23,898 	  	  	 	$199,666 	  	  	 	$126,660 	  	  	 	$326,326	  
		  				  				  				  				  				  			
	 Accumulated amortization and impairment as at January 1, 2011
	  	 	57,943  	  	  	 	859 	  	  	 	- 	  	  	 	58,802 	  	  	 	25,565 	  	  	 	84,367	  
	 Amortization expense
	  	 	18,838  	  	  	 	415 	  	  	 	- 	  	  	 	19,253 	  	  	 	6,780 	  	  	 	26,033	  
	 Disposals
	  	 	(202)  	  	  	 	- 	  	  	 	- 	  	  	 	(202) 	  	  	 	- 	  	  	 	(202)	  
	 Accumulated amortization and impairment as at December 31, 2011
	  	 	$76,579  	  	  	 	$1,274 	  	  	 	$- 	  	  	 	$77,853 	  	  	 	$32,345 	  	  	 	$110,198	  
	 Net book value as at December 31, 2011
	  	 	$96,814  	  	  	 	$1,101 	  	  	 	$23,898 	  	  	 	$121,813 	  	  	 	$94,315 	  	  	 	$216,128	  


  

					
	 	 	24  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The following is a continuity of the Company’s mineral property, plant and equipment for the year
ended December 31, 2010. 
  

																									
	  	  	 Mining plant
 and
 equipment
 ($000)	 	  	 Office and
 computer
 equipment
 ($000)	 	  	 Construction
 in progress
 ($000)	 	    	 Subtotal    
 ($000)    	 	  	 Mineral
 property and
 deferred
 development
 ($000)	 	  	Total 
($000) 	 
	 Cost as at January 1, 2010
	  	 	132,200  	  	  	 	1,212 	  	  	 	2,528  	  	    	 	135,940	  	  	 	74,742  	  	  	 	 210,682	  
	 Additions
	  	 	3,352  	  	  	 	541 	  	  	 	46,556  	  	    	 	50,449	  	  	 	1,368  	  	  	 	51,817	  
	 Change in decommissioning liability
	  	 	-  	  	  	 	- 	  	  	 	-  	  	    	 	-	  	  	 	2,036  	  	  	 	2,036	  
	 Disposals
	  	 	(6,243)  	  	  	 	(20) 	  	  	 	-  	  	    	 	(6,263)	  	  	 	-  	  	  	 	(6,263)	  
	 Transfers from construction in progress
	  	 	23,297  	  	  	 	- 	  	  	 	(42,848)  	  	    	 	(19,551)	  	  	 	19,551  	  	  	 	-	  
	 Cost as at December 31, 2010
	  	 	$152,606  	  	  	 	$1,733 	  	  	 	$6,236  	  	    	 	$160,575	  	  	 	$97,697  	  	  	 	$258,272	  
		  				  				  				    				  				  			
	 Accumulated amortization and impairment as at January 1, 2010
	  	 	45,512  	  	  	 	615 	  	  	 	-  	  	    	 	46,127	  	  	 	19,733  	  	  	 	65,860	  
	 Amortization expense
	  	 	14,864  	  	  	 	245 	  	  	 	-  	  	    	 	15,109	  	  	 	5,832  	  	  	 	20,941	  
	  

Disposals
  
	  	   
	(2,433)  
 
	    
	  	   
	(1)   
	    
	  	   
	-    
	    
	    	   
	(2,434)  
	  
 
	  	   
	-    
	  
 
	  	   
	(2,434)  
	  
 

	 Accumulated amortization and impairment as at December 31, 2010
	  	 	$57,943  	  	  	 	$859 	  	  	 	$-  	  	    	 	$58,802	  	  	 	$25,565  	  	  	 	$84,367	  
	 Net book value as at December 31, 2010
	  	 	$94,663  	  	  	 	$874 	  	  	 	$6,236  	  	    	 	$101,773	  	  	 	$72,132  	  	  	 	$173,905	  
	 Net book value as at January 1, 2010
	  	 	$86,688  	  	  	 	$597 	  	  	 	$2,528  	  	    	 	$89,813	  	  	 	$55,009  	  	  	 	  $144,822	  

 10. DIVIDENDS 
  

									
	 	  	Year ended  
December 31,  
2011  	 	  	Year ended   
December 31,   
2010   	 
	 	  	($000)	 	  	($000)  	 
	  
 Declared and paid during the
period
	  	 	14,114	  	  	 	7,495  	  
		  	 	$14,114	  	  	 	$7,495  	  
	  
 Dividend per share
	  	 	$0.12	  	  	 	$0.065  	  

 11. PROVISIONS 
  

	a)	Employee future benefits 

 The Company
accrues employee future benefits for all contract workers paid through its subsidiary employment services company. These benefits consist of a one-time payment equivalent to twelve days’ wages for each year of service (at the employee’s
most recent salary, but not to exceed twice the legal minimum wage), payable to all employees with fifteen or more years of service, as well as to certain employees terminated involuntarily prior


  

					
	 	 	25  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 
to the vesting of their seniority premium benefit. Under Mexican Labour Law, the Company also provides statutorily mandated severance benefits to its employees terminated under certain
circumstances. Such benefits consist of a one-time payment of three months’ wages upon involuntary termination without just cause. 
 The
liability associated with the seniority and termination benefits is calculated as the present value of expected future payments. In determining the expected future payments, assumptions regarding employee turnover rates, inflation, minimum wage
increases and expected salary levels are required and are subject to review and change. 
 A continuity of the employee future benefits
provision is as follows: 
  

									
	 	  	Year ended
December 31, 2011	 	  	Year ended
December 31, 2010	 
	 	  	($000)	 	  	($000)	 
	  
   Obligations at
beginning of period
	  	 	336	  	  	 	258	  
	   Current service cost
	  	 	97	  	  	 	151	  
	   Payments made against the liability
	  	 	(53)	  	  	 	(83)	  
	   Impact of foreign exchange
	  	 	(44)	  	  	 	10	  
	  
   Obligations at end of
period
	  	 	$336	  	  	 	$336	  

  

	b)	Property acquisition obligations 

 The
Company is in the process of acquiring property adjacent to its present and prospective mining operations, including property comprising the town of Mulatos. Property owners and possessors are being offered a comprehensive benefits package including
compensation for their property and/or relocation benefits. In certain cases, relocation benefits include deferred monthly payments over periods varying from three to five years. Obligations are recognized when a legal contract is signed by both
parties and are measured at the discounted value of expected future payments. The discounted value accretes to the estimated future value over the period of the payment obligation. At December 31, 2011 and December 31, 2010, the Company
applied a discount rate of 4.50% to expected future payments. 
 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. 

A continuity of property acquisition obligations is as follows: 
  

									
	 	  	Year ended 
December 31,  
2011 	 	  	Year ended 
December 31, 
2010 	 
	 	  	($000)	 	  	($000)	 
	  
   Obligations at
beginning of period
	  	 	780	  	  	 	946	  
	   Payments made and revisions in estimated cash flows and changes in assumptions
	  	 	(311)	  	  	 	(209)	  
	   Accretion of discounted cash flows
	  	 	32	  	  	 	43	  
	  
   Obligations at end of
period
	  	 	$501	  	  	 	$780	  
	  

  Comprising:
	  				  			
	   Current obligation
	  	 	$363	  	  	 	$428	  
	   Non-current obligations
	  	 	138	  	  	 	352	  
		  	  
  
	  

$501
	  

  
	  	  
  
	  

$780
	  

  



  

					
	 	 	26  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	c)	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. 
 A continuity of the decommissioning liability is as follows: 
  

									
	 	  	Year ended
December 31, 2011 	 	  	Year ended
December 31, 2010	 
	 	  	($000)	 	  	($000)	 
	  
   Obligations at
beginning of period
	  	 	7,559	  	  	 	5,115	  
	   Revisions in estimated cash flows and changes in assumptions
	  	 	(1,300)	  	  	 	2,036	  
	   Payments made against the liability
	  	 	(145)	  	  	 	-	  
	   Accretion of discounted cash flows
	  	 	566	  	  	 	408	  
	  
   Obligations at end of
period
	  	 	$6,680	  	  	 	$7,559	  

 Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis
upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for the necessary
decommissioning works required which will reflect market conditions at the relevant time. 
 The assumptions used in the determination of the
decommissioning liability are as follows as at: 
  

													
	 	  	December 31, 
2011 	 	  	December 31, 
2010 	 	  	January 1,    
2010    	 
	 Estimated cost ($000)
	  	 	13,431	  	  	 	15,682	  	  	 	11,042	  
	 End of mine life
	  	 	2020	  	  	 	2020	  	  	 	2019	  
	 Discount rate
	  	 	7.8%	  	  	 	7.5%	  	  	 	8%	  

 12. 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 January 1, 2010
	  	 	109,850,108	  	  	 	251,752	  
	 Acquisition of Turkish properties (note 4)
	  	 	4,000,000	  	  	 	50,630	  
	 Exercise of stock options
	  	 	2,489,900	  	  	 	17,637	  
	 Transfer from contributed surplus to share capital for stock options exercised
	  	 	-	  	  	 	5,848	  
	 Outstanding at December 31, 2010
	  	 	116,340,008	  	  	 	325,867	  
	 Exercise of stock options
	  	 	2,043,000	  	  	 	22,267	  
	 Transfer from contributed surplus to share capital for stock options exercised
	  	 	-	  	  	 	7,390	  
	  
 Outstanding at December 31,
2011
	  	 	    118,383,008	  	  	 	$355,524	  


  

					
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	 	2011 FINANCIAL REPORT

  

 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, and June 2, 2010, which allows the Company to grant incentive stock options to its directors, officers, employees and consultants. Under the Plan, the number of shares reserved for issuance
cannot exceed 10% 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. 

Stock options granted to directors, officers and certain consultants under the Plan are exercisable for a five-year period, and options granted to
employees are generally exercisable for a three-year period. Incentive stock options granted vest 20% on the date of grant, and 20% at each six-month interval following the date of grant. 
 The Plan is subject to shareholder approval and ratification every three years. The Plan was last approved by shareholders of the Company on May 15, 2008. The Company elected to withdraw its proposal
to shareholders to ratify the existing Plan at its Annual and Special meeting held on June 2, 2011. As a result, the Plan expired on May 15, 2011. Accordingly, stock options outstanding at May 15, 2011 remain outstanding and
exercisable subject to their initial terms and vesting conditions. New stock options cannot be granted until such time as the Company receives shareholder approval. 
 The following is a continuity of the changes in the number of stock options outstanding for the years ended December 31, 2011 and 2010: 

 

									
	 	  	 Number

 
  
	 	  	 Weighted
average
exercise price
($CAD)
	 
	 Outstanding at January 1, 2010
	  	 	5,511,800	  	  	 	$7.82	  
	 Granted
	  	 	4,021,000	  	  	 	14.72	  
	 Exercised
	  	 	(2,489,900)	  	  	 	7.26	  
	 Forfeited
	  	 	(128,200)	  	  	 	10.63	  
	  
 Outstanding at December 31,
2010
	  	 	6,914,700	  	  	 	$11.98	  
	 Granted
	  	 	2,115,000	  	  	 	14.30	  
	 Exercised
	  	 	(2,043,000)	  	  	 	10.64	  
	 Forfeited
	  	 	(581,000)	  	  	 	14.43	  
	  
 Outstanding at December 31,
2011
	  	 	6,405,700	  	  	 	$12.95	  

 The weighted average share price at the date of exercise for stock options exercised in 2011 was CAD $17.34 (2010 -
$15.60). 
 For the year ended December 31, 2011, the Company granted 2,115,000 incentive stock options to purchase common shares in the
capital of the Company at exercise prices ranging from CAD $14.24 per share to CAD $16.39 per share. For the year ended December 31, 2010, the Company granted 4,021,000 incentive stock options at an exercise prices ranging from CAD $13.04 to
CAD $17.28 per share. 

  

					
	 	 	28  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 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 year ended	  	December 31,
2011  	 	  	December 31,  
2010      	 
	  
 Weighted average share price at
grant date
	  	 	$14.30	  	  	 	$14.72  	  
	 Risk-free rate
	  	 	1.7%-2.3%	  	  	 	1.2%-2.6%  	  
	 Expected dividend yield
	  	 	0.43% - 0.58%	  	  	 	Nil – 0.43%  	  
	 Expected stock price volatility (based on historical volatility)
	  	 	42%-58%	  	  	 	42%-67%  	  
	 Expected option life, based on terms of the grants (months)
	  	 	20-60	  	  	 	20-60  	  
	  
 Weighted average per share fair
value of options granted
	  	 	$4.96	  	  	 	$5.80  	  

 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 December 31, 2011, 4,685,300 stock options were exercisable. The remaining 1,720,400
outstanding stock options vest over the following two years. 
 Stock options outstanding and exercisable as at December 31, 2011:

  

																									
	 	 	 	  	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
	 		  	 	843,100	  	  	 	7.22	  	  	 	0.41 	  	 		  	 	843,100	  	  	 	7.22  	  
	  $8.01 - $10.00
	 		  	 	893,000	  	  	 	9.72	  	  	 	2.22 	  	 		  	 	893,000	  	  	 	9.72  	  
	 $10.01 - $14.00
	 		  	 	140,000	  	  	 	12.95	  	  	 	2.52 	  	 		  	 	70,000	  	  	 	12.70  	  
	 $14.01 - $15.00
	 		  	 	4,444,600	  	  	 	14.61	  	  	 	3.40 	  	 		  	 	2,830,200	  	  	 	14.70  	  
	 $15.01 - $17.28
	 		  	 	85,000	  	  	 	16.71	  	  	 	1.92 	  	 		  	 	49,000	  	  	 	16.87  	  
		 		  	  
  
	  

6,405,700
	  

  
	  	  
  
	  

$12.95
	  

  
	  	  
  
	  

2.80 
	  

  
	 		  	  
  
	  

4,685,300
	  

  
	  	  
  
	  

$12.40  
	  

  


 c) Stock Appreciation Rights (“SARs”) 
 In 2011, the Company’s Board approved a 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 and certain consultants under the SARs Plan are exercisable for a five-year period, and
SARs granted to employees are generally exercisable for a three-year period. SARs granted vest 20% on the date of grant, and 20% at each six-month interval following the date of grant. 
 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 December 31, 2011, the SARs liability was $1,550,000 (2010 - nil) recorded in accounts payable and accrued liabilities in the Consolidated Statements of Financial Position.


  

					
	 	 	29  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The following is a continuity of the changes in the number of units outstanding for the year ended
December 31, 2011: 
  

									
	 	  	 Number

 
  
	 	  	Weighted
average
exercise price
($CAD)	 
	 Outstanding at January 1, 2011
	  	 	-	  	  	 	$-	  
	 Granted
	  	 	770,000	  	  	 	16.36	  
	 Exercised
	  	 	-	  	  	 	-	  
	 Forfeited
	  	 	-	  	  	 	-	  
	  
 Outstanding at December 31,
2011
	  	 	        770,000	  	  	 	$16.36	  

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

			
	For SARs granted in the year ended	 	      December 31,    
2011
	  
 Weighted average share price at
grant date
	 	$16.36  
	 Risk-free rate
	 	1.1%-1.5%  
	 Expected dividend yield
	 	0.70%-0.80%  
	 Expected stock price volatility (based on historical volatility)
	 	41%-66%  
	 Expected life, based on terms of the grants (months)
	 	20-60  
	  
 Weighted average per share fair
value of SARs granted
	 	$5.45  

 Stock appreciation rights outstanding and exercisable as at December 31, 2011: 

 

															
	 	  	 	  	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)

 

	 $15.01 - $17.00
	  		  	370,000  	  	15.66    	  	2.90  	  		  	74,000    	  	15.66  
	 $17.01 - $18.00
	  		  	400,000  	  	17.01    	  	4.86  	  		  	80,000    	  	17.01  
		  		  	770,000  	  	$16.36    	  	3.92  	  		  	154,000    	  	$16.36  

 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 

  

					
	 	 	30  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


									
	 	  	For the year ended	 
	 	  	December 31,  
2011  	 	  	December 31,
2010	 
	  
   Earnings
(000)
	  	 	$60,081	  	  	 	$63,795	  
	   Weighted average number of common shares outstanding (000)
	  	 	117,375	  	  	 	115,183	  
	   Basic earnings per share
	  	 	$0.51	  	  	 	$0.55	  
	  
   Dilutive effect of
stock options outstanding (000)
	  	 	1,294	  	  	 	1,724	  
	   Diluted weighted average number of common shares outstanding (000)
	  	 	118,669	  	  	 	116,907	  
	   Diluted earnings per share
	  	 	$0.51	  	  	 	$0.55	  

 13. INCOME TAXES 
  

	a)	Recent tax changes 

 In 2009, the Mexican
government approved tax reform that includes a 2% increase in the income tax rate in Mexico from 28% to 30% for a three-year period starting in 2010. 
 Effective January 1, 2008, the Company became subject to a Single Rate Tax Law enacted by the Mexican government on September 28, 2007. Under the Single Rate Tax Law, the Company’s Mexican
operating subsidiaries are subject to a tax equivalent to 17.5% of the Company’s revenues less certain allowable deductions (as determined on a cash basis). The single rate tax is payable each year to the extent that it exceeds income tax
otherwise payable pursuant to the pre-existing Mexican income tax laws. Any excess single rate tax paid cannot be credited against income taxes payable in future periods. For the years ended December 31, 2011 and 2010, the application of the
new single rate tax did not impact the Company’s tax expense. 
  

	b)	Rate Reconciliation 

 The reconciliation
of the expected tax expense at a combined statutory rate in Canada of 28.25% (2010 - 31%) and provision for income tax expense is: 
  

									
	   December 31
  
	  	 2011

 
	 	  	 2010

 
	 
	 	  	($000)	 	  	($000)	 
	  
   Earnings before income
taxes
	  	 	105,935	  	  	 	90,468	  
	  
   Expected tax expense at
statutory income tax rate
	  	 	29,924	  	  	 	28,043	  
	   (Decrease)/increase resulting from:
	  				  			
	   Difference in foreign tax rates
	  	 	2,000	  	  	 	(1,250)	  
	   Non-deductible stock-based compensation expense
	  	 	3,820	  	  	 	5,050	  
	   Non-taxable loss (gain)
	  	 	3,620	  	  	 	(3,010)	  
	   Change in foreign exchange rates
	  	 	7,270	  	  	 	(1,280)	  
	   Inflation net (deductible losses) taxable gains
	  	 	(1,350)	  	  	 	(830)	  
	   Increase (decrease) in Mexican deferred income tax rates
	  	 	570	  	  	 	(50)	  
	  
   Income tax
expense
	  	 	45,854	  	  	 	26,673	  


  

					
	 	 	31  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	c)	Deferred tax reconciliation 

 The
following information summarizes the principal temporary differences and the related deferred tax effect: 
  

									
	 December 31, 2011	  	Canada	  	Mexico	  	Turkey	  	Total  
	 	  	($000)	  	($000)	  	($000)	  	($000)  
	  Deferred tax assets
	  		  		  		  	
	  Asset retirement obligations
	  	-	  	1,950	  	-	  	1,950  
	  Other short-term
	  	-	  	120	  	-	  	120  
		  	-	  	2,070	  	-	  	2,070  
	  
  Deferred tax
liabilities
	  		  		  		  	
	  Inventory
	  	-	  	(1,220)	  	-	  	(1,220)  
	  Mineral property, plant and equipment
	  	-	  	(35,408)	  	(450)	  	(35,858)  
		  	-	  	(36,628)	  	(450)	  	(37,078)  
	  
  Net Deferred tax
liabilities
	  	-	  	(34,558)	  	(450)	  	(35,008)  
	 December 31, 2010	  	  
  

Canada
	  	  
  

Mexico
	  	  
  

Turkey
	  	  
  

Total  

	 	  	($000)	  	($000)	  	($000)	  	($000)  
	  Deferred tax assets
	  		  		  		  	
	  Asset retirement obligations
	  	-	  	2,150	  	-	  	2,150  
	  Other short-term
	  	-	  	120	  	-	  	120  
		  	-	  	2,270	  	-	  	2,270  
	  
  Deferred tax
liabilities
	  		  		  		  	
	  Inventory
	  	-	  	(1,160)	  	-	  	(1,160)  
	  Mineral property, plant and equipment
	  	-	  	(27,976)	  	-	  	(27,976)  
		  	-	  	(29,136)	  	-	  	(29,136)  
	  
  Net deferred tax
liabilities
	  	-	  	(26,866)	  	-	  	(26,866)  
	 January 1, 2010	  	  
  

Canada
	  	  
  

Mexico
	  	  
  

Turkey
	  	  
  

Total  

	 	  	($000)	  	($000)	  	($000)	  	($000)  
	  Deferred tax assets
	  		  		  		  	
	  Asset retirement obligations
	  	-	  	1,476	  	-	  	1,476  
	  Other short-term
	  	-	  	78	  	-	  	78  
		  	-	  	1,554	  	-	  	1,554  
	  
  Deferred tax
liabilities
	  		  		  		  	
	  Inventory
	  	-	  	(630)	  	-	  	(630)  
	  Mineral property, plant and equipment
	  	-	  	(23,522)	  	-	  	(23,522)  
		  	-	  	(24,152)	  	-	  	(24,152)  
	  
  Net deferred tax
liabilities
	  	-	  	(22,598)	  	-	  	(22,598)  

  

	d)	Loss Carry-forwards and other tax attributes 

 Deferred tax assets are recognized for the carry-forward of unused tax losses and tax credits to the extent that it is probable that taxable profits will be available against which the unused tax


  

					
	 	 	32  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 
losses / credits can be utilized. The Company has not recognized the benefit of tax loss carry-forwards and other tax attributes in Canada or Turkey as at December 31, 2011 and
December 31, 2010. 
 Non-capital losses available in Canada to be utilized in subsequent years are approximately $24 million expiring
between 2014 and 2031. Net capital losses available in Canada to be utilized in subsequent years are approximately $14 million which carryforward indefinitely. In addition, the Company has financing costs of $2 million in Canada which will be
deducted in future years. 
 Non-capital losses available in Turkey to be utilized in subsequent years are approximately $3 million expiring
between 2013 and 2016. 
  

	e)	Unrecognized deferred tax liabilities 


The temporary differences associated with investments in subsidiaries, for which a deferred tax liability has not been recognized, aggregate $320 million
as at December 31, 2011 (December 31, 2010 - $255.5 million, January 1, 2010 - $228.0 million). 
 14. OTHER (LOSS) INCOME

  

									
	  Year ended	  	December 31,  
2011  	 	  	December 31,
2010	 
	 	  	($000)	 	  	($000)	 
	  
   Fair value adjustment
on financial assets
	  	 	(857)	  	  	 	20	  
	   Fair value adjustment on derivative liabilities
	  	 	715	  	  	 	(715)	  
	   Gain on sale of securities
	  	 	783	  	  	 	-	  
	   Impairment of securities
	  	 	(1,621)	  	  	 	-	  
	   Gain on settlement (1)
	  	 	-	  	  	 	12,527	  
	   Loss on disposal of assets
	  	 	-	  	  	 	(1,598)	  
	   Other
	  	 	(254)	  	  	 	(841)	  
		  	  
  
	  

(1,234)
	  

  
	  	  
  
	  

9,393
	  

  


  

	(1)	On June 28, 2010, the Company entered into a preliminary settlement agreement with Primero Mining Corp. (“Primero”), formerly Mala Noche Resources,
relating to Primero’s proposed acquisition of the San Dimas mine. The settlement agreement released all parties from any claims. The settlement was finalized on August 6, 2010 upon completion of the acquisition of the San Dimas mine by
Primero. In consideration for relinquishing all claims, the Company received Canadian dollars (“CAD”) $1.0 million cash and 2 million units of Primero (with each unit consisting of one post-consolidation common share and 0.4 of one
purchase warrant) relating to the financing which Primero completed on July 20, 2010. The total consideration, consisting of cash, common shares and warrants, had a fair value of $12.5 million on August 6, 2010, which was recorded in Other
gain within the Consolidated Statement of Comprehensive Income. 


  

					
	 	 	33  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 15. 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. 

 

													
	 	  	Non-current    
assets    	 	  	Assets      	 	  	Liabilities   	 
	 	  	($000)    	 	  	($000)      	 	  	($000)   	 
	 As at December 31, 2011
	  				  				  			
	  
 Mexico
	  	 	215,111	  	  	 	395,313	  	  	 	61,874	  
	  
 Turkey
	  	 	109,007	  	  	 	117,520	  	  	 	1,666	  
	  
 Canada
	  	 	464	  	  	 	86,391	  	  	 	2,134	  
	  
 Total
	  	 	$ 324,582	  	  	 	$ 599,224	  	  	 	$ 65,674	  
	  
 As at December 31,
2010
	  				  				  			
	  
 Mexico
	  	 	173,361	  	  	 	319,242	  	  	 	50,694	  
	  
 Turkey
	  	 	100,201	  	  	 	107,832	  	  	 	1,306	  
	  
 Canada
	  	 	110	  	  	 	79,362	  	  	 	1,307	  
	  
 Total
	  	 	$ 273,672	  	  	 	$ 506,436	  	  	 	$ 53,307	  
	  
 As at January 1,
2010
	  				  				  			
	  
 Mexico
	  	 	145,163	  	  	 	266,933	  	  	 	41,267	  
	  
 Turkey
	  	 	-	  	  	 	521	  	  	 	-	  
	  
 Canada
	  	 	180	  	  	 	88,224	  	  	 	817	  
	  
 Total
	  	 	$ 145,343	  	  	 	$ 355,678	  	  	 	$ 42,084	  

  

																																	
	Year ended	  	December 31, 2011	 	  	December 31, 2010	 
	 	  	Mexico	 	  	Turkey	 	  	Canada	 	  	Total	 	  	Mexico	 	  	Turkey	 	  	Canada	 	  	Total    	 
	 	  	($000)	 	  	($000)	 	  	($000)	 	  	($000)	 	  	($000)	 	  	($000)	 	  	($000)	 	  	($000)	 
	  
 Revenues
	  	 	227,364	  	  	 	-	  	  	 	-	  	  	 	227,364	  	  	 	189,272	  	  	 	-	  	  	 	-	  	  	 	189,272	  
	 Earnings (loss)
	  	 	89,890	  	  	 	(6,135)	  	  	 	(23,674)	  	  	 	60,081	  	  	 	77,250	  	  	 	(1,089)	  	  	 	(12,366)	  	  	 	63,795	  
		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 

 16. COMMITMENTS AND CONTINGENCIES 
  


	a)	Escondida Development 

 During the third
quarter of 2009, the Company signed a contract with an international mining contractor to develop the Escondida zone of the Mulatos Pit. Development began in the third quarter of 2009 and is expected to be completed over approximately a two and a
half year period, following which the Company will begin mining the underlying deposit. The total contract value is approximately $61.2 million, and is subject to the contractor achieving certain preset performance conditions. As at
December 31, 2011, the Company has incurred approximately $59.7 million in project to date expenditures relating to this contract. 

  

					
	 	 	34  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	b)	Royalty 

 Production from certain
concessions within the Salamandra district, including the Mine, is subject to a sliding scale production royalty. At current gold prices above $400 per ounce, the royalty is calculated 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. With the achievement of commercial production on April 1,
2006, production to a maximum of two million ounces of gold is subject to royalty. As at December 31, 2011, the royalty was paid or accrued on approximately 806,000 ounces of applicable gold production. Royalty expense for the year ended
December 31, 2011 was $11.2 million (December 31, 2010: $9.1 million). 
 In addition, a third party has a 2% Net Smelter Return Royalty on
production from the Company’s Agi Dagi project. The Company has not recorded an accrual for this royalty at December 31, 2011 as the project is not in production. 

 

	c)	Mulatos Town Relocation 

 The Company
commenced the planned relocation of the town of Mulatos in 2007. Relocation contracts have been signed with in excess of half of the families residing in Mulatos at the start of the relocation program. Property owners and possessors are being
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 relocation effort in 2007, the Company has invested approximately $7.0 million in property acquisition, relocation benefits, legal and related costs. In addition, the Company has recognized a liability of $0.5 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 December 31, 2011. The discounted value of the liability was capitalized to mineral
property, plant and equipment. 
 During the second quarter of 2008, the Company 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 is payable once the land has been vacated and is transferred to the Company, which has not been accrued as at December 31, 2011. The probability and timing of this additional payment is currently unknown to the Company. 

During the third quarter of 2010, the Company received notice that the Mulatos Ejido had filed a complaint with the Unitary Agrarian Court to nullify the
2008 land purchase agreement. The Company has received a legal opinion that the action is without merit. Preliminary hearings have commenced, and the matter remains unresolved by the Court at this time. The land purchase agreement does not affect
current mining operations of the Company. 
 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. 

  

					
	 	 	35  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	d)	Operating lease commitments 

 The Company
has entered into operating lease commitments relating to the Corporate office lease. Future minimum lease payments under non-cancellable operating leases as at December 31, 2011 are as follows: 

 

			
	 	  	As at
  December 31,    
2011
	 	  	($000)  
	  
 2012
	  	221  
	 2013
	  	238  
	 2014
	  	238  
	 2015
	  	238  
	 2016 and beyond
	  	20  
	  
 Total
	  	$955  

 17. RELATED PARTY TRANSACTIONS 
 Remuneration of key management (includes the Corporation’s directors and executive team) 
  

									
	 Expense by nature:
	  	 	2011    	  	  	 	2010    	  
	 	  	($000)	 	  	($000)	 
			
	 Management salaries and benefits
	  	 	3,418	  	  	 	3,282	  
	 Directors fees
	  	 	230	  	  	 	254	  
	 Share based payments1 – Management
	  	 	5,983	  	  	 	10,730	  
	 Share based payments1 – Directors
	  	 	3,536	  	  	 	3,724	  
			
	 	  	 	$13,167	  	  	 	$17,990	  

  

	(1) 	 Represents grant date fair value of stock options and SARs granted during the year 


 These transactions are in the normal course of operations and all of the transactions are measured at the exchange amount of consideration established and agreed to by the parties. 

18. MANAGEMENT OF CAPITAL 
 The Company
defines capital that it manages as its shareholders equity. The Company’s objectives when managing capital are to safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and
benefits for other stakeholders. At December 31, 2011, total managed capital was $533.6 million (December 31, 2010 - $453.1 million, January 1, 2010 - $313.6 million). 
 The Company’s capital structure reflects the requirements of a company focused on sustaining strong cash flows from its current mining operations and financing both internal and external growth
opportunities and development projects. The Company faces lengthy development lead times as well as risks associated with increasing capital costs and project completion timing due to the availability of resources, permits and other factors beyond
the Company’s control. The Company’s operations are also significantly affected by the volatility of the market price of gold. 
 The
Company continually assesses its capital structure and makes adjustments to it with reference to changes in economic conditions and risk characteristics associated with its underlying assets. In order to maintain or adjust the capital structure, the
Company may issue new shares, pay dividends, sell assets or enter into new debt arrangements. 

  

					
	 	 	36  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The Company manages its capital structure by performing the following: 

 

	 	•	 	 Maintaining a liquidity cushion in order to address any potential operational disruptions or industry downturns 



 

	 	•	 	 Preparing detailed budgets and cash flow forecasts for each of mining operations, exploration, development projects and corporate activities that are
approved by the Board of Directors 


  

	 	•	 	 Regular internal reporting and Board of Directors’ meetings to review actual versus budgeted spending and cash flows 



 

	 	•	 	 Detailed project financial analysis to assess or determine new funding requirements 



There were no changes in the Company’s approach to managing capital during the year. 
 19. RECLASSIFICATION 
 The comparative financial statements have been reclassified to
conform to the presentation of the current period financial statements. 

  

					
	 	 	37  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 20. IFRS TRANSITION FROM PREVIOUS GAAP 
 The Company’s consolidated financial statements for the year ended December 31, 2011 is the first annual financial statements that comply with IFRS. The Company has prepared its opening IFRS
balance sheet by applying existing IFRS standards in effect at the release of these financial statements. 
 In preparing its opening IFRS
statement of financial position, the Company has adjusted amounts reported previously in consolidated financial statements prepared in accordance with previous Canadian generally accepted accounting principles (“GAAP”). An explanation of
how the transition from previous Canadian GAAP to IFRS has affected the Company’s financial position, financial performance, and cash flows is set out below. 
 IFRS 1 First-time Adoption of International Financial Reporting Standards sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retrospectively at the
transitional statement of financial position date with all adjustments to assets and liabilities charged or credited to retained earnings unless certain exemptions are applied. The Company has applied the following exemptions to its opening
statement of financial position dated January 1, 2010: 
  

	(a)	Business Combinations 


IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3 Business Combinations retrospectively to business
combinations that occurred before the date of transition to IFRS. The Company has utilized this election and has therefore applied IFRS 3 only to business combinations that occurred on or after January 1, 2010. 

 

	(b)	Share-based payment transactions 

 IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2 Share-based Payment to equity instruments that were granted on or before November 7, 2002, or equity instruments
that were granted subsequent to November 7, 2002 and vested before the latter of the date of transition to IFRS and January 1, 2005. The Company has elected not to apply IFRS 2 to awards that vested prior to January 1, 2010, which
have been accounted for in accordance with Canadian GAAP. The effect of applying IFRS 2 to unvested options at the transition date was to reduce retained earnings by $2.8 million as at January 1, 2010, with an offsetting adjustment to
contributed surplus. 
  

	(c)	Compound financial instruments 

 IAS 32 Financial Instruments: Presentation requires an entity to split a compound financial instrument at inception into separate liability and equity components. If the liability component is no
longer outstanding, retrospective application of IAS 32 involves separating two portions of equity, the first portion is in retained earnings and represents the cumulative interest accreted on the liability components, while the other portion
represents the original equity component. The Company has utilized this IFRS 1 exemption to not require separation of these two portions if the liability component is no longer outstanding at the transition date. 

 

	(d)	Decommissioning liabilities 

 Under IFRS 1, an entity can elect not to retrospectively calculate the effect of each change in estimate that occurred prior to the transition date on the decommissioning asset and related amortization.
Instead, it can elect to measure the liability at the transition date using a short-cut method. The Company has elected to use the IFRS 1 exemption and has measured the decommissioning asset and liability using the short cut method available. The
effect was to reduce mineral property, plant and equipment and decommissioning liability by $0.3 million as at January 1, 2010. 
  

	(e)	Mineral property, plant and equipment – deemed cost 

 IFRS 1 includes an election to use fair value or revaluation as deemed cost for mineral property, plant and equipment, and is available on an asset-by-asset basis. The IFRS 1 election is separate from the
policy choice available to measure long-lived assets at cost or under the revaluation model. The Company has elected to apply the IFRS 1 exemption to certain mobile equipment, which has resulted in a reduction of mineral property, plant and
equipment of $1.5 million as at January 1, 2010, with an after-tax adjustment to retained earnings of $1.0 million. 

  

					
	 	 	38  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	(f)	IAS 23 – Borrowing Costs 

 In accordance with IFRS 1, the Company has elected to prospectively apply IAS 23 effective January 1, 2011. 
 IFRS 1 also outlines specific guidelines that a first-time adopter must adhere to under certain circumstances. The Company has applied the following guidelines to its opening statement of financial
position dated January 1, 2010: 
  

	(g)	Estimates 

 In accordance
with IFRS 1, an entity’s estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under the previous GAAP applied, unless there is objective evidence that those estimates were in error. The
Company’s IFRS estimates as of January 1, 2010 are consistent with its Canadian GAAP estimates for the same date. 
  

	(h)	Mineral property, plant and equipment 

 IFRS 6 requires that an entity classify each asset in the exploration for and evaluation of mineral resources as tangible or intangible according to the nature of the assets acquired and to apply the
classification consistently. As a result, the Company has reclassified certain assets previously classified as mineral property, plant and equipment to exploration and evaluation assets. 
 IFRS employs a conceptual framework that is similar to Canadian GAAP. However, significant differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS has not
changed the Company’s actual cash flows, it has resulted in changes to the Company’s reported financial position and results of operations. In order to allow the users of the financial statements to better understand these changes, the
Company’s Canadian GAAP Statement of Operations and Comprehensive Income, Statement of Financial Position and Statement of Cash Flows for the year ended December 31, 2010 have been reconciled to IFRS, with the resulting differences
explained. 
  

	(i)	Mineral property, plant and equipment 


Due to the adjustments to the provision for decommissioning liabilities and the adjustment for deemed cost election discussed in (d) and
(e) above respectively, the cost of property plant and equipment is different in accordance with IFRS than in accordance with Canadian GAAP. As a result, even though amortization is calculated in the same manner, the amount of amortization
differs by $0.3 million for the year ended December 31, 2010. 
  

	(j)	Share-based payments 

 IFRS

  

	•	 	 Each tranche of an award with different vesting dates is considered a separate grant for the calculation of fair value, and the resulting fair value is
amortized over the vesting period of the respective tranches. 


  

	•	 	 Forfeiture estimates are recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods.



 Canadian GAAP 
  

	•	 	 The fair value of Share-based awards with graded vesting are calculated as one grant and the resulting fair value is recognized on a straight-line
basis over the vesting period. 


  

	•	 	 Forfeitures of awards are recognized as they occur. 


 The effect of applying IFRS 2 was an increase to Share based compensation expense by $3.0 million for the year ended December 31, 2010, with an offsetting adjustment to contributed surplus.


  

					
	 	 	39  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  


	(k)	Provision for decommissioning liabilities 


IFRS 
  

	•	 	 The provision for decommissioning liabilities must be adjusted for changes in key assumptions, including the discount rate.



 Canadian GAAP 
  

	•	 	 The provision for decommissioning liabilities is not adjusted for changes in key assumptions, including the discount rate.



 The effect was an increase in financing expense by a nominal amount for the year ended December 31, 2010, with an
offsetting adjustment to decommissioning liability. 
  

	(l)	Provision for property acquisition obligations 

 IFRS 
  

	•	 	 The provision for property acquisition obligations must be discounted using a discount rate applicable to settling the liability.



 Canadian GAAP 
  

	•	 	 The provision for property acquisition obligations must be discounted using a credited adjusted risk-free discount rate. 



The effect was a decrease in financing expense by a nominal amount for the year ended December 31, 2010, with an offsetting adjustment to the
property acquisition obligation. 
  

	(m)	Deferred tax liability 

 IFRS

 A deferred tax liability is recognized for a temporary difference, except to the extent the deferred tax liability arises from:

  

	 	•	 	 the initial recognition of goodwill; or 


  

	 	•	 	 the initial recognition of an asset or liability in a transaction that: 



 

	 	•	 	 is not a business combination; and 


  

	 	•	 	 at the time of the transaction, affects neither accounting profit nor taxable profit. 



Canadian GAAP 
 A deferred tax liability
is recognized for all taxable temporary differences unless they arise from the initial recognition of goodwill. There is no exemption for the initial recognition of an asset or liability in a transaction that is not a business combination, and at
the time of the transaction affects neither accounting profit nor taxable profit. Under Canadian GAAP, the carrying value of an asset acquired other than in a business combination is adjusted for the amount of the deferred tax recognized.

 The effect was a reduction of the deferred income tax liability balance of $2.7 million as at January 1, 2010, with an offsetting
adjustment to mineral property, plant and equipment of $2.9 million and opening retained earnings of $0.2 million. In addition, in 2010, mineral property, plant and equipment and deferred income taxes were reduced by $17.7 million related to the
Turkish operations, as well as foreign exchange loss and deferred income tax expense increased by a total of $1.9 million for the year ended December 31, 2010, with an offsetting adjustment to increase deferred income tax liability. 

 

	(n)	Deferred tax asset / liability 

 IFRS

 For non-monetary assets, temporary differences that arise when changes in exchange rates lead to changes in the tax basis rather than the
carrying amounts of those assets measured in the functional currency are recognized as a deferred tax asset / liability. 
 Canadian GAAP

 For non-monetary assets, temporary differences that arise when changes in exchange rates lead to changes in the tax basis rather than the
carrying amounts of those assets measured in the functional currency are not recognized. 

  

					
	 	 	40  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The effect was an increase in deferred income tax liability by $5.4 million as at January 1, 2010,
with an offsetting adjustment to opening retained earnings. In addition, the effect was a decrease in deferred income tax expense by $2.5 million for the year ended December 31, 2010, with an offsetting adjustment to deferred income tax
liability. 
  

	(o)	Available for Sale financial assets 


IFRS 
 For available for sale financial
assets, foreign exchange amounts arising from translation of the assets are recorded in net income. 
 Canadian GAAP 

For available for sale financial assets, foreign exchange amounts arising from translation of the assets are recorded in other comprehensive income.

  

	(p)	Presentation 

 The presentation in
accordance with IFRS differs from the presentation in accordance with Canadian GAAP. 

  

					
	 	 	41  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 Reconciliation of the Statements of Financial Position: 

The January 1, 2010 Canadian GAAP statement of financial position has been reconciled to IFRS as follows: 

 

																					
	A S S E T S	  	Ref.	 	 	  	CDN GAAP	 	  	 	  	IFRS
Adjustments	 	  	 	  	      IFRS      	 
								
	 Current Assets
	  		 		  				  		  				  		  			
	 Cash and cash equivalents
	  		 		  	 	$160,682	  	  		  	 	$ -	  	  		  	 	$160,682	  
	 Short-term investments
	  		 		  	 	26,200	  	  		  	 	-	  	  		  	 	26,200	  
	  
 Amounts receivable
	  		 		  	 	2,369	  	  		  	 	-	  	  		  	 	2,369	  
	  
 Advances and prepaid
expenses
	  		 		  	 	1,058	  	  		  	 	-	  	  		  	 	1,058	  
	  
 Inventory
	  		 		  	 	20,026	  	  		  	 	-	  	  		  	 	20,026	  
	 Total Current Assets
	  		 		  	  
  
	  
 210,335
	  
   
	  		  	 	-	  	  		  	 	210,335	  
	  
 Non-Current
Assets
	  		 		  				  		  				  		  			
	  
 Exploration and evaluation
assets
	  	(h)	 		  	 	-	  	  		  	 	521	  	  		  	 	521	  
	 Mineral property, plant and equipment
	  	(d),(e)
 (h),(m)
	 		  	   
	149,947  
	    
	  		  	   
	(5,125)  
	    
	  		  	   
	144,822  
	    

	 Total Assets
	  		 		  	  
  

 
	  
 $360,282

 
	  
   

 
	  		  	   
	$(4,604)  
	    
	  		  	   
	$355,678  
	    

	  

L I A B I L I T I E S
	  		 		  				  		  				  		  			
	 Current Liabilities
	  		 		  				  		  				  		  			
	  
 Accounts payable and accrued
liabilities
	  		 		  	 	$11,179	  	  		  	 	$ -	  	  		  	 	$11,179	  
	  
 Income taxes payable
	  		 		  	 	1,988	  	  		  	 	-	  	  		  	 	1,988	  
	 Current portion of other liabilities
	  		 		  	   
	370  
	    
	  		  	   
	-  
	    
	  		  	   
	370  
	    

	 Total Current Liabilities
	  		 		  	  
  
	  
 13,537
	  
   
	  		  	 	-	  	  		  	 	13,537	  
	  
 Non-Current
Liabilities
	  		 		  				  		  				  		  			
	 Deferred income taxes
	  	(d),(e)
 (m),(n)
	 		  	 	20,354	  	  		  	 	2,244	  	  		  	 	22,598	  
	 Decommissioning liability
	  	(d)	 		  	 	5,432	  	  		  	 	(317)	  	  		  	 	5,115	  
	 Other liabilities
	  	(l)	 		  	   
	759  
	    
	  		  	   
	75  
	    
	  		  	   
	834  
	    

	 Total Liabilities
	  		 		  	  
  

 
	  
 40,082

 
	  
   

 
	  		  	   
	2,002  
	    
	  		  	   
	42,084  
	    

	  
 E Q U I T Y
	  		 		  				  		  				  		  			
								
	 Share capital
	  		 		  	 	251,752	  	  		  	 	-	  	  		  	 	251,752	  
	 Contributed surplus
	  	(b)	 		  	 	10,114	  	  		  	 	2,750	  	  		  	 	12,864	  
	 Retained earnings
	  	(b),(d),(e)
(m),(n),(l)	 		  	   
	58,334  
	    
	  		  	   
	(9,356)  
	    
	  		  	   
	48,978  
	    

	 Total Equity
	  		 		  	  
  

 
	  
 320,200

 
	  
   

 
	  		  	   
	(6,606)  
	    
	  		  	   
	313,594  
	    

	 Total Liabilities and Equity
	  		 		  	  
  

 
	  
 $360,282

 
	  
   

 
	  		  	   
	($4,604)  
	    
	  		  	   
	$355,678  
	    



  

					
	 	 	42  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 The December 31, 2010 Canadian GAAP statement of financial position has been reconciled to IFRS as
follows: 
  

																			
	A S S E T S	  	Ref.  	  	CDN GAAP  	 	  	 	 	  IFRS
  Adjustments  	 	  	 	  	  IFRS     	 
	  
 Current
Assets
	  		  				  		 				  		  			
	 Cash and cash equivalents
	  		  	 	$146,334 	  	  		 	 	$- 	  	  		  	 	$146,334 	  
	 Short-term investments
	  		  	 	41,846 	  	  		 	 	- 	  	  		  	 	41,846 	  
	 Amounts receivable
	  		  	 	5,749 	  	  		 	 	- 	  	  		  	 	5,749 	  
	 Advances and prepaid expenses
	  		  	 	3,136 	  	  		 	 	- 	  	  		  	 	3,136 	  
	  
 Available-for-sale
securities
	  		  	 	9,380 	  	  		 	 	- 	  	  		  	 	9,380 	  
	  
 FVTPL securities
	  		  	 	1,094 	  	  		 	 	- 	  	  		  	 	1,094 	  
	  
 Inventory
	  		  	 	25,225 	  	  		 	 	- 	  	  		  	 	25,225 	  
	  
 Total Current
Assets
	  		  	 	232,764 	  	  		 	 	- 	  	  		  	 	232,764 	  
	  
 Non-Current
Assets
	  		  				  		 				  		  			
	  
 Exploration and evaluation
assets
	  	(h)  	  	 	- 	  	  		 	 	99,767 	  	  		  	 	99,767 	  
	  
 Mineral property, plant and
equipment
	  	(d),(e),  
(h),(i),(m)  	  	 	295,619 	  	  		 	 	(121,714) 	  	  		  	 	173,905 	  
	  
 Total Assets
	  		  	   
	$528,383   
	    
	  		 	   
	$(21,947)   
	    
	  		  	   
	$506,436   
	    

	  
 L I A B I L I T I E S
	  		  				  		 				  		  			
	  
 Current
Liabilities
	  		  				  		 				  		  			
	  
 Accounts payable and accrued
liabilities
	  		  	 	$14,393 	  	  		 	 	$- 	  	  		  	 	$14,393 	  
	  
 Income taxes payable
	  		  	 	3,373 	  	  		 	 	- 	  	  		  	 	3,373 	  
	 Current portion of other liabilities
	  		  	 	428 	  	  		 	 	- 	  	  		  	 	428 	  
		  		  	 	18,194 	  	  		 	 	- 	  	  		  	 	18,194 	  
	 Non-Current Liabilities
	  		  				  		 				  		  			
	  
 Deferred income
taxes
	  	(d),(e)  
(m),(n)  	  	 	42,784 	  	  		 	 	(15,918) 	  	  		  	 	26,866 	  
	  
 Decommissioning
liability
	  	(d),(k)  	  	 	7,731 	  	  		 	 	(172) 	  	  		  	 	7,559 	  
	 Other liabilities
	  	(l)  	  	 	677 	  	  		 	 	11 	  	  		  	 	688 	  
	  
 Total
Liabilities
	  		  	   
	69,386   
	    
	  		 	   
	(16,079)   
	    
	  		  	   
	53,307   
	    

	  
 E Q U I T Y
	  		  				  		 				  		  			
	  
 Share capital
	  	(b)  	  	 	326,119 	  	  		 	 	(252) 	  	  		  	 	325,867 	  
	 Contributed surplus
	  	(b),(j)  	  	 	17,314 	  	  		 	 	6,002 	  	  		  	 	23,316 	  
	 Accumulated other comprehensive income
	  	(o)  	  	 	(960) 	  	  		 	 	(372) 	  	  		  	 	(1,332) 	  
	  
 Retained earnings

 
	  	(b),(d),(e)  
(m),(n),(l)  	  	 	116,524 	  	  		 	 	(11,246) 	  	  		  	 	105,278 	  
	 Total Equity
	  		  	 
	458,997 
	  
	  		 	 
	(5,868) 
	  
	  		  	 
	453,129 
	  

	  
 Total Liabilities and
Equity
	  		  	   
	$528,383   
	    
	  		 	   
	($21,947)   
	    
	  		  	   
	$506,436   
	    



  

					
	 	 	43  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 Reconciliation of the Statement of Comprehensive Income: 

The Canadian GAAP statement of comprehensive income for the year ended December 31, 2010 has been reconciled to IFRS as follows: 

 

																			
	 	  	Ref.  	  	  CDN GAAP  	 	  	 	 	  IFRS
  Adjustments  	 	  	 	  	  IFRS     	 
	 OPERATING REVENUES
	  		  				  		 				  		  			
	  
 Revenue
	  		  	  
  
	  

$189,272 
	  

  
	  		 	  
  
	  

$ - 
	  

  
	  		  	  
  
	  

$189,272 
	  

  

	  
 MINE OPERATING
COSTS
	  		  				  		 				  		  			
	  
 Mining and
processing
	  		  	 	46,560 	  	  		 	 	- 	  	  		  	 	46,560 	  
	  
 Royalties
	  		  	 	9,090 	  	  		 	 	- 	  	  		  	 	9,090 	  
	  
 Amortization
	  	(i),(k)  	  	 	20,753 	  	  		 	 	(267) 	  	  		  	 	20,486 	  
		  		  	  
  
	  

76,403 
	  

  
	  		 	  
  
	  

(267) 
	  

  
	  		  	  
  
	  

76,136 
	  

  

	 EARNINGS FROM MINE OPERATIONS
	  		  	  
  
	  
 112,869 
	  
   
	  		 	  
  
	  
 (267) 
	  
   
	  		  	  
  
	  
 113,136 
	  
   

	  
 EXPENSES
	  		  				  		 				  		  			
	  
 Exploration
	  		  	 	7,594 	  	  		 	 	- 	  	  		  	 	7,594 	  
	  
 Corporate and
administrative
	  		  	 	9,187 	  	  		 	 	- 	  	  		  	 	9,187 	  
	  
 Share-based
compensation
	  	(j)  	  	 	13,300 	  	  		 	 	3,000 	  	  		  	 	16,300 	  
	  
 Accretion
	  	(p)  	  	 	460 	  	  		 	 	(460) 	  	  		  	 	- 	  
		  		  	  
  
	  

30,541 
	  

  
	  		 	  
  
	  

2,540 
	  

  
	  		  	  
  
	  

33,081 
	  

  

	  
 EARNINGS FROM
OPERATIONS
	  		  	  
  
	  
 82,328 
	  
   
	  		 	  
  
	  
 (2,273) 
	  
   
	  		  	  
  
	  
 80,055 
	  
   

	  
 OTHER INCOME
(EXPENSES)
	  		  				  		 				  		  			
	  
 Finance income
	  		  	 	1,510 	  	  		 	 	- 	  	  		  	 	1,510 	  
	  
 Financing expense
	  	(k),(l),(p)  	  	 	- 	  	  		 	 	(451) 	  	  		  	 	(451) 	  
	  
 Foreign exchange gain
(loss)
	  	(m),(o)  	  	 	294 	  	  		 	 	(333) 	  	  		  	 	(39) 	  
	  
 Other income (loss)
	  		  	   
	9,393   
	    
	  		 	   
	-   
	    
	  		  	   
	9,393   
	    

	EARNINGS BEFORE INCOME TAXES 	  		  	  
  
	  
 93,525 
	  
   
	  		 	  
  
	  
 (3,057) 
	  
   
	  		  	  
  
	  
 90,468 
	  
   

	  
 INCOME TAXES
	  		  				  		 				  		  			
	  
 Current expense
	  		  	 	(23,410) 	  	  		 	 	- 	  	  		  	 	(23,410) 	  
	 Deferred tax recovery (expense)
	  	(d),(e)  
(m),(n)  	  	   
	(4,430)   
	    
	  		 	   
	1,167   
	    
	  		  	   
	(3,263)   
	    

	  
 EARNINGS
	  		  	  
  
	  
 $65,685 
	  
   
	  		 	  
  
	  
 ($1,890) 
	  
   
	  		  	  
  
	  
 $63,795 
	  
   

	  
 Other comprehensive
income:
	  		  				  		 				  		  			
	  
 Unrealized gain (loss) on
securities
	  	(o)  	  	 	(960) 	  	  		 	 	(372) 	  	  		  	 	(1,332) 	  
	  
 COMPREHENSIVE
INCOME
	  		  	  
  
	  

$64,725 
	  

  
	  		 	  
  
	  

($2,262) 
	  

  
	  		  	  
  
	  

$62,463 
	  

  

	  
 EARNINGS PER
SHARE
	  		  	 	 	 	  		 	 	 	 	  		  	 	 	 
	  
 - basic
	  		  	  
  
	  
 $0.57 
	  
   
	  		 	  
  
	  
 ($0.02) 
	  
   
	  		  	  
  
	  
 $0.55 
	  
   

	 - diluted
	  		  	 	$0.56 	  	  		 	 	($0.01) 	  	  		  	 	$0.55 	  


  

					
	 	 	44  	 	ALAMOS GOLD INC.    












					
		 	



	 	2011 FINANCIAL REPORT

  

 Reconcilation of the Statements of Equity: 

The Canadian GAAP Statement of Equity as at January 1, 2010 and December 31, 2010 have been reconciled to IFRS as follows: 

 

											
	As at	  	Ref.  	  	  December 31, 
2010	 	  	  January 1,  
2010  	 
	  
 Total Equity - Canadian
GAAP
	  		  	 	458,997	  	  	 	320,200	  
	 Share-based compensation
	  	(b),(j)  	  	 	-	  	  	 	-	  
	 Decommissioning liabilities
	  	(d),(k)  	  	 	77	  	  	 	36	  
	 Mineral property, plant and equipment-deemed cost
	  	(e)  	  	 	(1,244)	  	  	 	(1,460)	  
	 Property acquisition obligation
	  	(i)  	  	 	19	  	  	 	-	  
	 Deferred taxes
	  	(m),(n)  	  	 	(3,821)	  	  	 	(4,988)	  
	 Available for Sale securities
	  	(o)  	  	 	-	  	  	 	-	  
	 Foreign exchange impact all the above differences
	  	(m)    
	  	   
	(899)  
	    
	  	   
	(194)  
	    

	 Total Equity - IFRS
	  		  	 	453,129	  	  	 	313,594	  

 Reconciliation of the Statement of Cash Flows: 
 The restatement from Canadian GAAP to IFRS did not have a significant impact on the Company’s consolidated statement of cash flows for the year ended December 31, 2010. As a result, no
quantitative reconciliation was performed. 

  

					
	 	 	45  	 	ALAMOS GOLD INC.