Alamos Gold (TSX, NYSE: AGI) reported weaker-than-expected quarterly profit as costs rose and gold production climbed more slowly than planned. Shares plunged.
Adjusted first-quarter earnings increased to $59.8 million, or $0.14 a share, from $51.2 million, or $0.13, in the same period a year ago, Toronto-based Alamos said Wednesday after the close of trading. Per-share profit missed the $0.19 consensus estimate in a survey of financial analysts.
The results sent Alamos shares tumbling about 12% to C$34.52 ($25.01) in late morning trading Thursday in Toronto. That gave the company a market capitalization of about C$14.5 billion ($10.5 billion).
鈥淥verall, a relatively weak quarter to start the year, but the company has a clear path to improved operations for the remainder of the year,鈥� CIBC Capital Markets analyst Cosmos Chiu said in a note Thursday. He reaffirmed his 鈥渙utperformer鈥� rating on the stock.
First-quarter gold production of 125,000 oz. came in at the low end of the company鈥檚 previously disclosed range and below analyst expectations.
CEO John McCluskey blamed a slower ramp-up at the Magino mill and lower production from the Young-Davidson property 鈥� both in northern Ontario 鈥� for the slump. The operations showed improvements in April, which the executive said would contribute to higher output and lower costs in the second quarter. Magino was integrated into Alamos鈥� portfolio after the company acquired Argonaut Gold last year.
Gold鈥檚 historic run is providing miners such as Alamos an unexpected tailwind. The metal, which set an all-time closing high of $3,433.55 an oz. in London last week, has gained about 40% since the start of the year.
Ontario, Manitoba catalysts
Helped by rising output at its Island Gold mine in Ontario and the development of the Lynn Lake project in Manitoba, Alamos is working on boosting gold production to about 900,000 oz. in a few years. It鈥檚 aiming to produce between 580,000 and 630,000 oz. in 2025.
First-quarter revenue jumped 20% to $333 million thanks to rising gold prices. Alamos sold 117,583 oz. of gold during the quarter at an average realized price of $2,802 per ounce. Sales were 6% lower than production due to timing, though the sale of these ounces will benefit future quarters, according to the company.
Total cash costs of $1,193 per ounce and all-in sustaining costs of $1,805 per ounce were above the top end of guidance for the first half, Alamos said. Higher share-based compensation costs and higher per-oz. costs at Young-Davidson and Magino drove the increase.
All-in sustaining costs are expected to drop about 20% in the second quarter, with further decreases planned for the rest of the year, Alamos said.
Full-year goal
Alamos also reaffirmed its full-year goal of producing between 580,000 and 630,000 oz. of gold this year.
鈥淲ith a further increase in production and decrease in costs expected in the second half of the year, we remain on track to achieve our full-year production guidance,鈥� McCluskey said. 鈥淲e expect this improvement to continue over the next several years through our portfolio of high-return, low-cost growth projects.鈥�
Higher milling rates at Magino, along with increased grades at Young-Davidson and the La Yaqui Grande mine in northern Mexico, are expected to lift second-quarter output to between 135,000 and 150,000 ounces, the company said. A more significant increase in production is expected into the second half.
鈥淭he noise in Q1/25 is not expected to last with production trending higher through the year,鈥� National Bank Financial analyst Don DeMarco, who has an 鈥渙utperform鈥� rating on Alamos, said in a note. Earnings 鈥渟hould continue to grow as more and more of the portfolio upside comes online.鈥�