Alamos Gold: BMO Production Estimates For Q4 Comes In High

On January 17th, Alamos Gold Inc. (TSX: AGI) reported its fourth quarter and full-year production results, as well as their 2022 to 2024 production estimates.

For the fourth quarter, Alamos Gold produced 112,500 ounces of gold bringing the full year 2021 production to 457,200 ounces, coming in the lower range of guidance. Costs have not yet been finalized but the company says that it is expected to be consistent with their guidance.

The company provided 2022 in-depth guidance, which included gold production of 440,000 to 480,000 ounces. While cash costs are expected to be between $875 to $925 per ounce and the all-in sustaining costs are stated to be between $1,190 to $1,240 per ounce. Total capital expenditures will be between $305 and $345 million while exploration is expected to be $27 million for 2022.

In the longer run, the company expects these numbers to grow to 460,000 to 500,000 ounces of gold in 2024, with cash costs of $650 to $750 per ounce and $950 to $1,050 of all-in sustaining costs per ounce.

Currently Alamos Gold currently has 13 analysts covering the stock with an average 12-month price target of C$12.46, or a 36% upside to the current stock price. Out of the 13 analysts, 1 has a strong buy rating, 6 have buy ratings, 5 have holds and 1 analyst has a sell rating. The street high sits at C$17.50, or a 91% upside to the current price, while the lowest price target sits at C$9.98.

In BMO Capital Markets’ note, they reiterate their outperform rating but lowered their price target from C$14 to C$11, saying that both the production results and three-year guidance came in below their estimates.

For the fourth quarter production results, BMO expected Alamos Gold to report 125,600 ounces. The primary reason for the miss was due to Mulatos reporting 23,100 ounces produced versus BMO’s estimate of 40,300 ounces.

For the full year, BMO calls it a “weak end to the year” as the company reported full-year production closer to the bottom of their revised guidance. Once again Mulatos produced lower than anticipated gold. BMO expected the mine to produce 135,00 to 145,000 ounces versus the actual 121,300 ounces of gold.

BMO provides a silver lining for investors in that even with costs going up for the next few years, the companies all-in sustaining costs will eventually drop down to ~$1000 per ounce in 2024 and by 2025 BMO expects Alamos to begin to generate significant free cash flow.

Lastly BMO ends the note by saying, “Over the three years, production guidance is meaningful below BMO and Consensus estimates, AISC/oz guidance is slightly above the Street for 2022-23, and capex is slight above expectations.”

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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