Canaccord: Alamos Gold’s Fourth Quarter Results Are “A Home Run”

Last week Alamos Gold (TSX: AGI) reported their fourth quarter and year end financial results for 2020. For the fourth quarter, the company generated free cash flow of C$58 million, which is its second consecutive quarter of strong free cash flow. Net cash flow from operations was C$131.4 million, a 69% increase year over year, and the company ended the quarter with C$264 million in cash and equivalents.

For the full year, the company met its revised production guidance, with 426.8 thousand ounces produced in 2020. They generated C$123.3 million in free cash flow for the year and sold 424.3 thousand ounces at an average price of $1,763 per ounce.

Alamos Gold currently has 13 analysts covering the company with a weighted 12-month price target of C$16.12. This is slightly down from the average before the results, which was C$16.53. Two analysts have strong buys while another seven have buy ratings. Three analysts have a hold rating and one analyst has a sell rating.

In a note issued last week, Canaccord’s Dalton Baretto reiterated their buy rating and C$15.50 price target on the name. Baretto headlines, “Closing out 2020 with a home run.”

Alamos Gold beat on every metric versus Canaccord’s estimates. Gold production was estimated to come in at 114.1 thousand ounces, while the cash costs were expected to be $799 per ounce. All-in sustaining costs came in at $1,091 per ounce, and EBITDA beat their $115 million estimate by $19 million. Below you can see the full breakdown of Canaccord’s estimates versus Alamos Gold’s earnings.

Baretto writes, “We are especially encouraged by the strong ramp-up of the new Lower Mine at Young-Davidson, which exceeded its year-end production rate target of 7,500tpd.” Below you can see how Alamo’s production by mine did versus Canaccord’s estimates.

Baretto believes that the company will forgo increasing their dividend after the most recent hike to U$0.025 per share. He believes that most of their C$264 million cash will go towards programs at Island Gold and potentially Lynn Lake and Kirazli.

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.

Leave a Reply