Markets

--Analyst Actions: Alamos Gold at the Denver Gold Forum

An image of stock prices rising and declining in value
Credit: Shutterstock photo

Alamos Gold Inc. (AGI.TO) presented at the Denver Gold Forum: On September 19, 2011, John McCluskey, CEO of AGI provided an update at the Denver Gold Forum.

Strategy for growth - target of 350kozs for 2013: "AGI reiterated y-o-y flat production in 2011 at 145-160kozs at increased cash costs of $440-465/oz, but will increase production by 50% in 2012 via the high grade Escondida option at Mulatos and then further growth through two Turkish deposits, Agi Dagi and Kirazli, coming on stream in 2013."

The 239% share price appreciation since 2008 vs. a 123% increase in gold price has been driven by exploration, production and margin growth.

Addressed the issue of cyanide: "AGI is looking forward to full production rates once cyanide is received in late Q3/Q4. Currently the gold is being held back in inventory."

Mulatos high grade mill operational by Q1/12: "The development of a gravity mill to process high grade Escondida ore will commence in Q1/12. AGI noted that there is an opportunity to expand to 1,000tpd from 500tpd."

In Turkey, last week AGI provided a mineral resource update to 1.96Mozs and expects to triple the original 1.14Mozs resource by 2012YE. "A response from the government on the EIA is expected in Q1/12. A feasibility study is expected by year end 2011. Management is forecasting combined mine production of 135kozspa for the first 8 years at $302/oz. AGI expects to better the capex estimate of $235M by $60M. The Camyurt project has been drilled out 1,100m at an average grade of 1.2g/t."

The company's strategy remains: 1) increasing production ( Escondida in 2012 and Turkey in 2013); 2) Increasing gold reserves (satellite projects in Mexico and Turkey); 3) Growth through acquisitions and exploration; 4) Continue to be a low cost producer; 5) Maintain solid financial profile (no debt, strong cash balance).

Valuation: "Our $20.00 Target price is based on a target P/NAV multiple of 1.10 times our cash adjusted NAV/DCF of $16.31 per share with net cash of $1.81 per share added at par."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Commodities

Latest Markets Videos

    MTNewswires

    Founded in 1999, MT Newswires (formerly known as Midnight Trader) is a leading provider of original source, multi-asset class, real-time, global financial news and information to most of the largest banks, brokerage firms and professional market data, trading & research applications in North America.

    Learn More