Like many other gold equities, even Alamos Gold [stock_market_widget type="inline" template="generic" color="default" assets="AGI.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has made the most of strong gold prices this year. Its stock has nearly doubled and there’s good reason to believe that Alamos is not done growing yet thanks to the end-market conditions and the company’s operational moves.
Let’s take a closer look at how Alamos performed in the latest quarter as that will give us a fair idea about what to expect from the company in the coming months.
Alamos Gold Shines Bright
Alamos Gold’s second-quarter production of 125,200 ounces of gold was in line with the company’s guidance and the output in the year-ago period. The average realized gold price witnessed by the company during the quarter came in at $1,309 an ounce, which was essentially flat as compared to the year-ago period.
The flat production and consistent gold pricing meant that Alamos’ revenue was nearly flat year over year at $168.1 million. However, the important thing to note is that its adjusted net earnings shot up to $17.7 million as compared to the year-ago profit of $4.9 million.
This increase in the bottom line was a result of the lower costs achieved by the company. Alamos Gold’s total cash cost per ounce of gold sold came in at $699 an ounce during the quarter, down from $832 an ounce in the prior-year period. Its all-in sustaining costs came in at $926 an ounce as compared to $996 an ounce in the year-ago period.
The lower costs were a result of an improvement in Alamos’ grade profile at some of its assets. For instance, as COO Peter MacPhail pointed out:
The good news for investors is that Alamos forecasts further improvement in grades during the second half of the year at its mines. For instance, the company has advanced development activities at the Kirazli mine, where it expects solid production growth at attractive rates of returns.
According to the press release:
The company believes that Kirazli will deliver its initial production by the end of next year.
Gold Prices Will Be Another Tailwind
Alamos Gold’s strategy of finding ways to boost production while keeping costs under check will prove to be a solid tailwind in a strong pricing environment. With gold trading at over $1,440 an ounce right now and expected to rise to over $1,600 an ounce going forward, it makes sense to stay invested in Alamos Gold because the stock can deliver more upside.
