Shares of Alamos Gold have steadily inclined almost 18 percent year-to-date. Is it on your watch list?
No doubt, gold price trends are inclined to impact gold mining stocks–for better or for worse. However, it’s important for investors to keep in mind the price of the precious metal isn’t the only thing to watch for when considering stocks.
On that note, one gold company that’s been discussed of late is Alamos Gold (TSX:AGI), a Canadian-based intermediate gold producer.
The company has production coming from three mines in North America: the Young-Davidson mine in Ontario, and the Mulatos and El Chanate Mines in Mexico.
In addition to its operating mines, Alamos is exploring and developing projects in Turkey and the US, and also Canada and Mexico.
As noted above, the company has been the topic of a variety of reports and analysts, with some projecting its stock to trade between $5 and $10 over the next year. That being said, shares of Alamos Gold closed Monday (Jan. 16) at $10.92, and have increased 17.93 percent year-to-date.
The company is also poised to have a busy year–with initial production starting at one of its satellite projects, and the completion of a feasibility study at another.
With the company’s stocks rising steadily, and a bustling 2017 in store, should Alamos Gold be on your radar?
Alamos Gold: Mulatos production to grow?
In a recent report done by Kerry Smith from Haywood Securities, it sets the target share price valuation for the company at $13–which isn’t far off from where it is now.
Regarding the company’s Mulatos District Exploration–which includes the La Yaqui, Cerro and La Carricito deposits–the research report notes that Alamos has spent very little money in regional exploration within the district–largely due to the inability to negotiate access rights with the Mulatos Ejido.
In the report, Haywood notes that Alamos has estimated the greater Mulatos camp to be the sixth largest of its kind in the world. That said, at the end of December 2016, the company allegedly formalized a 30-year agreement with the Ejido, allowing for a large part of the land package to open up for exploration.
With that in mind, Alamos Gold expects to produce between 150,000 and 160,000 ounces from the Mulatos gold mine in 2017, which is an increase from its 154,000 ounces produced in 2016.
Following a site visit, analysts over at BMO Capital Markets–as reported by Mining Journal–said the Mulatos property, “looks like the gift that will keep on giving to group production,” and that its La Yaqui satellite project would “serve to ensure Mulatos continued as a major contributor.”
As noted in the company’s 2017 outlook, Alamos has been given the go ahead to begin construction at La Yaqui, with Phase 1 to be completed in the first half of 2017.
“Alamos now has a lot of new targets that they can evaluate with this Ejido agreement in place,” the Haywood Securities report reads. “The Yaqui corridor will probably double in size to one million ounces over the next two years, in our opinion.”
Alamos Gold: what else to watch
Of course, the Mulatos District–and La Yaqui in particular–aren’t the only stories coming from Alamos in 2017. Between the Young-Davidson and Mulatos, the company expects gold production to fall somewhere between 400,000 and 430,000 ounces of gold–a six percent increase from 2016.
The company is also working towards the initiation of the permitting process and completing a feasibility study at its Lynn Lake development with a target completion for the third quarter in 2017.
Looking over to the Cerro Pelon deposit, a large focus of the 2017 exploration program will be to systematically explore the larger Cerro Pelon area, particularly on the western zone.
But, there’s more: earlier in January, the company received its forest permit for the Kirazli gold project in Turkey, which is indeed a significant acquirement for the company. In the press release, John A. McCluskey, president and CEO of Alamos said the Kirazli is Alamos’ highest return project and “will be a significant source of free cash flow in the years ahead.”
With a busy year ahead for the company, Alamos will surely be on watch lists for investors in the gold sector.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.