CIBC World Markets Inc. cut its price target on Alamos Gold Inc. (TSX:AGI.TO) to $23.00 from $24.00, reflecting higher costs for 2013 estimates.
Barry Cooper, an analyst at CIBC, cut his 2012 EPS estimates for the
company to US$1.33 from US$1.47 and 2013 estimates to US$1.72 from
US1.77.
Production in the fourth quarter was essentially in line with our
expectations of 43,000 ounces, Cooper said. The 46,500 ounces produced
included 3,000 ounces of non-commercial production from the Escondida
zone.
Cooper wrote that the start up of the mill associated with Escondida
ore will be a major milestone for the operation. The boost will come
from both grades and costs and partially offset total cash costs that
are expected to be approaching $600/oz for the heap leach operation
alone, he said.
"Grades are expected to be down 23% at the Mulatos pit year-over-year
and follow a previous decline of 18% in 2011. This should be a low
point relative to the reserve grade, although higher gold prices will be
affecting reserve figures for AGI as well as others as low grades
become economical," Cooper said.
"Throughput for Mulatos may prove difficult to achieve given the
17,500 TPD avg that has been forecast. About 500 TPD will come from mill
tailings, but to avg 17,000 TPD for the main crusher facility may be
aggressive," Cooper wrote. "We think that there could be a cushion in
the grade estimate that could help."
The stock is currently trading 0.12% lower at $17.31. The shares have
been trading in the 52-week range between $13.26 and $20.15.