Alamos Gold price target hiked on updated Island Gold District mine plan

Tue June 24 2025

Alamos Gold Inc (TSX:AGI, NYSE:AGI) has seen its price target raised by Jefferies analysts following the release of its updated life-of-mine (LOM) plan for its Island Gold District, which now incorporates the Magino asset.

The analysts’ new price target of $38 represents a 42% upside from Alamos Gold’s share price at the time of writing.

“With a 20-year mine life, strong operational leverage, and visible growth ahead, Alamos is well-positioned to outperform,” Jefferies wrote, maintaining a 'Buy' rating.

The company’s updated plan included significantly lower long-term costs, the analysts wrote. “All-in sustaining cost (AISC) came in roughly 26% below what we were modeling,” they noted.

The new plan forecasts average annual production of 306,000 ounces over 20 years at an AISC of $1,003 per ounce, well below Jefferies’ prior estimate of $1,347 per ounce.

The analysts attributed the cost improvement to several structural advantages, including significant productivity improvements, increased automation, higher throughput with a shaft-hoisting operation, and lower processing costs for Island Gold underground ore.

They also highlighted the benefit of lower-cost grid power once processing transitions to the Magino mill in 2026.

2025 costs are expected to trend higher, with AISC of $1,247 per ounce versus guidance of $1,100 per ounce to 1,150 per ounce. However, Jefferies sees a sharp drop starting in 2026. Costs are projected to fall into a $773 per ounce to $1,006 per ounce range between 2026 and 2030 as the Magino mill comes fully online.

“We expect even better numbers to come in the Q4 expansion plan,” the analysts wrote. That upcoming study is expected to incorporate 2.8 million ounces of measured and indicated resources into reserves and potentially increase Magino’s mill capacity to 18,000 to 20,000 tons per day, compared to 12,400 in the current LOM plan.

Source: https://www.proactiveinvestors.co.uk/