CIBC Capital Markets on Friday lowered its price target on Alamos Gold (AGI.TO, AGI) to C$82 from CD$90 after the company lowered guidance for second-quarter production from its Young-Davidson mine in Ontario.
Analyst Cosmos Chiu maintained an Outperformer rating on shares of the gold producer.
"Alamos Gold disclosed that the Young-Davidson mine has been impacted by two seismic events in the past week, with one occurring at an active mining front," Chiu said in a note to clients.
"While no injuries were sustained, infrastructure was damaged limiting access to two higher stopes that had been scheduled to be mined in Q2," the analyst said.
In a statement on Thursday, Alamos said it is revising lower its second quarter production guidance to between 130,000 and 135,000 ounces.
"While disappointing, Young-Davidson (~16% of corporate NAV5%) is no longer the key driver of value for the company with the emergence of the Island Gold District (~60% of corporate NAV5%)," Chiu said.
"Island Gold continues to perform well, and remains on track to achieve full-year guidance with significant growth for the remainder of the year," the analyst said.
Chiu said his price target reduction reflects the short-term operational impact from Young-Davidson.
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