Alamos Gold Inc. (TSX:AGI; NYSE:AGI) announced a revision to its second-quarter production and cost guidance due to operational disruptions at its Young-Davidson mine in northern Ontario. The company now expects to produce between 130,000 and 135,000 ounces, a 12% decrease from its previous guidance based on the midpoint. This reduction is primarily attributed to two seismic events last week, one occurring at an active mining front, which damaged infrastructure and limited access to two higher-grade mining areas. Additionally, a three-day power outage in late May caused by storm damage to the regional power line further impacted mining rates and output.
The company anticipates that the production from Young-Davidson for the second quarter will be lower than expected and in line with first-quarter output. Consequently, second-quarter costs are also projected to be higher than previously guided. Due to lower first-half production and expected reduced mining rates at Young-Davidson for the rest of the year (averaging approximately 5,000 tonnes per day), Alamos Gold now expects its consolidated production to be below the low end of its 2026 guidance, and costs to exceed full-year guidance. Revised full-year guidance for production and costs will be released with the second-quarter financial results in late July.
Despite the challenges at Young-Davidson, Alamos Gold's other Canadian operations are performing well. The Island Gold District is expected to maintain its planned production for the second quarter and is anticipated to increase its mining rate from 1,500 tonnes per day to 2,000 tonnes by the end of the year. The Magino open pit's mill ramp-up is progressing as scheduled, with an expected average of 10,000 tonnes per day by the third quarter. CEO John McCluskey expressed disappointment with the Young-Davidson issues but anticipates stronger production in the second half of the year.
The news led to a notable impact on Alamos Gold's stock, which closed 2.5% lower on the day of the announcement. Data from Trefis shows that Alamos Gold (AGI) shares have been on a 6-day losing streak, with cumulative losses amounting to -13.5% over this period, and a market capitalization decline of approximately $2.6 billion, currently standing at $16 billion. For the year-to-date in 2026, the stock has seen a modest gain of 1.3%.
