Hold Alamos after merger

Article Excerpt

ALAMOS GOLD $4.36 (Toronto symbol AGI TSINetwork Rating: Speculative) (604-681- 2802; www.alamosgold.com; Shares outstanding: 127.4 million; Market cap: $1.5 billion; No dividends paid) is the company formed by the merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold. The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which will sharply increase its costs. Alamos Gold holds cash of $358.0 million, which it will use to fund the Young-Davidson mine and boost the combined firm’s gold output from 400,000 ounces this year to 700,000 in 2018. The company’s outlook is positive, but like most gold producers, its shares will be heavily influenced by the future direction of gold prices. Alamos Gold is a hold. hold…