Alamos Gold (AGI) Q3 2026 earnings review
Alamos Gold meets third-quarter plan, but project delays hit 2027
Alamos Gold met its lowered third-quarter production target because record ore processing at Island Gold offset a steep drop at Young-Davidson. Revenue rose 10% to $510 million as a 27% jump in gold prices outweighed a 16% drop in gold output. Chief executive John McCluskey kept the reduced 2026 targets unchanged, which by our math leaves a 26% production jump for the fourth quarter.
| Gold production | 119,000 oz -16% from a year ago (inside the 115k–140k plan) |
|---|---|
| Average realized gold price | $4,258/oz +27% from a year ago |
| All-in sustaining costs (AISC) | $1,956/oz +42% from a year ago |
| 2026 outlook / 2027 projects | 2026 held Island Gold shaft delayed to mid-2027 |
⚖️ Verdict: 🔴 Bearish
The story got worse because construction delays and underground rock stress now push the 2027 production and cost improvement further out. Commissioning of the Island Gold shaft slipped by one quarter to mid-2027 with a 5% budget overrun, while slower development at PDA in Mexico and a gradual recovery at Young-Davidson will weigh on 2027 output and costs. On the positive side, the Magino mill passed 10,300 tonnes per day and the company retired 96% of its low-priced Argonaut gold contracts.
The question now is whether the 2027 delays are a one-quarter timing shift or a sign that deep-mine rock stress and contractor inflation will permanently raise costs. Supporters see expanding Island Gold capacity and unhedged gold prices funding the ramp-up, while skeptics see back-to-back annual forecast cuts and rising unit costs. The updated three-year plan in early 2027 will settle the size of the 2027 reset.
🐂 Bull Case
Island Gold Mining and Milling Rates Hit Records
The Island Gold District in Ontario, which combines the high-grade Island Gold underground mine and the adjacent Magino open-pit mine, is the growth engine for Alamos Gold. The Canadian miner wants this district to supply more than half its gold and pull company-wide costs down over the next decade.
Both parts of the district set volume records this quarter. Underground crews at Island Gold mined 1,790 tonnes of ore per day (tpd), up 15% from last quarter and 35% from a year ago. The Magino processing mill handled 10,313 tpd, up 16% from last quarter and above its 10,000 tpd target.
The company credited an "improving performance and reliability of the overall circuit driven by an enhanced maintenance program" alongside a temporary crusher. That matters because the district produced a record 68,700 ounces, or 58% of the miner's total output by our math, proving the surface mill can handle the extra rock before the larger expansion finishes.
What to watch: Island Gold underground mining rates in the fourth quarter. Reaching the 2,000 tpd year-end target would show the underground mine can keep expanding even before the new shaft opens.
Hedge Buyouts and Turkish Cash Clear 2027 Upside
When Alamos bought rival Argonaut Gold in 2024, it inherited forward contracts that forced it to sell 329,000 ounces of gold at roughly $1,820 per ounce. Critics note the miner spent $227.9 million in cash this year buying back those contracts at high gold prices, and that it adds those buyout costs back when reporting free cash flow.
Alamos paid $86.2 million in the third quarter to cancel 33,000 ounces of 2027 contracts at an effective price of $4,429 per ounce, and retired another 3,000 ounces in October. That leaves 14,000 ounces, meaning 96% of the inherited contracts are gone. On October 9, the company also collected a $160 million cash installment from last year's sale of its Turkish projects.
This matters because the cash drain from cancelling old contracts is almost over, so 2027 gold sales will capture market prices while the Turkish cash covers the buyout bill. The producer also bought back $16.6 million of its own shares in October, bringing year-to-date repurchases to $72.3 million.
What to watch: retirement of the final 14,000 hedged ounces before year-end. Finishing the buyouts leaves 2027 operating cash flow unencumbered by legacy contract settlements.
🐻 Bear Case
Project Delays Push 2027 Production Growth Later
"Commissioning of the shaft has been delayed approximately one quarter to mid-2027 given additional time required to complete the ore and waste handling system, but has no impact on our longer-term outlook," chief executive John McCluskey said. The Phase 3+ shaft at Island Gold and the new Puerto Del Aire (PDA) underground mine in Mexico were supposed to lift company output to 650,000–730,000 ounces in 2027.
Excavation crews at the Island Gold shaft bottom hit a rock dyke that needs extra ground support, pushing completion to mid-2027 and lifting the $835 million budget by about 5% ($42 million by our math). Consequently, underground mining rates will be "lower than previously guided during the first half of 2027", reaching 2,400 tpd in the second half.
Meanwhile, poor ground conditions and slow contractors at PDA will cut its second-half 2027 output as La Yaqui Grande winds down and Mexico takes $94.7 million in nine-month cash taxes. The company admitted that "the short-term delays within the Island Gold District and PDA, as well as the previously disclosed impact on mining rates at Young-Davidson, are expected to impact near-term production and costs into 2027". After cutting its 2026 forecast in July, Alamos will now lower its 2027 targets too.
What to watch: the updated three-year outlook in early 2027. It will show how much of the 690,000-ounce 2027 target and the $1,375 per ounce cost plan is lost to these delays.
Young-Davidson's Lower Mine Still Restricts Output
Young-Davidson is the company's second-largest mine in Ontario and historically its steadiest cash generator. A rock burst in June damaged access to two high-grade mining areas on the 9410 level, forcing management in July to cut the mine's 2026 output plan by a third.
In the third quarter, the mine's output dropped 40% from a year ago to 22,700 ounces as underground crews mined 5,135 tpd, down from 7,259 tpd last year. To keep the surface mill running at 7,067 tpd, the operation fed it low-grade surface stockpiles, pulling processed grades down to 1.20 grams of gold per tonne (g/t).
- Young-Davidson all-in sustaining costs (AISC, total operating and sustaining capital costs): $2,764 per ounce, up 87% from $1,476 a year ago
- Mine-site free cash flow: $30.4 million, down 51% from $62.3 million a year ago
- Ore grade mined underground: 1.60 g/t, down from 1.92 g/t a year ago and below plan
Alamos said "an updated mine plan is being evaluated, designed to minimize stress through an optimized ore extraction sequence" to lift mining rates gradually across 2027 and 2028. That matters because the company's existing 2027 and 2028 plans assumed Young-Davidson would immediately bounce back to 165,000 ounces a year.
What to watch: the revised Young-Davidson mine plan due in early 2027. A multi-year recovery below 7,000 tpd would permanently raise the mine's unit costs.
Island Gold Needs a Fourth-Quarter Grade Jump
To hit its full-year target of 290,000–310,000 ounces at the Island Gold District, Alamos is counting on both faster mining and richer ore in the final three months of the year. Through nine months, the district has produced 197,400 ounces.
In the third quarter, the concentration of gold in the underground rock fell to 8.69 g/t, down from 9.15 g/t in the second quarter and 12.05 g/t a year ago. Management blamed "higher than expected dilution within certain higher grade stopes mined in August", meaning waste rock mixed with the gold ore, though it said September returned to normal.
By our math, reaching the 300,000-ounce middle of the full-year district forecast requires 102,600 ounces in the fourth quarter, a 49% jump from the third quarter's record 68,700 ounces. Even the bottom of the range requires 92,600 ounces, so the miner needs underground grades to jump toward 11.5 g/t right away.
What to watch: fourth-quarter underground grades at Island Gold. Anything much below 11.0 g/t would make the middle of the full-year district target hard to reach.
Gold Prices Carry Revenue as Unit Costs Climb
Alamos sells an unhedged commodity, so surging market gold prices have driven its revenue and profit growth all year while actual gold volumes shrank. In the third quarter, its average realized gold price rose 27% from a year ago to $4,258 per ounce, lifting revenue 10% to $510.4 million even though ounces sold dropped 13%.
Meanwhile, unit costs climbed 42% as company-wide all-in sustaining costs (AISC) hit $1,956 per ounce, up from $1,375 a year ago. Mining and processing costs — the direct expense of digging and milling rock — rose 2.7 percentage points of revenue to 32.1% on labour, contractor and diesel inflation, offset by lower amortization (-2.6 points). Excluding the $86.2 million Argonaut hedge buyout add-back, free cash flow was negative $10.6 million by our math.
What to watch: fourth-quarter company-wide AISC per ounce. By our math, the full-year cost plan implies fourth-quarter AISC must drop to roughly $1,780 per ounce.
👓 Other Themes
Work Stand-Downs Follow Higher Injury Rates
Safety performance worsened in the third quarter as the total recordable injury frequency rate rose to 1.90 per 200,000 hours worked, up from 1.33 in the second quarter and 0.97 a year ago, with 32 recordable injuries and two lost-time injuries. Alamos stated that "the increase in injury frequency rate is not to its standards" and held work stand-downs across all mines to refocus crews on safety.
💲 Other KPIs
Profit per share excluding one-offs rose 18.9% from a year ago to $0.44, slowing from 73.5% growth in the second quarter as gold production dropped and unit costs rose. Unadjusted profit per share fell 40.0% to $0.39 because last year's third quarter included a $218.8 million accounting gain on the Turkish projects.
Spending on mines and equipment rose 68.1% from a year ago to $226.9 million, or 44.5% of revenue by our math, up from 30.4% of revenue in the second quarter. Growth projects took $164.4 million, led by $92.1 million at Island Gold and $40.2 million at Lynn Lake.
Cash and cash equivalents of $597.4 million minus $200.0 million of debt left net cash of $397.4 million by our math, down from $436.9 million in the second quarter after the $86.2 million hedge buyout. That figure excludes the $160 million Turkish sale payment received on October 9.
🔮 Guidance
Consistent with prior commentary. The fourth-quarter plan calls for 150,000 ounces at the middle of the range, up 26.1% from the third quarter and 6.0% above a year ago by our math. Higher underground mining rates and grades near 11.5 g/t at Island Gold are expected to drive the rebound. Over the prior three quarters, actual output trailed the middle of the quarterly target by 10.3% on average.
Unchanged. The full-year plan stays at the reduced range set in July, pointing to a 1.9% drop from 2025 at the 535,000-ounce midpoint by our math. With 373,500 ounces produced through nine months, hitting the middle of the full-year range leaves 161,500 ounces for the fourth quarter — slightly above the top of the fourth-quarter target range, meaning full-year output will likely finish in the lower half.
Unchanged. The full-year cost forecast remains at the higher range issued in July. After averaging $1,845 per ounce over the first nine months and $1,956 in the third quarter, hitting the $1,825 midpoint implies fourth-quarter AISC must fall to about $1,780 per ounce by our math as Island Gold volumes rise.
Unchanged. The plan keeps direct mining and processing costs at $1,225 per ounce at the middle of the range. Because nine-month cash costs averaged $1,302 per ounce ($1,375 in the third quarter), reaching the full-year midpoint requires fourth-quarter cash costs to drop to roughly $1,050 per ounce by our math.
Unchanged. Full-year cost of sales including amortization stays at $890 million. With $651.6 million recorded through September, that leaves $238.4 million for the fourth quarter by our math, up from $214.2 million in the third quarter on higher planned sales volumes.
Unchanged. The capital budget comprises $228–$255 million of sustaining capital, $657–$720 million of growth capital, and $60 million of capitalized exploration. Having spent $591.0 million on property, plant and equipment through nine months, reaching the $990 million midpoint implies a step-up to $399.0 million in the fourth quarter by our math.
❓ Key Questions
How much will 2027 production and cost targets change?
Alamos warned that shaft delays at Island Gold, slower underground development at PDA, and lower mining rates at Young-Davidson will hurt 2027 production and costs. Investors need to know how far the 650,000–730,000 ounce and $1,325–$1,425 per ounce AISC targets for 2027 will move.
What mining rate can Young-Davidson sustain in 2027 and 2028?
The company is redesigning the lower-mine extraction sequence at Young-Davidson to reduce rock stress and expects a gradual increase in mining rates over 2027 and 2028. How long will output stay below the historical 7,500–8,000 tpd rate and the prior 165,000-ounce annual plan?
Can Island Gold underground grades reach 11.5 g/t in Q4?
Reaching the 300,000-ounce midpoint at Island Gold requires 102,600 ounces in the fourth quarter by our math, up 49% from the third quarter. After August stope dilution pulled third-quarter grades down to 8.69 g/t, what average grade have crews mined in October?
Will rock conditions at the shaft and PDA raise 2027 capex?
Encountering a rock dyke at the Island Gold shaft bottom added 5% (~$42 million) to the Phase 3+ budget, while unexpected ground conditions slowed PDA development. Will these ground-support requirements and contractor inflation lift the $800–$890 million capital budget previously set for 2027?