Shares of Alamos Gold Inc. experienced a sharp decline on the Toronto Stock Exchange Friday, dropping 18.0% to C$42.13 by midday, after the company issued a significant production warning for its Young-Davidson mine. The stock touched a low of C$41.12 during the session, underperforming other gold miners such as Barrick Mining, which fell 1.8%, OceanaGold down 2.9%, and IAMGOLD off 2.3%, according to Google Finance data.
The warning stems from a series of operational setbacks at the Young-Davidson mine in northern Ontario. Alamos reported that two seismic events occurred last week, including one at an active mining face, which caused infrastructure damage and blocked access to two higher-grade stopes. Additionally, a late-May storm damaged a regional power line, forcing an unplanned three-day shutdown. The company emphasized that there were no injuries from these incidents.
As a result, Alamos now expects second-quarter production to be between 130,000 and 135,000 ounces, falling short of its previous internal targets. More concerning for investors, the company indicated that consolidated 2026 production will likely come in below the low end of its earlier guidance range, while costs are expected to exceed plan. Alamos plans to release revised full-year guidance alongside its second-quarter results, expected in late July.
CEO John A. McCluskey described the operational challenges as “disappointing” and noted that the first half of the year has been challenging. However, he expressed optimism that the Island Gold mine will help lift second-half results. Island Gold has averaged over 1,500 tonnes per day in the second quarter, with a year-end target of 2,000 tonnes per day. Meanwhile, the Magino mill averaged nearly 9,800 tonnes per day in June, with expectations to reach 10,000 tonnes per day by the third quarter.
In a separate development, Alamos announced it has cleared out the last of its legacy Argonaut Gold hedges, which had fixed a selling price for gold. The company spent $92.3 million in cash to retire 35,000 ounces under those contracts, increasing its exposure to spot gold prices moving forward.
Analysts reacted quickly to the news. BMO Capital Markets lowered its price target on Alamos to C$73 from C$79 but maintained its Outperform rating. BMO cited reduced mining rates at Young-Davidson, which is now targeting approximately 5,000 tonnes per day through the rest of 2026, down from its previous guidance of 8,000 tonnes per day.
The broader gold market also added pressure, with spot gold slipping 0.9% to $4,169.44 an ounce on Friday, on track for its third consecutive weekly loss. A stronger U.S. dollar and hawkish comments from the Federal Reserve have weighed on the precious metal. Nikos Tzabouras, senior market analyst at Tradu.com, described the “higher-for-longer Fed expectations” as “toxic for non-yielding assets” like gold.
The NYSE was closed for the Juneteenth holiday, so Alamos shares traded only in Toronto, where the news was priced first. U.S. traders are expected to react when markets reopen. The situation remains fluid, and further guidance cuts could materialize if Young-Davidson takes longer to stabilize than anticipated, placing more reliance on Island Gold to offset the shortfall. A continued drop in gold prices would compound the pressure, though a stronger ramp at Island Gold and firmer gold prices could provide some cushion.
