Net income jumps 59% in Q1 for Alamos Gold

Higher gold prices and lower cash costs catapulted profit in the first quarter by 59% for Alamos Gold (AGI-T). Net income reached $14 million or 12¢ per share compared with $8.8 million or 9¢ a share in the year-earlier quarter.

Revenue rose more than 31% to $46.7 million, up from $35.5 million in the first quarter of 2009. The higher revenue was accounted for by a 5% rise in the number of gold ounces oz. sold along with a 25% increase in the average realized gold prpice.

“Compared to a year ago, cash margins have increased 48% relative to a 25% rise in the gold price as a result of a 10% decline in cash costs over the same period,” Brian MacArthur of UBS Investment Research wrote in a research note to clients.

Production at Alamos Gold’s Multaos mine in Mexico, however, slid 10% to 41,600 oz. primarily because of the tie-in of the closed crushing circuit, which ultimately resulted in less tonnes and ounces being stacked on the heap during the fourth quarter of 2009. Gold production was also affected by an increase in the height of the heap. Nevertheless, the company says it is on track to produce between 160,000 and 175,000 oz. from Mulatos this year.

The Mulatos mine is within the company’s 100% owned Salamandra Concessions in the Sierra Madre Occidental mountain range in the east-central portion of the State of Sonora, Mexico. The mine is roughly 220 km by air east of the City of Hermosillo, and 300 km south of the border between the U.S. and Mexico.

In addition to Mulatos, the company has acquired the Agi Dagi and Kirazli gold projects in northwestern Turkey.

MacArthur of UBS has a buy on the stock and a target price of $17.50. At presstime in Toronto Alamos Gold was trading at $14.96 per share. It has traded between $7.78 and $15.47 per share over the last year and has about 114.2 million shares outstanding.