Wednesday, March 17, 2010

Alamos Gold (TSE:AGI): Going Big Time?

Alamos Gold is Ready for the Big Time

After a solid fourth-quarter report, Alamos Gold (TSE:AGI) has walked away from it with some swagger, and is looking toward significant expansion going forward.

The company has enjoyed three straight years of increasing their gold production, as their Mulatos Mine in Mexico continues to produce well, projecting between 160,000 to 175,000 ounces to be mined in 2010.

Cost an ounce will be at about $338, making it a very profitable project.

With that effort and a strong war chest of $147 million, including short-term investments and cash, Alamos gold is positioned to grow the company out through acquisitions, while maintaining some solid organic growth.

CEO John McCluskey has thrown aside subtle and let it be known they are hunting for gold properties and companies, and are willing to merge and do things nice, or get aggressive and make hostile bids if that's what it takes to grow the company.

They have two gold projects they acquired from Teck Resources (NYSE:TCK)and Fronteer Development Group (AMEX:FRG) in the early part of 2010, and estimate it'll begin production in the early part of 2013. They bought those for cash.

I like this company because of their strong cash position, organic growth potential, and the desire to grow over the next several years. Most of what I like is the cost controls in place, which show they have good management in place who aren't ready to just throw money around hoping to land a deal which could easily bankrupt or weaken the company.

That means they've worked hard to position themselves to take advantage of a number of opportunities in the near future, or to make their own opportunities. If they keep their heads and operational discipline, this could be a very nice gold company to invest in and hold.

Alamos Gold is Ready for the Big Time

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