Alamos Gold's Young-Davidson Problem: Seismic Events Cut Mining Rates and Push 2026 Guidance Down

Alamos Gold's Young-Davidson mine was supposed to bounce back in the second quarter of 2026. Instead, in a July 7, 2026 video, The Deep Dive walks through a cascade of setbacks — a three-day power outage in May, two seismic events, and lost access to two high-grade stopes — that has cut planned mining rates nearly in half and put full-year production on track to land below the low end of guidance. The stock fell as much as 20% on the announcement, and the host's core argument is that after repeated guidance problems, this is no longer one bad quarter but a pattern investors can no longer look past.

## A guidance miss already on the record

2025 set the stage. Alamos produced a record $205 million in free cash flow — cash left after operating and capital costs — but the video attributes that largely to strong gold prices rather than operational strength. Production came in at 545,000 ounces, down 4% year over year and about 15,000 ounces short of the bottom of a guidance range that had already been cut once, from a 605,000-ounce midpoint to 570,000 ounces in October.

Two things caused the shortfall, per the video: lower-than-planned grades (how much gold each ton of ore carries) and mining rates at Young-Davidson, plus seismic events at Island Gold in October. Now, the host notes, seismic problems have surfaced at Young-Davidson as well.

## A cornerstone mine in a slump

The video frames Young-Davidson — a bulk-tonnage mine, built to move large volumes of lower-grade ore, in the Abitibi region — as a cornerstone of Alamos since a 2015 merger valued at $1.5 billion. It has operated since 2011, starting as an open pit before going underground two years later, and has produced more than 2 million ounces over the past 15 years.

But 2025 was rough: 153,000 ounces, roughly 7,000 short of already-reduced guidance and more than 20,000 ounces below 2024 output.

## The promised recovery that never came

The first quarter of 2026 continued the slide. Young-Davidson produced 30,000 ounces, down 15% year over year and more than 25% short of the roughly 41,000 ounces needed to stay on pace for full-year guidance. Milling rates — how fast the mill, the plant that grinds ore to recover gold, processes material — averaged 6,800 tons per day, below guidance, after scheduled maintenance ran long and a transformer needed an unscheduled repair.

At the time, management called this manageable. Four active ore passes (vertical openings used to move ore between underground levels) were expected to add flexibility and lift mining and milling rates to about 8,000 tons per day from the start of Q2 through year-end.

## What went wrong instead

Conditions worsened in three steps. In May, a storm took out a regional power line that repair crews had difficulty locating, halting operations for three days. Then the mine experienced two seismic events — sudden failures or slips of rock along geological faults, caused by built-up stress releasing, and often triggered or intensified by mining work such as excavation and blasting. One occurred on an active mining front. The events damaged underground infrastructure and cut off access to two high-grade stopes (the underground cavities where ore is mined) that were slated to be mined before the end of the quarter.

The host adds a deeper concern: seismic events usually mean the geology is not as well understood as believed — otherwise the trouble spots would have been avoided — and safety considerations now force Alamos to slow planned mining rates while it works to prevent repeat events.

## Lower production, higher costs

The operational impact is stark. Planned mining rates of 8,000 tons per day have been cut to about 5,000 — nearly halved — from the start of Q2 through year-end. The company says new mine sequencing and ground support measures should allow higher rates beyond 2026, though the host doubts that is operationally feasible.

Guidance is following operations down. Q2 production guidance has been reduced from 135,000–150,000 ounces to 130,000–135,000 ounces, a 12% decline at the midpoints. Full-year production is now expected below the low end of the 570,000–650,000-ounce range — a range that was itself already revised down from the prior three-year outlook. Costs are expected to exceed the upper end of guidance, which stands at $1,020–$1,120 per ounce for cash costs and $1,500–$1,600 for AISC (All-In Sustaining Cost — what it really costs to produce an ounce, including sustaining expenses). Young-Davidson was already the highest-cost mine in the portfolio, with first-quarter AISC of $2,181 per ounce. A full guidance update, including full-year estimates, is expected alongside Q2 results.

## Why the market reacted so hard

The host's closing argument is about credibility. When Island Gold reported seismic events at the end of October, the market largely looked past the resulting guidance cut because it landed alongside decent Q3 results. Eight months later, similar events at a different mine read as a pattern rather than bad luck — "questions start getting asked about what exactly is going on here," in his words. With gold prices also falling, the stock dropped as much as 20% on the announcement.

The open question, per the video, is how large the full-year cut will be when Alamos reports Q2 results — and whether the claim that mining rates can recover beyond 2026 survives contact with the actual geology.