Shares of Alamos Gold (AGI) tumbled 9.92% in pre-market trading on Thursday, following the release of the company's first-quarter 2025 financial results that fell short of analyst expectations. The significant drop reflects investor concerns about the company's production levels and higher costs.

Alamos Gold reported adjusted earnings per share of $0.14 for Q1 2025, missing the analyst consensus estimate of $0.19 by 26.32%. While this represents a 7.69% increase from $0.13 per share in the same period last year, it failed to meet market expectations. Revenue for the quarter came in at $333 million, also below the analyst estimate of $378.45 million by 12.01%.

The company's gold production for the quarter totaled 125,000 ounces, consistent with the low end of quarterly guidance but down from 135,700 ounces in the first quarter of 2024. Despite the lower output, Alamos Gold maintained its full-year production guidance, stating that stronger production is expected in the second quarter and the remainder of the year.

Investors were particularly concerned about the increase in costs. Total cash costs rose to $1,193 per ounce, and all-in sustaining costs (AISC) increased to $1,805 per ounce, both above the company's guidance for the first half of 2025. The higher costs were attributed to lower grades processed at some operations and increased share-based compensation expenses.

The market's negative reaction was further amplified by valuation concerns. A recent comparison with industry peer Barrick Gold (GOLD) raised questions about Alamos Gold's valuation, with Barrick trading at a more attractive forward P/E ratio of 11.39 compared to Alamos Gold's 21.74.

While Alamos Gold's management remains optimistic about the company's outlook, emphasizing that they are still on track to achieve full-year production guidance and expect costs to decrease significantly in the coming quarters, the market's reaction suggests that investors are taking a cautious stance until they see concrete evidence of the promised improvements in production and cost management.