Bank of America: North American precious metals stocks face pressure from third-quarter results, with cash returns in focus

Why has the share-price reaction been weak despite reasonably good results?

As of the report’s publication, 6 North American precious metals companies covered by BofA had reported third-quarter results. Of these, 5 underperformed the S&P/TSX Global Gold Index in the trading day after reporting; weaker gold prices also weighed on the sector’s performance.
For example, Alamos Gold shares fell 9% in the trading day after its results, underperforming the index by 6.1 percentage points. Centerra Gold shares fell 1.1% over the same period but outperformed the index by 4.1 percentage points.
BofA believes companies that deliver shareholder returns above expectations while continuing to invest in growth projects and meeting or exceeding operating guidance may see the strongest share-price performance after reporting.

The average gold price in the third quarter of 2026 was 4,263 dollars per ounce, down 5.4% quarter on quarter but still up 23.3% year on year. The average silver price was 62.71 dollars per ounce, down 14.3% quarter on quarter. BofA believes the quarterly decline in average gold and silver prices will negatively affect the precious metals companies it covers.
Most companies also cited cost pressures from diesel, consumables, drilling and parts, among other items, and said they could partly offset them. The average spot price of diesel rose 15% quarter on quarter in the third quarter, further illustrating input-cost pressure.
Gold prices continued to weaken after the end of the quarter: in the week ending 30 October, gold closed at 3,874.62 dollars per ounce, down 3% for the week. Uncertainty over the Federal Reserve’s next policy move and Friday’s sell-off both affected prices.

Despite the quarterly decline in average gold and silver prices, BofA expects the North American precious metals companies it covers to generate combined free cash flow of about 6.1 billion dollars in the third quarter of 2026 and about 29.2 billion dollars for the full year. It therefore identifies capital allocation and shareholder returns as earnings-season priorities.
Agnico Eagle Mines returned 455 million dollars to shareholders in the third quarter, or about 53% of free cash flow. Management said a payout ratio of 50% was a reasonable estimate for 2027, up from 40% previously. BofA currently forecasts capital returns of 2.4 billion dollars for the company in 2027, about 41% of its forecast free cash flow, and therefore sees room to raise its return forecast.
Growth investment and costs will also use cash: the company plans maintenance shutdowns in the fourth quarter of 2026, affecting throughput at two mines. BofA raised its full-year cash cost forecast to 1,114 dollars per ounce, near the top of the company’s guidance range.

Alamos Gold’s third-quarter adjusted EBITDA was 5% below BofA’s expectation because gold sales were 3% below the bank’s estimate and costs were 4% higher. The company maintained its 2026 guidance and expects fourth-quarter production to rise 18%–34% quarter on quarter to 140 thousand–160 thousand ounces.
However, Alamos’s Phase 3+ shaft project was delayed by one quarter and capital expenditure increased 5%, while production at the PDA project in the second half of 2027 is expected to be below plan. BofA therefore cut its 2027 production forecast for the company from 656 thousand ounces to 608 thousand ounces and its target price from 36 dollars to 34 dollars per share, while maintaining a neutral rating.
Kinross Gold expects to meet its revised 2026 attributable gold equivalent production guidance, but BofA remains cautious about its 2027 outlook. The bank expects its production to be broadly flat year on year and cash costs to rise, while peers’ production increases and unit costs fall, and therefore maintains an underperform rating.