Alamos Gold (AGI.TO: Quote) said on Tuesday it produced 46,000 ounces of gold in the first quarter, more than it expected, and that it is on pace to produce between 145,000 and 160,000 ounces for the full year 2009.

Costs per ounce during the quarter were below $350, the Toronto-based company said in a statement, while the 46,000 ounces represented a 38 percent improvement over the year-before quarter.

The company's shares, which fell sharply on Friday and Monday, were up 3.2 percent at C$8.10 on the Toronto Stock Exchange on Tuesday.

Alamos, which mines from the Mulatos mine in Mexico, said first quarter production was helped by increased recoveries due to the early commissioning of new equipment in December 2008 that helped the heap leaching process.

The company said it is spending more than $1 million a month on exploration and has six drill rigs operation at its four exploration project areas in Mexico.

Alamos said it has more than $118 million in cash and short-term bank deposits, with no debt, and strong free cash flows at current gold prices.

Spot gold was at $881 an ounce on Tuesday afternoon.

($1=$1.24 Canadian) (Reporting by Cameron French; editing by Peter Galloway)

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