Currency in USD
Last close As at 25/03/2023
USD50.26
▲ 0.79 (1.60%)
Market capitalisation
USD22,555m
Research: Metals & Mining
FY22 marked a record-breaking year for Agnico Eagle Mines (AEM) after its Kirkland Lake acquisition, achieving annual gold production of 3,281koz at a US$780/oz total cash cost and a US$1,090/oz all-in sustaining cost (AISC). In Q422, AEM delivered strong gold production of 799koz at a US$863/oz cash cost, despite inflationary pressure and reduced production at LaRonde, Kittila and Pinos Altos. AEM’s quarterly dividend was maintained at US$0.40/share and it expects its recently announced acquisition of Yamana’s Canadian assets to close in March.
Agnico Eagle Mines |
A record-breaking year
Metals & mining |
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21 February 2023 |
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Agnico Eagle Mines is a research client of Edison Investment Research Limited |
FY22 marked a record-breaking year for Agnico Eagle Mines (AEM) after its Kirkland Lake acquisition, achieving annual gold production of 3,281koz at a US$780/oz total cash cost and a US$1,090/oz all-in sustaining cost (AISC). In Q422, AEM delivered strong gold production of 799koz at a US$863/oz cash cost, despite inflationary pressure and reduced production at LaRonde, Kittila and Pinos Altos. AEM’s quarterly dividend was maintained at US$0.40/share and it expects its recently announced acquisition of Yamana’s Canadian assets to close in March.
Strong production overshadows costs
AEM achieved payable gold production in line with its guidance of 3.2–3.4Moz, breaking its own production record in the process. However, owing to global inflationary pressures (largely linked to items such as energy, cyanide and steel), costs were slightly above the top end of the guidance range at US$780/oz total cash costs (cf US$725–775/oz) and US$1,090/oz AISC (cf US$1,000–1,050/oz).
Focused on the future
AEM’s focus is to expand its strategic positions by leveraging existing infrastructure, such as the optimisation of excess mill capacity across the Abitibi region as well as optimising Canadian Malartic and Detour Lake. The latter is set to increase mill throughput to 28Mtpa and continues to report successful exploration efforts. In the meantime, construction at the Odyssey project remains on schedule with shaft sinking expected to commence in March. Total gold reserves increased by 9% in FY22 (pro forma).
Mergers and acquisitions
Following its successful merger with Kirkland Lake in 2022, AEM is now in the final stages of the acquisition of Yamana Gold (alongside Pan American Silver), which will see it gain 100% ownership of the Canadian Malartic mine (329koz of gold in FY22), the Wasamac project and several other exploration properties.
Valuation: Dividend yield beating the pack
AEM continues to command a premium rating relative to the sector, consistent with both its size and the low-risk jurisdictions in which it operates. However, guidance is for production to increase from 3.24–3.44Moz in FY23 to 3.4–3.6Moz in FY25 and consensus earnings estimates have been moving upwards since our last note in November. Nevertheless, AEM’s yield is also at a notable premium to its peers.
Consensus estimates
Source: company data, Refinitiv. Note: PBT and EPS are normalised. |
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Research: Healthcare
In a bid to strengthen its balance sheet and support development programmes, Creo has announced a £28.5m (£26.8m net proceeds) fund- raise through institutional investors by placing 142.5m new ordinary shares at 20p/share (a 28% discount to the 15 February closing price). The fund-raising, subject to shareholder approval (AGM expected on 8 March), was oversubscribed against the minimum target of £25m, indicating strong shareholder support. In addition, Creo has announced an open offer to shareholders to raise another £5.2m in funds via the conditional issue of c 26m ordinary shares. Creo plans to use these funds to support its commercialisation plans, ongoing R&D efforts, licensing and partnering opportunities as well as working capital requirements. Notably, we estimate these funds to be sufficient to take Creo to net profitability (H126 as per our projections). We will incorporate the fund-raise into our estimates following shareholder approval and completion of the process.
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