Currency in USD
Last close As at 07/06/2023
USD50.75
▲ −1.27 (−2.44%)
Market capitalisation
USD24,975m
Research: Metals & Mining
Agnico Eagle Mines (AEM) started the year with strong quarterly production of 813koz at an US$832/oz total cash cost and a US$1,125/oz all-in sustaining cost (AISC). A number of records were achieved, including in cash flow and safety. This marks the final quarter incorporating 50% of production from Canadian Malartic. From 30 March, this will increase to 100%, following AEM’s acquisition of Yamana’s Canadian assets, which will add c 80–90koz in attributable production per quarter. Guidance for FY23 remains unchanged at 3.24–3.44Moz at a cash cost of US$840–890/oz and AISC of US$1,140–1,190/oz. An unchanged quarterly dividend of US$0.40/share was declared.
Agnico Eagle Mines |
A year of optimisation ahead
Metals and mining |
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2 May 2023 |
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Agnico Eagle Mines is a research client of Edison Investment Research Limited |
Agnico Eagle Mines (AEM) started the year with strong quarterly production of 813koz at an US$832/oz total cash cost and a US$1,125/oz all-in sustaining cost (AISC). A number of records were achieved, including in cash flow and safety. This marks the final quarter incorporating 50% of production from Canadian Malartic. From 30 March, this will increase to 100%, following AEM’s acquisition of Yamana’s Canadian assets, which will add c 80–90koz in attributable production per quarter. Guidance for FY23 remains unchanged at 3.24–3.44Moz at a cash cost of US$840–890/oz and AISC of US$1,140–1,190/oz. An unchanged quarterly dividend of US$0.40/share was declared.
Sealing the deals
Following its successful merger with Kirkland Lake in 2022, AEM has now concluded its acquisition of Yamana Gold (in concert with Pan American Silver). Consequently, AEM now owns 100% of Canadian Malartic, the Wasamac project located in the Abitibi region of Quebec, and several other exploration properties. In addition, on 6 April 2023 AEM entered into a 50/50 joint venture with Teck Resources for the San Nicolás copper-zinc project in Zacatecas, Mexico. The JV is targeting several permits and a subsequent feasibility study in 2024.
Looking to the future
AEM intend to expand their mill at Detour beyond 28Mtpa and conduct a technical study for an underground component; each could contribute c 300koz pa to production. The Canadian Malartic Complex is progressing with the Odyssey development (update expected June 2023), evaluating exploration opportunities and advancing drilling projects. Abitibi regional pipeline projects are also advancing internal studies (completion expected by early 2024) with the potential to process ore by 2028 at the Canadian Malartic Mill, adding up to c 500koz pa to production.
Valuation: Dividend yield leading the pack again
Consensus estimates
Source: Company data, Refinitiv. Note: PBT and EPS are normalised. |
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. 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 modestly upwards since our last note in February. However, they still appear conservative within the context of Q1 adjusted net EPS of US$0.578/share, the current gold price and the future 100% contribution to earnings from Canadian Malartic. At the same time, AEM’s yield remains at a notable premium to its peers.
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Research: Healthcare
Having completed the required 38 implantations in late 2022, Pixium Vision’s key upcoming clinical milestone is the primary efficacy data, expected in or around year-end 2023, from the PRIMAvera European pivotal study assessing the safety and clinical benefits of the wireless Prima System in patients with geographic atrophy due to age-related macular degeneration (GA-AMD). The company’s FY22 results showed a milder operating loss than expected, coming in at €11.9m, below our €12.5m estimate. Pixium has since taken further steps to curb its cash burn rate, and it now expects its funds on hand (€4.7m gross cash as of 31 March) to last until approximately the end of July, versus its prior guidance of June 2023. It is working actively to raise additional funds and has hired two investment banks to reach potential investors worldwide. We have rolled forward our estimates and given that we expect the company’s focus in 2023 and 2024 will be on preparing the Prima System for EU market approval and launch (which we continue to model in H125), we have pushed back our US commercialisation forecast by one year, to H227. We now obtain a pipeline rNPV valuation of €140.1m (vs €146.3m previously).
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