Last close As at 05/08/2026
USD165.45
▲ 14.84 (9.85%)
Market capitalisation
USD83,846m
Research: Metals & Mining
Agnico Eagle’s FY19 results revealed production of 1.782Moz at a total cash cost of US$673/oz, compared with prior guidance of 1.77–1.78Moz at US$620–670/oz. Adjusted EPS for Q419 was US$0.37/share – almost exactly the same as Q319 – to result in FY19 adjusted EPS of US$1.01/share (Edison calculation). At the same time, the quarterly dividend was raised from US$0.175/share to US$0.20/share. However, despite the positive aspects of the results, production guidance for FY20 was lowered from 1.9–2.0Moz to 1.875Moz (a decline of 3.8% at the midpoint) and the shares sold off 15.6%, albeit we believe this reaction to have been overdone. Production guidance for FY21 and FY22 remained (effectively) unchanged.
Agnico Eagle Mines |
Record production and cash flow
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Metals & mining |
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18 February 2020 |
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Agnico Eagle Mines is a client of Edison Investment Research Limited |
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Agnico Eagle’s FY19 results revealed production of 1.782Moz at a total cash cost of US$673/oz, compared with prior guidance of 1.77–1.78Moz at US$620–670/oz. Adjusted EPS for Q419 was US$0.37/share – almost exactly the same as Q319 – to result in FY19 adjusted EPS of US$1.01/share (Edison calculation). At the same time, the quarterly dividend was raised from US$0.175/share to US$0.20/share. However, despite the positive aspects of the results, production guidance for FY20 was lowered from 1.9–2.0Moz to 1.875Moz (a decline of 3.8% at the midpoint) and the shares sold off 15.6%, albeit we believe this reaction to have been overdone. Production guidance for FY21 and FY22 remained (effectively) unchanged.
Transient problems in Q4
The FY20 production guidance downgrade was mainly the result of two problems. The first was a slower than expected ramp-up of operations in Nunavut. The second was increased seismicity at LaRonde. Both however should prove transient. The delay in ramp-up at Nunavut resulted from two factors: 1) surface water in the Amaruq pit restricting the mining footprint and therefore altering the mining sequence, stripping ratio and mined grade etc; and 2) premature wear on the apron feeder at Meliadine. The first of these was effectively solved in September (although it inevitably takes a number of months before full mining flexibility is achieved). The second will be solved by delivery of appropriate spare parts, failing which the apron feeder will be replaced no later than March. In the meantime, mining at the West mine at LaRonde was temporarily suspended in mid-December and operations refocused on the East mine, while improved ground-support protocols are implemented. While the residual effects of both will continue to be felt into Q120, both should be consigned to history by Q220 and beyond, when production will once again return to a rising trend and unit costs will moderate.
Consensus estimates and valuation
Consensus forecast EPS for both FY20 and FY21 exist within a wide range of US$0.93–2.22/share and US$1.16–2.76/share, respectively. All other things being equal, we believe that an outcome close to the middle of the range is eminently achievable. By contrast, given that the CEO, Sean Boyd, described a 20c/share quarterly dividend as ‘secure’, dividend expectations seems unduly conservative for both FY20 and FY21. AEM has traditionally traded at a premium rating relative to its peers. Currently, however, it is cheaper than its North American peers on c 54% of common valuation measurements and more expensive on c 46%.
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Consensus estimates
Source: Company sources, Refinitiv. Note: PBT and EPS are normalised, excluding exceptional items. |
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Research: Investment Companies
Securities Trust of Scotland (STS) aims to generate income and long-term capital growth through a bottom-up approach to investing in global equities. The manager, Mark Whitehead, focuses on quality companies with an ability to sustain dividend growth, to build a relatively concentrated portfolio of 35–55 high-conviction stocks. In his view, this approach is naturally aligned with selecting companies that score highly on ESG issues. Since Whitehead’s appointment, and the adoption of the mandate, STS has delivered an annualised NAV total return of 12.9% and increased demand for its shares the valuation from trading at a persistent discount to trading at a premium to NAV.