Last close As at 05/08/2026
USD165.45
▲ 14.84 (9.85%)
Market capitalisation
USD83,846m
Research: Metals & Mining
Relative to the prior quarter (Q220), Agnico Eagle Mines’ (AEM) production in Q3 increased by 48.8% to 492.7oz and its adjusted net income by 111.4%. While this may seem impressive enough, adjusted net income actually increased by 327.0%, to 78.1c/share, as the company leveraged a 76.0% quarterly increase in revenues against a 47.2% increase in production costs to result in an 8.2pp uplift in gross margins. AEM also benefited from a relatively low effective tax rate of 33.1% in Q3. As a consequence of both its performance in Q3 and the expectation of a similar one in Q4, the company increased its quarterly dividend by 75%, from 20c/share to 35c/share.
Agnico Eagle Mines |
Showing its metal in Q3
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30 October 2020 |
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Relative to the prior quarter (Q220), Agnico Eagle Mines’ (AEM) production in Q3 increased by 48.8% to 492.7oz and its adjusted net income by 111.4%. While this may seem impressive enough, adjusted net income actually increased by 327.0%, to 78.1c/share, as the company leveraged a 76.0% quarterly increase in revenues against a 47.2% increase in production costs to result in an 8.2pp uplift in gross margins. AEM also benefited from a relatively low effective tax rate of 33.1% in Q3. As a consequence of both its performance in Q3 and the expectation of a similar one in Q4, the company increased its quarterly dividend by 75%, from 20c/share to 35c/share.
Operational records set; costs flat to lower
After seven of its eight mines were variously suspended in Q220 in response to COVID-19, operations rebounded strongly in Q3, with new performance records being set at Canadian Malartic, Goldex, Meliadine and LaRonde Zone 5. Unit costs were flat to lower, with the group recording an average cost of production of US$865/oz in Q3 (cf US$854/oz in Q220), an average total cash cost of US$764/oz (cf US$825/oz) and an average all-in sustaining cost (AISC) of US$1,016/oz (cf US$1,142/oz). At the same time, ongoing exploration success at East Gouldie at Canadian Malartic is expected to lead to a significant increase in its mineral resource estimate by the year end, which, in turn, should add to its mine life.
Cost and production outlook unchanged
AEM has left its production and cost guidance unchanged for FY20, at 1.68–1.73Moz at total cash costs and AISC of US$740–790/oz and US$1,025–1,075/oz, respectively. Gold production guidance for FY21 and FY22 also remains unchanged at 2.05Moz and 2.10Moz, respectively. Only AEM’s estimate of capex in FY20 has increased, by c 5.8%, from US$690m to US$720–740m, owing to accelerated development plans at Kittila and Amaruq and advanced procurement at Meliadine.
Valuation: Consensus estimates within a wide range
Consensus forecast EPS for both FY20 and FY21 continue to exist within wide ranges of US$1.66–2.09/share and US$1.44–6.56/share, respectively (presumably reflecting gold price forecast variations). Having recorded adjusted EPS of 120c/share to date in FY20 and 78c/share in Q3 alone, a result close to the consensus average in FY20 appears likely. In the meantime, AEM’s forecast yield remains almost 0.2 percentage points above the average of six of its closest peers.
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Consensus estimates
Source: Company sources, Refinitiv. Note: PBT and EPS are normalised, excluding exceptional items. |
Agnico Eagle Mines is a client of Edison Investment Research Limited
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Research: Healthcare
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