TSX:AEM - Post Discussion
Post by
retiredcf on Sep 20, 2023 9:12am
RBC
September 19, 2023
Agnico Eagle Mines Limited
Highlights from the Denver Gold Forum
NYSE: AEM | USD 49.30 | Outperform | Price Target USD 55.00
Sentiment: Neutral
Event: Agnico CEO Ammar Al-Joundi presented at the 2023 Denver Gold Forum.
Key takeaways:
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Agnico emphasized that it was a regional gold company, and not a global gold mining company. Regions the company focuses on must meet two criteria: 1) geological potential to be able to deliver multiple mines over multiple decades, and 2) political stability to operate. As an example, the company highlighted 16moz of resource additions thus far at Malartic's Odyssey in recent years, despite the mine having been discovered in 1923.
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In AEM's view, premier regions which meet its criteria are Nevada (dominated by its largest competitors), Western Australia (which hasn’t been consolidated), and its region of focus, the Abitibi in Ontario/Quebec. AEM also noted the re-emerging regions of Mexico and Europe, and its view of Nunavut being the best new emerging region. Core to AEM is to be the best miner in these regions, including being the employer of choice, strong government and community relationships, strong supplier relationships, and leading geological knowledge.
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AEM reviewed how optimization is a focus today, following recent consolidation. Key opportunities include Detour, where production will increase from 700koz to >1moz, and Malartic, where spare throughput of 40ktpd is available by 2028. AEM noted how Upper Beaver and Wasamac could add a combined 400koz of output annually, and would only utilize 1/4 of Malartic's spare throughput. This upside was characterized as requiring 30% lower capital than a standalone operation plus requiring a smaller environmental footprint, leading to better community relationships, better returns on capital, and a lower risk profile.
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In connection with Q&A, AEM acknowledged there was a risk of production declining slightly in 2026/27 as the Malartic open pit declines in output. The company believes that some of this production can be filled in, while long-term growth is still on track and a more meaningful target to focus upon. Actions to offset modest production shortfalls at the expense of long-term per share value drivers are not of interest.
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