Currently have a US$64.00 target. GLTA
Agnico-Eagle Mines Ltd.
(AEM-N, AEM-T) US$46.64 | C$62.82
2024-2026 Outlook; Amaruq Extended; East Gouldie Accelerating
Event
AEM reported Q3/23 adjusted EPS of $0.57, ahead of TD at $0.51 and
consensus at $0.49. Adjusted EBITDA was ~$842.5mm, slightly below TD at
$860mm, but above consensus at $830mm. FCF was ~$352mm, before changes in
working capital (TD $344mm).
Impact: POSITIVE
AEM reported Q4/23 gold production of 903kozs (TD: 866kozs), cash costs of
$888/oz (TD: $869/oz), and AISC of $1,227/oz (TD $1,232/oz). Gold production in
Q4/23 was led by strong production at the Detour Lake mine, the LaRonde complex
and the Macassa mine, offsetting lower production at Fosterville.
Year-end 2023 gold mineral reserves increased by 10.5% to 53.8 million ounces
of gold (1,287 million tonnes grading 1.30 grams per tonne). The y/y increase
in mineral reserves is largely due to initial mineral reserves at East Gouldie, the
acquisition of the remaining 50% interest in the Canadian Malartic complex, and net
reserve additions at Macassa.
AEM reported a number of positive operating updates, including:
The mine life at Amaruq has been extended to 2028 adding ~500,000 oz of gold
to the production profile. We have been modeling production ending in 2026.
Based on recent exploration success, AEM is studying a larger production
scenario at Hope Bay. Results from an internal technical report are expected in
2025. Up to this point, management has been targeting production of ~300,000
ozs/yr from Hope Bay later this decade.
The planned mining rate at the Odyssey South project (3,500 tpd) was
reached earlier than expected and sustained through Q4/23; underground ramp
development is also ahead of plan. As a result, AEM is studying the potential to
accelerate initial production from East Gouldie to 2026 from 2027.
At Detour Lake, AEM now expects the mill to reach a throughput rate equivalent
to 28 Mtpa in late 2024 as opposed to 2025.
2024/25 production guidance is in line with our expectations. 2026 production
guidance is better than our forecasts with the extension of Amaruq (Meadowbank
complex) production (Exhibit 1).
We believe that investors had been concerned that AEM's production would dip in
2026/27 as Amaruq production ended; we believe that management is addressing
those concerns.