Bullboard - Stock Discussion Forum Agnico Eagle Mines Ltd (Ontario) T.AEM

Alternate Symbol(s): AEM

Metals & Mining Gold

Agnico Eagle Mines Limited is a Canada-based gold mining company, which is engaged in producing precious metals from operations in Canada, Australia, Finland and Mexico. The Company has a pipeline of exploration and development projects in these countries as well as in the United States. Its operations include Canadian Malartic Complex, Detour Lake, Fosterville, Goldex, Kittila, La India... see more

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Agnico Eagle Mines Ltd (Ontario) > RBC

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Post by retiredcf on Jun 20, 2024 8:38am

RBC

June 20, 2024

Agnico Eagle Mines Limited
Revised Detour Lake mine plan and initial underground study; first impressions positive

NYSE: AEM | USD 64.61 | Outperform | Price Target USD 80.00

Sentiment: Positive

Event: AEM released an updated technical study for its Detour Lake mine in Ontario (22% of NAV; 21% of EBITDA). The updated plan refreshes the existing open pit mine plan for inflation, plus evaluates a PEA to develop an underground mine.

Impact: Positive. Updated costs for the current open pit plan are below RBC's inflation expectations, while the initial underground mine plan outlines favourable economics and manageable up-front capital requirements. The underground project outlines an 18% IRR and $0.9b NPV5% at $1,900/oz (or 25% and $1.4b at $2,300/oz). As outlined, initial underground production would commence in 2030 at a rate of 11.2ktpd and combined OP/UG output would deliver ~1moz of production until 2043, in line with AEM’s historical disclosed objectives. AEM has approved a $100m budget over a 3Y period to further evaluate advancement of the UG project. The company also highlighted the current UG plan reflects drilling as of October 2023, and it expects further upside from recent exploration.

A technical session is scheduled for 9AM ET and the replay may be accessed 1-888-390-0541

Details:

Total production LOM increases by 27% to 22moz with the new OP+UG mine plan vs. the 2022 standalone OP plan. This reflects a 0.7moz increase in the open pit, plus the addition of 4.0moz from the underground. Annual production is guided to increase 300koz / 43% from 2030-2043 vs the prior 2022 open pit mine plan.
TCC for the open pit mine are nearly unchanged vs. 2022 (i.e. $752/oz vs. $761/oz in 2022). AEM notes it reclassified $444m from opex to capex. When adjusting for this capital, we calculate open pit AIC of $1,077/oz vs. +5% vs. $1,022/oz prior. These costs are below RBCe's $1,382/oz, which reflects higher plus future inflation and lower grade resource additions.
The capital spending profile outlines a higher sustaining capital period for the open pit in 2025-27 (C$422m / C$367m / C$470m). Development capital for the underground plan is spent reasonably equally over 2027-2030 (ranges from C$170-C$240m per year).
Updated reserves as of March 31 largely reflect depletion (-0.3moz). AEM reported a decline of 4.7moz in M&I resources and increase in 4.9moz in inferred resources. This change reflects updated costs and a shallower open pit, while the company notes these resources could be readded to the underground mine plan with closer spaced drilling.