Scotia Capital During first-quarter earnings season for senior gold producers, Scotia Capital analyst Tanya Jakusconek thinks investor focus will be largely on operating performance “as little else is expected given year-end 2023 results (including 2024 guidance) were released in mid-February.”
“For Q1/24, we are expecting production for the group to be 5.5 million ounces at TCC and AISC [total cash costs and all-in sustaining costs] of $1,088/oz and $1,489/oz, respectively,” she said. “We are not expecting margins to increase quarter-over-quarter or year-over-year based on the average quarterly prices. However, the gold price is up $300 per ounce or 15 per cent from Q1/24 average price of $2,071 per ounce, and based on current commodity price of $2,360 per ounce, margins are forecast to expand.
“Heading into reporting, we prefer to be positioned in AEM, KGC and WPM. GOLD pre-released Q1/24 results and several other companies have pre-released including all the mid-tier streamers. With this higher commodity price and expected margin expansion, our preference is now the operators (lowered valuations) to the streamers (higher valuations). From an operating standpoint, our Q1/24 forecasts are generally more conservative versus limited consensus estimates. We are lower on EPS versus consensus estimates on GOLD and FNV and higher on IAG and KGC.”
Ms. Jakusconek expects the quarter to be the weakest of the year with the fourth quarter the strongest, a trend which was also seen in 2023.
She made a trio of target changes on Thursday:
- Franco-Nevada Corp. ( “sector perform”) to US$140 from US$139. The average on the Street is US$139.40.
- IAMGOLD Corp. ( “sector perform”) to US$3.75 from US$3.25. Average: US$3.69.
- Sandstorm Gold Ltd. ( “sector perform”) to US$6.25 from US$6.50. Average: US$7.36.
Heading into Q1/24 reporting, we are most comfortable recommending AEM and KGC,” said Ms. Jakusconek. “GOLD pre-released Q1/24 results and maintained 2024 guidance. The shares have underperformed due to a weak Q1/24 performance, especially on the copper front. Our preference going into the quarter is WPM over FNV; we expect WPM to have a decent quarter. We are also not expecting any new updates on Cobre Panama from FNV given the elections (May 4th) are after their conference call. The rest of the mid-tier streamers have pre-released their production and sales.”