AS OPERATIONS DELIVER, EXPLORATION SUCCESS TAKES CENTRE STAGE
THE TD COWEN INSIGHT
AEM reported a solid Q1/24 operational quarter and is well positioned to meet annual guidance. In our view, exploration successes at Malartic, Odyssey, and Hope Bay stole
the stage and suggest that AEM's organic pipeline is looking better and better. Upcoming catalysts include an update on the Detour Lake underground project in June and an update on the Upper Beaver project in July.
Impact: NEUTRAL
AEM provided exploration updates for three key assets with its Q1/24 results and discussed each in more detail on the quarterly call. We have summarized highlights below:
AEM expects to provide an update on underground mining scenarios for the Detour Lake operation during Q2/24 that will include proposed next steps to de-risk and optimize the project. Exploration drilling continues to intercept mineable grades and widths near the potential exploration ramp for the underground project.
Exploration drilling at Hope Bay during Q1/24 totaled 30,600 metres and returned strong results in the Gap area between the Patch 7 and Suluk zones of the Madrid deposit. With this emerging new mineralized area showing grades and thicknesses greater than average for the Madrid deposit, management expects that this area could have a positive impact on mining scenarios for potential project redevelopment. AEM is reviewing options for a second production front at the Gap area and production levels at the higher end of 300,000-400,000 ozs/yr range are increasingly likely in our view. We expect a technical update on the Hope Bay Project in 2025.
Drilling to the east of the East Gouldie deposit has identified ore grade material over mineable widths outside the current mineral resource envelope. As well, drilling has hit good grade and mineable widths to the west of the East Gouldie deposit. The holes suggest upside to the inferred mineral resource in both directions. Management has discussed the potential for the development of a second shaft at the Odyssey project, and we expect an update on the project during 2025.
We are maintaining our BUY recommendation. Our target price has increased to $78.00 (from $74.00). We have increased our target P/NAV multiple to 1.75x (from 1.5x) to reflect what we view as positive exploration updates as outlined above and the organic growth potential that is becoming more apparent at AEM's Canadian operations.