Back to top

Analyst Blog

We are retaining our Neutral recommendation on Agnico-Eagle Mines Ltd. (AEM - Analyst Report). Its revenues and adjusted earnings for second-quarter 2012 outstripped the Zacks Consensus Estimates. However, profit slid 37% year over year as higher cost more than offset a modest growth in revenues.

Payable gold production climbed 11% year over year in the quarter on the back of record gold production from five mine operations. The company raised its gold production target for 2012 based on the first half production trend.

Agnico-Eagle has rebounded from a series of underperformances in 2011. The company has sufficient cash flow, which enables it to maintain a very strong exploration budget for 2012, primarily focused on Kittila, Meliadine and Mexico.

Agnico-Eagle is currently exploring expansion opportunities in Kittila, its largest contributor to proven and probable gold reserves, and is conducting a feasibility study for a potential 25% expansion in throughput. The company recently announced that its board has approved the development and construction of the La India mine in Mexico with commercial production is expected to begin in the back half of 2014.

Agnico-Eagle is also reinvesting in its assets to expand its output. The company also has consistently rewarded its shareholders by way of dividend payments. Moreover, Agnico-Eagle’s revised life of mine plan is expected to yield significant free cash flows over the next several years.

However, any potential delay associated with the development projects may jeopardize the company’s future production. The company also contends with persistently high operating costs.

In addition, uncertainties surrounding the Goldex mine could affect the stock’s performance. Agnico-Eagle suspended operations at the mine in October 2011 considering the safety of its employees. While its Board has approved two zones in the mine for gold production following a thorough investigation, production at the core Goldex Extension Zone (GEZ) remains suspended.

Agnico-Eagle, which competes with Barrick Gold Corporation (ABX - Analyst Report), Kinross Gold Corporation (KGC - Analyst Report) and Newmont Mining Corp. (NEM - Analyst Report), currently retains a short-term Zacks #3 Rank (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%