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AEM's Lower AISC Signals Strong Cost Discipline: Can It Be Sustained?
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Key Takeaways
Agnico Eagle cut AISC to $1,183/oz in Q1, driven by deferred capital at key mines.
AEM posted a record operating margin in Q1, underscoring effective cost control.
AEM guides 2025 AISC at $1,250-$1,300/oz, expecting higher costs later as deferred spend catches up.
Agnico Eagle Mines Limited (AEM - Free Report) achieved a notable milestone in the first quarter of 2025 by reducing its all-in sustaining costs (AISC) — the most important cost metric of miners — to $1,183 per ounce, marking a 10% decrease from the prior quarter. This improvement was primarily due to the deferral of certain sustaining capital expenditures at Detour Lake and Canadian Malartic operations. AEM clocked a record-high operating margin in the first quarter, thanks to reduced production costs. The company's strategic cost management has positioned it favorably in the industry.
In contrast, Newmont Corporation (NEM - Free Report) reported an AISC of $1,651 per ounce for the same period, reflecting a roughly 13% sequential increase. The rise was partly attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets. Newmont expects gold AISC for the total portfolio to be $1,630 per ounce in 2025, reflecting a rise from $1,516 per ounce in 2024.
Similarly, Barrick Mining Corporation (B - Free Report) saw a 22% sequential increase in AISC, reaching $1,775 per ounce. This upside was influenced by operational challenges, higher total cash costs per ounce and an uptick in minesite sustaining capital expenditures. Lower production, partly due to due to the suspension of operations at Barrick’s Loulo-Gounkoto mine, also contributed to the rise. For 2025, Barrick projects AISC in the range of $1,460-$1,560 per ounce, indicating a year-over-year increase at the midpoint.
Agnico Eagle's ability to lower its AISC amid industry-wide cost pressures underscores its operational efficiency. However, the company anticipates higher AISC in the latter part of 2025 as deferred expenditures are realized. AEM forecasts AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint. Maintaining its cost discipline will be crucial for the company to sustain its margin expansion.
The Zacks Rundown for AEM
Shares of Agnico Eagle have shot up 56.6% year to date against the Zacks Mining – Gold industry’s rise of 55.6%, largely driven by the gold price rally.
Image Source: Zacks Investment Research
From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 20.26, a roughly 41.1% premium to the industry average of 14.36X. It carries a Value Score of C.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AEM’s 2025 and 2026 earnings implies a year-over-year rise of 42.6% and 0.8%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.
Image Source: Zacks Investment Research
AEM stock currently carries a Zacks Rank #2 (Buy).
Image: Bigstock
AEM's Lower AISC Signals Strong Cost Discipline: Can It Be Sustained?
Key Takeaways
Agnico Eagle Mines Limited (AEM - Free Report) achieved a notable milestone in the first quarter of 2025 by reducing its all-in sustaining costs (AISC) — the most important cost metric of miners — to $1,183 per ounce, marking a 10% decrease from the prior quarter. This improvement was primarily due to the deferral of certain sustaining capital expenditures at Detour Lake and Canadian Malartic operations. AEM clocked a record-high operating margin in the first quarter, thanks to reduced production costs. The company's strategic cost management has positioned it favorably in the industry.
In contrast, Newmont Corporation (NEM - Free Report) reported an AISC of $1,651 per ounce for the same period, reflecting a roughly 13% sequential increase. The rise was partly attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets. Newmont expects gold AISC for the total portfolio to be $1,630 per ounce in 2025, reflecting a rise from $1,516 per ounce in 2024.
Similarly, Barrick Mining Corporation (B - Free Report) saw a 22% sequential increase in AISC, reaching $1,775 per ounce. This upside was influenced by operational challenges, higher total cash costs per ounce and an uptick in minesite sustaining capital expenditures. Lower production, partly due to due to the suspension of operations at Barrick’s Loulo-Gounkoto mine, also contributed to the rise. For 2025, Barrick projects AISC in the range of $1,460-$1,560 per ounce, indicating a year-over-year increase at the midpoint.
Agnico Eagle's ability to lower its AISC amid industry-wide cost pressures underscores its operational efficiency. However, the company anticipates higher AISC in the latter part of 2025 as deferred expenditures are realized. AEM forecasts AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint. Maintaining its cost discipline will be crucial for the company to sustain its margin expansion.
The Zacks Rundown for AEM
Shares of Agnico Eagle have shot up 56.6% year to date against the Zacks Mining – Gold industry’s rise of 55.6%, largely driven by the gold price rally.
From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 20.26, a roughly 41.1% premium to the industry average of 14.36X. It carries a Value Score of C.
The Zacks Consensus Estimate for AEM’s 2025 and 2026 earnings implies a year-over-year rise of 42.6% and 0.8%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.
AEM stock currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.