Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) reported another strong quarter, with both production and earnings-per-share higher than estimates and above guidance. It took impairment charges for two end-of-life small mines. Full-year cash costs came in at $865 per ounce. And the company left its 2024 guidance mostly unchanged, with a small increase in costs (hardly a surprise), providing many positive updates to projects in the pipeline.
The company also increased its year-end reserves, though this was not unexpected as it now incorporates the 50% of Malartic that it did not own a year ago. The balance sheet remains strong, though cash declined a little less than $20 million to $339 million, quarter on quarter. As regards the longer-term outlook, Agnico is aiming to at least partly fill in the reduction in anticipated production in 2026 and 2027 before increases toward the end of the decade.
It is evaluating bringing forward the East Gouldie underground Malartic project by one year to 2026, which would mean some production in 2026 and a full year in 2027. It should be noted that the company does not provide any production estimates beyond three years. It does emphasize however that it has several possible options and is investing heavily in its existing assets.
In all, Agnico demonstrated once again why it is the best-in-class among the major miners, with strong, open management, world-class assets in low-risk jurisdictions, a good pipeline, particularly in Canada, a solid balance sheet, and low costs.
Although the stock price has bounced off its pre-earnings low, up $3, it remains a Buy.
Barrick's Financial Beat, Despite a Production Miss
Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) fourth-quarter earnings beat expectations with free cash flow up 50%; it had already pre-released production, which disappointed the market with a miss for the full year. More importantly perhaps, was that the company's 2024 guidance was less than what the market was expecting. Perhaps the company has learned that ambitious guidance that misses is punished by the market.
This year has several assets that could come in higher than the company is currently anticipating, including the Nevada Gold Mines, Puerto Viejo, and Porgera. As usual, Barrick expects each quarter to produce sequentially more throughout the year. It is expecting lower production for two main reasons: a delay in receiving the permit on Gold Rush and the delays in the ramp-up at Pueblo Viejo.
Not only is 2024 production guidance lower than expected, but cost guidance is higher than widely expected, not only because of the lower production but also because of lower grades at Pueblo Viejo.
One should note that, unlike most other companies, Barrick does not change its guidance during the year. Some companies that met or exceeded guidance issued updated estimates in October, which is obviously a lot easier to achieve. The company announced a $1 billion share buyback program, with CEO Mark Bristow saying the company was undervalued.
It should be noted, though, that no shares were purchased under its 2024 buyback program. Barrick has multiple world-class mines around the world, with several large-scale projects in its pipeline. It has a rock-solid balance sheet and aggressive management.
Although the stock has bounced off its low, it remains a Strong buy.
Royal Misses for Full Year, but Not Unexpected
Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) beat fourth-quarter estimates, though its full-year gold equivalent ounces (GEOs) were a little below its guidance. The primary reasons for the full-year miss were the strike at Peñasquito in Mexico and the delays in the expansion at Pueblo Viejo. Royal also announced a new agreement on its Mt Milligan stream, with a near-term cash payment in return for price support over the longer term, thus enabling the mine operator Centerra to extend the mine life.
On balance, this is a good agreement. Royal ended the year with $845 million in available liquidity, most of that on a line of credit which it expects to fully repay by the end of the year, assuming no new for capital. Royal took on significant debt in 2022 to purchase assets, which it partly paid down in 2023. Royal is more precious metals dominant than the other major royalty companies, with gold accounting for 80% of its revenue and silver another 10%. It has a good pipeline and a strong balance sheet.
If you do not own, it's a Buy.
TOP BUYS this week, in addition to the above include Nestle SA (NESN:VX; NSRGY:OTC), Hutchison Port Holdings Trust (HPHT:Singapore), Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), Altius Minerals Corp. (ALS:TSX.V), Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ), Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE), Metalla Royalty & Streaming Ltd. (MTA:TSX.V; MTA:NYSE American), Midland Exploration Inc. (MD:TSX.V), and Lara Exploration Ltd. (LRA:TSX.V).
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Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of gnico Eagle Mines Ltd., Barrick Gold Corp., Franco-Nevada Corp., Altius Minerals Corp., Metalla Royalty & Streaming, Midland Exploration Inc, and Lara Exploration Ltd.
- Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: All. I determined which companies would be included in this article based on my research and understanding of the sector.
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