Proactive Investors - Agnico Eagle Mines Ltd ({{TSX:AEM) is a gold producer to watch following its acquisition of Yamana Gold (TSX:TSX:YRI, LSE:AUY), according to analysts at Stifel GMP.
The firm resumed coverage of Agnico with a ‘Buy’ rating and C$89 price target. Shares of Agnico traded 1.3% higher Wednesday afternoon at $77.53.
“With YRI's Canadian assets now in AEM's portfolio, Agnico has gained 100%-ownership of Canadian Malartic, the Wasamac project, and other exploration properties,” analysts said. “The consolidation of Canadian Malartic is an important value driver, giving full control over the operation including the ongoing development of the Odyssey (Malartic UG) project.”
The acquisition will allow Agnico to leverage infrastructure and regional expertise and ultimately realize the benefit of consolidated production from Malartic in the second quarter. Stifel’s three-year outlook sees 7% growth over 2022 production with 3.4-3.6 million ounces (Moz) by 2025.
“The Malartic operation is an important value driver and as AEM takes full ownership it expects to see immediate synergies from consolidation of regional support services ($10M/yr),” analysts said. “The team also assumes full control over the development of Odyssey. With anticipated excess mill capacity at the Malartic mill, AEM will be in a better position to assess opportunities to leverage future excess mill capacity.”
Within the Abitibi region of Quebec, Agnico owns 31.5Moz in reserves and 32.8Moz in measured and indicated resources.
“We view Agnico Eagle as a high-quality, senior gold producer,” analysts said. “Following the merger with Kirkland Lake and consolidating ownership of the Canadian Malartic mine, AEM is cementing its position of dominant Canadian gold producer with production in Canada of greater than 2.7Moz/yr (+80% of AEM's total production).”