Agnico Eagle Strikes New 52-Week High - Analyst Blog

Shares of Agnico Eagle AEM reached a new 52-week high of $37.89 on Jun 23, eclipsing its previous high of $37.51. The stock retraced a bit to end the trading session at $37.74 on that day.
 
The gold miner, which has a market cap of around $6.6 billion, has seen its shares shot up roughly 43% so far this year. Average volume of shares traded over the last three months is around 2,093.8K.

What's Driving AEM?

Agnico Eagle posted forecast-topping first-quarter 2014 results on May 1. Profit for the quarter surged as lower costs and higher gold production offset a decline in metal pricing. Both revenues and adjusted earnings topped Zacks Consensus Estimates. The company expects gold production for 2014 to exceed the higher end of its guidance range.

Agnico Eagle, a Zacks Rank #1 (Strong Buy) stock, maintains a solid exploration budget and is reinvesting in its assets to expand output. Moreover, the company's revised life of mine plan is expected to yield significant free cash flows over the next several years.

Agnico Eagle is currently progressing with an expansion at Kittila – its largest contributor to proven and probable gold reserves – which is expected to boost throughput capacity at the mine starting mid-2015. The expansion is expected to cut total cash costs per ounce over the next several years.

The company's move to jointly acquire Osisko Mining Corporation represents another positive, which will boost its production profile and improve cost structure. Agnico Eagle and Yamana Gold Inc. AUY recently completed the acquisition of the issued and outstanding common shares of Osisko. Agnico Eagle and Yamana now each own 50% of the shares of Osisko.

The acquisition is a strategic fit for Agnico Eagle. The buyout is expected to be accretive to the company and will also improve its total cash cost and all-in sustaining cost profiles. Agnico Eagle also gets an access to Canadian Malartic, the largest producing gold mine in Canada that has the potential to produce an average of roughly 600,000 gold ounces per year for 14 years.

Other Stocks to Consider

Other gold mining companies with favorable Zacks Rank include Alamos Gold Inc. AGI and Pretium Resources Inc. PVG, both holding a Zacks Rank #2 (Buy).