Shares of Agnico Eagle Mines Limited AEM have gained 27.9% in the past three months compared with the industry’s 21.1% rise.
The company has a market cap of $19.8 billion. Average volume of shares traded in the past three months was nearly 1,488.2K. The company has an expected earnings per share growth rate of 83.5% for 2020.
Let’s discuss the factors that are driving the stock.
Driving Factors
Bright prospects of key growth projects and higher gold prices are contributing to the company’s price performance.
In July, Agnico Eagle increased its production guidance for 2020. Gold production for the year is now projected to be 1.68-1.73 million ounces compared with the previously mentioned 1.63-1.73 million ounces.
Agnico Eagle is making good progress with its key growth projects. The company is also expanding mine life across a number of properties. Operations at Meliadine, which produced 238,394 ounces of gold in 2019, returned to normal levels in June following reduction of activity levels in the wake of the coronavirus pandemic. The company expects to complete the planned mill expansion to 4,600 tons per day by fourth-quarter 2020.
In April, the company also restarted its Quebec operations including the Canadian Malartic, which is the largest operating open-pit gold mine in Canada. Canadian Malartic competed successful ramp-up in April and attained a monthly milling record in May. The Barnat deposit at Canadian Malartic is expected to declare commercial production in fourth-quarter 2020.
The Kittila expansion is also expected to increase mine efficiency and lower operating costs of the company. With the expected completion of the shaft and mill expansion at Kittila in 2021, the annual gold production is expected to increase in 2022 and beyond.
Further, gold has been the bright spot this year as mounting fears over the coronavirus pandemic made it the most attractive safe-haven asset. Slump in crude oil prices, low interest rate environment and geopolitical tensions have also triggered demand for gold.
Gold prices crossed the $1,800-an ounce mark in June 2020 and also surged past the $1,900 an ounce mark in July. Prices also crossed the $2,000-an ounce level earlier this month for the first time, courtesy of strong safe-haven demand. Higher gold prices are expected to continue driving earnings amid market volatility and economic uncertainties.
Agnico Eagle Mines Limited Price and Consensus
Agnico Eagle Mines Limited price-consensus-chart | Agnico Eagle Mines Limited Quote
Zacks Rank & Key Picks
Agnico Eagle currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Kinross Gold Corporation KGC, Eldorado Gold Corporation EGO and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Kinross has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 78.9% in the past year.
Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. Its shares have returned 23.5% in the past year.
Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 68.6% in the past year.
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