We are upgrading our recommendation on Agnico-Eagle to Outperform
following its forecast-topping first quarter results. 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 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. We are also encouraged by
its recent move to jointly acquire Osisko, which will boost its
production profile and improve cost structure.
Founded in 1953, Toronto, Canada-based Agnico-Eagle Mines
Limited is a gold producer with mining operations in Canada, Mexico
and Finland, and exploration activities in Canada, Europe, Latin
America and the U.S. Agnico-Eagle's LaRonde mine in Quebec is one
of Canada's largest operating gold mines by gold reserves and has
provided the company's foundation for domestic and international
expansion. Throughout its history, Agnico-Eagle's policy has been
not to sell forward its future gold production. In 2013, the
company produced 1,099,335 ounces of gold at total cash costs of
$672 per ounce. Its proven and probable gold reserves (net of 2013
production) totaled 149 million tons at the end of 2013, containing
16.9 million ounces of gold.
Agnico-Eagle operates through four regional units: the Quebec
Region, the Nunavut Region, the European Region and the Latin
The Quebec Region includes the LaRonde mine (including the
LaRonde mine extension below Level 245, earlier referred to as the
LaRonde II project) and the Goldex and Lapa mine projects situated
in the Abitibi region of Quebec.
The Nunavut Region comprises the Meadowbank mine project, which
is administered by the office in Vancouver, British Columbia.
Agnico-Eagle's operations in the European Region are performed
through its indirect subsidiary, Riddarhyttan Resources AB, which
owns the Kittila mine project in Finland.
In the Latin American Region, operations at the Pinos Altos
project are conducted through the company's subsidiary,
Agnico-Eagle Mexico S.A. de C.V. The company also has the La India
mine in the Mulatos gold belt in Sonora, Mexico.
Agnico-Eagle, in May 2013, wrapped up its takeover of mining
company Urastar Gold Corp. The company acquired all the outstanding
shares of Urastar pursuant to a statutory plan of arrangement under
the Business Corporations Act (British Columbia). Following closure
of the deal, Urastar is now a fully-owned subsidiary of Agnico
Agnico-Eagle penned a definitive agreement with Urastar in March
2013. Urastar is engaged in the exploration of former gold
producing regions in Sonora, Mexico, which is among the richest
gold producing belts globally.
On Apr 16, 2014, Agnico-Eagle and Yamana Gold Inc. (AUY) entered
into an agreement to jointly acquire 100% issued and outstanding
common shares of Osisko Mining Corporation for a total
consideration of roughly C$3.9 billion, or C$8.15 per share ($3.55
billion or $7.43 per share). The offer consists of about C$1
billion ($0.9 billion) in cash, roughly C$2.33 billion ($2.12
billion) in Agnico-Eagle and Yamana shares, and shares of a new
company with an implied value of roughly C$575 million ($523.8
Per the agreement, Agnico-Eagle and Yamana will each own 50% of
Osisko, and set up a joint committee to operate the Canadian
Malartic Mine in Quebec. Once the transaction is complete, Osisko
shareholders will own roughly 16.7% of Agnico-Eagle and around
14.4% of Yamana. As part of the agreement, certain assets of Osisko
will be transferred to Spinco (a new company), the shares of which
will be distributed to Osisko shareholders. The acquisition is
expected to close in early June 214.
Agnico-Eagle Mines Ltd. (AEM): Read the Full
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