Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) reported a very strong quarter, its first full quarter with Kirkland assets. Production rose above estimates while operating costs were down (with cash costs at $726/oz and all-in sustaining costs at $1,026), largely due to increased synergies from the merger with Kirkland as well as currency and fuel hedges.
The company had said that its initial estimates on synergies were conservative. Looking ahead to the rest of the year, the company expects continued strong production though also for costs to increase, to the upper end of its previous guidance.
Long-term Growth Ahead
Looking further ahead, initial production from Odyssey (Malartic underground) is now scheduled for the first quarter of next year, while the technical update on the Detour Mine looks for a 38% increase in reserves and extending the mine life by 10 years.
Since March, the company has paid down $250 million in debt, leaving $343 million of debt. Importantly, debt repayments scheduled over the next several years are light, around $100 million each year, which will be very manageable from cash flow. The company now has $2.2 billion of available liquidity. It also initiated its buyback program during the quarter. Although on a very small scale so far.
Agnico is one of our top gold picks. The company has good operations in low-risk regions; continues to execute well; has top, conservative management; a broad management bench; a strong balance sheet; and a deep pipeline.
The stock has bounced in the last week from $38.44, but it remains a very Strong Buy.
Few Details on Any Deal for Vista, but Strong Financial Position
Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX) reported progress on its objective to seek a partner for its Mt Todd gold project in Australia, and understandably it was all rather vague without any specifics.
CEO Fred Earnest says that the company and its advisor, CIBC, are both “working diligently” towards the goal of a transaction, and “pleased with our progress.”
The company is “evaluating a range of strategic opportunities.”
Clearly, a transaction on Mt Todd is the most important issue for the company, and for its stock price. The company has not announced any timing, including specifically the deadline for companies to submit bids, so shareholders are in the dark on progress. The longer the process continues without any specific news from the company, then the longer the stock price will drift.
With over $11 million cash, the company is well-positioned for current needs. Costs during the last quarter were $1 million, half of the prior-year quarter, because of lower exploration and holding costs.
Expenditures going forward are expected at around $1.5 million per quarter. The stock has moved from a mid-month low of $0.54, but can be bought at this price, particularly for investors who do not own any.
Fortuna Wraps up an Exploration Story With a Royalty
Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) has sold its 51% interest in a project in Serbia, on which it had earn-in options, to Medgold, the owner of the rest of the property, for a 1% royalty on any production. We don’t ascribe much value to this, but it concludes a long saga for Fortuna.
Fortuna is a good buy at the current level.
TOP BUYS THIS WEEK in addition to those above include Osisko Royalties (OR.NY, 10.45); Wheaton Precious Metals (WPM.NY, 34.30); Midland Exploration (MD, To., 0.36); Franco-Nevada (FNV.NY, 127.98); Royal Gold (RGLD, Nasdaq, 104.77); Ares Capital (ARCC, Nasdaq, 19.39); Barrick Gold (GOLD.NY 15.74); and Pan American Silver (PAAS, Nasdaq, 20.33).
Want to be the first to know about interesting Gold and Silver investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.
Adrian Day's Disclosures
Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM.
Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in the securities mentioned. Directors, officers, employees, or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company release. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Vista Gold Corp., Fortuna Silver Mines Inc., Wheaton Precious Metals Corp. Osisko Gold Royalties Ltd. Midland Exploration Inc., Franco-Nevada Corp., and Barrick Gold Corp., companies mentioned in this article.