Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Agnico Updates Plans for Malartic, Increasing Mine Life
Contributed Opinion

View Important Disclosures for this Article
Share on Stocktwits


Adrian Day Global Analyst Adrain Day looks at recent developments at three of his favorite gold companies, one large miner, one royalty generator, and one exploration company. Day believes all three are good buys here.

Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) updated plans for the Canadian Malartic mine as it transitions from open-pit to the underground, called Odyssey, by 2028. The underground mine life has been extended a few years to 2042 with a total 23% increase in gold production. There will be a few weak years, up to 2027, as the open pit winds down, with lower production and higher costs.

But from 2028 onwards, annual production is expected to be above 500,000 ounces each year, with cash costs estimated at US$768/ounce, up from a previous estimate of US$630. Capex is expected to be US$1.71 billion, up from a 2020 study, attributable to inflation pressures; construction remains on schedule. Despite the increases, Malartic will still have a lot of excess mill capacity as the mines move from open pit to higher-grade underground. Initially, it plans to cut back on the mill operation to reduce costs.

But further out, as we have discussed, Agnico plans to utilize the excess capacity with ore from other deposits, both nearby and in the general district. It has budgeted US$10 million for exploration on the nearby regional targets.

It also has large projects in the Abitibi district, including some it purchased from Kirkland last year, whence ore could be shipped to the existing mill facility, thus reducing costs. Malartic, Canada's second-largest gold mine, and now 100% owned by Agnico, represents a little over 20% of Agnico's NAV and a little less of its revenue.

Many Nearby Deposits Can Be Mined at Low Cost

Obviously, the higher capex and operating costs are negative, while not unexpected, and the production during the transition years is less than expected.

However, there is plenty of exploration potential in nearby deposits that could see those production numbers revised. In addition, the overall production increases, and mine life extension is positive.

The most important factor remains that the multiple deposits around Malartic can use the excess mill capacity, thus reducing costs for these new deposits. Agnico, with top management, a clear strategy, low jurisdictional risk, a solid balance sheet, and a strong pipeline, remains our favorite large miner.

It is a Buy.

New Exploration and a New Acquisition From Two Top Juniors

Midland Exploration Inc. (MD:TSX.V) announced a US$1.3 million exploration program in the Labrador Trough with SOQUEM , focusing on copper.

The program will focus on discoveries of mineralization last year. No drilling is yet planned.

As per our discussion in the last Bulletin, Midland is a Strong Buy at the current level.

Orogen Royalties Inc. (OGN:TSX.V) has acquired another project in Nevada. The Firenze gold-silver project, on government land, was acquired through staking by Orogen's joint venture with Altius. With gold outcrops, Firenze has not been subject to modern-day exploration and is undrilled.

This is a good example of Orogen's strategy of acquiring prospective projects cheaply and making them available for sale or option.

For the reason discussed in Bulletin #867, Orogen is a Strong Buy.

TOP BUYS this week, in addition to the above, include Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE),  Altius Minerals Corp. (ALS:TSX.V),  Gladstone Investment Corp. (GAIN: NASDAQ), Hutchison Port Holdings Trust (HPHT:Singapore), Ares Capital Corp. (ARCC:NASDAQ), Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE),  Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ), and Nova Royalty Corp. (NOVR:TSX.V).

*See Bulletin #864 for a discussion of Gladstone's quarterly and bonus distributions.

Bearing in mind the possibility of weak gold markets as the Federal Reserve and other central banks raise rates more and the U.S. Treasury's massive bond issuance in the months ahead, withdrawing liquidity from the market, if you are underweight, the following can be accumulated: Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE), Franco-Nevada Corp. (FNV:TSX; FNV:NYSE),  Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX), and Barrick Gold Corp. (ABX:TSX; GOLD:NYSE).

UPCOMING APPEARANCES This Wednesday, at 2 pm Eastern, I'll be presenting during the MoneyShow Virtual Expo, which runs from 27 to 29, with a talk on gold. Then in July are two live events.

First up is FreedomFest, July 12-15, this year in Memphis, Tenn. I will be on panels on international investing and another on gold. And next is the ever-popular Rule Symposium, a top conference for resource investors with William Bonner (via video), Robert Friedland, Robert Quartermain, and many more; Osisko's Sandeep Singh, Wheaton's Randy Smallwood, and Lara's Miles Thompson (from companies on our list) will also be there, July 23-27 in Boca Raton, Fla. 

Sign up for our FREE newsletter

Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Agnico Eagle Mines Ltd., Midland Exploration Inc., Orogen Royalties Inc., Wheaton Precious Metals Corp., Altius Minerals Corp., Fortuna Silver Mines Inc., Pan American Silver Corp., Nova Royalty Corp., Osisko Gold Royalties Ltd.,Franco-Nevada Corp., and Barrick Gold Corp.
  2.  Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with All. I determined which companies would be included in this article based on my research and understanding of the sector.
  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.
  4.  This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Adrian Day 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. 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. © 2023. 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.

Want to read more about Gold, Critical Metals, Base Metals and Silver investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe