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Insiders Are Buying Agnico-Eagle Mines
Posted by: Markus Aarnio (IP Logged)
Date: September 16, 2013 02:01PM

One gold miner has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

The stock is purchased by three or more insiders within one month.

The stock is sold by no insiders in the month of intensive purchasing.

At least two purchasers increase their holdings by more than 10%.

Agnico-Eagle Mines (AEM) is a long established, Canadian headquartered, gold producer with operations located in Canada, Finland and Mexico, and exploration and/or development activities in Canada, Finland, Mexico and the U.S. The company has full exposure to higher gold prices consistent with its policy of no forward gold sales and maintains a corporate strategy based on increasing shareholder exposure to gold, on a per-share basis. It has declared a cash dividend for 31 consecutive years.



Insider Buying During the Last 30 Days
  • Brian Christie purchased 1,000 shares on Aug. 13 and currently holds 1,792 shares or less than 0.1% of the company. Brian Christie joined Agnico-Eagle in December 2012 as vice president investor relations. Brian Christie increased his holdings by 126.3% in August.
  • Guy Gosselin purchased 2,000 shares on Sept. 11 and currently holds 6,001 shares or less than 0.1% of the company. Guy Gosselin is vice-president, exploration. Guy Gosselin increased his holdings by 50% in September.
  • Christian Provencher purchased 500 shares on Sept. 13 and currently holds 2,862 shares or less than 0.1% of the company. Christian Provencher is vice-president, Canada. Christian Provencher increased his holdings by 21.2% in September.
Insider Buying by Calendar Month

Here is a table of Agnico-Eagle Mines' insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
September 20132,5000
August 20131,0000
July 201300
June 20139,9040
May 201300
April 20131,2000
March 20139,8640

There have been 24,468 shares purchased and there have been zero shares sold by insiders since March 2013.

Financials

Agnico-Eagle Mines reported the second-quarter financial results on July 24 with the following highlights:

Revenue$336.4 million
Net loss$24.4 million
Cash$136.4 million
Debt$861.0 million
Gold production224,089 ounces
Total cash costs$785 per ounce



Outlook

Production is expected to be stronger in the second half of 2013 due to resumption of production at Kittila, increased production at Creston Mascota, the ongoing ramp up of production from the deeper and richer levels of LaRonde, higher expected grades at Meadowbank, and the planned start of production at Goldex.

Agnico Eagle's production guidance for 2013 is 970,000 to 1,010,000 ounces of gold. Expected total cash costs per ounce are $735 to $785. For the full year 2013, expected all-in sustaining costs are approximately $1,100 per ounce.

In 2014, Agnico Eagle expects to have significant production growth from LaRonde (due to anticipated improvement in grades), Goldex (due to a planned full year of operations) and La India (due to the expected start of commercial production in 2014). Agnico Eagle expects payable gold production to be in the range of 1,100,000 ounces to 1,140,000 ounces in 2014.

In 2015, further production growth is expected from LaRonde (due to higher grades) and Pinos Altos (due to anticipated mill optimization) with payable gold production expected to exceed 1,200,000 ounces.



Competition


Agnico-Eagle Mines' competitors include Barrick Gold (ABX), Kinross Gold (KGC) and Newmont Mining (NEM). Here is a table comparing these companies.

CompanyAEMABXKGCNEM
Market Cap:4.66B17.74B5.92B14.03B
Employees:N/A28,1559,00016,400
Qtrly Rev Growth (yoy):-0.27-0.01-0.04-0.11
Revenue:1.74B14.30B4.33B9.13B
Gross Margin:0.470.450.560.51
EBITDA:627.97M6.01B3.15B3.72B
Operating Margin:0.20-0.080.260.28
Net Income:188.57M-9.72B-5.08B-733.00M
EPS:1.09-10.18-5.10-1.34
P/E:24.62N/AN/AN/A
PEG (5 yr expected):-4.333.41-3.28-0.75
P/S:2.621.231.351.54

Agnico-Eagle has the highest P/S ratio among these four companies. Barrick Gold has seen two insider buy transactions in August. Kinross Gold saw intensive insider buying in June. Newmont Mining has seen 22 insider sell transactions and one insider buy transaction this year.

Conclusion

There have been three different insiders buying Agnico-Eagle and there have not been any insiders selling Agnico-Eagle during the last 30 days. All three of these insiders increased their holdings by more than 10%.

There are five analyst buy ratings, 13 neutral ratings and three sell ratings with an average target price of $33.37. The stock is trading at a P/E ratio of 24.62 and a forward P/E ratio of 36.39. Agnico-Eagle has a book value of $19.80 per share and the stock has a dividend yield of 3.27%.

Agnico-Eagle's gold reserves stand at 18.7 million ounces. Agnico-Eagle Mines also has approximately 96 million ounces of silver, 220,000 tonnes of zinc and 73,000 tonnes of copper in reserves. Over the next three years, Agnico-Eagle expects to grow its gold production by 20% to over 1,200,000 ounces.

I would expect the book value of $19.80 per share to act like the worst case support for the stock.

Disclosure:
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.


Stocks Discussed: AEM, ABX, KGC, NEM,
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