Agnico Eagle Mines (AEM, Financial) had a decent performance on the stock market for the past few months as it rose from its 52-week low. And with fourth quarter numbers that topped the analyst’s consensus, investors have higher hopes from the miner. But the big question is, how much can we expect from a stock that has been on a down trend for the past more than four years. Starting with its numbers, let's see in detail what are its future prospects and what should be our take on it.
During the quarter its revenue increased 15.1% from a year ago period to $503.1 million, while earnings adjusted for one-time items came in at 6 cents a share, which was better than the 4 cents consensus estimate. The numbers are quite encouraging, considering the present commodity pricing environment and reflects its strong operational performance.
A strong asset portfolio
The company has a strong asset portfolio with improving grades at its gold mines. For example at Laronde, production was up 13%, while cash cost declined $100 on a year over year basis.
Apart from this, Agnico is currently working on various projects, which has the potential to drive its future growth and Meadowbank is one among them. The company is analyzing all possibilities to bring that back into the mine plant, which would consequently allow us to bring that production back in 2017 and continue into 2018 as well.
These developments looks promising which in conjunction with improving gold prospects could be rewarding. The company reported record gold production during the quarter and it expects the same trend to continue in the coming months. This is because the company is investing in key projects. As per a recent press release:
"Drilling of the Suuri Trend below the Roura area has returned 5.3 g/t gold over 10 meters at a vertical depth of approximately 1.6 km (ROD14-004F). Drilling has also shown indications of a new parallel zone 150 meters east of the main zone with intersections including 7.0 g/t gold over 7.0 meters at almost 1.3 km depth (ROD14-005)."
Conclusion
Led by its strong operational performance, Agnico generated cash flow of $670 million in 2014 and now with increasing production at lower unit cost, the company is positioned better to grow both its operating cash flow and net free cash flow in 2015. This is good news for investors as it has maintained its quarterly dividends at 8 cents per share. Hence, investors should consider this stock for long-term gains.
