Agnico Eagle Earnings: Solid Result, Driven by Higher Gold Prices and Sales Volumes

Our fair value estimate for no-moat Agnico Eagle is unchanged at USD 54 per share after its 2023 result was broadly in line with our expectations. Adjusted EBITDA of roughly USD 3.2 billion was modestly higher than our forecast and 20% up on 2022, driven by increased gold sales volumes and price, partially offset by higher unit cash costs. Adjusted net profit after tax of about USD 1.1 billion rose 9% on 2022, affected by additional depreciation and amortization from purchasing the remaining 50% of the Canadian Malartic mine from Yamana Gold in March 2023. Accounting rules mean Agnico revalued its initial 50% stake in Canadian Malartic, contributing to higher depreciation and amortization. Along with the increased share count from this acquisition, EPS was modestly lower than in 2022, at USD 2.24 per share. However, we think accounting earnings don't reflect the company’s underlying performance. Free cash flow per share rose by roughly half, to USD 1.94 per share, a solid result in our view. While Agnico paid a total price for the remainder of Canadian Malartic, we think there are opportunities to expand production while potentially also developing the Wasamac deposit that came with the acquisition.