Agnico Eagle Mines Ltd. (AEM) once again beat analyst estimates, with record quarterly production and cost control, putting it on track to meet annual guidance on both production and costs, reports Adrian Day, editor of Global Analyst.

Each of Agnico’s operations reported production in line or better than expected, with the exception of Amaruq (where the mill had a 15-day shutdown because of a longer-than-usual caribou migration) and Fosterville (due to lower grades; the mine resumed full operating hours at the end of the quarter after noise restrictions were lifted).

Detour, Canada’s largest gold mine, reported record ore throughput and production. Quarterly EBITDA of $889 million was significantly above analyst estimates.

Looking ahead, various major projects are moving ahead, with study results expected later this year on optimization at the Abitibi gold belt, including sequencing of production from the various deposits near to Malartic; as well as an underground study on Detour Lake. Along with partner Teck Resources (TECK), Agnico is expecting to complete a feasibility study at San Nicolás next year.

Overall, Agnico has a lot of growth ahead of it, but it has also increased its total exploration budget for the year following success by around 10% to $350 million, one of the large exploration spends of any gold miner.

Although it is a premium company with a lower political risk profile, stronger balance sheet and higher margins, it is trading at lower multiples on most valuation metrics than other major golds miners. Agnico is a buy.

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