Adrian Day, a leading international advisor and the editor of Global Analyst, reviews a trio of gold mining companies that he continues to hold in his recommended buy list.

Agnico Eagle (AEM) reported another strong quarter, with production and earnings-per-share both higher than estimates, and above guidance. Full-year cash costs came in at $865 per ounce. And the company left its 2024 guidance mostly unchanged, providing many positive updates to projects in the pipelines.

The balance sheet remains strong, though cash declined a little less than $20 million to $339 million, quarter on quarter. As regards the longer-term outlook, Agnico is aiming to at least partly fill in the reduction in anticipated production in 2026 and 2027, before increases towards the end of the decade. 

It should be noted that the company does not provide any production estimates beyond three years. It does emphasize however that it has several possible options and is investing heavily in its existing assets.

In all, Agnico demonstrated once again why it is the best-in-class among the major miners, with strong, open management, world class assets in low-risk jurisdictions, a good pipeline, particularly in Canada, a solid balance sheet, and low costs. Although the stock price has bounced off its pre-earnings low, up $3, it remains a buy.

Barrick Gold (GOLD) saw its fourth-quarter earnings beat expectations with free cash flow up 50%; it had already pre-released production, which disappointed the market, with a miss for the full year.

More importantly perhaps was that the company’s 2024 guidance was less than what the market was expecting. Perhaps the company has learned that ambitious guidance that misses is punished by the market. One should note that, unlike most other companies, Barrick does not change its guidance during the year.

The company announced a $1 billion share buyback program, with CEO Mark Bristow saying the company was undervalued. It should be noted, though, that no shares were purchased under its 2024 buyback program.

Barrick has multiple world-class mines around the world, with several large-scale projects in its pipeline. It has a rock-solid balance sheet and aggressive management. Although the stock has bounced off its low, it remains a strong buy.

Royal Gold (RGLD) beat fourth-quarter estimates, though its full year Gold Equivalent Ounces (GEOs) were a little below its guidance. The primary reasons for the full-year miss were the strike at Peñasquito in Mexico and the delays in the expansion at Pueblo Viejo.

Royal also announced a new agreement on its Mt Milligan stream, with a near-term cash payment in return for price support over the longer term. On balance, this is a good agreement.

Royal ended the year with $845 million in available liquidity, most of that on a line of credit which it expects to fully repay by the end of the year, assuming no new for capital. Royal took on significant debt in 2022 to purchase assets, which it partly paid down in 2023.

Royal is more precious metals dominant than the other major royalty companies, with gold accounting for 80% of its revenue and silver another 10%. It has a good pipeline and a strong balance sheet. If you do not own, it’s a buy.

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