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Agnico Eagle Mines Limited Message Board

  • investora2z investora2z Aug 10, 2013 6:46 AM Flag

    Cost control is important..

    The earnings were nothing special, but the guidance was maintained, and the all-in sustaining costs are expected to be around $1100 per ounce. The production is likely to be in the range of 970K to 1.01 million ounces. The production costs increased in Q2, and hopefully they will come down in the second half numbers. Cost will be an important factor, and low cost producers will be preferred in case of a rebound in the sector. A seekingalpha article had mentioned that the average cost of production for gold is around $1211 per ounce, with some companies like Pershing Gold (PGLC), a development stage company, expected to have much lower costs (~$800-900). While Agnico is not doing too badly on this front, some of the peers are at lower cost. Further, the valuations are relatively high. Gold has shown strength recently, and next week may see it crossing the recent highs. That will be pretty good for changing the sentiments in the short term. On the downside, the recent lows need to hold, if tested again. Agnico has shown strength by bouncing around 10% from the recent lows, and another 3-4% rise in gold can see it going to the next orbit. Not very easy, but not too tough either. The fact is that gold has corrected significantly, and has spent several months under tremendous pressure. Further, going below $1200 may lead to adjustments due to demand-supply dynamics. So the extreme outcome theories may be tucked away for some time. The conviction of the shorts will reduce with each uptick, provided the moves are decisive. Then, it will be a stock pickers market, and those with good financials and prospects may be preferred. If Agnico can keep the leverage and cost under control, it may be a good performer.

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