Agnico Eagle Mines Limited AEM recently announced that the Amaruq satellite deposit at the Meadowbank Complex achieved commercial production on Sep 30, 2019.
Notably, the start of production at the Meliadine and Amaruq projects positions Agnico Eagle to generate net free cash flow in second-half 2019. It will also enable the company to lower net debt as well as increase dividend payout while steadily growing business.
Agnico Eagle owns 100% in the Amaruq deposit. Development of the project was approved in February 2017 by its board of directors as a satellite deposit for supplying ore to the existing Meadowbank mill.
The mining operations at Amaruq use the existing infrastructure at the Meadowbank mine. It also has additional infrastructure built at the site that includes fuel storage, warehouse and camp facility. The Amaruq ore is moved using long haul off-road type trucks to the Meadowbank site for processing.
Moreover, ore processing at Amaruq started in August 2019 by using low-grade stockpiles. Production at the Meadowbank complex totaled 48,869 ounces of gold in third-quarter 2019, which was 22.2% higher than prior projection of 40,000 ounces of gold. This includes pre-commercial payable gold production of 35,281 ounces at Amaruq as well as 13,588 ounces from Meadowbank. Pre-commercial production sales were 32,042 ounces of gold.
Agnico Eagle is expected to provide an update on total capital costs of the project in its third-quarter earnings release.
It may be noted that mining activities at Amaruq is affected, during the third quarter, by slower-than-expected dewatering activities that was caused by heavy rainfall. Dewatering activities are mostly complete and roughly a month later than previously expected.
The slower-than-expected ramp up of mining activities enabled the company to accelerate planned maintenance, which was originally scheduled for 2020. As such, the mill was briefly shut down in mid-September. It is expected to restart on or around Oct 14, 2019.
Agnico Eagle noted that production guidance at the Meadowbank for 2019 is now expected to be 200,000 ounces of gold, lower than prior forecast of 230,000 ounces. However, the company retained its full-year 2019 production guidance of 1.75 million ounces of gold despite lower view for the Meadowbank Complex.
Agnico Eagle’s shares have surged 58.4% in the past year compared with the industry’s 62% rally.
Zacks Rank & Key Picks
Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Royal Gold, Inc RGLD and Arconic Inc ARNC, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinross has an expected earnings growth rate of 170% for 2019. The company’s shares have surged 74.2% in the past year.
Royal Gold has a projected earnings growth rate of 82.1% for fiscal 2020. The company’s shares have rallied 74% in a year’s time.
Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 14.3% in the past year.
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