Agnico Lays Out Plans for Million-Ounce Producer

Source: Adrian Day 06/26/2024

Global Analyst Adrian Day discusses some recent updates on some of the companies on his list.

Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) released updated resource estimates and an updated mine plan for Detour Lake in Northern Ontario, incorporating its proposed underground mining, which will provide early access to a high-grade core at depth. The Preliminary Economic Assessment (PEA) demonstrates the potential to increase annual production to 1 million ounces when the underground starts in 2030 for the next 13 years.

The plan is to mine underground concurrently with the open pit while increasing the mine life another two years to 2054. Agnico has talked about the possibility of 1 million ounce production from Detour, and the PEA has provided a clear path to achieving it. It will spend $100 million over the next three years and $730 million in all. Project economics are solid, increasing production by 27%, with underground costs of $690 per ounce and, at today’s gold price, an IRR of 25%.

The PEA is further evidence of Agnico’s long-term plans to maximize returns from the assets it acquired with Kirkland and to remain the dominant miner in Canada. Detour will be one of the top five gold mines in the world. With top management, a solid balance sheet, a clear strategic focus, and low political risk, Agnico is our favorite of the large miners; it is the #3 gold miner globally.

However, after a run in the stock price, we are holding, but, particularly for new investors, we would buy any meaningful pullback.

Fortuna Changes Its Name While Expanding Key Gold Mine

Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) shareholders voted in favor of a change in name to Fortuna Mining, effective last week. The stock symbol remains the same. The name change reflects the current reality of the company. After its purchase of Roxgold and the start of its new flagship Séguéla mine, gold is the dominant metal produced, with about 80% of revenue coming from gold this year.

Although Fortuna will lose much of its luster for silver-focused investors, the reality is that with the possible run-down of mining at San Jose, it was losing attraction to silver-focused investors anyway.

Separately, Fortuna provided an update on exploration at the Kingfisher prospect at Séguéla, which was discovered earlier this year. The company has defined continuous mineralization along 1 km of strike, and it remains open to the south and to depth. Drilling will continue for the balance of the year, with a resource estimate anticipated for early next year.

Drilling continues at two other deposits at Séguéla, hitting high-grade intercepts at depth at Ancient. The drilling helps to confirm that Séguéla has the potential for an expanded and long-life mine. With a solid and improving balance sheet, strong and fiscally conservative management, multiple mines, and low costs, Fortuna is set to become a recognized mid-tier miner.

If you do not own it, it should be bought.

Pan American Shows Why It’s the Top Silver Miner

Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) held its annual investor day earlier in the week. Though there was little news, management outlined the company’s strong growth prospects as well as made a case for it being the “go-to” silver investment. It has the largest silver resources and reserves of any company, the second-largest production, and is the largest and most liquid silver stock with the highest correlation to the silver price of any stock.

The acquisition of Yamana early last year increased the gold in the portfolio, but the company has been reducing that by its disposition of non-core assets. The disposals have also dramatically deleveraged the balance sheet after the Yamana purchase, with net leverage (after the sale of La Arena) around 0.4x. Pan American has a broad portfolio of mines throughout Latin America.

It has solid brownfields potential at several mines, including Jacobina and El Peñon, and major growth projects that are longer dated or of uncertain timing. It is seeking a partnership for the development of its large La Colorada Skarn. The consultation process at Escobal in Guatemala has been held up this year with the change in government and changes in several key government decision-makers, but it is nearing its end.

Pan American is our top silver company, but after the strong rally since March (when it traded just about $12), we are holding.

Vista Is Well Financed and Can Be Patient

Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX) has received the third and final payment of $10 million from the $20 million royalty investment by Wheaton Precious Metals. The company is now well-financed to continue drilling and other work on its Mt Todd project.

We do not believe that additional exploration success will generate sustained gains in the stock price. The market is looking for concrete advances in the process of monetizing or partnering the project.

Hold.

CORRECTION: In my write-up on Fox River Resources Corp. (FOX:CNSX) last week, I indicated that David Lotan joined as non-executive chairman late last year. In fact, he became chairman in January 2023 and became a 10% shareholder near the end of the year.

Buy.

TOP BUYS this week, in addition to the above, include Gladstone Investment Corp. (GAIN: NASDAQ), Barrick Gold Corp. (ABX:TSX; GOLD:NYSE), Midland Exploration Inc. (MD:TSX.V), Lara Exploration Ltd. (LRA:TSX.V), and Orogen Royalties Inc. (OGN:TSX.V).

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Agnico Eagle Mines Ltd., Fortuna Silver Mines Inc., Pan American Silver Corp., Barrick Gold Corp., Midland Exploration Inc., and Orogen Royalties Inc.
2. Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: All. I determined which companies would be included in this article based on my research and understanding of the sector.
3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Adrian Day Disclosures

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2023. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

( Companies Mentioned: AEM:TSX; AEM:NYSE, FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE, PAAS:TSX; PAAS:NASDAQ, VGZ:NYSE.MKT; VGZ:TSX, )