Agnico-Eagle Needs These Catalysts To Recover

Gold stocks are trading like dot-coms were in the late ’90s, and Agnico-Eagle Mines (AEM) is no exception. Its stock price over the past 6 years has mimicked the volatility felt throughout the sector. This trend has been seen in the prices of gold ETFs, and even the supposedly more stable financial products like mutual funds.

Agnico-Eagle was recently in the news because it had seemingly abruptly divested its shares in Rubicon Minerals (RBY), which is primarily engaged in exploration, rather than mining.

Official news releases were nil to scant from Agnico-Eagle itself, and as of this writing, nothing official from the company has been released. Rubicon has acknowledged the divestiture, but hasn’t said much else about Agnico-Eagle’s selling of its stake.

Nothing in Agnico-Eagle’s Q1 necessarily raises any red flags. In fact, the mining company has $155 million in cash reserves, and its operations throughout the world, and in particular, its LaRonde, Lapa, and Pinos Altos mines, are all projected to generate yields on target- and on schedule.

But some analysts are not so sure. Agnico-Eagle was recently downgraded, with an analyst pointing to the aforementioned mines generating higher costs than expected. If this is true, margins next year will thin, and who’s to say if this love-hate volatility about gold stocks among the world’s exchanges will still be in play then, and whether or not it will weigh in or against Agnico-Eagle’s favor.

Agnico-Eagle has recovered some of its share price, since its nosedive last year following the closing of its Goldex mine.To continue reading, click here.