Agnico-Eagle Mines stock forecast (NYSE:AEM)

A year ago, Agnico shares were north of $70. Prices crumpled to as low as $33, though, on news that the company was forced to close its Goldex mine in Quebec due to safety concerns. It looks like a recovery is well underway.

This post is part of series where we’re checking in on the Top 500 gold and silver mining stocks profiled in our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock.

Performance: First, let’s compare Agnico-Eagle’s performance against the AMEX Gold Bugs Index (HUI) – a basket of industry-leading gold stocks.

Time Span AGONF Performance HUI Performance
1 Month +9.5% +13%
3 Month +18.8% +3%
YTD +33% -12%

Agnico-Eagle Mines is one of the top-performing stocks in the HUI this year. The stock also happens to be the smallest component of the HUI with a 3.11 percent weighting. As the smallest component of the HUI, Agnico’s market cap still stands at a massive $8.28 billion. Since it’s smaller than some of its peers, though, share prices could be a bit more volatile.

Why we like Agnico: 1.66% dividend; More than 21 million ounces of gold reserves. By market cap, Agnico is Canada’s fifth-largest gold producer. In Q3 2011 alone, the company increased its production by 11 percent to 265,978 ounces of gold. According to their most recent numbers, they’ve got total proven and probable gold reserves nearing 21.3 million ounces.

Recent News: RBC Dominion Securities raised their price target on Agnico-Eagle to $53 a share last week. A year ago, shares were north of $70. Prices crumpled to as low as $33, though, on news that the company was forced to close its Goldex mine in Quebec due to safety concerns. On top of that, Agnico wrote off part of its investment in its Meadowbank mine in Nunavut.

RBC analyst Stephen Walker says things are finally looking up. “The company has shown its ability to ‘under-promise and over-deliver’ on its operating results and drive strong performance at its five operating mines,” he wrote in a note (per the Financial Post). “However, we believe investors expect to see the company deliver results that are sustainable and demonstrate future growth over the next 2-3 years.”

Agnico’s looking to the future with new exploration partnerships in Colombia and Alaska (with Miranda Gold) among other places.

Agnico paid out a dividend of $0.20 cents on Aug. 30. That’s up 25 percent over the company’s $0.16 dividend a year ago. Thanks to growing enthusiasm for gold and silver mining shares, I think RBC’s price target is low, and I wouldn’t be surprised to see shares north of $60 a year from now.

Check out our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock (pictured above) to uncover more undiscovered gold and silver mining stocks.


Undervalued Gold Mining Stocks: Petaquilla Minerals Ltd.

At least one writer pegs Petaquilla Minerals’ price target above $3 a share. Here’s why.

It’s not often that you find a promising junior gold mining stock trading at a P/E of 2.1. Petaquilla Minerals Ltd. (OTC:PTQMF, TSX:PTQ) is doing just that, though, even as it expects to rapidly ramp up gold production at it’s growing deposits in Panama.

You can blame the stock’s poor performance (shares are down 30 percent YTD) on overall weakness in gold mining shares, but if interest in the sector returns, I expect Petaquilla to outperform. Here’s why:

1) Promising production. Cash flow is the lifeblood of a small mining company, and Petaquilla’s cash flow from its Molejon gold mine in Panama is growing along with production targets.

“For the current fourth quarter of fiscal 2012, the Company is forecasting gold poured within the range of 18,000 to 21,000 ounces, and revenues within the range of $27 to $31.5 million,” Petaquilla wrote in its most recent earnings report.

All told, Petaquilla expects to mine more than 100,000 ounces of gold in 2012, up to 145,000 ounces in 2013 and perhaps as many as 250,000 ounces by 2015. Promising exploration is also ongoing at the Lomero-Poyatos project in the wake of Petaquilla’s 2011 acquisition of Iberian Resources Corp. in Spain. Exploration there should kick off within two months (per reports).

2) Big backers. One of the more promising signs Petaquilla’s committed to growth is the fact that management owns more than 12 percent of the company. Other big shareholders include Sprott Asset Management, U.S. Global Investors and Libra Advisors, according to Morgan Report contributor Chris Marchese. lists Account Management LLC as the single biggest holder in Petaquilla with 122,780 shares.

3) Fair cash costs. Petaquilla’s cash costs for fiscal 2012 are expected to fall between $550-$600 per ounce of gold sold. Compare that with a company like Alexis Minerals that recently reported cash costs north of $2,000 an ounce.

Those low costs prompted Chris Marchese to put peg Petaquilla Minerals’ price target above $3 a share.

“I’ve modeled a net asset value on a fully diluted basis of over $3/share [using $1,600/oz. gold and $2.50 copper – discounted at 15 percent], significantly higher than the current $0.42/share market price,” he said in an interview with The Gold Report. “It has been completely overlooked by the market even though it has one of the best production growth profiles out there, courtesy of its recent acquisition of Iberian Resources Corp. in August 2011.”

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