Agnico Eagle (AEM) Increases Stake In Royal Road To 19.9%

Agnico Eagle Mines Limited (NYSE:AEM) has increased stake in Royal Road Minerals Limited to 19.9% by purchasing 26,133,158 ordinary shares for around C$5.2 million (or roughly $3.9 million).

Prior to this deal, Agnico Eagle owned and controlled over 16,379,550 ordinary shares of Royal Road, which represented roughly 9.43% of its issued and outstanding ordinary shares. The company currently owns roughly 19.9% of the issued and outstanding ordinary shares of Royal Road on a non-diluted basis.

In regards to this transaction, Agnico Eagle entered into an investor rights agreement with Royal Road. Per the agreement, Agnico Eagle will own (provided Agnico Eagle owns) directly or indirectly 9.5% or more of the ordinary shares of Royal Road that is calculated according to the investor rights agreement.

Notably, the company has acquired the ordinary shares of Royal Road for investment purposes. It may, from time to time, purchase additional ordinary shares or other securities or dispose some or all of the ordinary shares or other securities, depending on market conditions and other factors subject to the investor rights agreement.

Agnico Eagle’s shares have lost 6.3% in the past year, against the industry’s 0.6% rise.

The company’s adjusted earnings per share came in at 14 cents in the first quarter of 2019, which beat the Zacks Consensus Estimate of 5 cents.

Gold production rose 2.3% year over year to 398,217 ounces in the quarter. Total cash costs per ounce were $623, down roughly 3.9% from $648 in the prior-year quarter. All-in sustaining costs (AISC) were $836 per ounce, down 6% from the prior-year quarter’s figure of $889.

Agnico Eagle reaffirmed production and cost guidance for 2019. Gold production for the year is projected at 1.75 million ounces. The projection includes pre-commercial production from Meliadine of roughly 60,000 ounces of gold and Amaruq of around 40,000 ounces of gold.

Total cash costs per ounce are projected between $620 and $670 for 2019. AISC is expected in the range of $875-$925 per ounce.

The company expects around 55% of expected gold production for 2019 to materialize in the second half of 2019.

Zacks Rank & Key Picks

Agnico Eagle currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Materion Corporation (NYSE:MTRN) , Fortescue Metals Group Ltd. (OTC:FSUGY) and AngloGold Ashanti Limited (NYSE:AU) , all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 23.1% for 2019. The company’s shares have gained 17.5% in the past year.

Fortescue Metals has an impressive projected earnings growth rate of 101.5% for the current year. The company’s shares have surged 68.2% in a year’s time.

AngloGold has an estimated earnings growth rate of 86.8% for the current year. Its shares have rallied 37.6% in the past year.

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