Agnico Eagle Mines Stock Soars Higher on 10.5% Increase in Gold Reserves

AEM stock (TSX:AEM) posted strong earnings, bringing the share price back up after falling 15% so far in 2024. And more is likely on the way.

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Agnico Eagle Mines (TSX:AEM) may have reported a fourth quarter loss, yet shares rose higher this week as the company expanded its gold reserves. The mining company now looks primed to see an increase in share price, with shares rising 3% after the earnings report. So is AEM stock a buy? Or should investors wait in the wings? Let’s drill into earnings.

What happened

AEM stock reported a loss of US$381 million in the fourth quarter, down from a profit reported the same time the year before. This amounted to a loss of US$0.77 per share, yet earnings, adjusted for non-recurring costs, came to $0.57 per share.

Even so, the results were better than analysts on Wall Street expected, believing the company would hit US$0.48 per share during the quarter. Furthermore, AEM stock reported US$1.8 billion in revenue, and US$1.9 billion in profit for the year at US$3.95 per share. Revenue, meanwhile, hit US$6.6 billion for the year.

The company saw its share price fall since the beginning of 2024, with AEM stock down 11% year to date. However, even this is an improvement, with the stock falling by 15% before earnings hit the headlines. But it looks like there’s even more coming for shareholders in 2024.

Major increase in reserves

AEM stock secured its future in gold as the company announced a 10.5% increase in its proven and probable gold reserves. It now has a whopping 53.8 million ounces of gold on hand. The jump came from the discovery of a new mineral reserve, which held 5.2 million ounces of gold.

Furthermore, AEM stock managed to also make strategic acquisitions during the year. This included the remaining 50% interest in its Canadian Malartic complex. This alone helped add 1.5 million ounces to reserves as well.

Discoveries of even more minerals helped AEM stock expand even further, and this could be quite exciting for investors in the coming year. After all, the discoveries were only made in 2023. Therefore, there could be even more to discover in the next year.

Be aggressive

The aggressive attitude towards exploration is likely to continue into 2024. So don’t be surprised if you hear about even more new areas coming up in the year to come. In fact, the company announced exploration continues to be a large part of its budget for 2024.

And it couldn’t come at a better time. Economists still believe that interest rates will be cut within the next year. Once that happens, there will be several benefits for AEM stock. First off, lower interest rates mean taking on more cash at lower rates to further expand the company. Second, lower inflation rates would also mean more spending on gold and other minerals. Therefore, AEM stock will likely start eating away at those reserves very soon.

So with shares still down 11% year to date as of writing, a solid future looking ahead, and trading at 9.2 times earnings as of writing, AEM stock looks like a strong option. Add in the dividend yield at 3.42%, and you’ve got yourself a deal.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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