National Bank Financial analysts anticipate a mixed earnings season for the Canadian precious metals sector in Q4 2024, forecasting lower cash costs and a tailwind from weakening global currencies.
National Bank Financial equity analysts are predicting a mixed earnings season for the Canadian precious metals sector in response to several producers pre-releasing their fourth-quarter 2024 operating results. They anticipate lower cash costs quarter-over-quarter due to the back-half-weighted production schedule of many companies.
Additionally, the analysts expect a tailwind from the weakening of global currencies against the USD in Q4, with the exception of the Turkish Lira due to its extreme inflation rates. Key focus areas for the analysts include management commentary on capital allocation plans and the overall financial leverage of the sector, which they anticipate will decrease as debt is repaid with expected strong cash flows. Their estimates suggest that 4Q24 will mark the highest and fourth consecutive quarter of rising free cash flow per gold equivalent ounce sold.While consensus estimates remain fluid, the analysts express confidence in their projections. They anticipate Eldorado Gold (ELD.TO), and Torex Gold (TXG.TO) beating consensus adjusted earnings per share estimates, while Centerra (CG.TO), Aya Gold and Silver (AYA.TO) and Wesdome (WDO.TO) are expected to miss. The analysts provide detailed reasoning behind their conviction calls in the report. For concentrate producers, provisional pricing adjustments are anticipated to have a modest net negative impact on 4Q24 earnings. National Bank Financial maintained its price deck for all metals unchanged while updating both near and long-term foreign exchange rates. These changes were accompanied by a series of target price adjustments for stocks in their coverage universe. Companies with target price changes of 10 percent or more include SSR Mining (up 27 percent), G Mining (up 25 percent), Aura Minerals (up 19 percent), Calibre (up 18 percent), Wesdome (up 18 percent), Equinox (up 16 percent), Alamos (up 15 percent), New Gold (up 14 percent), Barrick (up 13 percent), IAMGOLD (up 13 percent), Lundin Gold (up 13 percent), Allied Gold (up 12 percent), Agnico Eagle (up 11 percent), Artemis (up 11 percent), Coeur (up 11 percent), Kinross (up 10 percent) and Montage (down 11 percent). Analysts highlighted specific reasons for these adjustments. For instance, Mike Parkin emphasized Kinross' significant growth opportunities within its North American portfolio, including the Great Bear project (Ontario), the potential Curlew Basin restart (Washington State), and the Round Mountain U/G project (Nevada) under development. Don DeMarco pointed to improving operational performance at G Mining, marked by free cash flow of $151 million in Q3/24, expected to continue with the La Colorada ventilation fix boosting throughput and grade, and the Jacobina optimization study on deck.Meanwhile, Rabi Nizami reiterated G Mining's status as a long-term Top Pick, citing the team's ability to deliver projects on time and on budget, with the TZ mine (approximately 200koz/year) now completed and quickly ramping up to full capacity. He also highlighted the company's positioning for another re-rating in the coming years as attention turns towards the development of the much larger Oko West project (350koz/year), targeting combined output of 500koz/year by 2028.Shane Nagle, focusing on the royalty sector, predicted strong free cash flow generation at current gold prices, anticipating a competitive deal environment that would likely contribute to consolidation within the industry. He sees several companies motivated to acquire OR's high-quality, diversified portfolio with key assets operated by Senior/Intermediate counterparties in politically stable jurisdictions.
Precious Metals Earnings Canadian National Bank Financial Analysts Q4 2024
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