Can Agnico Eagle's Solid Free Cash Flow Drive Its Next Growth Phase?

Agnico Eagle Mines Limited AEM logged robust third-quarter free cash flow of roughly $1.2 billion, nearly doubling the prior-year figure of $620 million. The surge was backed by the strength in gold prices and strong operational execution. Free cash flow before working capital adjustments reached $1,035 million, up around 84% from the year-ago quarter. Operating cash flow also climbed around 67% to roughly $1.8 billion in the third quarter.

The strong free cash flow supports investments in growth initiatives, including the Odyssey project in the Canadian Malartic Complex, Detour Lake and Hope Bay, as well as debt repayments and shareholder returns. AEM’s strong liquidity position and substantial cash flows allow it to maintain a strong exploration budget and fund a strong pipeline of growth projects. 

The company remains focused on paying down debt using excess cash, with total long-term debt reducing by roughly $400 million sequentially to $196 million at the end of the third quarter. It ended the quarter with a significant net cash position of nearly $2.2 billion, driven by the increase in cash position and reduction in debt. 

AEM also returned around $350 million to its shareholders in the third quarter. A robust free cash flow generation places it firmly in the upper tier of gold producers. This allows the company to pivot these funds into high-return growth initiatives, enhance returns and further accelerate debt reduction.

Among Agnico Eagle’s peers, Newmont Corporation NEM registered a record free cash flow in the third quarter, underscoring its operational efficiency and the strength of its Tier 1 portfolio. Newmont’s free cash flow more than doubled year to year to $1.6 billion, led by an increase in net cash from operating activities. This marked the fourth straight quarter of free cash flow exceeding $1 billion.  However, Newmont has cautioned that several factors could weigh on its fourth-quarter free cash flow, including continued higher spending on Yanacocha’s water treatment construction and planned severance payments.

Barrick Mining Corporation B reported a free cash flow of $1.5 billion for the third quarter, rising from $444 million in the prior-year quarter. The surge reflects Barrick’s higher operating cash flows driven by an uptick in realized gold prices. Barrick generated strong operating cash flows of roughly $2.4 billion in the quarter, up 105% year over year.

The Zacks Rundown for AEM

Agnico Eagle’s shares have shot up 77.5% in the past six months against the Zacks Mining – Gold industry’s rise of 95.6%, largely driven by the gold price rally.

From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 21.52, a roughly 29.2% premium to the industry average of 16.65X. It carries a Value Score of C.

The Zacks Consensus Estimate for AEM’s 2025 and 2026 earnings implies a year-over-year rise of 90.5% and 30.1%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

AEM stock currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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