Can Agnico Eagle's Profits Keep Shining Amid Rising Production Costs?

Agnico Eagle Mines Limited AEM delivered better-than-expected earnings in the fourth quarter on higher gold prices, but it remains hamstrung by higher unit costs. Its all-in sustaining cost (AISC) — the most important cost metric of miners — was $1,517 per ounce in the fourth quarter, marking a roughly 10% increase from the prior quarter and a 15% year-over-year rise. 

AISC increased year over year due to higher total cash costs and an uptick in sustaining capital expenditures. Total cash costs per ounce for gold were $1,089, 18% higher than $923 a year ago and also up from $994 in the prior quarter. Total cash costs of $979 per ounce and AISC of $1,339 per ounce for 2025 were also above the top end of AEM’s guidance due to increased royalty costs.

While Agnico Eagle is taking action to control costs, the inflationary pressure is likely to continue, weighing on its overall financial performance. Maintaining cost discipline to sustain margin expansion will be crucial for the company.

AEM forecasts total cash costs per ounce in the range of $1,020 to $1,120 and AISC per ounce between $1,400 and $1,550 for 2026, suggesting a year-over-year increase at the midpoint of the respective ranges. Cash costs are expected to increase in 2026, partly due to higher royalty costs, cost inflation (including higher labor and electricity costs) and lower grades across certain mines. Higher production costs warrant caution, as they will likely weigh on AEM’s profitability. 

Among AEM’s peers, Barrick Mining Corporation B also saw a 9% year-over-year increase in AISC in the fourth quarter, reaching $1,581 per ounce. It also rose 3% sequentially. Barrick’s AISC also rose 10% year over year to $1,637 in 2025. For 2026, Barrick projects AISC in the range of $1,760-$1,950 per ounce, indicating a year-over-year increase at the midpoint. 

Newmont Corporation NEM lowered its third-quarter AISC to $1,566 per ounce, marking a 3% decrease from the prior-year quarter and a decline from $1,593 in the prior quarter. This improvement was primarily due to a decline in costs applicable to sales and lower general and administrative expenses, as Newmont is enjoying the benefits from its cost-saving actions. Newmont expects gold AISC for the total portfolio to be $1,630 per ounce in 2025, reflecting a rise from $1,516 per ounce in 2024. Newmont is slated to report fourth-quarter results tomorrow.

The Zacks Rundown for AEM

Shares of Agnico Eagle have shot up 59.2% in the past six months against the Zacks Mining – Gold industry’s rise of 74%, largely driven by the gold price rally.

From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 16.86, a roughly 20% premium to the industry average of 14.05X. It carries a Value Score of C.

The Zacks Consensus Estimate for AEM’s 2026 and 2027 earnings implies a year-over-year rise of 52.9% and a decline of 1.5%, respectively. The EPS estimates for 2026 and 2027 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research