AEM's Debt Discipline Deepens: Lower Leverage a Recipe for Growth?

Agnico Eagle Mines Limited AEM has made impressive strides in fortifying its balance sheet, underscoring its commitment to financial discipline. It remains focused on paying down debt using excess cash, having reduced net debt by a staggering $1,287 million in 2024. It further slashed net debt by $212 million sequentially to just $5 million at the end of the first quarter. The company’s long-term debt-to-capitalization is just around 5%, indicating lower financial risks. 

This sharp deleveraging was driven by strong free cash flow generation. AEM has a robust liquidity position and generates substantial cash flows, which allow it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. It generated solid first-quarter free cash flows of $594 million, up around 50% year over year, backed by the strength in gold prices and robust operational results. 

The company’s aggressive deleveraging efforts have rendered enhanced financial flexibility, underpinning confidence in its capacity to fund growth and drive shareholder returns without over-reliance on external financing. Agnico Eagle’s ultra-low debt profile also offers a competitive edge in addition to bolstering its ability to reinvest in exploration and development projects.

Looking across the peer landscape, Kinross Gold Corporation KGC has also taken steps to improve its leverage profile, thanks to strong free cash flow generation. Kinross repaid $800 million of debt during 2024 and the remaining $200 million of its term loan in the first quarter, reducing its net debt to around $540 million. Notably, Kinross’ free cash flow more than doubled year over year to $370.8 million in the first quarter. 

Newmont Corporation NEM is balancing deleveraging with post-Newcrest acquisition integration and asset streamlining through strategic non-core divestments. Newmont has reduced debt by $1 billion since the beginning of 2025. Newmont ended the first quarter with net debt of $3,221 million, down from $5,308 million at the end of 2024.

The Zacks Rundown for AEM

Agnico Eagle’s shares have rallied 54.7% year to date against the Zacks Mining – Gold industry’s rise of 54.4%, driven by an upswing in gold prices.

From a valuation standpoint, AEM is currently trading at a forward 12-month earnings multiple of 19.96, a roughly 42.9% premium to the industry average of 13.97X. 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 42.6% and 0.8%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

AEM stock currently carries a Zacks Rank #2 (Buy). 

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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