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  5. AEM: Pondering selling my position in NGT and replaced it with AEM. [Agnico Eagle Mines Limited]
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Investment Q&A

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Q: Pondering selling my position in NGT and replaced it with AEM. NGT's performance in the last 12 moths seems to be below par, relative to their peers and the future does not seem to be very promising. Can you give me a read what has driven the weak performance and if you agree with the switch. Does a small position in gold producers make sense at this stage?
Much appreciated.
Asked by Francisco on August 25, 2023
5i Research Answer:

We think gold and the gold sector look decent today; IF rates peak and the US dollar weakens, gold should do better. Mining companies have been hit with a combo of inflation and labour issues. We do think AEM looks better than NGT. Its weakness stems from several factors: investors do not like the Newcrest acquisition much, and it is a very large transaction, all in stock. It has missed estimates in five of the past eight quarters. At Penasquito it has had labour issues. EBITDA has been in decline with weaker-than-expected production. Management has also essentially over-promised and then under-delivered. Even this year the company wil have trouble meeting the low end of its expected production guidance. AEM is not problem-free, certainly, but does look better currently.