Spring brings in a new season for gold and gold equities, Stifel GMP analysts wrote in an earnings preview published on Wednesday, but they cautioned not to expect the mining companies’ production numbers to bloom.
“After a strong finish to 2022, most gold miners under coverage indicated that Q1 (production) will be the lightest quarter of the year (a reflection of mining sequencing, planned mill maintenance, and in some case, seasonality),” the analysts said.
They also warned that first-quarter cash costs are expected to remain elevated, due to the continuing presence of inflation, which is further compounded by lower expected quarterly production.
There are some reasons for optimism, though, as higher gold prices are signaling better margins for these miners and declining oil and gas prices may provide some relief to costs in the coming quarters.
Stifel is forecasting an average gold price of US$2,000 per ounce for the second quarter of 2023 and US$1,961 for the year.
The analysts also noted that most gold miners have indicated either a stronger weighted second half or a gradual increase in production throughout the course of 2023, as they anticipate 1Q production to represent 20%-23% of full year guidance at midpoint on average.
Stifel analysts added that relative to the consensus, its 1Q earnings estimates are higher for Agnico Eagle Mines Ltd (TSX:AEM) and Dundee Precious Metals Inc (TSX:DPM), and lower for Barrick Gold Corp and Franco-Nevada Corp.
Agnico Eagle kicks off the 1Q reporting season on April 27, 2023.
Contact Sean at sean@proactiveinvestors.com