By: Creamer media

Toronto-based Agnico Eagle Mines had a roughly $7.9-billion market capitalization when Paulson & Co. took a stake in the company. It’s now worth about $59-billion in New York, with its market cap more than doubling since the beginning of 2024 alone. The gains mean the stock is virtually tied with Denver-headquartered Newmont as the world’s most valuable gold-focused producer.

Agnico Eagle is Paulson & Co.’s preferred pick among large gold miners because it operates in predictable jurisdictions — such as Canada and Australia — while other miners do business in places that have seen coups and other types of political instability. The firm sold off the last of its stake in Barrick Mining in 2022, which has been in a protracted dispute over a mine in Mali. It also sold off its holdings in Anglogold Ashanti after a sharp run-up in the stock.

“Mining is so hard as it is” that investors don’t also need “the headache” of geopolitical risk, said Marcelo Kim, partner at Paulson & Co. The fund’s largest gold-sector holding is Perpetua Resources Corp., a small-cap firm with a gold mine in Idaho.

“We’re very focused on being in the right jurisdictions,” he said.

Analysts have also rewarded Agnico’s approach. National Bank of Canada analyst Shane Nagle issued one of the stock’s 16 outperform ratings, which is “based on Agnico Eagle’s low-risk jurisdictions combined with its continued strong/consistent operational performance near-term production outlook.” Last week, TD Cowen and Bank of Nova Scotia both reiterated that Agnico Eagle is a top pick.

The stock has clobbered rivals Barrick Mining Corp. and Newmont over the past year. It’s also one of the few large gold mining stocks to outperform the metal itself over the same period.

Kim said he has no plans to sell now that Agnico Eagle enjoys higher valuations, as measured by both its price-to-earnings ratio and its market capitalization. “We’d rather pay a high multiple for a company where we’re comfortable with what they’re doing,” he said.

He also believes that record purchases of bullion by central banks will continue to buoy gold prices and therefore Agnico’s stock.