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Which Gold Miner’s Production Growth in 2016 Could Surprise You?

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Upside to guidance?

Agnico Eagle Mines’s (AEM) 2Q16 gold production beat market expectations with gold production of 409,000 ounces. AEM has also raised its production guidance for 2016 to a midpoint of 1,590,000 ounces from 1,565,000 ounces. This is mainly due to its stronger-than-expected first half production performance.

Agnico Eagle Mines has exceeded its guidance for a few years in a row. This year’s guidance also seems conservative and could have an upside.

New Gold (NGD) produced 99,000 ounces of gold in 2Q16, which was slightly better than the market’s expectations. Due to the company’s strong performance in 1H16, it is positioned to meet its full-year guidance of 360,000–400,000 ounces of gold.

New Gold expects its copper production to exceed the high end of its guidance of 81 million–93 million pounds.

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Will there be improvement in the second half?

Iamgold (IAG) produced 197,000 ounces of gold in 2Q16, a fall of 2.5% year-over-year (or YoY) and a growth of 3% sequentially. The company’s production in the first half was 388,000 ounces, which is 49% of the midpoint of its full-year guidance.

IAG expects its production to pick up in the second half of the year, which could help it beat the guidance. For now, however, it expects kept its guidance to be unchanged at 770,000–800,000 ounces. The company is facing the issue of hard rock, which could lead to decline in grades at two of its major mines. The future production growth could be a concern for the company.

Downgrading guidance

Eldorado Gold (EGO) reported production of 124,000 ounces of gold, which was a slight miss on expectations. Its production in 1H16 reached 44% of the midpoint of its fiscal 2016 guidance. As a result of weaker production from Kisladag and Tanjianshan, the company reduced its full-year guidance from 565,000–630,000 ounces to 570,000 ounces.

The SPDR Gold Trust ETF (GLD) mirrors gold prices in the market. Agnico Eagle Mines and Eldorado Gold account for 6.6% of GDX’s holdings.

While it’s important to understand the current trend of gold production, it’s more important to look at companies’ gold production growth in the long term. We’ll discuss this in the next part of this series.

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