The keys risks to our investment thesis on AEM include commodity exposure, political risk (although most of AEM’s operations are in areas with low political risk and a history of mining) & operating risk.
Metals Pricing Volatility - Gold pricing is driven by a number of market factors including mining output, scrap availability, central bank sales and US inflation rates. A significant decline in the price of gold due to any combination of these factors could reduce AEM's realized pricing and sales volumes. However, an increase in the gold price would be a benefit. AEM is also exposed to volatility in silver, copper, and zinc pricing.
Mining Operations - The company's mining operations are subject to variability in ore quality and structural issues which could potentially decrease production volumes and increase unit costs.
If the impact from the risks outlined turns out to be greater/less than estimated, the shares could fail to achieve/outperform our target price.
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