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Analysts remain bullish on Agnico-Eagle Mines Ltd. (NYSE:AEM) following the company’s friendly $692-million bid for Cumberland Resources Ltd. (CLG).

Desjardins Securities analyst Michael Fowler thinks Cumberland’s gold assets, which are in pre-production development in Nunavut, have good upside given future exploration opportunities.

As a result, he suggests that there is a small chance of another bidder like Newmont Mining Corp. (NYSE:NEM) or Gold Fields Ltd. (NYSE:GFI) entering the fray, but expects Agnico to come out with Cumberland regardless.

“We believe that this is a positive transaction for Agnico-Eagle and is the sort of action that should be occurring more often with regards to mid/senior producers taking over development companies,” Mr. Fowler said in a research note.

He has a “buy” rating and $62.75 price target on Agnico shares, representing upside of 33%.

Wellington West analyst Catherine Gignac has a $55 price target on the stock and a “buy” rating, saying the deal is a good fit given Agnico’s growth strategy.

“Agnico’s aggressive exploration programs in Finland, Mexico, and Quebec are returning positive results with likely increases to their reserve base in coming years,” she said in a research note, adding that if the Cumberland deal succeeds as expected, it will give Agnico “a new advanced stage project, in a positive mining district, with a complementary development team for a relatively low cost.”

However, she also noted that Cumberland’s gold project is only in the construction phase and Agnico expect to pay $375-million to build the mine and boost capacity there.

AEM 1-yr chart
AEM 1-yr chart

Source: More Upside for Agnico Following Cumberland Deal