Strong Loonie Could Hurt Miners Like Northgate Minerals, Agnico-Eagle, Yamana , Kinross

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Includes: AEM, AUQ, AUY, KGC
by: FP Trading Desk

Currency market players long the loonie and cross-border shoppers may be beneficiaries of a Canadian dollar at par with the U.S. greenback, but many Canadian miners are feeling the heat and likely looking for some relief.

With the Canadian and U.S. currencies now worth roughly the same amount, companies with operations in Canada and those reporting in Canadian dollars will see the most significant impact to their earnings, UBS analyst Tony Lesiak told clients in a note.

As a result of this exposure, UBS lowered its 2007, 2008 and 2009 earnings per share estimates for a handful of names. These include HudBay Minerals Inc. (HBM/TSX), FNX Mining Co. (FNX/TSX), Inmet Mining Corp. (IMN/TSX), Northgate Minerals Corp. (NXG), Agnico-Eagle Mines Ltd. (NYSE:AEM), Yamana Gold Inc. (NYSE:AUY) and Kinross Gold Corp. (NYSE:KGC). Meanwhile, Agnico-Eagle, Yamana, Northgate and Alamos Gold Inc. (AGI/TSX) had their target prices cut due to lower conversion values for their U.S. dollar denominated assets.