As usual, it’s been a wild ride for Agnico-Eagle Mines Ltd. shareholders.

When the gold miner announced its private placement to sell at least US$252-million in stock to fund expansion and bolster its balance sheet on Nov. 19, its shares fell 12% to around $33 in Toronto. This brought the year-to-date decline to roughly 40%. By the end of the month, Agnico was up above $48 per share. But after steady declines this week, it is trading around $35 again. Sharp moves in the price of gold are also playing a role.

The private placement closed on Thursday with 9.2 million units sold at US$31.50 each for a total of US$290-million. Each unit consists of a common share and half of a warrant, which entitle the holder to buy a common share for US$47.25 at any time in the five-year term.

UBS analyst Brian MacArthur said he believes the issue provided important financing for Agnico’s growth and mine development. Bringing his expectations in line with other gold companies under coverage UBS, he hiked his price target on the stock to US$41 from US$39.

David Haughton at BMO Capital Markets agrees, saying funding may have been tight if the company relied exclusively on its existing debt facilities of up to US$600-million. He also said “prevailing weak metal prices adversely impacted future cash flow.”

The analyst noted that Agnico has underperformed the Philadelphia Gold and Silver Index by 15% in the past two months as a result of near-term exposure to base metal revenue (particularly zinc), possible funding issues and minor hiccups related to its impressive growth profile.

“Resolution of the funding together with positive observations at the recent Kittila site visit improves the outlook for the stock,” Mr. Haughton told clients, reiterating a US$40 target price.

Jonathan Ratner