Agnico-Eagle Mines Ltd. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Senior manager of the securities portfolio at the National Inc (National) concerned about the recent decline in shares of Agnico-Eagle Mines Ltd (AEM), a Canadian gold producer with years of experience in the gold mining, was considered one of the strongest portfolio of artists. Senior portfolio manager and his team recently spent time in one of the mines AEM and believed in the operational capacity of the company. National Research Department produced free cash flow projections for the AEM, that a senior portfolio manager to review and change, after their visit to the company. He knew that, despite his team's confidence in the future prospects of AEM, the shares may have become overvalued from a fundamental point of view. Senior portfolio manager has asked his team to perform fundamental valuation of equity AEM. Typically, this means that the team will use a discounted cash flow (DCF) methodology to the financial assumptions that have been carefully studied. However, he knew that the DCF valuation is likely to underestimate the resources of companies like AEM, and DCF estimates tend to go to the flexibility provided in making the life of the nodes in the company in relation to the goods removed from the land. As a result, senior portfolio manager reminded the team that the method of DCF, for the mining company, should be expanded to explicitly include the cost of the unmined metals. Underground unmined gold should be valued as a real possibility, using adjusted Black-Scholes model. "Hide
by George Athanassakos, Dan Buffery Source: Richard Ivey School of Business Foundation 27 pages. Publication Date: September 10, 2007. Prod. #: 907N11-PDF-ENG