Bank of America analysts have identified several North American precious metals companies that are poised to benefit from the recent depreciation of the Canadian dollar (CAD) against the U.S. dollar (USD). The companies with significant Canadian assets, including Agnico Eagle Mines, Alamos Gold, IAMGOLD, and New Gold, are expected to see a material increase in their net asset value (NAV) due to the weaker CAD.
A 10% depreciation in the CAD is projected to drive NAV increases of 11% for Agnico Eagle, 15% for Alamos Gold and IAMGOLD, and 13% for New Gold. Centerra Gold is also expected to benefit from similar dynamics.
The CAD has declined 16% since its peak in June 2021 and is now trading near levels last seen during the early days of the COVID-19 pandemic in March 2020. The bank attributes the weakness to factors such as fiscal deterioration in Canada, high private debt levels, and the Bank of Canada’s faster pace of interest rate cuts compared to the U.S. Federal Reserve.
The potential for 25% tariffs on Canadian exports to the U.S. could also exacerbate downward pressure on the currency. Additionally, the environment is opening up opportunities for companies like Triple Flag Precious Metals, which has recently expanded into the lithium market. Although the move modestly impacts TFPM’s NAV, the firm maintains a Buy rating on TFPM, citing its undervaluation compared to senior peers.
As the CAD continues its decline, companies with strong Canadian exposure remain positioned for gains.
