Wellington West Capital Markets has raised its price targets on two of Canada’s largest gold producers. Analyst Catherine Gignac moved her forecast for shares of Agnico-Eagle Mines Ltd. from $55 to $60 and for Kinross Gold Corp. from $20 to $23.50. Both are rated “market perform.”

The more optimistic view on Agnico is a result of its low financing risk and robust growth prospects. She told clients that its previously announced equity issue provides the company with a strong financial buffer for its development pipeline and possible acquisitions. Ms. Gignac also said Agnico’s high valuation is justified given its superior growth rate coupled with low geopolitical risk. Wellington expects Agnico will achieve 18 million to 20 million ounces in gold reserves when it reveals a resource update due on February 18.

The higher target for Kinross is a reflection of its rising cash flow from organic growth. In addition to this strong gold growth profile, the company has no gold hedging and lacks base metals exposure, Ms. Gignac noted. This supports a premium valuation multiple versus the senior peer group, and while Kinross outperformed them in 2008, it should perform in-line in 2009, she added. Meanwhile, the recently approved mining law in Ecuador should help alleviate risk.

Jonathan Ratner