Agnico Eagle Mines Limited
) adjusted earnings (barring one-time items other than stock-option
expenses) of 25 cents per share for second-quarter 2014 missed the
Zacks Consensus Estimate of 29 cents per share.
The company logged a net income of $37.7 million (or 20 cents
per share) on a reported basis in the second quarter, which
compares favorably with a loss of $24.4 million (or 14 cents a
share) recorded in the year-ago quarter. The bottom-line
improvement was aided by significantly higher gold production that
offset a decline in realized metal prices.
Agnico Eagle's shares fell around 9% to close at $37.19
yesterday, reflecting the earnings miss.
Revenues and Operational Highlights
Agnico Eagle registered revenues of $437.8 million in the
quarter, up 30.1% from $336.4 million in the year-ago quarter. The
results however missed the Zacks Consensus Estimate of $458
Payable gold production in the quarter increased 45.5% year over
year to 326,059 ounces.
Total cash costs per ounce of gold produced on a by-product
basis for the reported quarter were $626 compared with $785 per
ounce on a by-product basis in the second quarter of 2013
(excluding the Kittila operations). The lower cash cost per ounce
in 2014 was mainly due to higher grades at Meadowbank and
contributions from commercial production at Goldex and La
Gold production at LaRonde mine in northwestern Quebec, Canada, was
48,494 ounces in the reported quarter compared with 46,119 ounces
in the year-ago quarter. Production increased in the second quarter
due to slightly higher grades and higher tonnage processed. Total
cash costs per ounce were $691 on a by-product basis, down 25.5%
year over year.
Production at the Canadian Malartic mine (on a 100% basis) in
the reported quarter was 133,181 ounces of gold at a total cash
cost per ounce of $645 on a by-product basis. Production from Jun
16 to Jun 30, 2014 (on a 100% basis) was 23,756 ounces at a total
cash cost per ounce of $614 on a by-product basis.
Payable production in the second quarter at the 100% owned Lapa
mine in northwestern Quebec was 18,821 ounces of gold, down 18.8%
year over year. Total cash costs per ounce were $847 on a
by-product basis compared with $720 in the year-ago quarter.
The Goldex mine in northwestern Quebec produced 23,929 ounces of
gold in the quarter compared with 43,359 ounces in the prior-year
quarter. Total cash cost per ounce was $654 on a by-product basis,
down 3.7% year over year.
Payable production of 118,161 ounces of gold at the 100% owned
Meadowbank mine in Nunavut, Canada was up 28.6% year over year.
Total cash costs per ounce were $577 on a by-product basis in the
quarter, down 36.7% year over year. The increase in year over year
production and lower total cash costs was attributable to higher
grades, increased throughput, higher recoveries, and lower mine
site costs per ton.
Gold production at Kittila in the reported quarter was 31,830
ounces with a total cash cost per ounce of $862 on a by-product
basis. In the second quarter of 2013, the Kittila mill was idle for
most of the quarter due to the relining of the autoclave, and hence
there were no comparable figures.
Payable production at Pinos Altos mine in northern Mexico in the
quarter was 43,978 ounces of gold, down 7.2% year over year. Total
cash cost per ounce was $481 on a by-product basis which was down
3% from $496 in the year-ago quarter. Production and total cash
costs were lower year over year due to lower grades processed in
the mill and fewer heap leach tons placed.
Payable gold production at Creston Mascota was 11,159 ounces, up
about 10% year over year. Total cash cost per ounce was $616 on a
by-product basis, up 23.7% year over year. The higher production
was due to more tons stacked, while the increased costs were
incurred due to higher mine site costs per ton in the quarter.
The La India mine in Mexico started commercial production in Feb
2014. Payable gold production in the second quarter was 17,809
ounces at a total cash cost per ounce of $457 on a by-product
Agnico Eagle's cash and cash equivalents totaled $240.8 million
as of Jun 30, 2014, compared with $136.4 million as of Jun 30,
2013, up 76.5%. The increase owed largely to higher production as
well as lower production costs. Long-term debt increased to $1.3
billion as of Jun 30, 2014, from $0.9 billion as of Jun 30,
Cash provided by operating activities in the second quarter was
$197.7 million compared with $75.3 million in the prior-year
quarter. Capital expenditures in the second quarter were $101.5
million compared with $171.8 million in the year-ago quarter. On a
100% basis, capital expenditures at the Canadian Malartic Mine in
the second quarter were C$42.1 million.
In the second quarter, Agnico Eagle and Yamana Gold Inc. (
) each acquired 50% of Osisko Mining Corporation and formed a joint
committee to operate the Canadian Malartic mine.
The 100% owned Meliadine mine near Rankin Inlet, Nunavut,
continued with its underground development, exploration, technical
studies and permitting in the second quarter. An updated technical
study is expected in late 2014.
Agnico Eagle also believes that by the beginning of 2015, there
is good potential to refine and improve the Canadian Malartic
Agnico Eagle expects payable gold production to be in the range of
1,225,000 to 1,245,000 million ounces (excluding the ounces from
Canadian Malartic). Total cash costs on a by-product basis are
anticipated to be $650 to $675 per ounce.
Including Canadian Malartic, 2014 production is expected to be
1,350,000 to 1,370,000 million ounces, while total cash costs on a
by-product basis are expected to remain in the range of $650 to
$675 per ounce.
The guidance for all-in sustaining costs on a by-product basis
remained unchanged at $990 per ounce.
The company's overall tax rate for 2014 is expected to be within
35% to 40% down from the earlier guidance of 40% to 45%. The
decrease is primarily due to the high proportion of the profit
being generated by the Meadowbank mine, which continues to be
sheltered by tax pools.
Agnico Eagle also stated that due to optimization efforts,
particularly at Meadowbank, Kittila and in its Southern Business,
it expects to increase the gold production guidance for 2015,
beyond the addition of the Canadian Malartic mine.
Agnico Eagle currently carries a Zacks Rank #3 (Hold).
Other companies in the gold mining industry worth considering
are Sibanye Gold Limited (
), and Pretium Resources Inc. (
). While Sibanye Gold carries a Zacks Rank #1 (Strong Buy), Pretium
Resources holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
PRETIUM RES INC (PVG): Free Stock Analysis
AGNICO EAGLE (AEM): Free Stock Analysis Report
YAMANA GOLD INC (AUY): Free Stock Analysis
SIBANYE GLD-ADR (SBGL): Free Stock Analysis
To read this article on Zacks.com click here.