Agnico Eagle Mines Limited
) rose around 2.3% during the trading session following the
release of its fourth-quarter 2013 results. The company's
adjusted earnings (barring one-time items other than stock-option
expenses) were 23 cents per share in the quarter, beating the
Zacks Consensus Estimate of 21 cents per share. The company's
shares eventually closed at $33.47, gaining around 1.8%.
The company logged a net loss of $453.3 million (or $2.61 per
share) on a reported basis in the fourth quarter compared with a
net income of $82.8 million (or 48 cents a share) recorded in the
The loss in the reported quarter mainly resulted from $436.3
million of after-tax non-cash impairment loss, $47.2 million of
non-cash deferred tax charge related to a new Mexican mining tax
law and $10.2 million of non-cash impairment loss on securities
available for sale.
For full-year 2013, the company posted net loss of $406.5
million (or $2.35 per share) compared with a net income of $310.9
million (or $1.81 per share) recorded in 2012. The results were
impacted by lower-realized metal prices, non-cash impairment
loss, non-cash deferred tax charges elated to the new Mexican
mining tax law and non-cash impairment losses on available for
sale securities during 2013.
Revenues and Operational Highlights
Revenues declined roughly 3% year over year to $437.2 million
in the reported quarter but surpassed the Zacks Consensus
Estimate of $399 million. For full-year 2013, revenues
decreased 14.5% to $1,638.4 million from $1,917.7 million in
Payable gold production in the quarter increased roughly 3.6%
year over year to a record 322,443 ounces. Higher production
level was mainly due to record throughput, better-than-expected
gold grades and higher mill recoveries at the Meadowbank
Total cash costs per ounce for the fourth quarter decreased
19% year over year to $623 per ounce due to higher production and
continued cost control at several of the operations, particularly
in the Meadowbank mine, which more than offset lower byproduct
Realized gold price fell 26% to $1,244 an ounce from $1,684 a
year ago. Gold prices declined due to a challenging gold
Gold production at Kittila in the reported quarter decreased
around 8% to 41,710 ounces at total cash costs per ounce of $687
from 45,273 ounces produced at total cash costs per ounce of $569
in the year-ago quarter. The mine's production was lower in the
reported quarter as all the ore was sourced from the relatively
higher cost underground.
Payable production at the Pinos Altos mine in northern Mexico
decreased 5% year over year to 46,490 ounces of gold. Cash cost
per ounce increased around 50% year over year to $442 due to
decline in realized silver price. The mine's production lowered
mainly due to slightly lower grades processed.
The Creston Mascota heap leach operates as a satellite
operation to the Pinos Altos mine. Payable gold production at
Creston Mascota was 10,666 ounces, a roughly three-fold year over
year rise from 3,560 ounces produced in the prior-year quarter.
The year ago lower production was due to suspension of operations
for leach pad modifications which resulted in fewer ounces from
drain-down of older leach panels.
Payable gold production at Meadowbank rose 60% year over year
to 123,433 ounces in the quarter. Cash cost per ounce decreased
around $547 year over year to $637. The year-over-year increase
in production and decrease in costs were due to better grade
processed and ongoing cost control programs.
Agnico-Eagle's cash and cash equivalents were at $170 million
as of Dec 31, 2013, compared with $332 million as of Dec 31,
2012, down 48.7%. Long-term debt was $1,000 million as of Dec 31,
2013, compared with $830 million as of Dec 31, 2012, up
Cash provided by operating activities in the fourth quarter
was $135.9 million compared with $106 million in the prior-year
quarter. Capital expenditures in the quarter decreased 12.3% to
$133.1 million from $151.8 million in the year-ago quarter. The
decrease in capital spending is a reflection of capital and cost
reduction initiatives that have been incorporated in the second
half of 2013.
Agnico-Eagle's Board declared a quarterly cash dividend of 8
cents per share, a reduction of around 64%, payable on Mar 17,
2014, to stockholders of record as of Mar 3, 2014. The reduction
in quarterly dividend payment is based on the challenging
environment prevailing in the current gold market and
management's decision to conserve cash for longer-term
development and growth of its asset base.
The 100% owned Goldex mine in northwestern Quebec, achieved
its commercial production in the fourth quarter, with the mill
processing an average of 5,343 tons per day in the quarter. The
La India mine's commissioning commenced ahead of schedule in the
third quarter of 2013 and commercial production from this mine is
expected in the first quarter of 2014.
Agnico-Eagle expects payable gold production to be in the range
of 1,175,000 ounces to 1,205,000 ounces for 2014. The company
expects to achieve the projected gold production at a total cash
cost per ounce of $670 to $690.
The guidance assumes strong operational performance from the
Meadowbank mine and positive contributions from other mines. The
company also expects all-in sustaining costs to be roughly $990
per ounce for 2014.
Agnico-Eagle further expects production growth in 2014 from
LaRonde, Goldrex and La India. Anticipated improvement in grades
is expected to drive growth in LaRonde. The company also expects
similar higher-than-expected grades at the Meadowbank mine to
reoccur in 2014.
Agnico-Eagle currently retains a Zacks Rank #3 (Hold).
Other companies in the gold mining industry worth considering
Franco-Nevada Corporation Inc.
Gold Fields Ltd.
Golden Star Resources, Ltd.
). While Franco-Nevada carries a Zacks Rank #1 (Strong Buy), both
Gold Fields and Golden Star hold a Zacks Rank #2 (Buy).
AGNICO EAGLE (AEM): Free Stock Analysis
FRANCO NV CP (FNV): Free Stock Analysis
GOLD FIELDS-ADR (GFI): Free Stock Analysis
GOLDEN STAR RES (GSS): Free Stock Analysis
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