We have retained our Underperform recommendation on gold miner
) following its tepid first-quarter 2013 results. Out view
reflects high operating costs across a number of mines and a weak
gold price environment.
AGNICO EAGLE (AEM): Free Stock Analysis
GOLDEN MINERALS (AUMN): Free Stock Analysis
HI-CRUSH PTNRS (HCLP): Free Stock Analysis
LAKE SHORE GOLD (LSG): Free Stock Analysis
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Profit for the first quarter, reported on Apr 25, slid roughly
70% on lower gold prices and production as well as higher cash
costs. Adjusted earnings fell well short of the Zacks Consensus
Estimate. Revenues fell by double digits, yet beat expectations.
Payable gold production declined in the quarter, mainly due to
the suspension of the Creston Mascota heap leach facility. While
Agnico-Eagle achieved record quarterly throughput at its
Meadowbank mine in northern Canada, its Kittila mine in northern
Finland saw a decline in payable gold production in the quarter.
The company backed its production guidance for the full year.
While Agnico-Eagle maintains a solid exploration budget and is
reinvesting in its assets to expand output, any potential delay
associated with the development projects may jeopardize its
Moreover, one of Agnico-Eagle's main issues has been persistently
high operating costs across a number of mines. Total cash cost
jumped around 25% year over year in the first quarter, mainly due
to lower by-product revenue at LaRonde and lower grades at
Agnico-Eagle raised its cash cost guidance for 2013 to a range of
$735-$785 per ounce from the earlier expectation of $700-$750 to
reflect weak metals prices and production changes at Goldex and
Kittila mines. The company is exposed to a weak gold price
environment, which may continue to affect its bottom line.
Agnico-Eagle currently retains a short-term (1 to 3 months) Zacks
Rank #5 (Strong Sell).
Other Stocks to Consider
Other companies in the mining industry with favorable Zacks Rank
Lake Shore Gold Corp.
Hi-Crush Partners LP
Golden Minerals Company
). All of them carry a Zacks Rank #2 (Buy).