Agnico-Eagle Mines Limited (
CP: US$ 38.94
TP: US$ 50
CAP: US$ 6.8b
1 416 352 4587
AEM beats, revises 2012 guidance upwards; Revising Estimates
Q2/12 adjusted EPS of $0.40 vs. CS est. of $0.33: After market
close on July 25th, AEM reported Q2/12 headline EPS of $0.25 and
adj. EPS of $0.40, beating CS at $0.33 and consensus at $0.31. The
beat was on ~20% higher production (+43kozs) and ~6% lower costs
than Credit Suisse estimates (-$43/oz).
Q2 production of 265kozs at $660/oz beat CS est. of 222kozs at
AEM raised FY12 production guidance to 975kozs (from
875-950kozs) and we now forecast 995kozs FY12 production (from
945kozs) as AEM produced 520kozs in H1/12. Mgmt. expects costs to
be near the low end of original $690-$750/oz guidance, with Credit
Suisse at $650/oz for FY12.
Meadowbank beats on production and (even our expected
improvement in) costs: Meadowbank produced 98kozs vs. Credit Suisse
at 71kozs and $804/oz vs. Credit Suisse at $995/oz. As we expected,
the mine is now hitting its stride under the tighter mine plan as
unit costs of $91/t in Q2 are tracking below FY12 guidance of
$97/t, but in-line with Credit Suisse at $90/t. We expect a
downward trend in costs to continue as the company fed the mill
from higher cost stockpiles. Production benefitted from grades and
LaRonde did indeed have heat and vent issues as it opened up new
areas, but was factored into our estimates (40kozs vs Credit Suisse
at 38kozs). Costs were higher than forecast (part unit costs, part
byproducts), we do expect that to improve as the mine adds
flexibility with additional development.
AEM approves development of Goldex M and E zones: First gold
production is expected in 2014 and is expected to yield a total of
300kozs over a four year mine life at $900/oz total cash costs.
Cash flows from this project will help fund exploration of
additional areas, including the D zone, and which has ~1.32Moz of
M&I resources at 1.6g/t. We preliminarily model $148M in value
for Goldex, which includes optionality for the D zone.
EPS revised in FY12/13/14 to $2.05/$2.41/$1.90 from
$1.93/$2.55/$1.85 on higher production in FY12 & FY14, offset
by higher costs at Pinos each year.