Agnico Eagle Mines Limited AEM reported net income of $10.1 million (or 5 cents per share) in the second quarter of 2015, down 54.5% from $22.2 million (or 12 cents per share) recorded in the year-ago quarter.
Barring one-time items other than stock-option expenses, earnings came in at 7 cents per share in the quarter. Earnings were in line with the Zacks Consensus Estimate.
Agnico Eagle reported record metal production from its Mexican operations in the quarter and reaffirmed its production guidance for the full year. Its shares fell roughly 7.4% to close at $21.63 on Jul 30.
Revenues and Operational Highlights
Agnico Eagle registered revenues of $510.1 million in the second quarter of 2015, up 16.3% from $438.5 million in the year-ago quarter. But the top line missed the Zacks Consensus Estimate of $517 million.
Payable gold production in the second quarter increased 23.8% year over year to 403,678 ounces. The rise in production was aided by the inclusion of a full-quarter production from Canadian Malartic, increased throughput levels at Goldex, higher mill capacity at Kittila and improved grades at LaRonde and Pinos Altos, along with higher heap leach stacking at La India and Creston Mascota.
For the reported quarter, total cash costs per ounce of gold produced on a by-product basis were $601 compared with $631 a year ago. Lower total cash costs per ounce on a by-product basis were aided by increased gold and silver production levels at most of the company's mines and weaker local currencies in the reported quarter.
Northern Business
Gold production at the LaRonde mine in northwestern Quebec, Canada, was 64,007 ounces in the second quarter, compared with 48,494 ounces in the year-ago quarter. Total cash costs per ounce were $613 on a by-product basis, down 16.3% year over year. Cash costs and production in the quarter were positively impacted by higher gold grades and favorable foreign exchange rates.
Production at the Canadian Malartic mine (in which Agnico Eagle has a 50% ownership) in the reported quarter was 68,441 ounces of gold, at a total cash cost per ounce of $609 on a by-product basis. Comparison of production year over year is not relevant due to the Canadian Malartic General Partnership.
Payable production in the second quarter at the 100%-owned Lapa mine in northwestern Quebec was 19,450 ounces of gold, up 3.3% year over year. Total cash costs per ounce were $678 on a by-product basis compared with $832 in the year-ago quarter. Increased production at lower costs came on the back of improved gold grades, better recoveries and favorable foreign exchange rates.
The Goldex mine in northwestern Quebec produced 26,462 ounces of gold in the quarter, at a total cash cost per ounce of $633 on a by-product basis compared with 23,929 ounces of gold, at a total cash cost per ounce of $670 on a by-product basis in the prior-year quarter. The decrease in total cash costs in the reported quarter was due to higher production resulting from higher tonnage and favorable foreign exchange rates.
Payable production of 91,276 ounces of gold at the 100%-owned Meadowbank mine in Nunavut, Canada was down 22.8% year over year. Total cash costs per ounce were $688 on a by-product basis in the quarter, up 22.2% year over year. Lower production and higher costs in the quarter were attributable to the processing of lower grade ore and lower recoveries.
Gold production at Kittila in the second quarter was up nearly 32% from the year-ago quarter figure to 41,986 ounces, at a total cash cost per ounce of $776, down 9.9% from the year-ago quarter on a by-product basis. Higher production in the quarter was backed by increased mill capacity, while costs decreased due to increased production, lower energy costs and favorable foreign exchange rates.
Southern Business
Payable production at the Pinos Altos mine in northern Mexico in the reported quarter was 50,647 ounces of gold, up 15.2% year over year. The rise in production was aided by higher grades processed and increased throughput. Total cash cost per ounce was $384 on a by-product basis, down 25.6% from $516 in the year-ago quarter. The year-over-year decrease in total cash costs per ounce was mainly due to higher silver production and favorable foreign exchange rates.
Payable gold production at Creston Mascota was 15,606 ounces, up about 39.9% year over year due to higher stacked tons. Total cash cost per ounce was $402 on a by-product basis, down 34.4% year over year. Cash costs declined due to lower minesite costs per ton, higher production and favorable foreign exchange rates.
The La India mine in Mexico had started commercial production in Feb 2014. Payable gold production at the mine was 25,803 ounces, up 44.9% year over year, at a total cash cost per ounce of $410 on a by-product basis. Total cash costs were down 7.4% year over year, positively impacted by increased production volumes and favorable foreign exchange rates.
Financial Position
Agnico Eagle’s cash and cash equivalents totaled $158.3 million as of Jun 30, 2015, down 34.3% from $240.8 million as of Jun 30, 2014. Long-term debt decreased to $1.18 billion as of Jun 30, 2015, from $1.3 billion as of Jun 30, 2014.
In second-quarter 2015, Agnico Eagle repaid $25 million under its credit facility; C$20 million was repaid under the Canadian Malartic General Partnership secured loan facility; and the Canadian Malartic senior unsecured convertible debentures worth C$37.5 million were completely converted by the holders. All these helped reduce Agnico Eagle’s indebtedness by around $70 million.
Cash provided by operating activities in the second quarter of 2015 was $188.3 million ($152.8 million before changes in non-cash components of working capital), compared with $182.7 million a year ago.
Outlook
Agnico Eagle reaffirmed its production guidance for 2015 at about 1.6 million ounces, with total cash costs on a by-product basis of $600–$620 per ounce (slightly down from $610–$630 per ounce stated earlier) and all-in sustaining costs (“AISC”) of roughly $870–$890 per ounce (down from the prior projection of $880–$900 per ounce). The company anticipates capital expenditures for 2015 to be around $539 million, up $58 million from the previously stated figure.
Zacks Rank
Agnico Eagle currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the basic materials sector include Primero Mining Corp. PPP, Vista Gold Corp. VGZ and Schnitzer Steel Industries, Inc. SCHN, all carrying 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 >>
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
Be the first to comment