Agnico-Eagle Mines Limited (AEM) reported quarterly net income of $68.8 million or 41 cents per share for the second quarter of 2011. Net income includes a non-cash foreign currency translation loss of $2.7 million, or $0.02 per share and stock option expense of $8.3 million.
Adjusted net income for the reported quarter was $79.4 million, or $0.47 per share compared with $100.4 million or $0.64 per share in the prior-year quarter. Results were a penny below the Zacks Consensus Estimate.
The decrease in net income was largely due to a return to normal levels of tax expense and a foreign currency translation loss versus a large tax recovery and a large foreign currency translation gain in the second quarter of 2010.
Revenue
In second-quarter 2011, revenues were $433.7 million versus $347.5 million in the prior- year quarter. Results were below the Zacks Consensus Estimate of $440 million.
Payable gold production in the second quarter of 2011 was 239,328 ounces compared with 257,728 ounces in the prior-year quarter.
The lower level of production in 2011 resulted from the issues in April relating to the March 2011 fire at the Meadowbank mine and also due to higher-than-expected levels of dilution in its pit during the second quarter of 2011.
Total cash costs for the second quarter of 2011 were $565 per ounce compared with $482 per ounce in the second quarter of 2010. The higher cost in 2011 was largely attributable to the issues at Meadowbank, which more than offset the positive impact of higher byproduct metals prices.
Financial Position
Cash provided by operating activities was $162.8 million versus $161.6 million in the second quarter of 2010, primarily attributable to 25% higher gold production and significantly higher metal prices.
Cash and cash equivalents increased to $139.0 million as of June 30, 2011, up from the balance of $114.8 million in March 31, 2011.
Capital expenditures in the second quarter of 2011 were $114.4 million, including $18.9 million at Kittila, $31.1 million at Meadowbank, $22.6 million at LaRonde, $9.7 million at Pinos Altos, $14.3 million on Goldex and $4.4 million at Lapa.
With its current cash balances, anticipated cash flows and available bank lines, management believes that Agnico-Eagle remains fully funded for the development and exploration of its current pipeline of gold projects in Canada, Finland, Mexico and the USA.
Available bank lines as of June 30, 2011 were approximately $1.2 billion.
Rubicon Minerals Corporation Update
Agnico-Eagle today agreed to invest C$70 million in the common shares of Rubicon Minerals Corporation ("Rubicon") in a non-brokered private placement. As a result of the transaction, Agnico-Eagle will own 21,671,827 shares of Rubicon, or approximately 9.2% of the basic shares outstanding. Additionally, the Company plans to enter into a technical services agreement with the aim of advancing Rubicon's Phoenix gold project in Red Lake, Ontario.
Outlook
For full-year 2011, management expects capital expenditures to total $423 million, up from the December 15, 2010 estimate of $313 million. Major components of the increase include $25 million impact of foreign exchange movements, $21 million of change in dyke design at Meadowbank and $19 million of soil settlement remediation at Goldex.
The remaining amounts are largely accelerated capital previously expected to be spent in 2012 and amounts relating to the Meadowbank fire (of which approximately $10 million may be recovered through insurance).
Agnico-Eaglefaces stiff competition from Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC) and Newmont Mining Corp. (NEM).
Currently, we maintain an Underperform recommendation on the stock and a Zacks #3 Rank (Hold).
BARRICK GOLD CP (ABX): Free Stock Analysis Report
AGNICO EAGLE (AEM): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment