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Agnico Eagle Reports 4Q Profit, Investment In Canadian Arctic

(Kitco News) - Agnico Eagle Mines Ltd. (NYSE, TSX: AEM) late Wednesday announced a profitable fourth quarter and said the company was making a $1.2 billion investment to build one gold mine in Canada’s Arctic and expand another.

The company’s board of directors has approved two major projects in Canada's Nunavut territory.

“Our primary focus will be on developing and expanding our business in Nunavut as we complete the construction of a new mine at Meliadine and develop the Amaruq satellite deposit at Meadowbank,” said Sean Boyd, chief executive officer. “These new operations, along with optimizations at existing mines, are expected to result in production growth from current levels to approximately 2 million ounces in 2020, along with a decline in unit costs.”

Both operations are expected to start production in the third quarter of 2019. This means that output at Meliadine is now forecast to begin approximately one year earlier than previously anticipated, the company said.

Meanwhile, the company reported fourth-quarter net income of $62.7 million, or 28 cents per share, compared to a net loss of $15.5 million, or 7 cents, in the same quarter of 2015. The October-December bottom line includes several special items, the largest of which was a reversal of impairment charges for the Meadowbank mine and Meliadine project, net of tax, of $81.2 million, or 36 cents per share.

Excluding special items, adjusted net income in the fourth quarter was $4.5 million, or 2 cents per share.

Agnico Eagle's board of directors has declared a quarterly cash dividend of 10 cents per common share, payable on March 15 to shareholders of record as of March 1.

"Continued strong operating results in the fourth quarter of 2016 allowed us to exceed our production forecast and beat our cost guidance for the fifth consecutive year and positions us to complete the development of our growth projects over the next two years”, Boyd said.

Agnico Eagle said production for full-year 2016 was 1,662,888 ounces of gold, compared to guidance of 1,600,000 ounces. In 2015, full-year production was 1,671,340 ounces.

For full-year 2016, the company recorded net income of $158.8 million, or 71 cents per share. In 2015, net income was $24.6 million, or 11 cents. Agnico Eagle said the increase was primarily due to higher realized gold and silver prices, up 8% and 11%, respectively.

Net debt was reduced by $346 million during 2016. At year-end, Agnico Eagle listed $548 million in cash, cash equivalents and short term investments, with $1.2 billion in undrawn credit lines

Production guidance for 2017 and 2018 are unchanged from previous expectations of approximately 1.55 and 1.5 million ounces, respectively, the company said. Production in 2019 is forecast to be approximately 1.6 million ounces, before hitting 2 million in 2020.

Agnico Eagle said it is “evaluating additional opportunities to increase production in 2018 and beyond.”

The company said 2016 gold reserves increased by 5% to 19.9 million ounces, with 268.4 million tonnes grading 2.31 grams per tonne. Measured and indicated mineral resources increased by 9%, while inferred mineral resources decreased by 4%. The average gold reserve grade in 2016 was essentially unchanged from the previous year, the company said.

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

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