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Agnico Eagle Reports Dip In 1Q Profit, But Tops Expectations

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Editor's Note: Updating earlier story with analyst comments

(Kitco News) - Agnico Eagle Mines Ltd. (NYSE, TSX: AEM) late Thursday reported a decline in its first-quarter net profit as revenues fell due to lower gold sales, lower prices and less by-product revenue.

Quarterly net income was listed at $37 million, or 16 cents per share, down from $44.9 million, or 19 cents, in the same period a year ago. Excluding special items, adjusted net income was $32 million, or 14 cents per share.

Analysts said the company beat expectations, with Credit Suisse reporting that the consensus forecast was 6 cents and BMO Capital Markets saying 7 cents.

Mine revenue declined to $532 million from $578 million in the same quarter of 2018. The average realized price of an ounce of gold fell to $1,301 from $1,332 a year ago.

Gold output in the first quarter was put at 398,217 ounces, including 17,582 ounces of pre-commercial gold production at the Meliadine project. The total was up from 389,278 ounces in the first quarter of 2018.

Without Meliadine, however, production and sales fell from the year-ago period primarily due to expected reduced throughput levels at Meadowbank as the mine transitions to the Amaruq satellite deposit in the second half of the year. Consolidated all-in sustaining costs (excluding Meliadine) fell to $836 an ounce from $889 in the year-ago quarter.

Meliadine should achieve commercial production next month, while Amaruq remains on schedule to begin production in the third quarter, Agnico Eagle said.

"Operationally, 2019 is off to a very good start with strong production and cost performance in the first quarter from Goldex, Kittila, Pinos Altos and Creston Mascota. We have also seen significant exploration results from several of our key pipeline projects in the first quarter,” said Sean Boyd, chief executive officer. "With commercial production expected shortly at Meliadine, and Amaruq on schedule for start-up in the third quarter of 2019, we anticipate higher gold production to result in increased earnings and cash flow in the second half of the year.”

The company said it expects around 55% of its 2019 gold production to occur in the final six months of the year. Production guidance for 2019 was left at 1.75 million ounces of gold, when including pre-commercial production from Meliadine of approximately 60,000 ounces and from Amaruq of some 40,000. The company still anticipates that AISC for 2019 will be in the range of $875 to $925.

Since the company’s first-quarter production represents around 23% of annual guidance and the producer says output is weighted toward the second half of 2019, Agnico Eagle “is in a strong position to meet or potentially beat guidance,” BMO said.

Agnico Eagle maintained a quarterly dividend of $0.125 per share, payable on June 14 to shareholders of record as of May 31.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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