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Agnico Eagle reports solid performance despite challenges in second quarter

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(Kitco News) - Despite some production disruptions, senior gold producer Agnico Eagle Mines Limited (NYSE: AEM TSX: AEM) said that it had a solid performance in the second quarter of 2020.

Wednesday evening after the North American equity close, Agnico reported quarterly net income of $105.3 million, or $0.44 per share, between April and June. The company said that its earnings include non-cash mark-to-market gains on warrants of $33.7 million ($0.14 per share), derivative gains on financial instruments of $16.0 million ($0.07 per share), foreign currency translation gains on deferred tax liabilities of $15.2 million ($0.06 per share), and various other adjustments losses of $3.9 million ($0.01 per share).

"Excluding these items would result in adjusted net income of $44.3 million or $0.18 per share for the second quarter of 2020," the company said.

The results were relatively in line with expectations.

"The second quarter was challenging given the global COVID-19 pandemic and its impact on our operations. While our business returned to normal production levels ahead of schedule in June, we did have seven of our eight mines on care and maintenance at one point during the quarter. We finished the quarter strong as our employees responded quickly and effectively with a plan to manage the mine shutdowns and subsequent restart and ramp-up of operations while protecting the health, safety and well being of our employees and the communities in which we operate", said Sean Boyd, Agnico Eagle's Chief Executive Officer.

The company said that payable gold production in the second quarter totaled 331,064 ounces, down nearly 20% compared to 412,315 ounces produced in the second quarter of 2019.

Looking at costs, the company said that all-in-sustaining-costs in the second quarter totaled $1,142 per ounce, up compared to $953 reported last year.
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However, higher gold prices more than compensated for the higher costs and lower production. Agnico reported cash flow $162.6 million in the second quarter up $126.3 million reported in 2019.

"The increase in net income and in cash provided by operating activities during the second quarter of 2020, compared to the prior-year period, was mainly due to higher average realized gold prices, and lower exploration and general and administrative expenses, partially offset by lower gold sales volume, and temporary suspension costs," the company said.

Boyd said that the company has ramped up to full production and is looking at a strong second half of 2020.

The company expects gold production to ramp up in the second half of 2020, averaging between 480,000 to 500,000 ounces per quarter. Total, cash costs per ounce are expected to be between $690 to $740, the company said.

Agnico has increased its annual production guidance to between 1.68 to 1.73 million ounces, up slightly compared to the previous guidance of 1.63 to 1.73 million ounces.

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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