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A year ago Agnico-Eagle Mines Ltd.’s Meadowbank mine in Nunavut was producing more bad news than gold. But after ending 2011 with a loss, Agnico just reported its third consecutive quarter of profits, surprising analysts with higher-than-expected production from its large, open-pit operation.
“Big beat on Q3 production and costs,” Credit Suisse analyst Anita Soni wrote in a report after Agnico-Eagle results were published. “Meadowbank drives the beat, mine optimizations working.” According to chief executive officer Sean Boyd, it may not be the last surprise from the mine, which is Agnico’s largest producer.
“We began the year with this plan that on paper looked good,” Mr. Boyd said after the company reported record production of 110,988 ounces of gold at Meadowbank in the third quarter. The figure beat second-quarter production by 10 per cent and came after it mined higher grade pockets with greater success.
A secondary crushing unit at the mine helped it process about 11,000 tonnes of ore per day, the company said, compared with almost 10,000 tonnes per day put through the mill in the previous quarter.
“As it turned out we exceeded our expectations in terms of how many tonnes we could mine and process,” said Mr. Boyd, a 27-year company veteran.
As recently as February, Agnico-Eagle was swimming in negativity. It had just written down close to half the value of Meadowbank, where it rewrote the mine plan to exclude marginal ounces from reserves as it cut back on booming costs. At the same time, it took a writedown for the forced shutdown at its star Goldex mine in Quebec.
Shareholders punished Agnico-Eagle for the string of bad news, driving the company stock down to a 52-week low of $31.50 in February. These days it is approaching $60 a share.
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