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TORONTO – Agnico Eagle Mines Ltd. kicked off the third-quarter gold earnings season with a strong result that sets a positive tone for the rest of the sector.
The Toronto-based miner’s adjusted earnings came in at US$60.5-million, or US35¢ a share, which was well above the highest analyst estimates. Agnico also boosted its full-year production guidance and announced deeper cost cuts.
The stock jumped more than 15% in early trading on Thursday. “We had some pretty solid production across the board,” chief executive Sean Boyd said in an interview, adding the company has said for months that the second half of 2013 would be stronger than the first half.
The results show gold companies can thrive in a weaker gold price environment, a major concern for investors over the past several months. Agnico’s gold production in the quarter reached a record 315,828 ounces, driven by a strong result from the Meadowbank mine in Nunavut, which opened in 2010. That mine performed poorly in its first couple of years of operation, but has turned a corner.
“Even we were pleasantly surprised at Meadowbank, [though] we knew were going into parts of the deposit that had shown in the prior year were higher grade,” Mr. Boyd said.
Due to weak gold prices, investors are currently fixated on how companies are managing their costs. Agnico appears to be doing a solid job. It reported total cash costs of US$591 an ounce in Q3, compared to US$785 in the second quarter (the Q2 figure was unusually high because of a maintenance shutdown at the Kittila mine in Finland). For the full year, the company now expects cash costs US$690 an ounce, well below its prior estimate of US$735 to US$785.
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