Agnico Eagle Mines Ltd. (AEM, Financial)Â informed the market April 27 of the financial and operating results for the first quarter.
The Canadian miner headquartered in Toronto closed the first quarter with an earnings per share (EPS), adjusted to one-time charges non-GAAP measure, of 28 cents, up 133.3% year over year, and beat analysts’ expectations on earnings by 17 cents. The difference between analysts’ average estimate of Agnico Eagle’s EPS and the actual figure produced a positive 211.1% surprise.
Source: Yahoo Finance
The average figure was the result of the estimates of 15 analysts, who were surveyed on the miner’s first-quarter non-GAAP EPS.
Agnico Eagle Mines closed a solid first-quarter on the grounds of revenues that came in at $547.5 million, a 11.6% on a year-over-year basis. The Canadian gold producer also beat analysts’ expectations on first-quarter by $35.7 million.
Source: Yahoo Finance
Analysts forecasted that Agnico Eagle’s first-quarter revenue would have come in at $511.8 million ranging between a low of $462.86 million and a high of $539.24 million.
There are no doubts that revenue and earnings of the first quarter were backed by a rising gold price, up 3.23% year over year to an average quarterly price per troy ounce of $1,219.36 on the London Bullion Market. However, during the quarter in question Agnico Eagle Mines accomplished those improvements at operations, in terms of lower costs and increased outcome of gold produced and sold, that enabled the company to strongly increase the cash flow. The company generated a cash flow from operations of $223 million, a nearly 53% increase from the same item of one year ago, that together with the proceeds from the issuance of new shares, as announced by the company March 27, permitted Agnico Eagle Mines to close the first quarter of 2017 with $804.3 million in cash on hand and securities.
During the first quarter, Agnico Eagle Mines produced 418,000 ounces of gold, up 7,000 ounces on a year-over-year basis, at a total cash cost of $539 per ounce, a 6% decrease from the comparable quarter of 2016 when the company sustained a total cash cost per ounce of gold of $573.
Higher gold production in the first quarter compared to the same period of one year ago, at Meadowbank, at Kittila and from the lower mine at La Ronde, positively impacted on the company’s overall total cash cost per ounce, more than offsetting the negative impact from lower production at Lapa, at Pinos Altos, at Goldex and due to lower levels of throughput and decreased productivity from minor stoping processes at Mascota and at La India.
In addition, a lower amount of capitalized stripping costs at Pinos Alto and Mascota, the timing of unsold inventory at Pinos Alto, at Mascota and at La India plus longer haulage distances during mining activities at La India and Mascota also stressed the cash cost per ounce of gold.
At Canadian Malartic mine cash costs were instead flat on a year-over-year basis while production dropped 3% to 71,382 ounces of gold.
During the first quarter of 2017, lower total cash costs combined with a lower amount of funds used by Agnico Eagle Mines as capex caused the all-in sustaining costs (AISC) to decrease by 7% compared to the same quarter of 2016 to $741 per ounce of gold.
For 2017, the Canadian miner increased expectations on gold production which is now expected “to exceed 1.57 million ounces of gold as a result of the Lapa mine life extension to the end of the second quarter of 2017,” Agnico Eagle Mines says. The total cash costs and AISC per ounce of gold are expected to be of $595 to $625 and of $850 to $900.
The company expects to use funds for $850 million as capex for 2017.
Concerning the pipeline of gold projects that Agnico Eagle Mines is advancing, Sean Boyd, the CEO of the Canadian gold producer, said: “In the first quarter we also made very good progress at several of our growth projects with Meliadine progressing as expected, the Canadian Malartic extension receiving government approval and the Goldex Deep project ahead of schedule and under budget.”
Agnico Eagle Mines closed at $43.48 per share Thursday, down 13 cents or minus 0.30% from the previous trading day with a volume of 2,389,288 shares traded on the New York Exchange, or approximately 1% of the float. At the moment, the gold stock has an EV-EBITDA ratio of 12.63 and a price-book (P/B) ratio of 2.18.
During the first quarter, Arnold Van Den Berg (Trades, Portfolio) reduced his position in Agnico Eagle Mines by 2.91% to 159,698 shares of the Canadian gold stock.
Disclosure: I have no position in Agnico Eagle Mines.
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