Agnico Eagle Mines Ltd. (AEM, Financial) released its financial and operating results for the second quarter of 2017 after the market closed on July 26.
For the second quarter, Agnico Eagle reported adjusted EPS of 24 cents– or $54.9 million - beating analysts’ expectations by nine cents and producing a positive surprise of 60%. EPS were 166.67% higher than those reported in the comparable quarter of 2016.
Source: Yahoo Finance
Revenue for the quarter came in at $549.9 million, a 2.3% increase from the comparable quarter of 2016. The miner beat expectations by $20.47 million.
The year-over-year increase in the quarterly revenue was driven by an increase in gold sales volumes. The Canadian miner sold 419,873 ounces of gold, up from 404,533 ounces in second-quarter 2016, at an average realized gold price of $1,260 per ounce, which was $8 lower than the year before.
Gold sales accounted for approximately 96% the company’s total revenue for the quarter. Silver sales, which were 1.219 million ounces at an average realized price of $17.03 per ounce – accounted for approximately 3.8%. The remaining 0.2% was generated from zinc and copper sales.
The company produced 427,743 ounces of gold during the quarter, a 4.6% increase from the prior-year quarter due to mining higher grades of ore at Canadian Malartic and Meadowbank mines. This resulted in increased throughput levels with substantial benefits for the miner in terms of increased production and cost reductions. Production costs of $634 per ounce were essentially flat year over year. Total cash costs decreased 6% to $556 per ounce of gold from the comparable quarter of 2016. All-in sustaining costs declined 7% to $785 per ounce from $848 per ounce in second-quarter 2016.
During the quarter, the company generated $184 million in operating cash flow, a 19.8% decrease year over year.  The company spent $192.3 million on property maintenance and mine development. The reduction in operating cash flow was probably due to a lower average realized gold price compared to the same quarter in 2016.
The company closed the quarter with $952.4 million in cash and securities, which represents an 18.4% increase from the previous quarter, plus a $1.2 billion line of credit. The issuance of a new corporate loan brought the long-term debt to $1.37 billion. At the beginning of the quarter, the miner refunded a $115 million corporate loan.
For full fiscal 2017, Agnico Eagle Mines guides gold production of approximately 1.62 million ounces at a total cash cost per ounce ranging between $580 and $610 and an AISC per ounce ranging between $850 and $900.
The advancement of the project at Maliadine is progressing as planned and within the company’s budget. Exploration activities at Amaruq continue to deliver positive results. In addition, Agnico Eage Mines expects to increase the mineral resources from infill and exploration activities its exploration team is undertaking at properties. Positive results are also expected in terms of resource conversions.
Agnico Eagle Mines closed at $47.38 per share on Wednesday, up $1.96 or 4.29% from the previous trading day with a volume of 2,280,741 shares traded on the New York Stock Exchange.
The Canadian gold producer has a market capitalization of $10.86 billion and a price-book (P/B) ratio of 2.26.
Analysts have set a target price of $55.73 per share and the recommendation rating is 2.5 out of 5.
Disclosure: I have no positions in Agnico Eagle Mines.
