GG Goldcorp Inc.

Agnico-Eagle Mines Limited’s (AEM) first-quarter 2013 adjusted earnings (excluding one-time items other than stock-based compensation expenses) of 24 cents per share were well below the Zacks Consensus Estimate of 34 cents.

On a reported basis, the Canada-based mining company posted a profit of $23.9 million or 14 cents per share in the quarter, down from a profit of $78.5 million or 46 cents per share a year ago. Profit fell primarily due to lower gold prices and production along with higher cash costs.

Revenues and Operational Highlights

Consolidated revenues declined roughly 10.7% year over year to $423.2 million in the reported quarter, but exceeded the Zacks Consensus Estimate of $406 million. Payable gold production in quarter declined 7.1% year over year to 236,975 ounces. Lower production level was mainly due to the Creston Mascota heap leach being suspended for most of the quarter.

Payable gold production at Meadowbank rose 3% year over year to 81,818 ounces in the quarter. Agnico-Eagle achieved record quarterly throughput at Meadowbank. The Kittila mine in northern Finland recorded an 8% decline in payable gold production to 43,145 ounces. At the KIttila mine, Agnico-Eagle expects longer-than-planned scheduled that will impact it by about 10,000 to 15,000 ounces of production.

The LaRonde mine in northwestern Quebec logged payable gold production of 39,073 ounces, down 10% year over year. Production at the Lapa mine was 26,868 ounces, down 6% year over year. At the Pinos Altos mine in northern Mexico, payable production was 46,071 ounces of gold, down 19% from the year-ago quarter.

Total cash cost jumped 24.6% year over year to $740 per ounce, mainly due to lower by-product revenue at LaRonde, lower grades at Meadowbank and a lack of production from the lower cost Creston Mascota mine.

Financial Condition

Agnico-Eagle’s cash and cash equivalents stood at $264.4 million as of Mar 31, 2013, compared with $199.1 million as of Mar 31, 2012. Long-term debt was $800 million as of Mar 31, 2013, compared with $830 million as of Mar 31, 2012.

Cash provided by operating activities in the first quarter was $146.1 million compared with $196.5 million in the prior-year quarter.

Outlook

Agnico-Eagle reiterated its production guidance and expects payable gold production in the band of 970,000 ounces to 1,010,000 ounces for 2013 with second half of the year contributing significantly to the overall production. Resumption of production Kittila, increased production at Creston Mascota, the ongoing ramp up of production at LaRonde, higher expected grades at Meadowbank, and the start of production at Goldex will be the contributing factors.

Agnico-Eagle revised its cash cost guidance for 2013 in the range of $735-$785 up from the previous expectation of $700-$750 to reflect the production changes at Goldex and Kittila, as well as changes in commodity and currency price assumptions since the beginning of 2013. All-in sustaining costs are expected to be roughly $1,110 per ounce.

Capital expenditures are expected to be $621 million in 2013, reflecting an accelerated schedule at both Goldex and La India.

Goldex and La India are expected to come online ahead of schedule. Goldex is expected to commence production in the fourth quarter of 2013, while La India is scheduled to start production in the first quarter of 2014. Both the mines are expected to contribute meaningfully to growth in 2014.

Another copper and gold company Freeport-McMoRan Copper & Gold Inc (FCX) recently released its first quarter results. The company’s adjusted earnings (excluding one-time charges) of 73 cents per share for the quarter beat the Zacks Consensus Estimate by a penny but trailed the year-ago earnings of 96 cents.

Among other gold mining companies, Newmont Mining Corporation (NEM) is expected to report its results after the closing bell on Apr 29 and Goldcorp Inc. (GG) is slated to release its results on May 2.
Agnico-Eagle retains a short-term (1 to 3 months) Zacks Rank #3 (Hold).
 

 
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