ABX Barrick Gold Corp. (BC) (delisted)

Agnico-Eagle Mines Limited (AEM) reported quarterly net loss of $81.6 million or 48 cents per share in the third quarter of 2011. Net income includes 95 cents per share after-tax write off of the company's Goldex operation (as announced on October 19, 2011), a 19 cents closure provision, stock option expense of 5 cents per share and the write down of available for sale securities of 2 cents per share, partly offset by a non-cash foreign currency translation gain of 13 cents per share.

Adjusted net income in the reported quarter was $101.9 million, or 60 cents per share compared with $121.5 million or $0.73 per share in the prior-year quarter. Results were below the Zacks Consensus Estimate of 67 cents.

The decrease in net income was largely attributable to a return to normal levels of tax expense and a foreign currency translation loss versus a large tax recovery and a large foreign currency translation gain in the third quarter of 2010.

Revenue

In third-quarter 2011, revenues were $520.5 million versus $398.5 million in the prior- year quarter.

Payable gold production in the third quarter of 2011 was 265,978 ounces compared with 285,178 ounces in the prior-year quarter.

The lower level of production in 2011 was largely due to the processing of lower grades at Meadowbank, LaRonde and Goldex.

Total cash costs in the third quarter of 2011 were $563 per ounce compared with $423 per ounce in the third quarter of 2010.  The higher cost in 2011 was largely attributable to the 7% lower gold production and also higher total cash costs per ounce at Meadowbank, Kittila, Lapa and Goldex.  Each of these mines processed lower grades than in the prior-year period.

Financial Position

Cash provided by operating activities was a record $197.6 million versus $156.8 million in the third quarter of 2010, primarily attributable to 39% higher realized gold price and significantly higher byproduct metal revenue when compared to that realized in the third quarter of 2010.

Cash and cash equivalents decreased to $116.7 million as of September 30, 2011, from $139.0 million in June 30, 2011.

Capital expenditures in the third quarter of 2011 were $164.0 million, including $ 45.0 million at Meliadine, $43.6 million at Meadowbank, $23.3 million at LaRonde, $22.9 million at Kittila, $16.0 million on Goldex, $6.7 million at Pinos Altos and $4.3 million at Lapa.

Available bank lines as of September 30, 2011 were approximately $1.12 billion.

Take-Over Bid for Grayd Resource Corporation

On October 19, 2011, Agnico-Eagle and Grayd Resource Corporation amended the acquisition agreement dated September 19, 2011 and Agnico-Eagle amended the offer dated October 13, 2011 made by Agnico-Eagle for all of the outstanding shares of Grayd to increase the maximum amount of cash available under the Offer to approximately C$183 million (from approximately C$92 million).  The maximum number of common shares of Agnico-Eagle available for issuance under the Offer remains unchanged at approximately 2.7 million (based on the number of Grayd shares outstanding on a fully-diluted basis as at September 19, 2011).  A notice of change and variation of the Offer was mailed to shareholders of Grayd on October 21, 2011.  The expiry time of the Offer remains unchanged at 5:00 p.m. (Toronto time) on November 18, 2011, unless the Offer is extended or withdrawn.

Outlook

Due to the suspension of operations at Goldex, Agnico-Eagle now expects production of approximately 1.01 million ounces of gold for the full-year 2011 at total cash costs per ounce of approximately $575 versus the previous guidance of approximately 1.08 million ounces at total cash costs per ounce of $495.  The higher total cash cost reflects the loss of the relatively lower cost Goldex mine combined with high costs, which continue to be realized at Meadowbank.

With its current cash balances, anticipated cash flows and available bank lines, management believes that Agnico-Eagle remains fully funded for the development and exploration of its current pipeline of gold projects in Canada, Finland, Mexico and the USA.

Agnico-Eagle faces stiff competition from Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC) and Newmont Mining Corp. (NEM).

Currently, we maintain a Neutral recommendation on the stock and a Zacks #3 Rank (Hold).

 
BARRICK GOLD CP (ABX): Free Stock Analysis Report
 
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