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Agnico-Eagle Mines Limited’s (AEM) third-quarter 2012 adjusted earnings (excluding one-time items other than stock-based compensation expenses) of 63 cents per share outpaced the Zacks Consensus Estimate of 40 cents.

Profit, as reported, came in at $106.3 million (or 62 cents per share). The Canada-based mining company posted a loss of $81.6 million (or 48 cents a share) a year ago. The bottom line was boosted by strong gold production and healthy performance across its mines, especially at Meadowbank in Nunavut.

Revenue and Operational Highlights

Consolidated revenues rose roughly 4.3% year over year to $537.8 million, beating the Zacks Consensus Estimate of $436 million. Payable gold production in the third quarter climbed 7.9% year over year to 286,971 ounces, riding on higher grades at LaRonde, Kittila, Meadowbank and Pinos Altos, as well as record throughput at Meadowbank.

The company witnessed record production at its gold mines in Meadowbank in northern Canada, and Pinos Altos in northern Mexico, during the quarter. Payable gold production at Meadowbank surged 42% to 110,988 ounces in the quarter. At Pinos Altos, payable production climbed 17.5% year over year to 61,973 ounces of gold. The company also saw higher production at its Kittila mine in northern Finland, which recorded payable gold production of 48,619 ounces, a 28.2% year over year surge.

Total cash cost in the quarter was down 1.2% to $556 per ounce, mainly due to lower costs at Meadowbank, Kittila and Pinos Altos, partly offset by higher costs at LaRonde.

Financial Position

Cash and cash equivalents amounted to $320.8 million as of September 30, 2012, compared with $221.5 million as of December 31, 2011. Long-term debt stood at $800 million as of September 30, 2012, compared with $920.1 million as of December 31, 2011. Cash provided by operating activities was a record $199.5 million, almost flat annually.

Outlook

Agnico-Eagle lifted its gold production guidance for 2012. The company now expects production to be 1,025,000 ounces of gold, up from its earlier view of 975,000 ounces. Total cash costs per ounce are projected to be approximately $660, down from the previously provided estimate of $690. Capital expenditure is expected to be approximately $457 million in 2012.

The company maintained its production guidance of approximately 990,000 ounces of gold for 2013. For 2014 and 2015, Agnico-Eagle is expected to realize organic production growth from the new La India mine, the restart of Goldex (M and E zones), higher gold grades at LaRonde and continued operating strength at Meadowbank.

Agnico-Eagle, which competes with Barrick Gold Corporation (ABX) and Kinross Gold Corporation (KGC), currently retains a short-term Zacks #2 Rank (Buy). Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.
 

 
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