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Agnico Eagle Mines Posts a Wide Earnings Miss in Q2 2018

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Agnico Eagle’s earnings

Agnico Eagle Mines (AEM) reported its second-quarter earnings on July 25 after the market closed. The company reported an EPS of $0.01. The company missed analysts’ consensus estimate of $0.08. Agnico Eagle Mines’ peers (GDX) including Barrick Gold (ABX), Goldcorp (GG), and New Gold’s (NGD) earnings missed the estimates in the second quarter. Agnico Eagle Mines’ revenues of $556 million were slightly ahead of the consensus expectations of $544 million. Lower gold sales and higher costs were mainly responsible for the company’s lower earnings.

Lower production and higher costs

While reduced throughput levels at Meadowbank were responsible for the lower production, stronger local currencies against the US dollar and higher operational costs at some operations increased the costs. Agnico Eagle Mines maintained a quarterly dividend of $0.11 per share.

Agnico Eagle Mines’ production during the second quarter was 405,000 ounces of gold, which represents a decline of 5% year-over-year. The company’s AISC (all-in sustaining costs) of $921 per ounce increased (17.3%) compared to $785 per ounce in the same quarter last year.

Raises annual production guidance

Sean Boyd, Agnico Eagle Mines’ CEO, said, “In the second quarter, we continued to make good progress on our development projects in Nunavut. We recently received the Type A water licence for the Whale Tail pit at Amaruq, which allowed us to begin construction in late July, and the shipping season is now underway at Meliadine, which should facilitate timely completion of the project allowing for the expected start of production in the second quarter of 2019.”

The company increased the 2018 gold production from 1.53 million ounces to 1.58 million ounces. The guidance for AISC of $890–$940 per ounce didn’t change.

We’ll get more details about Agnico Eagle Mines’ results and next steps during its earnings call. The earnings call is scheduled at 11:00 AM EST on July 26. In What to Expect from Agnico Eagle Mines’ Q2 2018 Earnings Call, we highlighted the key topics Agnico Eagle Mines’ management could address in the earnings call.

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