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Agnico Eagle (AEM) Comfortably Beats on Q1 Earnings

Agnico Eagle Mines Limited AEM reported a net income of $27.8 million (or 13 cents per share) in the first quarter of 2016, compared with net income of $28.7 million (or 13 cents per share) recorded in the year-ago quarter.

Adjusted earnings came in at 6 cents per share in the first quarter, exceeding the Zacks Consensus Estimate of 2 cents.

The shares of the company rose 9.2% and closed at $47.21 on Apr 29.

Revenues and Operational Highlights

Agnico Eagle registered revenues of $490.5 million in first-quarter 2016, up 1.4% from $483.6 million in the year-ago quarter. Sales beat the Zacks Consensus Estimate of $477 million.

Payable gold production in the first quarter increased 1.8% year over year to 411,336 ounces. The higher production is attributable to increased grades and better recoveries at LaRonde, higher throughput at Goldex and Kittila, and higher grades at Canadian Malartic.

For the reported quarter, total cash costs per ounce of gold produced on a by-product basis were $573, lower than $588 a year ago due to higher production levels at LaRonde, Goldex, Canadian Malartic and La India. All in sustaining cost (AISC) for the quarter was $797 per ounce on a by-product basis, down from $804 in the prior-year quarter. The lower AISC is mainly due to lower total cash costs per ounce on a by-product basis compared to first-quarter 2015.

Financial Position

Agnico Eagle ended the first quarter with cash and cash equivalents of $162.7 million, up 17.9% from $138 million in the first quarter of 2015. Long-term debt decreased 12.7% to $1,064.8 million as of Mar 31, 2016, from $1,220.1 million as of Mar 31, 2015.

The outstanding balance on Agnico Eagle’s $1.2 billion credit facility reduced to $210 million as of Mar 31, 2016, from $265 million as of Dec 31, 2015.  This resulted in available credit lines of around $990 million, excluding the $300 million accordion facility.

Total capital expenditures in the first quarter were $100.7 million.

Dividend

Agnico Eagle's board announced a quarterly cash dividend of 8 cents per share, payable on Jun 15, to shareholders on record as of Jun 1, 2016.

Outlook

Agnico Eagle expects production for 2016 to meet the top end of the guidance range of about 1.525–1.565 million ounces of gold, with total cash costs per ounce on a by-product basis in the range of $590–$630 and AISC in the band of $850–$890 per ounce.

Zacks Rank

Agnico Eagle currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the gold mining space include New Gold, Inc. NGD, Alamos Gold, Inc. AGI and Barrick Gold Corporation ABX. While New Gold sports a Zacks Rank #1 (Strong Buy), both Alamos and Barrick carry a Zacks Rank #2 (Buy).

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