Agnico Eagle (AEM) Beats Q3 Earnings, Sales Estimates

Agnico Eagle Mines Limited (NYSE:AEM) reported a net income of $49.4 million or 22 cents per share in the third quarter of 2016, compared with net income of $1.3 million or a penny per share recorded in the year-ago quarter.

Adjusted earnings came in at 24 cents per share in the third quarter, exceeding the Zacks Consensus Estimate of 19 cents.

Shares of the company rose 0.8% to close at $48.77 on Oct 27.

Revenues and Operational Highlights

Agnico Eagle registered revenues of $610.9 million in third-quarter 2016, up 20% from $508.8 million in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $552 million.

Payable gold production in the third quarter slumped 5.7% year over year to 416,187 ounces. The lower level of production in was mainly due to reduced grades at Lapa and Meadowbank.

For the reported quarter, total cash costs per ounce of gold produced on a by-product basis were $575, higher than $536 a year ago due to decreased gold production at Lapa and Meadowbank compared with the year ago quarter.

All in sustaining costs (“AISC”) for the quarter were $821 per ounce, up from $759 in the prior-year quarter. The higher AISC is mainly due to lower production, higher total cash costs per ounce on a by-product basis and increased capital spending compared with the year ago period.

Financial Position

Cash and cash equivalents as of Sep 30, 2016 were $618.6 million, soaring 295.4% from $202 million as of Sep 30, 2015. As of Sep 30, 2016, net debt was $587.9 million, a decrease of $154 million from Jun 30, 2016.

The outstanding balance on the Agnico Eagle’s $1.2 billion credit facility was nil as of Sep 30, 2016. This results in available credit lines of roughly $1.2 billion, excluding the uncommitted $300 million accordion feature.
On Oct 26, 2016, Agnico Eagle amended its $1.2 billion credit facility to extend the maturity date from Jun 22, 2020 to Jun 22, 2021.

Total capital expenditures in the reported quarter were $146.8 million.
Outlook

Agnico Eagle stated that its strong operating performance led to higher operating cash flow and an increase in its cash position which further supports its development plans to grow production to roughly 2 million ounces in 2020.

Zacks Rank

Agnico Eagle currently carries a Zacks Rank #4 (Strong Sell).

Some better-ranked companies in the mining space include Newmont Mining Co. (NYSE:NEM) , Pershing Gold Corp. (NASDAQ:PGLC) and Eldorado Gold Corp. (NYSE:EGO) all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Newmont has an expected earnings growth rate of 82.8% for the current year.

Pershing Gold has an expected earnings growth rate of 26.3% for the current year.

Eldorado Gold has an expected earnings growth rate of 120% for the current year.

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