Agnico Eagle Mines: return to normal in the second half of 2020

The Canadian gold producer Agnico Eagle Mines (NYSE / TSX AEM / WKN 860325) Yesterday reported a net profit yesterday that was almost four times as high as in the second quarter of 2019. This was mainly due to the significantly higher gold price and a reduction in exploration costs.

As a result, Agnico generated a net profit of $ 105.3 million, or $ 0.43 per share, in June, compared to $ 27.8 million, or $ 0.12, in the year-ago period. Adjusted for one-time items and non-cash items, the company’s second-quarter earnings were $ 44.3 million, or $ 0.18 per share, an increase of 50% over the previous year. Analysts had estimated second quarter adjusted earnings at $ 0.15 per share.

Agnico’s operating cash flow was $ 162.6 million, compared to $ 126.3 million in the prior year quarter. Both the increase in net profit and cash flow are said to be due to the high price of gold and lower exploration and administrative expenses. This would have been offset by lower gold sales and the cost of temporary mine closures due to COVID19 lockdowns.

As CEO Sean Boyd explained, the company returned to normal operations earlier than expected in June, but seven of the group’s eight mines were shut down during the quarter. Now that operations at all mines have resumed, and gold production is expected to reach 160,000 ounces in July, the company is well positioned to deliver a strong second half. Boyd assumes an average gold production of 480,000 to 500,000 ounces per quarter with declining costs per unit of production.

Agnico raised its production forecast for 2020 to 1.68 to 1.73 million ounces after previously assuming 1.63 to 1.73 million ounces. Forecasts for total cash costs and AISC remain unchanged at $ 740 to $ 790 an ounce and $ 1,025 to $ 1,075 an ounce, respectively. The company expects investment expenditures for 2020 to be around $ 690 million.

Production forecasts for 2021 and 2022 remain the same, averaging 2.05 and 2.10 million ounces, respectively.

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