Agnico Eagle Soars as Profit Tops Estimates on Gold Costs

Agnico Eagle Mines Ltd. (AEM), the fifth-biggest Canadian gold producer, surged the most in almost five years after the company reported earnings that beat analysts’ estimates and said 2013 production and costs will be better than it previously forecast.

Agnico rose 19 percent to C$31.82 at the close in Toronto, the biggest gain since Nov. 21, 2008.

Third-quarter profit, excluding a non-cash foreign-currency loss of 4 cents and other one-time items, was 35 cents a share, the Toronto-based company said in a statement released yesterday after the close of regular trading. That was almost four times the 9-cent average of 15 estimates compiled by Bloomberg. Sales fell 17 percent to $444.3 million, beating the $373.7 million average estimate.

Agnico is among gold producers seeking to curb costs and cut spending after gold slumped into a bear market in April.

“We had expected AEM to beat street estimates going into Q3 but this surpassed even our expectations,” Anita Soni, a Toronto-based analyst at Credit Suisse Group AG, said in a note yesterday, referring to the ticker Agnico trades under in Canada and the U.S. “The big beat was on better production and costs than our expectations at every asset, in particular at Meadowbank.”

Record quarterly output and improved costs at the company’s Meadowbank mine in Nunavut helped Agnico beat expectations in the quarter, Chief Executive Officer Sean Boyd said in a telephone interview.

‘The Surprise’

“The surprise was Meadowbank,” where ore grades were higher than expected, Boyd said yesterday. “We expect that Meadowbank will have a strong fourth quarter,” which will probably continue into early 2014, he said.

Agnico said it now expects to produce about 1.06 million ounces of gold this year, as much as 9.3 percent more than a previous forecast of 970,000 to 1.01 million ounces. The average cost to produce an ounce of gold, after profiting from the sale of other metals, will be about $690, Agnico said. The company forecast $735 to $785 on July 24.

Agnico’s third-quarter net income fell to $47.3 million, or 27 cents a share, from $106.3 million, or 62 cents, a year earlier, the company said.

Gold averaged $1,328 on the Comex in New York in the third quarter, 20 percent less than a year earlier and 6.3 percent lower than the second quarter.

The largest Canada-based gold producers by sales are Barrick Gold Corp. (ABX), Goldcorp Inc., Kinross Gold Corp. and Yamana Gold Inc.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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