UPDATE 2-Agnico Eagle profit drops on lower output
* Q2 EPS $0.41 vs $0.64 a yr earlier
* Agnico to acquire 9.2 pct stake in Rubicon Minerals
* 2011 capex to be higher than previously forecast (Adds details on Rubicon investment, results; In U.S. dollars, unless noted)
TORONTO, July 27 (Reuters) - Agnico-Eagle Mines (AEM.TO) said on Wednesday its quarterly profit fell as gains from higher metal prices were more than offset by lower production volumes and increased tax expenses.
The Toronto-based gold miner also announced that it will acquire a 9.2 percent stake in exploration company Rubicon Minerals (RMX.TO) via a C$70 million private placement deal.
Rubicon owns the Phoenix gold project in Red Lake, Ontario -- one of Canada's most prolific gold producing districts that is also home to Goldcorp's (G.TO) Red Lake mine, which is one of the largest gold mines in Canada.
"This really makes sense and ties right into our strategy," Agnico's Chief Executive Sean Boyd told Reuters. "We are going to continue this strategy going forward to try to identify and get more involved in things that may work down the road."
Under the terms of the deal, Agnico will buy about 21.7 million Rubicon shares for C$3.23 per share, a 5.5 percent premium to Rubicon's closing price of C$3.06 on Wednesday.
Vancouver-based Rubicon, in a separate statement said it intends to use the proceeds from the deal to further develop its Phoenix project. The private placement deal is expected to close later this week.
Agnico, which owns mines spread across Canada, Mexico and Finland, said net income in the second quarter ended June 30 fell to $68.8 million, or 41 cents a share, from a year-before profit of $100.4 million, or 64 cents a share.
The company said gold production in the quarter was 239,328 ounces, down from 257,728 ounces a year earlier. Total cash costs in the latest period rose to $565 an ounce from $482 an ounce.
Agnico said the lower production level was largely due a fire at its Meadowbank mine in the northern Canadian territory of Nunavut and some operational issues that hurt output from the site.
"With the installation of the permanent secondary crusher at Meadowbank, we have seen a significant improvement in our production rates," said Boyd, who expects Agnico's gold output to improve in the second-half of 2011.
Agnico produced about 490,000 ounces of gold in the first six months of the year. The company has forecast full year gold production of about 1.08 million ounces, at total cash costs of about $495 per ounce.
Boyd also said the company is extremely pleased with recent drill results from both its Kittila mine in Finland and its Goldex mine in Quebec.
The company raised its 2011 capital expenditure forecast to $423 million from $313 million, primarily due to movements in currency markets and increased costs at Meadowbank and Goldex. (Reporting by Euan Rocha; editing by Peter Galloway and Carol Bishopric)
- Tweet this
- Share this
- Digg this