UPDATE 2-Agnico-Eagle profit drops; La India ahead of schedule
* Q1 EPS $0.14 vs $0.46 a year earlier
* Revenue drops 11 percent to $423.2 million
* CEO sees opportunity in low prices; highlights South America
By Allison Martell
TORONTO, April 25 (Reuters) - Agnico-Eagle Mines Ltd reported a drop in quarterly profit on Thursday, hurt in part by lower gold prices and production, and raised its forecast cash costs for the year.
The Toronto-based company said its La India project in Mexico is now expected to start commercial production in the first quarter of 2014, rather than the second quarter.
Agnico is pushing to increase production, despite the fact that economic uncertainty had prompted many of its rivals to clamp down on spending and shelve new developments even before gold prices plunged earlier this month.
"We think it's an over-reaction in the market," Chief Executive Sean Boyd said of the price drop. "We just see it really as a time of opportunity, we don't view it as a time to sit on our hands."
The company has made several small investments in junior miners in recent months.
"There are some countries in South America we'd be interested in. We just made a strategic investment in a company that has an asset in Peru," said Boyd.
Agnico bought a stake in Sulliden Gold Corp Ltd through a private placement in early April, representing about 10 percent of the company on a non-diluted basis. Sulliden's Shahuindo gold and silver project in Peru is in permitting.
Both La India and the next Agnico project scheduled to start production, Goldex in Quebec, are marginal, and with its next major development project - the Meliadine mine in Canada's far north - not expected until 2018, it is not yet clear where future growth will come from.
Cash costs for the first quarter rose to $740 per ounce, from $594 per ounce a year earlier, and Agnico said it expects cash costs between $735 and $785 per ounce for 2013, up from a previous forecast of $700 to $750 per ounce.
Costs rose in part because byproduct revenue from the LaRonde mine in Quebec fell, northern Canada's Meadowbank was hit by lower grades and the lower cost Creston Mascota mine in Mexico was not producing during the quarter, the company said.
Rising costs have been a recurring headache for gold miners. And compounding that concern, gold slipped into a bear market earlier this month, dropping to a two-year low below $1,400 per ounce for the first time in two years. The precious metal was trading in the $1,450 an ounce range on Thursday.
CRESTON MASCOTA, GOLDEX RETURN
Agnico suspended production at Creston Mascota in the fall after ore shifted unexpectedly on its leach pad. Rather than continue operating the first phase of the mine, Boyd said, Agnico built its second phase. Leaching resumed on a new pad in March.
Another mine hit with engineering problems, Goldex, is now expected to start production by the end of this year, rather than early next year.
Agnico was forced to write down Goldex in the fall of 2011 after water inflow and ground stability concerns made operating there unsafe.
The company is now developing satellite projects around the mine, but cash costs in 2013 are expected to be quite high, at $1,130 per ounce, "reflecting the startup of production," Agnico said.
Net earnings fell to $23.9 million, or 14 cents a share, in the quarter to March 31, from $78.5 million, or 46 cents, a year earlier. Revenue fell 11 percent to $423.2 million.
Excluding a non-cash stock option expense and other one-time items, earnings were $53.6 million, or 31 cents a share.
Analysts, on average, had been expecting earnings of 33 cents on revenue of $416.9 million, according to Thomson Reuters I/B/E/S.