* 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
By Allison Martell
TORONTO, April 25 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
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
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
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