Agnico Eagle Mines Limited AEM reported net income of $1.3 million (or a penny per share) in the third quarter of 2015, versus a loss of $15.1 million (or 7 cents per share) recorded in the year-ago quarter.

For the reported quarter, total cash costs per ounce of gold produced on a by-product basis were $536 compared with $716 a year ago. Lower total cash costs per ounce on a by-product basis were aided by increased gold and silver production levels at most of the company's mines and weaker local currencies in the reported quarter.

Northern Business

Payable gold production at the LaRonde mine in northwestern Quebec, Canada, was 71,860 ounces in the third quarter, compared with 37,490 ounces in the year-ago quarter. Total cash costs per ounce were $558 on a by-product basis, down 35.2% year over year. Cash costs and production in the quarter were positively impacted by higher gold grades, improved throughput and favorable currency exchange rates.

Production at the Canadian Malartic mine (in which Agnico Eagle has a 50% ownership) in the reported quarter was 76,603 ounces of gold, at a total cash cost per ounce of $544 on a by-product basis compared with production of 64,761 ounces of gold at total cash cost per ounce of $735 on a by-product basis. Production increased in the reported quarter due to increased mill throughput and higher grades.  Costs in 2015 were lower due to increased production and favorable currency rates.

Canadian Malartic had very strong operational performance in the quarter. New records were set for quarterly tons milled (4.94 million tons), tons processed per day (53,703 tons), and ounces produced (153,206 ounces on a 100% basis).  

Payable production in the third quarter at the 100%-owned Lapa mine in northwestern Quebec was 25,668 ounces of gold, up 3.6% year over year. Total cash costs per ounce were $522 on a by-product basis compared with $606 in the year-ago quarter. Increased production at lower costs came on the back of better recoveries associated with increased component of free gold in the Zulapa Z7 ore zone.

The Goldex mine in northwestern Quebec produced 32,068 ounces of gold in the quarter, at a total cash cost per ounce of $479 on a by-product basis compared with 27,611 ounces of gold, at a total cash cost per ounce of $582 on a by-product basis in the prior-year quarter. The decrease in total cash costs in the reported quarter was due to higher production resulting from higher tonnage and favorable currency rates. Higher production was due to increased tonnage, improved grades and higher recoveries.

Payable production of 99,425 ounces of gold at the 100%-owned Meadowbank mine in Nunavut, Canada was up 8.6% year over year. Total cash costs per ounce were $598 on a by-product basis in the quarter, down 23% year over year. Higher production was mainly due to the processing of higher grade ore and modestly improved recoveries.

Gold production at Kittila in the third quarter was up nearly 64.6% from the year-ago quarter figure to 46,455 ounces, at a total cash cost per ounce of $639, down 32.8% from the year-ago quarter on a by-product basis. Higher production in the quarter was backed by improved mill capacity and the planned 2014 shutdown, while costs fell due to increased production and favorable currency rates.

Southern Business

Payable production at the Pinos Altos mine in northern Mexico in the reported quarter was 47,725 ounces of gold, up 16% year over year. The rise in production was aided by higher grades processed and increased throughput. Total cash cost per ounce was $392 on a by-product basis, down 28.1% from $545 in the year-ago quarter. The year-over-year decrease in total cash costs per ounce was mainly due to higher gold and silver production and favorable currency rates.

Payable gold production at Creston Mascota was 12,716 ounces, down about 4.9% year over year due to fewer stacked tons. Total cash cost per ounce was $436 on a by-product basis, down 21.6% year over year. Cash costs declined due to lower minesite costs per ton, higher silver production and favorable currency rates.

Payable gold production at the La India mine in Mexico was 28,604 ounces, up 40.8% year over year, at a total cash cost per ounce of $436 on a by-product basis.  Production was aided by by rain flushing residual ounces from the heaps and considerably higher ore grades placed on the heaps than planned. Total cash costs were down 20.3% year over year, positively impacted by increased production volumes and favorable currency rates.

Financial Position

Agnico Eagle’s cash and cash equivalents totaled $201.9 million as of Sep 30, 2015, up from $158.8 million as of Sep 30, 2014. Long-term debt decreased to $1.2 billion as of Jun 30, 2015, from $1.36 billion as of Sep 30, 2014.

The outstanding balance on Agnico Eagle’s $1.2 billion credit facility was reduced to $350 million on Sep 30, 2015, from $375 million on Jun 30, 2015.  This results in available credit lines of around $850 million, excluding the $300 million accordion facility.

In the third quarter, the company amended its $1.2 billion credit facility to extend the maturity date from Jun 22, 2019 to Jun 22, 2020 and improve the pricing terms.

Total capital expenditures in the third quarter of 2015 were $122.4 million.

Outlook

Agnico Eagle increased its outlook for 2015 gold production and expects it to be roughly 1.65 million ounces, up from the previous expectation of 1.6 million ounces. The company revised its guidance for total cash costs on a by-product basis from the previous range of $600 -$620 per ounce to about $590-$610 per ounce.  All-in sustaining costs (AISC) are now expected in the range of roughly $840-$860 per ounce, down from the prior projection of $870 to $890 per ounce.

Capital expenditures in 2015 are also projected to be roughly $50 million, lower than earlier guidance due to positive foreign currency adjustments and deferrals into future periods.

Zacks Rank

Agnico Eagle currently carries a Zacks Rank #2 (Buy).

Some better-ranked mining companies are NovaGold Resources Inc. NG, Asanko Gold Inc. AKG and Primero Mining Corp. PPP. While NovaGold carries a Zacks Rank #1 (Strong Buy), Asanko Gold and Primero Mining hold a Zacks Rank #2 (Buy).

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