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Agnico Eagle (AEM) Tops Earnings and Sales Estimates in Q4

Zacks Equity Research

Agnico Eagle Mines Limited AEM reported net loss of $393.7 million or $1.67 per share in fourth-quarter 2018, against net income of $37.5 million or 16 cents in the year-ago quarter. Results in the quarter were partly affected by impairment losses along with derivative losses on financial instruments and non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments. Notably, the company recorded hefty impairment losses of $389.7 million or $1.66 per share in the reported quarter.

Barring one-time items, adjusted earnings per share came in at 14 cents, which beat the Zacks Consensus Estimate of 3 cents.

Agnico Eagle generated revenues worth $537.8 million, down around 4.9% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $509.4 million.

2018 Highlights

For 2018, net loss came in at $326.7 million or $1.40 per share, against net income of $240.8 million or $1.04 a year ago.

Revenues increased 2.3% year over year to roughly $2.2 billion.

Agnico Eagle Mines Limited Price, Consensus and EPS Surprise

Agnico Eagle Mines Limited Price, Consensus and EPS Surprise | Agnico Eagle Mines Limited Quote

Operational Highlights

Payable gold production fell 0.6% year over year to 410,712 ounces from 413,212 ounces in the year-ago quarter. Total cash costs per ounce were $608, up roughly 2.7% from $592 in the prior-year quarter.

All-in sustaining costs (AISC) were $852 per ounce, down 5.9% from the prior-year quarter’s $905. The decline can be attributed to lower sustaining costs, partly offset by lower expected gold production along with higher total cash costs per ounce.

Financial Position

As of Dec 31, 2018, cash and cash equivalents were around $301.8 million, down roughly 52.3% year over year.

Long-term debt was $1,721.3 million at the end of 2018, up 25.5% year over year.

Total cash provided by operating activities were $140.3 million in the fourth quarter, down 16% year over year.

Total capital expenditure for the fourth quarter and 2018 totaled $289.1 million and $1.07 billion, respectively.

Outlook

Agnico Eagle provided production and cost guidance for 2019. Gold production for the year is now projected at 1.75 million ounces. The mid-point of the earlier guidance was 1.7 million ounces. Higher gold production view mainly considers commercial production at Meliadine, which is expected to start in the second quarter of 2019 along with a modest increase in gold production at Meadowbank.

Total cash costs per ounce is projected between $620 and $670. AISC is expected in the range of $875-$925 per ounce.

For 2019, the company expects to have the four key production assets — Canadian Malartic, the LaRonde complex, Meliadine and the Meadowbank complex — each with annual production rates of 250,000-400,000 ounces of gold.

Price Performance

Agnico Eagle’s shares have inched up 0.1% in the past year, against the industry’s 2.6% decline.



Zacks Rank & Key Picks

Agnico Eagle currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space include Kirkland Lake Gold Ltd. KL, The Mosaic Company MOS and Silver Standard Resources Inc. SSRM. While Kirkland currently sports a Zacks Rank #1 (Strong Buy), Mosaic and Silver Standard Resources carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Kirkland has an expected earnings growth rate of 20.9% for 2019. The company’s shares have surged 126% in the past year.

Mosaic has an expected earnings growth rate of 23.5% for 2019. Its shares have rallied 26.3% in a year’s time.

Silver Standard Resources has an expected earnings growth rate of 29.2% for 2019. Its shares have surged 62.7% in a year’s time.

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