Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) reported "earnings per share of $0.27" as of Q2/17E exceeded expectations "due to higher revenue and lower taxes," Andrew Kaip of BMO Capital Markets wrote in a July 26 research report. "Adjusted EPS was $0.25, above our estimate for $0.17 and consensus of $0.14."
Production results tracked similarly, Kaip pointed out. "Quarterly production of 428 Koz came in ahead of our estimate of 403 Koz. . .driven primarily by beats at Meadowbank and Malartic due to higher grades," he stated.
Due to "strong first half operational performance," Agnico Eagle raised production guidance for 2017, Kaip noted, "to 1.62 Moz (previously 1.57 Moz gold)." Additionally, the company lowered cash cost guidance with "all-in sustaining cost now expected to be $830–880/oz (from $850–900/oz)," according to BMO Capital's report.
Kaip also commented on cash flow during Q2/17, indicating stronger production results gave it a boost. "Operating cash flow of $184M was in line with our estimate for $185M while free cash flow of ($8M) was above our estimate for ($24M)," he wrote. "Capital expenditures were $17M lower than expected."
The report indicated, too, that the company ended Q2/17 "with net debt of $291M" and "access to $1.2B in available credit lines."
Overall, in Q2/17, Agnico Eagle "posted another strong quarter, building off a beat in Q1/17, as the company delivered higher production, lower costs and EPS above expectations," concluded Kaip. "The company increased production guidance once again."
The metals and mining analyst went on to provide these updates on various Agnico Eagle projects:
Meliadine: It is advancing on time and on budget, but "underground development is ahead of plan with engineering 80% complete."
LaRonde: For zone 5, "permits are expected mid-2018."
Lapa: "Operations are now anticipated to [move] to Q3/17E."
Goldex: Commercial production was declared at the Deep 1 project on July 1.
Meadowbank: Agnico "expects to extend production through year-end 2018."
Amaruq: The final public hearing for phase 1 is scheduled for September 2017.
Agnico Eagle's stock is trading at about $47.38/share. BMO Capital rates it a Market Perform.
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Disclosures from BMO Capital Markets, Agnico Eagle Mines, July 26, 2017
Analyst's Certification: I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures:
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Agnico Eagle Mines.
Disclosure 6C: Agnico Eagle Mines is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 8C: BMO Capital Markets or an affiliate has a financial interest in 0.5% or more in the issued share capital of Agnico Eagle Mines.
Disclosure 9: BMO Capital Markets makes a market in Agnico Eagle Mines.
Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Agnico Eagle Mines.