(This is an abridged version of the release. For the full version click here)
TORONTO , July 25, 2018 /CNW/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $5.0 million , or $0.02 per share, for the second quarter of 2018. This result includes a realized gain on asset disposals of $25.0 million ( $0.11 per share) primarily related to the sale of the West Pequop Joint Venture, Summit and PQX properties in Nevada , non-cash foreign currency translation losses on deferred tax liabilities of $15.9 million ( $0.07 per share), non-cash foreign currency translation losses of $3.9 million ($0.02 per share) and mark-to-market adjustments and derivative losses on financial instruments of $2.8 million ( $0.01per share). Excluding these items would result in adjusted net income 1 of $2.6 million or $0.01 per share for the second quarter of 2018. In the second quarter of 2017, the Company reported net income of $54.9 million or $0.24 per share.
Included in the second quarter of 2018 net income, and not adjusted above, is non-cash stock option expense of $3.8 million ( $0.02 per share).
Income and mining taxes expense for the second quarter of 2018 was $35.4 million , or an effective tax rate of 88%. In the first six months of 2018, the income and mining taxes expense was $59.9 million , or an effective tax rate of 55%. These tax rates are higher than prior guidance partly due to the distribution of earnings by jurisdiction in the second quarter of 2018. The Company anticipates the overall effective tax rate to normalize over the remainder of 2018 to approximately 45% for the full year 2018.
In the first six months of 2018, the Company reported net income of $49.9 million , or $0.21 per share. This compares with the first six months of 2017, when net income was $130.8 million , or $0.57 per share.
In the second quarter of 2018, cash provided by operating activities was $120.1 million ( $159.5 million before changes in non-cash components of working capital), as compared with the second quarter of 2017 when cash provided by operating activities was $184.0 million in ( $197.2 million before changes in non-cash components of working capital).
In the first six months of 2018, cash provided by operating activities was $327.8 million ( $340.1 million before changes in non-cash components of working capital), as compared with the first six months of 2017 when cash provided by operating activities was $406.6 million ( $421.2 million before changes in non-cash components of working capital).
The decrease in net income and cash provided by operating activities during the current quarter compared to the prior year period was mainly due to lower gold sales volumes and higher costs, partially offset by higher realized gold prices. Lower gold sales were as a result of expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site. The higher costs were principally a result of the strengthening of local currencies against the U.S. dollar and higher costs at several operations, principally at Meadowbank and Kittila.
"Our mines continued to deliver strong operational performance during the quarter, which has allowed us to increase 2018 production guidance to 1.58 million ounces of gold from 1.53 million ounces. Cash costs remained at the mid-point of our guidance, but we expect these costs to trend lower in the second half of the year", said Sean Boyd , Agnico Eagle's Chief Executive Officer. "In the second quarter, we continued to make good progress on our development projects in Nunavut . We recently received the Type A water licence for the Whale Tail pit at Amaruq, which allowed us to begin construction in late July, and the shipping season is now underway at Meliadine, which should facilitate timely completion of the project allowing for the expected start of production in the second quarter of 2019" added Mr. Boyd .
1 Adjusted net income is a non-GAAP measure. For a discussion regarding the Company's use of non-GAAP measures, please see "Note Regarding Certain Measures of Performance".
Second quarter 2018 highlights include:
- Operational performance remains strong - Payable gold production 2 in the second quarter of 2018 was 404,961 ounces at production costs per ounce of $750 , total cash costs 3 per ounce of $656 and all-in sustaining costs per ounce 4 ("AISC") of $921
- Production guidance increased for 2018 - Full year production guidance is now forecast to be 1.58 million ounces of gold compared to previous guidance of 1.53 million ounces of gold. Unit cost guidance is unchanged, with total cash costs per ounce of $625 to $675 and AISC of $890 to $940 per ounce. However, the Company expects total cash costs per ounce to trend lower in the second half of 2018
- Amaruq project receives permit approval - The Type A water licence for the Whale Tail pit was approved by the Minister of Crown-Indigenous Relations and Northern Affairs Canada on July 11, 2018 . Preliminary construction work and stripping of the Whale Tail pit began in late July, as expected, and the Whale Tail deposit remains on schedule and budget for the start of production in the third quarter of 2019
- Meliadine project proceeding on schedule and on budget; step-out drilling extends Tiriganiaq mineralization -The 2018 shipping season is underway at Meliadine and development activities remain on track for the expected commencement of production in the second quarter of 2019. A recent drill hole returned 27.3 grams per tonne ("g/t") gold over 12.8 metres at 483 metres depth. This hole is expected to extend the inferred mineral resources envelope at Tiriganiaq
- Akasaba West Project receives Federal and Provincial authorization - The Company will now proceed with applications for the Mining Lease and Certificates of Authorization. The Company is reviewing the timeline for the integration of the Akasaba West project into the Goldex production profile
- LaRonde Zone 5 (LZ5) declares commercial production and Lapa mine life extended until the fourth quarter of 2018 - LZ5 declared commercial production on June 1, 2018 . In order to maximize production, ore from LZ5 will be batch processed with ore from Lapa until the end of 2018
- A quarterly dividend of $0.11 per share was declared
2 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
4 All-in-sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".