Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) has grown from a small, single-mine gold producer to a multi-mine and international gold mining company under the watchful eye of Sean Boyd since his appointment as CEO in 1998. It comes as no surprise that the company has managed to set a consistency pattern in delivering immense shareholder value.
The company recently published its quarterly net income of $27.8 million, or $0.12 per share, for the second quarter of 2019 which included non-cash foreign currency translation gains on deferred tax liabilities of $5.9 million ($0.03 per share), derivative gains on financial instruments, mark-to-market and other adjustments of $3.3 million ($0.01 per share) and non-cash foreign currency translation losses of $4.1 million ($0.02 per share). Excluding these items would result in adjusted net income1 of $22.7 million or $0.10 per share for the second quarter of 2019. In the second quarter of 2018, the Company reported net income of $5.0 million or $0.02 per share.
Agnico Included in the second quarter of 2019 net income, and not adjusted above, a non-cash stock option expense of $3.3 million ($0.01 per share). In the first six months of 2019, the Company reported net income of $64.8 million, or $0.28 per share. This demonstrated a strong positive movement compared with the first six months of 2018, when net income was $49.9 million, or $0.21 per share.
Agnico Eagle attribute the increase in net income in the first six months of 2019 compared to the prior year period to lower amortization and income and mining taxes, partially offset by lower gold sales volume. In the second quarter of 2019, cash provided by operating activities was $126.3 million ($157.3 million before changes in non-cash components of working capital), as compared with the second quarter of 2018 when cash provided by operating activities was $120.1 million ($159.5 million before changes in non-cash components of working capital).
In the first six months of 2019, cash provided by operating activities was $275.0 million ($328.1 million before changes in non-cash components of working capital), a significant decrease compared to the first six months of 2018 when cash provided by operating activities was $327.8 million ($340.1 million before changes in non-cash components of working capital). Agnico Eagle cites this decrease to lower gold sales volumes, partially offset by higher realized gold prices and higher by-product revenue. Lower gold sales were mainly as a result of the expected lower gold production in the period due to reduced throughput levels at Meadowbank and mill shutdowns at LaRonde and Kittila.
Sean Boyd, Agnico Eagle Vice Chairman and Chief Executive Officer said, “The second quarter of 2019 was another period of strong operating performance with production and costs tracking well with guidance. One of the key highlights in the quarter was the declaration of commercial production at our Meliadine mine in Nunavut”, He went on to further indicate that ,”With Meliadine ramping up to full production over the balance of the year and Amaruq on schedule to achieve commercial production in the third quarter of 2019, the Company is well positioned for a strong second half from both a financial and operational perspective”.
Payable gold production in the second quarter of 2019 was 412,315 ounces at production costs per ounce of $735, total cash costs per ounce of $652 and all-in sustaining costs per ounce of $953. The company set production and cost guidance for 2019 at 1.75 million ounces, total cash costs per ounce and AISC per ounce in the range of $620 to $670 and $875 and $925, respectively. The company increased its capital budget to for 2019 $750 million from previous guidance of $660 million citing lower pre-commercial gold sales credited against capital at Meliadine, the advancement of the Amaruq underground development program and accelerated spending on the Meliadine saline water treatment system.
Total project development capital expenditures related to the construction of the Company’s new Nunavut mines, Amaruq and Meliadine, are expected to be below the combined capital expenditure forecast of $1.23 billion. The total project development capital expenditures for Meliadine were approximately $830 million.