Agnico-Eagle profit plunges

Reuters

February 18, 2009 at 5:39 PM EST

TORONTO — — Agnico-Eagle Mines Ltd. [AEM-T]said Wednesday its fourth-quarter profit fell by two-thirds, as higher mining costs and plunging base metal prices offset the impact of higher gold production.

The Canadian gold producer earned $21.9-million (U.S.), or 15 cents a share, in the quarter ended Dec. 31. That was down from $65.2-million, or 46 cents, in the year-before period.

Stripping out non-cash currency translation gain, a tax recovery, and a non-cash writedown of investments, the company earned nil per share.

That just missed expectations of a profit of 1 cent a share from analysts polled by Thomson Reuters.

Agnico-Eagle Mines

Gold production rose 49 per cent to 89,630 ounces, while cash costs soared to $463 an ounce from $184, due in part to the impact of plunging copper and zinc prices, which Agnico produces as a byproduct and uses to offset gold mining costs.

Taking out the impact of the lower base metal prices, including downward revisions to sales recorded in the third quarter, but finalized in the fourth quarter at lower prices, cash costs would have been below $300 an ounce.

Also hurting results was a retreat in realized gold prices to $789 an ounce from $895.

Factoring in the price revisions, realized copper prices were actually negative during the quarter, while zinc prices fell 71 per cent.

Gold has rallied into the first quarter, and was around $985 an ounce Wednesday.

Toronto-based Agnico, which operates mines in Quebec and Finland, said its gold reserves rose 8 per cent during the quarter, and it set a target of 20 million to 21 million ounces by year-end 2010.

Yearly production is expected rise to 1.2 million ounces by 2010.

Asked about the company's growth plans past 2010, chief executive officer Sean Boyd said the company expected to wring more reserves out of its current properties.

"We don't have to make a major acquisition to grow the company," Mr. Boyd said in a conference call.

Capital costs are expected to total $450-million this year.