Agnico Eagle Reports Record Free Cashflow, Allocates Additional Funds to Exploration
Agnico Eagle Mines (TSX:AEM,NYSE:AEM) announced its Q2 financial and operating results on Wednesday (July 31), reporting record numbers on the back of gold’s strong price move during the period.
The company achieved net income of US$472 million, or US$0.95 per share, up 46 percent from the previous year. Its adjusted net income came to US$535.3 million, or US$1.07 per share — a new record.
Free cashflow also saw significant growth, marking the third consecutive quarter of record performance.
“We continue to deliver strong and reliable operational results which, combined with higher gold prices, drove record operating margin and free cash flow for the third consecutive quarter,” said Ammar Al-Joundi, Agnico Eagle’s president and CEO, in a press release. “We generated over half of a billion dollars of free cash flow in the second quarter.”
Cash provided by operations increased by 33 percent compared to the same period last year, coming in at US$961.3 million, or US$1.92 per share. Payable gold production for the quarter was 895,838 ounces; production costs per ounce came in at US$862, while total cash costs per ounce were US$870 and all-in sustaining costs per ounce were US$1,169.
The company highlighted strong production at its Canadian Malartic, LaRonde and Fosterville mines.
Agnico is maintaining its full-year guidance for payable gold production at approximately 3.35 million to 3.55 million ounces, and announced a US$50 million increase in its exploration budget due to positive exploration results at Canadian Malartic, Detour Lake and Hope Bay. Hope Bay will receive the bulk of the funds allocated.
“In the East Gouldie deposit at Odyssey mine, recent exploration drilling continues to demonstrate the potential to grow the deposit laterally with good results both on the eastern and western extension outside of the current footprint of the mineral reserve outline,” said Guy Gosselin, senior vice president of exploration at Agnico.
Jamie Porter, Agnico’s CFO, highlighted the company’s strong financial performance and focus on cost discipline.
“We generated record financial results for a third consecutive quarter, with adjusted EBITDA of approximately $1.2 billion and free cash flow of over $0.5 billion in the second quarter,” Porter said. “During the quarter, we significantly strengthened our balance sheet, increased our liquidity to $2.9 billion, and reduced our net debt to under $1 billion, all supported by record-free cash flow. We also increased returns to shareholders through $50 million of share buybacks.”
Work progressing at Upper Beaver gold-copper project
Agnico also announced promising strides at its Upper Beaver project in Ontario, Canada.
The company is committing US$200 million over the next three years to further evaluate and reduce risks associated with the project, with plans for both an exploration decline and shaft.
“We see the potential for Upper Beaver to be a low-cost, long-life project, with a solid risk-adjusted return and upside potential that supports moving us to the next phase,” said Dominique Girard, senior vice president of operations.
The company completed an internal review of Upper Beaver in June, saying it has the potential to yield an annual average of around 210,000 ounces of gold and 3,600 metric tons of copper, with production possibly beginning as soon as 2030.
In 2024, the company plans to spend around US$50 million on constructing surface facilities, site preparation and shaft collar excavation. Initial site work began earlier this year, with approximately US$15 million spent in H1.
Upper Beaver is located in Northeastern Ontario, about 25 kilometers east of Kirkland Lake. The district has a rich history of over 110 years in mineral exploration and mining, producing more than 42 million ounces of gold.
The mineralization at Upper Beaver extends along a 400 meter strike length and reaches depths of up to 2,000 meters, remaining open at depth. The current plan anticipates open-pit production from 2030 to 2034 at an average rate of 2,000 metric tons per day, with 500 metric tons per day stockpiled for later processing.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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