Agnico Eagle CEO Sean Boyd
Canadian gold miner Agnico Eagle has issued a new production and capital expenditure (capex) guidance for 2020 to reflect the impact of Covid-19-related production shutdowns, but with mines ramping up again, the group says it is positioned for a strong second half.
NYSE- and TSX-listed Agnico Eagle expects its 2020 production to be 1.63-million to 1.73-million ounces, compared with its withdrawn guidance of 1.875-million ounces.
The guidance was reduced after the miner in March sent home its Nunavut-based workforce and reduced its mining activities at Meliadine and Amurq. Operations in Quebec were temporarily suspended for three weeks in March and April and its Mexican operation was also put on temporary suspension in April.
Agnico Eagle reports that gold production will gradually ramp up in Quebec, Mexico and Nunavut in the second quarter and a quarterly average of 480 000 oz to 500 000 oz should be achieved in the second half of the year.
The group still expects to produce about 2.05-million ounces in 2021 and 2.10-million ounces in 2022.
The lower-than-originally planned production caused by the temporarily suspension of activities at seven of the company’s mines during the first quarter increased the cost guidance for the year. Total cash costs should be $740/oz to $790/oz, compared with the withdrawn guidance of $725/oz to $775/oz. The all-in sustaining cost (AISC) guidance is forecast to be $1 025/oz to $1 075/oz, compared with the previously guided $975/oz to $1 025/oz.
In the first quarter of 2020, Agnico Eagle produced 411 266 oz, which includes the precommercial gold production from the Barnat deposit at Canadian Malartic, compared with 398 217 oz in the first quarter of 2019.
The higher level of gold production in the first quarter of 2020, when compared with the prior-year period, was primarily owing to increased production at the Meliadine mine, which achieved commercial production in May 2019.
Production costs per ounce in the first quarter of 2020 were $872, compared with $727 in the prior-year period. Total cash costs per ounce in the first quarter of 2020 were $836, compared to $623 in the prior-year period.
AISC in the first quarter of 2020 was $1 099/oz, compared to $836/oz in the prior-year period.
Meanwhile, Agnico Eagle reduced its capex guidance for 2020, from $740-million to $690-million, owing to a decrease in underground development costs at various operations as a result of temporary Covid-19 shutdowns and the deferral of development costs associated with the Amaruq underground project.
In addition, the Kittila shaft expansion has been delayed for at least three months owing to contractor travel restrictions related to the Covid-19 pandemic.
FINANCIAL RESULTS
Agnico Eagle has reported a quarterly net loss of $21.6-million, or net loss of $0.09 a share, and adjusted net income of $56-million, or $0.23 a share, for the first quarter of 2020. For the first quarter of 2019, the company reported net income of $37-million, or $0.16 a share.
"The first quarter of 2020 was challenging given the global Covid-19 pandemic and its impact on our gold production and unit costs in March as operations were reduced to minimum activities at all five of our Canadian mines. Throughout this crisis the health, safety and wellbeing of all our employees and the communities that we operate in have been our top priority and remain a key focus as we have begun to carefully restart and ramp up our Canadian operations,” says CEO Sean Boyd.
"Furthermore, despite the temporary shutdowns required to manage Covid-19, substantial progress was made in the first quarter at our LaRonde, Meliadine and Amaruq operations. As a result, we expect to have a strong second half this year with quarterly gold production expected to return to levels similar to the fourth quarter of 2019. Given the strong gold price and much weaker local currency environment than budgeted, we anticipate generating significant free cash flow in the second half of 2020.”
Agnico Eagle’s dividend has remained unchanged and it declared a quarterly dividend of $0.20 a share.