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Forex loss helps trim Agnico-Eagle profit

Sean Boyd, president and CEO of Agnico-Eagle

Deborah Baic/The Globe and Mail

Agnico-Eagle Mines Ltd. says its second quarter profits fell by nearly a third, due to a foreign exchange loss, and a return to normal tax expenses.

The Toronto-based gold producer said Wednesday it returned to normal tax levels after a large tax recovery and foreign exchange gain last year.

The company reported a net profit of $68.8-million, or 41 cents per share, in the second quarter. That compared with earnings of $100.4-million, or 64 cents per share, in the same quarter of 2010.

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The company said that excluding those items, net income would have come in at $79.4-million, or 47 cents per share.

The actual results fell short of analyst expectations. Those polled by Thomson Reuters had predicted earnings per share of 44 cents.

Mining revenue jumped to $433-million from $347-million.

The company said it saw increased cash from operations, primarily due to a 25 per cent higher realized gold price and higher prices for byproduct metals.

"The company expects to deliver a strong second half operationally, with gold production anticipated to increase approximately 20 per cent over the first half of 2011", chief executive officer Sean Boyd said in a statement after markets closed,.

He added that Agnico-Eagle is following a new plan to keep it one of the fastest growers in the gold industry. On Wednesday it announced a deal to acquire a 9.2 per cent stake in Rubicon Minerals Corp., a Toronto miner that controls the Phoenix gold project in northern Ontario.

"To that end, we have made a $70-million strategic investment in Rubicon Minerals today, and also plan to enter into a technical services agreement to help advance their high-grade Phoenix deposit in Red Lake, Ont.," he said.

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Agnico-Eagle has mining operations, exploration and development projects in Canada, Finland, Mexico and the United States. The company's LaRonde mine is Canada's largest operating gold project in reserves.

In May, Agnico-Eagle acquired three million shares in Colibri Resource Corp., raising its stake to 18.6 per cent in the junior miner, which operates in Mexico.

Earlier that month it signed a $76-million joint venture deal with Evolving Gold Corp. for Evolving's Rattlesnake Hills project in Wyoming.

After a strong quarter in which profits more than doubled, Agnico-Eagle said in April that it plans to continue its current mine expansion plans, to boost growth, but Boyd acknowledged that gold miners have to consider increasing dividends to compete for investors.

The company slashed its outlook for the year in March, blaming a kitchen fire at its Meadowbank mine in Nunavut for reducing the number of staff and cutting production.

The gold miner expected staffing levels to return to normal by the end of April, around the same time when the processing rates and grades are expected to improve.

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