Agnico stock rises on record quarterly profit, free cash flow

Agnico Eagle Mines (TSX, NYSE: AEM) shares rose after the Canadian miner reported record quarterly profit and free cash flow on the strength of rising gold prices.

Adjusted net income for the second quarter jumped 82% to a record $976 million, or $1.94 a share, topping analyst expectations. Free cash flow more than doubled to $1.31 billion, or $2.60 a share, Toronto-based Agnico said Wednesday after the close of stock market trading.

The company’s operating margin – which is calculated by deducting production costs from mining operations revenue – jumped 55% to a record $2.03 billion.

“The better financial results are mainly due to stronger operating results,” Scotia Capital mining analyst Tanya Jakusconek said in a note.

Cost control

Agnico “continues to demonstrate strong quarterly results, maintaining its track record of meeting or exceeding quarterly expectations while remaining focused on cost control to expand margins,” added Shane Nagle, a mining analyst at National Bank Financial.

Shares of Agnico about rose 0.8% to C$172.01 Thursday in Toronto, boosting the company’s market capitalization to about C$86.5 billion. The stock has gained about 46% this year, topping the 9.5% gain of the benchmark S&P/TSX Composite Index.

Rising gold prices only explain part of the profit improvement. Agnico’s realized gold price averaged $3,288 during the second quarter, about 38% more than the $2,342 average from the same period a year ago. That outstripped a 5.7% increase in production costs to $911 per ounce.

Output drop

Quarterly gold production fell 3.3% to 866,029 oz. primarily due to lower production from the Canadian Malartic mines and Meadowbank mines in Canada, and Fosterville in Australia, Agnico said. Longer-than-expected Caribou migration in Nunavut, which affected both mining and milling operations at Meadowbank, curtailed output.

Gold sales also declined, falling 3.1% to 846,835 oz. from 874,230 oz. in the same period a year ago.

Agnico’s second-quarter performance “reflects the strength of the gold price environment, our disciplined cost management and the consistency of our operational execution,” CEO Ammar Al-Joundi said in the statement. “We remain focused on executing on our 2025 guidance and advancing our key growth projects to drive long-term value creation.”

Toronto-based Agnico said it expects to produce between 3.3 million and 3.5 million oz. of gold this year, unchanged from an earlier target. All-in sustaining costs should range from $1,250 to $1,300 per oz., the company added.

Excluding capitalized exploration, capital expenditures should range from $1.75 billion to $1.95 billion this year, Agnico also said. Including capitalized exploration, the figure rises to between $2.04 billion and $2.26 billion.