Proactive Investors - Agnico Eagle Mines (TSX:AEM) Limited shares have dropped more than 7% despite the senior gold producer reporting record annual gold production and operating cash flow attributed to solid operational performance across its recently-integrated asset portfolio for 2022.
In a statement, Agnico Eagle said including the full year of production from the legacy Kirkland Lake gold mines, which were acquired in February, total payable gold production in 2022 was a record 3,280,731 ounces at production costs per ounce of $821, total cash costs per ounce of $780 and all-in sustaining costs (AISC) per ounce of $1,090.
Agnico Eagle achieved payable gold production of 2,086,405 ounces in the full year 2021.
Net income for the full-year came in at $670.2 million, or $1.53 per share, compared to full-year 2021 net income of $561.9 million, or $2.31 per share.
Agnico Eagle added that its gold mineral reserves increased to a record level during 2022, with year-end gold mineral reserves increasing by 9% to 48.7 million ounces of gold, due primarily to significant additions at Detour Lake and the successful conversion of mineral resources at other operations.
Fourth quarter earnings top expectations
Adjusted net income per share for the fourth quarter topped expectations at $0.41 per share, ahead of the consensus expectation of $0.39.
The company noted that the increase in 4Q net income compared to the prior-year period was due primarily to higher mine operating margins and gains from derivative financial instruments, partially offset by higher amortization, exploration, and general and administrative expense from the inclusion of the Detour Lake, Fosterville, and Macassa mines, and the impairment on the La India mine.
Payable gold production in the quarter was 799,438 ounces at production costs per ounce of $834, total cash costs per ounce of $863 and AISC per ounce of $1,231. This is up from payable gold production of 501,932 ounces in the year-ago quarter.
"From a safety and operational standpoint, 2022 was another strong year as we had our best safety performance in our 66-year history, we met production forecasts and managed our costs in a highly inflationary environment," Agnico Eagle CEO Ammar Al-Joundi commented.
"It was a transformational year for Agnico Eagle. The merger with Kirkland Lake Gold and the pending acquisition of Yamana's Canadian assets will result in the consolidation of the Abitibi Gold Belt, one of the best gold regions in the world, and positions us well to continue to grow and create value for all our stakeholders for years to come.”
Looking ahead at 2023, Al-Joundi noted: “Our focus will be on optimizing and growing Detour Lake and Canadian Malartic and on establishing a plan to capitalize on existing infrastructure, including our excess mill capacity, in the Abitibi region of Quebec, with the potential to produce up to 500,000 ounces of gold per year by the end of the decade.”
Results to be viewed as ‘disappointing,’ analysts say
Analysts at Canaccord Genuity (TSX:TSX:CF, LSE:CF) said, overall, investors were likely to view Agnico Eagle’s 4Q release as “disappointing.”
“While the 4Q/22 results were a slight miss versus our estimates, largely on higher costs, Agnico’s 2023 and 2024 gold production guidance is about 6% below our forecasts and below the company’s previous guidance, after adjusting for the increased ownership interest in Canadian Malartic,” they wrote in a note to clients.
“The lower guidance reflects operational challenges and lower production levels at LaRonde and Macassa in addition to ongoing regulatory and legal restrictions at Fosterville and Kittila. 2023 cash cost guidance is about 9% higher than our forecast, as a consequence of inflationary pressures and reduced volumes.”
The analysts maintained their ‘Buy’ rating on the stock and price target of C$90.
Following the release of its financials, US-listed shares of Agnico Eagle were down 7.2% at US$45.74, while its Toronto-listed shares had shed 7.2% at C$61.60 on Friday morning.