Agnico Eagle Mines Ltd. posted record quarterly gold production during the third quarter, falling in line with where the company expected to be, its CEO said.
CEO Sean Boyd said on an Oct. 24 earnings call that Agnico Eagle expected its nearly 477,000 ounces of production. As a result of more output and decreased capital spending, the company also expected to generate free cash flow, Boyd said.
The company recently reached commercial production at the Amaruq satellite mine at Meadowbank in Nunavut, Canada, with the ramp-up ongoing. In terms of overall exploration, the company had "some encouragement" at the Canadian Malartic underground mine in Quebec, the CEO said. The operation will require more drilling and analysis.
"I think the fact that this was discovered is pretty consistent with our expectations of the underground exploration potential of the property when we bought it in 2014 and really consistent with our strategy at that time where we thought there was the potential to find additional mineralization underground," Boyd said. "And we knew that we were well-matched and positioned given our extensive underground skill set in the region."
Record output levels from Agnico Eagle, which achieved commercial production at Meliadine in Nunavut earlier in the year, was not exclusively driven by the two new mines, according to Boyd. The LaRonde complex in Quebec saw record production of about 107,000 ounces, and the Goldex operation in the province has seen record output since its restart. Additionally, the Canadian Malartic mine posted record throughput, and the Kittila mine in Finland saw record production.
"There's still upside in terms of being able to grow that production, but also the total operating margin is growing as we increase our gold production, and that's driving an increase in operating cash flow," the CEO said.
This year marks the Canadian miner's sixth straight year with an increase in total dividends paid, Boyd said, noting that the time frame corresponds with a period when the price of gold was relatively flat and the company spent the most on capital expenditures in its history.
The miner extended its Meadowbank operation by almost a year more than it expected a few years ago, he said, and the company is about at the point where it will transition to the Amaruq deposit instead, after it achieved commercial production on Sept. 30.
The recent period was also the Meliadine mine's first quarter of production. Agnico Eagle plans to move forward with phase two of that project in February.
"The gold price will determine where we are in April after what we would expect to be two very solid quarters of production and cash generation," Boyd said. "Our focus is to pay debt when it becomes due. That's certainly the intention, but the focus is also to optimize the investment opportunities that our current pipeline presents to us."
Agnico Eagle posted third-quarter net income of US$76.7 million, or 32 cents per share, increasing year over year from US$17.1 million, or 7 cents per share.