Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Agnico-Eagle Worth Its Wait

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

I'd venture to guess that "I didn't do it" has to be among the most commonly told fibs on the planet.

If gold miner Agnico-Eagle (NYSE: AEM  ) were to say that, though, after careful review of the evidence I would have to agree. Agnico missed analyst expectations for non-GAAP numbers for the third quarter by $0.02. The company reported pretty dismal earnings of $0.10 per share in GAAP earnings, which even included some one-time gains. More disappointing still was the year-over-year reduction in cash from operations despite higher gold prices and increased gold production. Given the dreary numbers, Fools may be surprised to learn that I hope Agnico-Eagle doesn't change a thing. Keep up the good work, people!

With gold spending a surprising amount of time below $800, I fully expected this third quarter to be a challenging one. Megaminer Barrick Gold (NYSE: ABX  ) also missed expectations, and Newmont Mining's (NYSE: NEM  ) production costs rose to $480 per ounce.

Higher costs have been a common theme as the prices for base metals like zinc and lead -- which typically lessen the costs of gold production through byproduct accounting -- have fallen precipitously. This zinc effect put a major strain on Agnico's second-quarter results, too, and has affected diversified miners like Teck Cominco (NYSE: TCK  ) . Yamana Gold (NYSE: AUY  ) , for its part, has its fate linked somewhat with that of copper. As with gold prices, Agnico has no control over price volatility in byproduct metals, but Fools would love for zinc to mount a recovery in time for far greater gold production in the company's medium-term pipeline.

Agnico-Eagle raised gold production by 23% over the year-ago quarter as the new Goldex mine began commercial production and the Kittila mine in Finland is deep into its commissioning. Agnico paired this increased production with an impressive cash cost of $240 per ounce -- half that just reported by Newmont. As Kittila begins to hit its stride, Agnico expects record gold production in the fourth quarter.

To be sure, Agnico lost some money on investments during the quarter. Meanwhile, the company ended up with a $40 million gain and 760,000 shares of Goldcorp (NYSE: GG  ) when that company purchased a small exploration company in which Agnico held a sizable stake.

While we wait for gold and zinc prices to go back up, my only message to Agnico-Eagle is, again: Keep up the good work.

Further Foolishness:

Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 85 companies, and you'll find Christopher's comments on most of them.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He owns shares of Agnico-Eagle Mines, Yamana Gold, and Teck Cominco. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 767541, ~/Articles/ArticleHandler.aspx, 5/27/2016 10:39:57 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,857.60 29.31 0.16%
S&P 500 2,094.48 4.38 0.21%
NASD 4,920.00 18.23 0.37%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/27/2016 10:24 AM
AEM $45.06 Down -0.01 -0.02%
Agnico-Eagle Mines… CAPS Rating: **
ABX $17.04 Down -0.10 -0.55%
Barrick Gold Corp. CAPS Rating: ***
AUY $4.34 Down -0.06 -1.25%
Yamana Gold, Inc.… CAPS Rating: ***
GG $16.90 Down +0.00 +0.00%
Goldcorp, Inc. (US… CAPS Rating: ***
NEM $32.48 Up +0.03 +0.09%
Newmont Mining Cor… CAPS Rating: ***
TCK $9.44 Down -0.22 -2.28%
Teck Resources Lim… CAPS Rating: ***