Agnico-Eagle reports second-quarter loss

Lower gold prices and production, as well as reduced interest income, led to a loss for Agnico-Eagle Mines (age-t) in the second quarter.

The company recorded a net loss of $1.2 million (or 3 cents per share) for the 3-month period, down from income of $3.9 million (10 cents per share) in the same period of 1996.

For the first half of 1997, the company recorded a loss of $2 million (5 cents per share), compared with earnings of $5.7 million (15 cents per share) in the first half of the previous year.

Operating cash flow declined in the recent second quarter to $2.7 million from $10 million in the second quarter of last year.

As a result of lower realized gold prices and reduced gold production, revenue declined during the quarter, dropping 26% to $18.1 million. The average gold price realized by Agnico during the second quarter of this year was US$343 per oz., compared with US$383 per oz. in last year’s second quarter.

Production at the LaRonde mine in Quebec dropped to 8,679 oz., owing to lower gold grades in the Main zone.

Proven and probable reserves at LaRonde stand at 5.9 million tons averaging 0.18 oz. gold per ton, equivalent to 1 million contained ounces. Resources stand at 21.8 million tons, equivalent to 3.5 million contained ounces.

Lower copper grades during the first six months of 1997 contributed to a drop in copper production of 800,000 lb. Higher copper prices in the first half of the year, however, partially offset lower production, resulting in a decrease in byproduct revenue of $200,000. The drop in byproduct revenue contributed to increased cash operating costs — the company spent US$213 to produce an ounce of gold in the first half of 1997, compared with US$192 in the same period last year.

The company did report some good news, however. Overall production for the first half of 1997 was 76,285 oz. at US$213 per oz., compared with projections of 69,000 oz. at a cash operating cost of US$247 per oz. Gold production for the year is budgeted at 160,000 oz. at a cash operating cost of US$215 per oz.

The company plans to mine higher-grade ore during the second half of 1997, and, based on high gold production and steady cash costs for the first half of the year, is on pace to exceed production and operating cost targets for the year.