Agnico Eagle Reports Record Free Cashflow, Allocates Additional Funds to Exploration

Agnico Eagle Mines (TSX:AEM,NYSE:AEM) announced its Q2 financial and operating results on Wednesday (July 31), reporting record numbers on the back of gold's strong price move during the period.

The company achieved net income of US$472 million, or US$0.95 per share, up 46 percent from the previous year. Its adjusted net income came to US$535.3 million, or US$1.07 per share — a new record.

Free cashflow also saw significant growth, marking the third consecutive quarter of record performance.

"We continue to deliver strong and reliable operational results which, combined with higher gold prices, drove record operating margin and free cash flow for the third consecutive quarter," said Ammar Al-Joundi, Agnico Eagle's president and CEO, in a press release. "We generated over half of a billion dollars of free cash flow in the second quarter."

Cash provided by operations increased by 33 percent compared to the same period last year, coming in at US$961.3 million, or US$1.92 per share. Payable gold production for the quarter was 895,838 ounces; production costs per ounce came in at US$862, while total cash costs per ounce were US$870 and all-in sustaining costs per ounce were US$1,169.

The company highlighted strong production at its Canadian Malartic, LaRonde and Fosterville mines.

Agnico is maintaining its full-year guidance for payable gold production at approximately 3.35 million to 3.55 million ounces, and announced a US$50 million increase in its exploration budget due to positive exploration results at Canadian Malartic, Detour Lake and Hope Bay. Hope Bay will receive the bulk of the funds allocated.

"In the East Gouldie deposit at Odyssey mine, recent exploration drilling continues to demonstrate the potential to grow the deposit laterally with good results both on the eastern and western extension outside of the current footprint of the mineral reserve outline," said Guy Gosselin, senior vice president of exploration at Agnico.

Jamie Porter, Agnico's CFO, highlighted the company's strong financial performance and focus on cost discipline.

"We generated record financial results for a third consecutive quarter, with adjusted EBITDA of approximately $1.2 billion and free cash flow of over $0.5 billion in the second quarter," Porter said. "During the quarter, we significantly strengthened our balance sheet, increased our liquidity to $2.9 billion, and reduced our net debt to under $1 billion, all supported by record-free cash flow. We also increased returns to shareholders through $50 million of share buybacks."

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.