Agnico Eagle Generates Record Free Cash
The result was despite a drop in the gold price
Agnico Eagle Mines (TSX/NYSE: AEM) has reported better than planned second quarter production, which led to record free cashflow generation and record shareholder returns.
Payable gold production for the June quarter was 855,816 ounces, up from 825,109oz in the March quarter and better than the 845,000oz flagged earlier this month.
The company said the strong operating performance was led by Detour Lake in Canada, Kittila in Finland and Fosterville in Australia.
Group production costs were US$1114 per ounce, total cash costs were US$1054/oz and all-in sustaining costs were US$1459/oz, with the latter figure down from US$1483/oz in the March quarter.
Despite a drop in the company’s average realised gold price from US$4861/oz to US$4483/oz, free cashflow was a record US$1.33 billion, or US$2.66 per share, while cash from operating activities was US$2.14 billion, or US$4.27 per share.
Quarterly net income was US$1.6 billion, or US$3.19 per share, while adjusted net income was US$1.54 billion, or $3.07 per share.
Agnico Eagle’s cash balance increased by US$352 million to US$3.46 billion at the end of June, resulting in a net cash position of US$3.26 billion with total debt outstanding of US$197 million.
The company returned a record US$625 million to shareholders during the second quarter, including a quarterly dividend of US45c per share and the repurchase US$400 million worth of shares under its upsized US$2 billion buy-back program.
“Our high-quality portfolio delivered another strong quarter, with better-than-planned production and disciplined cost control driving strong margins and record quarterly free cash flow,” Agnico Eagle president and CEO Ammar Al-Joundi said.
“The strength of our business and our balanced capital allocation approach enabled us to reinvest in future growth, enhance our portfolio through the completion of the regional consolidation in Finland, further strengthen our balance sheet and return a record US$625 million to our shareholders through dividends and share repurchases during the quarter.
“Continued progress across our growth projects, supported by positive exploration results, reinforces our confidence in our long-term outlook, while our strong financial position supports our commitment to creating long-term value and delivering strong returns to our shareholders.”
Outlook for H2
Earlier this month, Agnico Eagle reported that a rock mass movement of around one million tonnes of material occurred along the north wall of the Barnat open pit at the Canadian Malartic complex in Quebec, Canada.
The area affected was, at the time, subject to enhanced geotechnical monitoring and mining has been suspended while the company carries out geotechnical assessments and remediation measures.
Under the current remediation plan, the moved rock mass material will remain in place, and a safety rock catchment area and berm will be constructed along portions of the north wall.
A new temporary access ramp alongside the southwest wall was built this month and will provide access to a redesigned open pit, with final pit and remediation designs currently being refined.
Remediation work is expected to be completed in the current quarter, with mining activities anticipated to resume in the fourth quarter of 2026.
Agnico Eagle expects the event to reduce gold production at Canadian Malartic by 60,000-80,000oz of gold in the current half and by up to 150,000oz in each of 2027 and 2028.
Total cash costs at Canadian Malartic are now expected to be around US$1260/oz this year, up from previous guidance of US$1187/oz.
As a result, group guidance for 2026 is expected to be at the lower end of the range of 3.3-3.5 million ounces.
Full-year total cash costs and AISC guidance for 2026 remains unchanged at US$1020-1120/oz and US$1400-1550/oz, respectively.
Total capital expenditure for 2026 (excluding capitalised exploration) is now expected to be between US$2.6-2.8 billion, up from US$2.2-2.4 billion, following the approval of the US$2.4 billion Hope Bay development in Nunavut, Canada, which was announced in May.
The operation is expected to produce 400,000-435,000oz of gold per year over an initial 11-year mine life from 2030.
At Canadian Malartic, the first phase of shaft sinking for the Odyssey underground was completed this month, reaching a depth of 1586m, while the development of underground exploration ramps at Detour Lake and Upper Beaver advancing in line with plans.
The San Nicolás copper-zinc project in Mexico, a 50:50 joint venture with Teck Resources (TSX: TECK) received the land use change and the environmental impact assessment permits this month, though Canaccord Genuity analyst Carey MacRury suggested a construction decision could be delayed pending the closing of Teck’s takeover by Anglo American (LSE: AAL).
During the June quarter, Agnico Eagle increased its stake in Wallbridge Mining Company (TSX: WM) via a C$22.4 million investment, and last week, it paid C$60 million for a stake in Pierre Lassonde’s new float, Cadillac Mines Corporation.