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Energy

Miner Agnico beats quarterly profit on gold price surge, raises capex

(Reuters) - Canada's Agnico Eagle Mines AEM.TO reported a better-than-expected quarterly profit on Wednesday, benefiting from a surge in gold prices and sales volume, and raised its capex forecast for the year as it spends on several sites to boost production.

Agnico now expects total capital expenditure for the year to range between $720 million and $740 million, higher than earlier forecast of $690 million, as it develops its Kittila mine in northern Finland, its first to open outside of Canada.

The increased capital spending also includes development cost for its Amaruq underground project and Meliadine mine in Canada.

Massive stimulus packages to aid economies reeling from coronavirus-driven woes and a low interest rate environment have helped drive about 25% increase in prices of gold this year as the metal is seen as an inflation hedge.

Agnico said average realized price for gold jumped about 29% to $1,911 per ounce in the reported quarter, while gold production rose over 3% to 492,693 ounces.

The company, with operating mines in Canada, Finland and Mexico, said it expects similar production levels in the current quarter and raised its quarterly dividend by 75%.

Agnico, which earlier in the year experienced temporary shutdowns or reduced activity at certain mines due to COVID-19 restrictions, said it has seen limited impact on operational productivity.

However, the company added that its Nunavut-based workers remained at home in the third quarter and there is no set date for their return to work.

Net income rose to $222.6 million, or 91 cents per share, in the quarter ended Sept. 30 from $76.6 million, or 32 cents per share, a year earlier.

Revenue rose to $980.6 million from $683 million.

Excluding items, the company earned 78 cents per share. Analysts had expected a profit of 66 cents per share, according to Refinitiv IBES.

(This story has been refiled to correct to “it spends” from “its spends” in paragraph 1)

Reporting by Arundhati Sarkar in Bengaluru; Editing by Vinay Dwivedi and Maju Samuel

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