UPDATE 2-Gold miner Agnico earnings miss but raises output forecasts

Wed Oct 29, 2014 7:49pm EDT
 
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(Recasts with earnings miss, adds production forecast for 2014)

Oct 29 (Reuters) - Agnico Eagle Mines reported lower-than-expected adjusted earnings on Wednesday partly due to increased spending on exploration but raised its gold production forecasts for both this year and next due to strong operating results at its mines.

For the second time this year, the Toronto-based gold producer raised its output forecast for 2014. It now expects to produce around 1.4 million ounces of gold this year, up from a previous forecast of between 1.35 million to 1.37 million ounces.

Agnico also lifted its production outlook for 2015 to 1.6 million ounces as it expects higher output from its Meadowbank mine in Canada, Kittila mine in Finland and Mexican operations.

The new projection compares with a previous forecast of 1.25 million ounces in 2015. That forecast, however, excluded production from the Canadian Malartic mine, which Agnico bought a stake in earlier this year.

Agnico reported a net loss in the third quarter of $15.1 million, or 7 cents a share, in the three months to the end of September due to a number of one-off non-cash items, including stock option expenses and foreign currency translation losses. That compared with a net profit of $74.9 million, or 43 cents a share, in the same period a year ago.

Adjusting for these one-time items, Agnico earned $4.2 million, or 2 cents a share. That was below the 15 cents analysts were expecting, according to Thomson Reuters I/B/E/S.

Desjardins analyst Michael Parkin said the earnings were lower than expected partly due to increased exploration spending by Agnico at its Amaruq project in Nunavut.

Agnico said it produced 349,273 ounces of gold in the third quarter, up from 315,828 ounces in the comparable quarter in 2013.

Its average cash costs for producing an ounce of gold on a by-product basis rose to $716 an ounce from $591 in the same period last year.

In recent quarters, Agnico and its peers have been slashing costs as the gold industry tries to restore profit eroded by a 35 percent fall in the gold price in the past three years, soaring mine site costs and overpriced acquisitions. However, analysts have said miners have cut as much as they can and expect costs to rise from here. (Reporting by Nicole Mordant in Vancouver; Editing by Chris Reese, Matthew Lewis and Lisa Shumaker)