Agnico-Eagle profit misses estimates, cuts outlook

By Cameron French

TORONTO (Reuters) - Profit at Agnico-Eagle Mines (AEM.TO: Quote) dropped by a steeper than expected 78 percent in the second quarter, the company said on Wednesday, as it also cut its 2008 gold output forecast and warned of a 40 percent jump in capital costs.

The Canadian gold producer earned $8.3 million, or 6 cents a share, in the quarter ended June 30. That was down from $37.8 million, or 28 cents a share, in the year-before period, as the company's bottom line was stung by a 56 percent year-on-year drop in zinc prices.

Stripping out one-time items, core earnings were 9 cents a share, which fell short of the profit of 17 cents a share expected by analysts.

"It's certainly below my expectations and the street's," said Barry Allan, an analyst at Research Capital in Toronto.

"I know the street's not going to greet it well."

Payable gold production rose to 59,452 ounces at total cash costs of $113 an ounce, compared with 56,392 ounces a year earlier at cash costs of negative $699 an ounce, as the company recorded its zinc production as an offset to its gold mining costs.

However, the year-on-year fall in zinc prices, combined with lower zinc production, led to higher costs per ounce and the profit decline in the most recent quarter.

Realized gold prices were $804 an ounce, up from $683 an ounce in the year-before period.