TORONTO (Reuters) - Gold miner Agnico Eagle Mines Ltd (AEM.TO) reported a net loss on Wednesday, hurt in part by a maintenance shutdown, and said it is “reviewing all aspects” of its business in light of the recent drop in gold prices.
Gold prices have fallen sharply, from more than $1,600 an ounce early this year to below $1,200 in late June. The precious metal was trading around $1,320 on Wednesday.
“Given the current low gold price environment, we are in the process of reviewing all aspects of our business,” said Chief Executive Sean Boyd in a statement. But Boyd said Agnico’s planned growth in 2014 and 2015 would not be affected.
Agnico laid out $50 million in capital and other cost reductions for the rest of this year, and said its 2014 capital expenditures would be more than $200 million lower than the $600 million it last estimated.
Asked in an interview whether the company would consider asset sales, Boyd said it would “look at anything that would allow us to upgrade and improve the quality of our business.” But he said the first step was to “maximize and optimize.”
“We can’t determine exactly how long we will be in a volatile period for gold prices, but the appropriate approach was to be prudent and make sure that we maintain as much financial flexibility as we can,” he said.
Agnico’s results were hurt by a planned maintenance shutdown at the Kittila mine in northern Finland, where costs exceeded revenues in the quarter.
A spike in costs and uncertain outlook for gold have prompted miners around the world to scale back expansion plans over the last year, but when Agnico last reported earnings in April, Boyd said he believed the market was over-reacting.
On Wednesday, he said the company was on track to meet its 2013 production guidance, with stronger production figures from the LaRonde mine in Quebec, northern Canada’s Meadowbank and Kittila in the second half, as well as the start of production at Quebec’s Goldex.
A new technical study on Agnico’s next major development project, Meliadine in Canada’s far north, is expected in 2014, and Agnico emphasized that capital spending beyond that point is “subject to board approval and prevailing market conditions.”
Cash and equivalents dropped to $136 million by the end of the quarter, from $264 million at the end of the first quarter, hurt by lower production and prices. Agnico said it is “well within” debt covenants at current gold prices, and its earliest maturity is in 2017.
The company’s net loss for the second quarter was $24.4 million, or 14 cents a share, compared with net income of $43.3 million, or 25 cents, a year earlier. Revenue fell to $336.4 million from $459.6 million.
Excluding a currency gain and other items, the loss was $4.6 million, or 3 cents a share.
Reporting by Allison Martell; Editing by Tim Dobbyn