* Goldcorp Q2 profit $1.11/shr vs loss 32 cts/shr
* Agnico Q2 EPS 63 cents vs 1 cent year ago
* Profits aided by strong gold price, increased production (Adds details, analyst comment; in U.S. dollars unless noted)
By Euan Rocha
Although production expenses rose for both Canadian miners, a big year-over-year increase in the price of bullion more than offset the impact of higher costs.
Gold, which rose to a record high of more than $1,260 an ounce in June, averaged nearly $1,200 an ounce in the quarter — up about 8 percent from the prior quarter and nearly 30 percent above year-earlier levels.
Goldcorp’s output rose 5 percent to 609,500 ounces helped by increased output from its Red Lake mine in Canada and its Los Filos mine in Mexico. While Agnico’s output more than doubled to over 250,000 ounces, driven by increasing output from a series of new mines.
Goldcorp, which has recently sold a number of non-core assets and acquired new projects that are located in proximity to its existing mines, said its second-quarter net income was boosted by gains from asset sales and a non-cash foreign exchange-related gain. [ID:nN02167705]
Goldcorp said net income in the quarter was $826.7 million, or $1.11 a share, compared with a year-ago loss of $232.4 million, or 32 cents a share, when results were hurt by a non-cash foreign exchange translation loss.
Excluding items, the company reported earnings of $198.8 million, or 27 cents a share, up from $99.2 million, or 14 cents a share.
Revenue rose 34 percent to $844.3 million, as gold ounces sold rose 6 percent, while its average realized gold price rose 30 percent to $1,208 per ounce.
Goldcorp said the ramp-up at Penasquito continues to meet and exceed expectations. The gold-silver-lead-zinc project will be Mexico’s largest open-pit mine once complete.
The company said construction at its Pueblo Viejo project in the Dominican Republic continues on schedule, with gold production expected to begin in the fourth quarter of 2011.
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Agnico-Eagle said its second-quarter gold production more than doubled from a year-ago, as new operations continued to ramp-up production.
The company began commercial production from its Lapa mine in Quebec and the Kittila mine in Finland in mid-2009, while its Meadowbank mine in the Canadian Arctic territory of Nunavut began production earlier this year.
The company said it earned $100.4 million, or 63 cents a share, in the quarter ended June 30. The latest results include a non-cash foreign currency translation gain and a one-time tax recovery that were slightly offset by non-cash stock-based compensation expenses.
That compared with year-before earnings of $1.2 million, or 1 cent a share, when profit was hit by a non-cash currency translation charge and stock option expenses.
Excluding items, the company reported earnings of 44 cents a share, above the consensus view of 39 cents a share, according to Thomson Reuters I/B/E/S.
Raymond James analyst Brad Humphrey noted that Agnico’s production ramp-up is moving along well.
“As far as production and costs go, it (Agnico) is in-line overall,” said Humphrey, adding that he was pleased with the company’s quarterly results.
Quarterly revenue more than doubled to $347.5 million.
The company reiterated its 2010 gold output forecast of between 1 million and 1.1 million ounces, but raised its cash cost forecast to between $425 and $450 an ounce, from the $400 an ounce level. ($1=$1.04 Canadian) (Reporting by Euan Rocha; editing by Rob Wilson and Carol Bishopric)