April 29, 2009 / 8:38 PM / 9 years ago

UPDATE 2-Agnico-Eagle profit boosted by tax recovery

* First-quarter EPS $0.35/shr vs $0.20/shr

* Cuts 2009 production guidance on sluggish mine startup

* Gold production surges 80 percent year-over-year (Adds details, in U.S. dollars unless noted)

TORONTO, April 29 (Reuters) - Agnico-Eagle Mines (AEM.TO) said on Wednesday its quarterly profit surged 88 percent, helped by higher gold production and a $38.6 million tax recovery.

However, the company trimmed its full-year production guidance due to sluggish performance at its new mine in Finland

The Canadian gold producer earned $54.3 million, or 35 cents a share, in the quarter ended March 31. That was up from $28.9 million, or 20 cents a share, in the year-before period.

Stripping out nonrecurring items, including the tax recovery and a stock options expense, Agnico earned 13 cents a share.

That beat the average analyst expectation of 10 cents a share, as polled by Reuters Estimates.

Gold production rose 80 percent to 91,812 ounces, helped by output from the Goldex mine in Quebec, which opened last year.

Cash costs were $312 per ounce, compared with minus $399 in the first quarter of 2008, when Agnico’s byproduct base metals output more than offset the costs of gold mining.

However, the decline in copper and zinc prices, combined with the opening of the Goldex mine, which produces no byproduct metal, shifted the costs significantly, the company said.

Agnico’s Kittila mine in Finland poured its first gold in January, but the ramp-up has been slower than expected, prompting the company to cut its 2009 production guidance to 550,000 to 575,000 ounces at costs of $340 an ounce from its previous target of 590,000 ounces at $325 per ounce.

Kittila is expected to reach commercial production in the third quarter of 2009.

The company also raised its capital spending expectation to about $540 million from $450 million, due mostly to higher spending on Agnico’s Meadowbank project in the Canadian Arctic.

Agnico, whose flagship mine is the La Ronde operation in Quebec, poured first gold from its Lapa mine — also in Quebec — in April, it said.

Agnico said its pipeline is fully funded, and maintained its target of 1.2 million ounces of production in 2010.

Its shares fell 58 Canadian cents to C$55.43 on the Toronto Stock Exchange on Wednesday. The results were released after the market close.

$1=$1.20 Canadian Reporting by Cameron French; editing by Rob Wilson

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