July 30, 2009 / 6:54 PM / 8 years ago

UPDATE 1-Agnico-Eagle shares up on strong results, outlook

* Core earnings of $0.16/ shr top expectations

* May raise dividend, seek development assets

* Shares up 6.8 percent at C$60.71 (In U.S. dollars, unless noted)

By Cameron French

TORONTO, July 30 (Reuters) - Shares of Agnico-Eagle Mines (AEM.TO) jumped nearly 7 percent on Thursday after the gold miner reported stronger than expected second-quarter results.

The company, which is boosting its annual gold output from 276,762 ounces last year to a forecast 1.2 million ounces next year, also plans to raise its dividend next year and is on the lookout for early-stage development assets, Chief Executive Sean Boyd said.

Toronto-based Agnico said late on Wednesday its net profit fell to $1.2 million, or 1 cent a share, from $8.3 million, or 6 cents a share, as the company took $13.3 million in non-cash losses.

But core earnings of 16 cents a share topped analyst expectations of 12 cents a share, as polled by Reuters Estimates.

“Agnico had a good quarter,” John Ing of investment dealer Maison Placements said in an interview.

Blackmont Capital analyst Richard Gray boosted his 12-month price target to C$83 from C$82 on the results, implying a 37 percent rise over the next year.

He said the better than expected results were due to lower mining costs and on higher price adjustments to previous base metal sales.

At mid-afternoon, Agnico’s shares were up C$3.86 at C$60.71, easily the strongest Toronto-listed gold miner.

The company has opened three mines this year, and plans to open its Meadowbank project in Nunavut early in 2010, which will bring its current round of expansion to an end and drastically reduce its capital spending plans over the next two years.

Agnico spent about $900 million last year, and expects to spend about $550 million this year. Capital spending in 2010 should be a bit over $200 million, and below $100 million in 2011 and 2012, it said.

Speaking on a conference call on Thursday, Boyd said Agnico would probably use available cash flow next year to raise its dividend and look for early-stage properties that it can develop into mines.

“We will look for opportunities to increase our production beyond 2014 through acquisition,” he said.

$1=$1.08 Canadian Reporting by Cameron French; editing by Rob Wilson

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