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Agnico-Eagle Hikes Dividend

Zacks Equity Research

Agnico-Eagle Mines Limited (AEM) announced that its board of directors has approved a 10% hike in its regular quarterly cash dividend to 22 cents per share. The increased dividend will be paid on Mar 15, 2013 to shareholders of record as of Mar 1, 2013. This reflects the company’s commitment toward increasing its shareholder’s value.

In February 2012, the company announced a 25% hike in its regular quarterly cash dividend to 20 cents per share, which was paid on Mar 15, 2012 to shareholders of record as of Mar 1, 2012.

In October 2012, Agnico-Eagle released its third quarter 2012 results. The company’s adjusted earnings (excluding one-time items other than stock-based compensation expenses) of 63 cents per share outpaced the Zacks Consensus Estimate of 40 cents during the quarter.

Profit, as reported, came in at $106.3 million or 62 cents per share for the quarter compared with a loss of $81.6 million or 48 cents a year ago. The bottom line was boosted by strong gold production and healthy performance across its mines, especially at Meadowbank in Nunavut.

Consolidated revenues rose roughly 4.3% year over year to $537.8 million, beating the Zacks Consensus Estimate of $436.0 million. Payable gold production in the third quarter climbed 7.9% year over year to 286,971 ounces, riding on higher grades at LaRonde, Kittila, Meadowbank and Pinos Altos, as well as record throughput at Meadowbank.

Agnico-Eagle lifted its gold production guidance for 2012. The company now expects production to be 1,025,000 ounces of gold, up from its earlier view of 975,000 ounces. Total cash costs per ounce are projected to be approximately $660, down from the previous estimate of $690. Capital expenditure is expected to be approximately $457 million in 2012.

The company maintained its production guidance of approximately 990,000 ounces of gold for 2013. For 2014 and 2015, Agnico-Eagle is expected to realize organic production growth from the new La India mine, the restart of Goldex (M and E zones) mine, higher gold grades at LaRonde and continued operating strength at Meadowbank.

Agnico-Eagle, which competes with Barrick Gold Corporation (ABX) and Kinross Gold Corporation (KGC), currently retains a Zacks #3 Rank (Hold) for the short-term (1 to 3 months). Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.

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