2011 a year to forget for Agnico-eagle

TORONTO – For Sean Boyd, the lesson to take away from 2011 could not be more obvious.

“I think we’ve learned it’s better to underpromise and over-deliver,” the chief executive of AgnicoEagle Mines Ltd. said in an interview at the company’s annual meeting in Toronto on Friday.

For Agnico and its shareholders, 2011 was an annus horribilis like no other in its recent history. The gold miner faced countless operational problems at its remote Meadowbank mine in Nunavut, which never performed to expectations and was partially written off. Agnico also stunned investors by shuttering its Goldex mine in Quebec because of safety concerns. That move triggered class-action lawsuits over the company’s disclosure.

Agnico shares lost more than 50 per cent of their value last year despite fantastic gold prices. The company’s reputation as a top mine operator was also eviscerated.

Looking back, Boyd said his main regret was moving forward so rapidly at Meadowbank, where grades have disappointed. Cash costs at that mine are above $1,000 U.S. an ounce, and Agnico no longer expects them to improve very much.

“In hindsight, maybe we should have just drilled it for a year rather than continue the development track ... laid out by the junior company that previously owned it,” he said.

But aside from Meadowbank, Boyd said that Agnico’s performance has been excellent, with its other new mines (Kittila, Pinos Altos and Lapa) all doing well. Its flagship Laronde mine in Quebec also continues to deliver solid results after 24 years of operation. With all those projects running smoothly, the company can put more focus on finding efficiencies.

For Agnico to earn back the confidence of investors, it has to deliver strong results over multiple quarters. It took a major step in that direction this week, reporting adjusted first quarter earnings of 59 cents U.S. a share that were far ahead of analyst expectations.