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Gold producer Agnico-Eagle Limited (AEM - Analyst Report) announced that it has selected Q9 Networks to deliver high availability co-location services in support of its critical IT systems. These co-location services will be crucial for a new hybrid cloud solution, especially designed for Agnico-Eagle’s IT systems such as ERP, financial and web-based applications.

Agnico-Eagle offers an improved level of private as well as public cloud-based IT services to its users but lacked data center infrastructure to achieve reliability targets consistently. Q9 Networks develops and operates its data centers to address the challenging IT infrastructure needs of increased power and cooling demands in high density computing devices. It was selected over other data center providers mainly because of its power and network time guarantees, high level of security and ability to meet the audit requirements.

With the services of Q9 on board, Agnico-Eagle intends to consolidate its IT and infrastructure from two internal facilities to a Q9 data center in Toronto. Consistent with this consolidation, Q9 will offer a secure physical space, highly reliable power, bandwidth and “round the clock” monitoring to facilitate optimum performance and fidelity for all Agnico-Eagle's business systems.

Agnico-Eagle operates with nearly 5,000 employees. The intended co-location at Q9 will do away with the complexities of managing multiple facilities, reduce expenses and provide secure access to critical IT systems for employees around the globe.

Agnico-Eagle’s third-quarter 2012 results, released in Oct 2012, were impressive as both revenues and adjusted earnings outpaced the Zacks Consensus Estimates. The company’s adjusted earnings (excluding one-time items other than stock-based compensation expenses) for the quarter were 63 cents per share, comprehensively beating the Zacks Consensus Estimate of 40 cents.

The company turned to a profit of $106.3 million (or 62 cents per share) in the quarter from a loss of $81.6 million (or 48 cents a share) a year ago, riding on strong gold production and healthy performance across its mines. Consolidated revenues rose roughly 4.3% year over year to $537.8 million, beating the Zacks Consensus Estimate of $436 million.

The company saw record production at its gold mines in Meadowbank in northern Canada and Pinos Altos in northern Mexico during the quarter. It raised its gold production target for 2012.

Agnico-Eagle has rebounded from a series of underperformances in 2011, which was partly attributable to the closure of its Goldex mine due to safety issues. The company maintains a solid exploration budget and is reinvesting in its assets to expand output.

However, any potential delay associated with the development projects may jeopardize future production. Moreover, uncertainties surrounding the Goldex mine could affect the stock’s performance.

Agnico-Eagle retains a short-term (1 to 3 months) Zacks Rank #4 (Sell). Other companies in the gold mining industry worth considering are AngloGold Ashanti Ltd. (AU - Snapshot Report), DRDGOLD Ltd. (DRD - Snapshot Report) and Franco-Nevada Corporation (FNV - Snapshot Report). All these companies hold a Zacks Rank #1 (Strong Buy).

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