Gold has doubled since 2008, so you'd expect the gold mines that were green-lighted based on those old numbers to be generating massive cash flow by now. Some are. But some aren't, and the difference, as with so much of life, is execution.

Canadian miner Agnico-Eagle, for instance, had a tough 2011, with a mine-related problem raising costs, cutting production, and knocking its stock down by half. But its other properties are picking up the slack, so this year it gets to sell rising production into a reasonably strong market with fewer extraneous costs. The result:

Agnico-Eagle Begins 2012 With A Strong First-Quarter

(Kitco News) - After going through an awful year in 2011 that saw Agnico-Eagle Mines Ltd. (NYSE:AEM)(TSX:AEM) shut down a major mine, lower gold grades and expensive write-downs, the company has kicked off 2012 with strong operating and financial results.

"We had a difficult year last year with some operating challenges," said Sean Boyd, president and chief executive officer of Agnico-Eagle. "We've worked hard over the last several months on optimizing our operations as we move forward."

Agnico-Eagle produced 254,955 payable gold ounces in the first quarter compared to 252,362 payable gold ounces produced during the same time last year. Two of the company's mines achieved record gold production in the quarter.

"A lot of these new mines are at the point where they are more mature and we can see that reflected in the results in the first quarter," said Boyd. "So we were extremely pleased that we had contribution from all of our mines."

Financial results were equally strong in the first quarter, with Agnico-Eagle posting a quarterly net income of $78.5 million, or 46 cents per share. The company had a net income of $45.3 million, or 27 cents per share, during the same period last year.

Enduring a harder 2012 is Goldcorp, another big Canadian miner that had its operating problem this year rather than last:

Goldcorp profit hurt by Ontario mine setback
TORONTO, April 25 (Reuters) - Canadian miner Goldcorp Inc reported a slim increase in its operating profit on Wednesday, as its most prolific mine was hit by operational problems that reduced output and offset most of the gains from a surge in bullion prices.

Vancouver-based Goldcorp said adverse ground conditions at the Red Lake mine in northern Ontario delayed the development of certain areas in the mine's high-grade zone. That, together with lower grades in certain other areas of the mine, led to a slow start to 2012.

The issues led to an 18 percent drop in Goldcorp's quarterly gold output and threw the miner's full-year production forecast into question. Its shares were down more than 3.7 percent in after-hours trading on Wednesday.

"We were clearly a bit disappointed with the production performance, I feel like we left an opportunity on the table," said Chief Executive Chuck Jeannes. "Overall I was happy that we saw increased earnings, increased revenues and increased cash flows quarter-on-quarter, but it could have been better."

Jeannes said output has begun to pick-up at Red Lake, but the company is now conducting a review to see whether it can make up the first-quarter shortfall over the rest of the year.

"We can certainly work around the issues. We don't have a concern about the long term future of Red Lake, but whether we can make up those ounces this year will be determined."

Canada's No. 2 gold miner said that for now it is sticking by its 2012 gold production forecast of 2.6 million ounces at total cash costs of $250 to $275 per ounce of gold on a by-product basis.

The lesson? For big, diversified miners, operating problems are seldom permanent or decisive. Mines have their ups and downs, and technical snags usually get fixed, after which production, costs and cash flow return to plan. And even when they don't, one mine's shortfall is frequently offset by pleasant surprises at other mines. That's the attraction of the majors versus the juniors: If a junior has just one or two properties and one of them fails, it's an existential threat. If one of Goldcorp's mines underperforms, it's one bad quarter (defined as only a slight increase in operating profit) followed by a return to normalcy.

This is not to say that majors will outperform the best juniors -- they probably won't -- but it is a lesson in how to play diversified miners: If you're confident that gold will rise from here, operating problems that crush the share price of an Agnico-Eagle or Goldcorp represent a buying opportunity. The worst case for a company like this is that it can't fix its problems in the near term and becomes a buy-out candidate, probably for a premium over its post-bad-quarter price.