Agnico Eagle Reports Fourth Quarter and Full Year 2015 Results – Strong Operational Performance Yields Record Annual Production; Updated Amaruq Mineral Resources and Initial Mineral Resources Declared at El Barqueño and the Sisar Zone at Kittila
Stock Symbol:
AEM (NYSE and TSX)
For further information: Investor Relations (416) 947-1212
(All amounts expressed in U.S. dollars (“$” or “US$”) unless otherwise noted)
AGNICO EAGLE REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS – STRONG OPERATIONAL PERFORMANCE YIELDS RECORD ANNUAL PRODUCTION; UPDATED AMARUQ MINERAL RESOURCES AND INITIAL MINERAL RESOURCES DECLARED AT EL BARQUEÑO AND THE SISAR ZONE AT KITTILA
Toronto (February 10, 2016) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the “Company”) today reported a quarterly net loss of $15.5 million, or a net loss of $0.07 per share for the fourth quarter of 2015. This result includes a noncash foreign currency translation loss on deferred tax liabilities of $8.6 million ($0.04 per share), various mark-to-market adjustment losses of $5.0 million ($0.02 per share), unrealized losses on financial instruments of $3.3 million ($0.01 per share), non-cash foreign currency translation losses of $1.3 million ($0.01 per share), non-cash stock option expense of $3.6 million ($0.02 per share) and non-recurring gains of $2.4 million ($0.01). Excluding these items would result in adjusted net income of $3.9 million ($0.02 per share) for the fourth quarter of 2015. In the fourth quarter of 2014, the Company reported a net loss of $21.3 million or a net loss of $0.10 per share.
Fourth quarter 2015 cash provided by operating activities was $140.7 million ($112.6 million before changes in non-cash components of working capital), this compares to cash provided by operating activities of $164.0 million in the fourth quarter of 2014 ($151.6 million before changes in non-cash components of working capital). The decrease in cash flow before changes in working capital during the current period was largely due to a tax adjustment in the fourth quarter of 2015.
"In 2015, our operations continued to perform well, which allowed us to do better on both our production and cost guidance for the fourth consecutive year. Despite a volatile gold price environment, we doubled our exploration spending, continued to advance our pipeline of development projects, and reduced our net debt by approximately $190 million", said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “Over the next three years, we are forecasting stable annual production and costs, which should allow us to continue to invest in our existing mines, maintain funding levels at our key exploration projects, advance our development pipeline in Nunavut at a steady and measured pace and maintain our history of continuous dividend payments to shareholders”, added Mr. Boyd.
Fourth quarter and full year 2015 highlights include:
- Guidance exceeded for fourth consecutive year – Payable production1 in 2015 was 1,671,340 ounces of gold at total cash costs2 per ounce on a by-product basis of $567, compared to guidance of 1,650,000 ounces at total cash costs per ounce on a by-product basis of $600. All-in sustaining costs per ounce3 (“AISC”) on a byproduct basis for 2015 were $810, compared to guidance of $850 per ounce
- Stable production and costs expected through 2018 – Average annual production from 2016 to 2018 is forecast to be approximately 1.53 million ounces of gold. Production for 2016 is forecast to be between 1.525 and 1.565 million ounces of gold with total cash costs per ounce on a by-product basis of between $590 and $630 per ounce. AISC for 2016 are forecast to be between $850 and $890 per ounce. Costs were calculated using a US$/C$ exchange rate of 1.30, EURO$/US$ exchange rate of 1.10 and a US$/MXP exchange rate of 16.00
- Increased gold reserve grades at key mines, significant increase in year-end 2015 gold resources, slight decline in gold reserves after mining depletion – Gold reserve grades increased at the LaRonde, Canadian Malartic, Goldex and La India mines. Measured and indicated mineral resources were up 1%, while
1Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
2Total cash costs per ounce is a Non-GAAP measure. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures” below. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. See “Note Regarding Certain Measures of Performance”. For information about the Company’s total cash costs per ounce on a co-product basis please see “Reconciliation of Non-GAAP Performance Measures”.
3All-in-sustaining costs per ounce is a Non-GAAP measure and is used to show the full cost of gold production from current operations. For a reconciliation to production costs, see “Reconciliation of Non- GAAP Financial Performance Measures – Reconciliation of Production Costs to All-In Sustaining Costs per Ounce of Gold Produced” below. The Company calculates all-in sustaining costs per ounce of gold produced as the aggregate of total cash costs per ounce on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock option expense) and reclamation expenses divided by the amount of gold produced. All-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as all-in sustaining costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. The Company's methodology for calculating all-in sustaining costs per ounce may not be similar to the methodology used by other producers that disclose all-in sustaining costs per ounce. See "Note Regarding Certain Measures of Performance". The Company may change the methodology it uses to calculate all-in sustaining costs per ounce in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council.
inferred mineral resources increased by 23%. Mineral reserves declined by only 5% (0.9 million ounces) to 19.1 million ounces due to mine depletion of approximately 1.8 million ounces
- Gold resources increased by 67% at Amaruq - Inferred mineral resources at Amaruq now total 3.3 million ounces (16.9 million tonnes grading 6.05 grams per tonne (“g/t”) gold). The 2016 Phase 1 drill program (approximately 75,000 metres) is now underway with a focus on expanding and upgrading mineral resources and outlining a second open pit deposit
- Initial inferred gold resources declared at El Barqueño and the Sisar Zone at Kittilla – At El Barqueño, initial inferred mineral resources are estimated to be 0.61 million ounces (19.7 million tonnes grading 0.96 g/t gold), while at Kittila the recently discovered Sisar Zone contains inferred mineral resources of 0.65 million ounces (3.4 million tonnes grading 5.91 g/t gold)
- Moderate 2016 capital spending preserves production optionality in Nunavut
- Expenditures at Amaruq are designed to expand and upgrade the gold
resources and outline a second source of open pit ore for the project. Planned spending levels at Meliadine for 2016 are expected to be sufficient to keep critical path elements moving forward. However, decreased spending as compared with previous internal forecasts is expected to delay the potential project start-up by approximately one year to 2020
- Improved financial flexibility – In 2015, net debt was reduced by $190 million, further strengthening the Company’s investment grade balance sheet
- A quarterly dividend of $0.08 per share declared
New Three-Year Guidance Plan - Stable Production and Cost Profile
The Company is announcing its production and cost guidance for 2016 through 2018. The Company expects average annual production of approximately 1.53 million ounces of gold over the next three years with a stable cost profile.
Highlights from the new production and cost guidance for 2016 through 2018 include:
- In 2016, payable production is expected to be between 1.525 million and 1.565 million ounces of gold. Total cash costs per ounce on a by-product basis in 2016 are expected to be between $590 and $630 using a US$/C$ exchange rate assumption of 1.30. Previous guidance for 2016 (from the February 2015 forecast) was 1.60 million ounces. The change from previous guidance is primarily due to the expansion of the Vault pit, which increased overall production from Meadowbank but deferred ounces from 2016 to 2017 and 2018, thereby extending the mine life
- Consolidated AISC for 2016 are expected to be between $850 and $890 per ounce. In 2017 and 2018, the Company’s goal is to reduce AISC below this range
- The estimated production level in 2017 is currently forecast to be approximately 1.55 million ounces of gold (up from 1.50 million ounces in its February 2015 forecast), while production in 2018 is forecast to be approximately 1.50 million ounces of gold. However, the Company is evaluating potential optimizations and opportunities (none of which have yet been approved for construction) at a number of existing operations to further enhance the production profile in 2018 and beyond. These include:
- LaRonde optimization potential − Bousquet Zone 5 − Lapa Zone 8 - Upper mine and Zulapa 7 - Deep 2 Zone
- Goldex optimization potential − Increased throughput from Deep Zone 1 − Potential for accelerated development of Deep Zone 2 − Potential development of the Akasaba West satellite deposit
- Kittila optimization potential − Upper Rimpi Zone development − Potential development of the new Sisar Zone
- Mexican optimization potential − Satellite zones at Pinos Altos and Creston Mascota − Potential to expand reserves at La India
Development Pipeline Expected to Provide Further Production Growth in 2019 and Beyond
The Amaruq and Meliadine projects in Nunavut, the El Barqueño project in Mexico, the Odyssey Zone and near pit/underground opportunities at Canadian Malartic (these opportunities are near or below the existing mining infrastructure), and a possible expansion of the LaRonde mine at depth have the potential to further add to the Company’s production profile in 2019 and beyond.
Fourth Quarter and Full Year 2015 Financial and Production Highlights
In the fourth quarter of 2015, strong operational performance continued at the Company's mines. Payable production in the fourth quarter of 2015 was 422,328 ounces of gold compared to 387,535 ounces in the fourth quarter of 2014. A detailed description of the production and cost performance of each mine is set out below.
Total cash costs per ounce on a by-product basis for the fourth quarter of 2015 were $547 compared to $662 per ounce for the fourth quarter 2014. The decrease in total cash costs per ounce on a by-product basis in the fourth quarter of 2015 is mainly due to higher production levels at the LaRonde, Canadian Malartic, Meadowbank, Kittila, Pinos Altos and Creston Mascota mines and favourable foreign exchange rates.
In the fourth quarter of 2015, the average value of the Canadian dollar, Euro and Mexican Peso were 10%, 7%, and 17% lower, respectively, than the Company’s 2015 currency price assumptions (see February 11, 2015 news release).
For the full year 2015, the Company recorded net income of $24.6 million, or $0.11 per share. In 2014, Agnico Eagle recorded net income of $83.0 million, or $0.43 per share.
Compared with the prior year, 2015 earnings were affected by lower realized gold and silver prices (down 8% and 14%, respectively, period over period) and increased exploration expenses (up 97%, period over period). In 2015, exploration drilling yielded a significant increase in inferred mineral resources at the Amaruq project in Nunavut, an initial inferred mineral resource at the El Barqueño project in Mexico and a maiden inferred mineral resource at the Sisar Zone at Kittila. The decrease in realized gold and silver prices and increase in exploration expenses were partially offset by higher gold production and favourable foreign exchange rates.
For the full year 2015, cash provided by operating activities was $616.2 million ($660.0 million before changes in non-cash components of working capital). This represents a decrease over 2014, when cash provided by operating activities totalled $668.3 million ($624.4 million before changes in non-cash components of working capital). The decrease was primarily due to increased inventory positions.
For the fourth consecutive year, Agnico Eagle has reported annual gold production in excess of annual guidance. The Company's payable production for the full year 2015 was 1,671,340 ounces of gold at total cash costs per ounce on a by-product basis of $567, compared to guidance of 1,650,000 ounces at total cash costs per ounce on a byproduct basis of $590 to $610. In 2014, full year production was 1,429,288 ounces at total cash costs per ounce on a by-product basis of $637.
The improvement in gold production in 2015 was a result of strong operating results from all of the mines, particularly Canadian Malartic as a result of the full year inclusion of production, LaRonde as a result of the higher grades from mining in more gold rich areas of the lower areas of the mine (below the 215 level), Goldex due to better productivity, increased throughput at Kittila from the ramp up of the mill expansion, increased stacking capacity at La India, and higher grades from Pinos Altos. The decrease in total cash costs per ounce on a by-product basis in 2015 was primarily due to higher gold production for 2015, strong cost control initiatives at all of the mines and the positive effect of foreign exchange rates.
For the full year 2015, the average value of the Canadian dollar, Euro and Mexican Peso were 5%, 4%, and 18% lower, respectively than the Company’s 2015 currency price assumptions (see February 11, 2015 news release).
AISC for 2015 on a by-product basis was $810 per ounce, which is below the previous 2015 guidance between $840 and $860 per ounce. The lower AISC is primarily due to lower than forecast total cash costs per ounce on a by-product basis in 2015 and a reduction in sustaining capital expenditures through a strong emphasis on sustaining capital expenditure controls.
Quarterly Dividend Declared
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.08 per common share, payable on March 15, 2016 to shareholders of record as of March 1, 2016. Agnico Eagle has now declared a cash dividend every year since 1983.
Expected Dividend Record and Payment Dates for 2016
| Record Date | Payment Date |
| March 1* | March 16* |
| June 1 | June 15 |
| September 1 | September 15 |
| December 1 | December 15 |
*Declared
Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend reinvestment plan. Dividend Reinvestment Plan
Conference Call Tomorrow
The Company's senior management will host a conference call on Thursday, February 11, 2016 at 11:00 AM (E.S.T.) to discuss financial and operating results.
Via Webcast:
A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 416-260-0113 or toll-free 1-800- 524-8950. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 1-647-436-0148 or toll-free 1-888-203-1112, access code 8252919. The conference call replay will expire on March 15, 2016 at 2:00 PM (E.S.T.). The webcast along with presentation slides will be archived for 180 days on www.agnicoeagle.com.
Liquidity - Existing Cash and Credit Facility Provide Flexibility
Cash and cash equivalents and short term investments decreased to $131.6 million at December 31, 2015, from the September 30, 2015 balance of $208.1 million partly as a result of using cash to repay outstanding balances on the Company’s credit facility.
The outstanding balance on the Company’s $1.2 billion credit facility was reduced from $350 million at September 30, 2015 to $265 million at December 31, 2015, resulting in availability under its credit lines of approximately $935 million, not including the $300 million accordion facility.
Total capital expenditures made by the Company in the fourth quarter of 2015 were $133.0 million, including $22.2 million at Meliadine, $20.0 million at Pinos Altos, $18.0 million at Meadowbank, $18.0 million at Kittila, $16.7 million at LaRonde, $13.6 million at Canadian Malartic (50% basis), $13.6 million at Goldex, $7.9 million at La India, $2.6 million at Creston Mascota and $1.0 million at Lapa.
Total capital expenditures for the full year 2015 were $449.8 million including $67.3 million at LaRonde, $66.7 million at Meliadine, $65.2 million at Meadowbank, $61.8 million at Pinos Altos, $56.4 million at Kittila, $48.8 million at Goldex, $43.4 million at Canadian Malartic (50% basis), $23.4 million at La India, $6.5 million at Lapa and $4.2 million at Creston Mascota.
Total sustaining capital expenditures made by the Company in the fourth quarter of 2015 were $90.4 million, including $18.0 million at Meadowbank, $16.7 million at LaRonde, $15.1 million at Kittila, $13.6 million at Canadian Malartic (50% basis), $11.4 million at Pinos Altos, $7.9 million at La India, $4.1 million at Goldex, $2.6 million at Creston Mascota and $1.0 million at Lapa.
Total sustaining capital expenditures for the full year 2015 were $305.1 million including $67.3 million at LaRonde, $65.2 million at Meadowbank, $45.7 million at Kittila, $41.6 million at Canadian Malartic (50% basis), $35.5 million at Pinos Altos, $23.4 million at La India, $15.7 million at Goldex, $6.5 million at Lapa, and $4.2 million at Creston Mascota.
Three-Year Guidance Plan Outlines a Stable Production and Cost Profile
The Company is announcing its production and cost guidance for 2016 through 2018. The Company expects average annual production of approximately 1.53 million ounces over the next three years with a stable cost profile.
Various internal projects at current operating mines have the potential to add incremental production in 2018, while Amaruq, Meliadine and El Barqueño are expected to add significant production starting in 2019 to 2020. However, the Company continues to take a prudent and measured approach to development while maintaining financial flexibility.
In 2016, payable production is expected to be between 1.525 million and 1.565 million ounces of gold. Total cash costs per ounce on a by-product basis in 2016 are expected to be in a range from $590 to $630 using a US$/C$ exchange rate assumption of 1.30. Previous production guidance for 2016 (from the February 2015 forecast), was 1.60 million ounces.
The change in production compared to the previous 2016 guidance is primarily due to the decision to proceed with the expansion of the Vault pit at Meadowbank (thereby extending the mine life). With the Vault extension, the production forecast at Meadowbank was reduced in 2016, but increased for 2017 and 2018.
Consolidated AISC for 2016 are expected to be between $850 and $890 per ounce using a US$/C$ exchange rate assumption of 1.30.
Sensitivities to the 2016 guidance are presented in the table below:
2016 commodity and currency price Approximate impact on total assumptions cash costs per ounce on a by-product basis Silver ($/oz) 16.00 $1 / oz change in $2 silver price Copper ($/mt) 4,700 10% change in Nil copper price Zinc ($/mt) 1,750 10% change in zinc Nil price Diesel (C$/ltr) 0.77 10% change in $2 US$/C$ 1.30 diesel price $5 1.0% change in US$/C$ EURO$/US$ 1.10 1.0% change in $1 Euro$/US$ US$/MXP 16.00 10% change in $3 US$/MXP
Estimated Payable Gold Production
| Northern | 2015 Actual | 2016 | 2017 | 2018 |
| Business | Forecast* Forecast | Forecast | ||
| LaRonde | 267,921 | 275,000 | 320,000 | 375,000 |
| Canadian | 285,809 | 280,000 | 295,000 | 305,000 |
| Malartic (50%) | 90,967 | 60,000 | 0 | 0 |
Lapa
| Goldex | 115,426 | 105,000 | 105,000 | 130,000 |
| Kittila | 177,374 | 200,000 | 190,000 | 200,000 |
| Meadowbank | 381,804 | 305,000 | 320,000 | 155,000 |
| 1,319,301 | 1,225,000 1,235,000 | 1,165,000 |
Southern Business
| Pinos Altos | 192,974 | 175,000 | 175,000 | 180,000 |
| Creston Mascota | 54,703 | 45,000 | 40,000 | 40,000 |
| La India | 104,362 | 100,000 | 105,000 | 115,000 |
| 352,039 | 320,000 | 320,000 | 335,000 | |
| Total Gold | 1,671,340 | 1,545,000 1,550,000 | 1,500,000 |
Production
2015 Actual 2016 Forecast* Total Cash Costs Per Ounce
Northern Business
| LaRonde | $590 | $592 |
| Canadian Malartic | 596 | 593 |
| Lapa | 590 | 640 |
| Goldex | 538 | 601 |
| Kittila | 709 | 646 |
| Meadowbank | 613 | 750 |
609 644 Southern Business
| Pinos Altos | 387 | 443 |
| Creston Mascota | 430 | 604 |
| La India | 436 | 470 |
408 474
Total $567 $608
*midpoint of expected ranges
In 2017, payable production is expected to be approximately 1.55 million ounces of gold. Previous guidance for 2017 (from the February 2015 forecast), was 1.50 million ounces. The increase in production compared to the previous 2017 guidance is primarily due to the Vault extension at Meadowbank, and increased production expected at Goldex and La India. The increased production levels at Goldex and La India are largely due to the forecast of improved operating efficiencies at the mines.
In 2018, payable production is expected to be approximately 1.50 million ounces of gold. However, the Company is evaluating potential optimizations (none of which have yet been approved for construction) at a number of existing operations to further enhance the Company’s production profile. These potential optimizations are discussed in more detail below.
Total cash costs per ounce on a by-product basis for 2017 and 2018 are expected to be similar to the 2016 forecast. In 2017 and 2018, the Company’s goal is to reduce AISC below the level forecast for 2016.
Stable Three-Year Gold Production Forecast
Since the prior three-year production guidance of February 11, 2015 ("Previous Guidance"), there have been several operating developments resulting in changes to the overall three-year production profile. Descriptions of these changes are detailed below.
Northern Business
| LaRonde Forecast | 2015 | 2016 | 2017 | 2018 | ||||||
| Previous Guidance (oz) | 245,000 | 300,000 | 330,000 | n.a. | ||||||
| Current Guidance (oz) | 267,921 (actual) | 275,000 | 325,000 | 375,000 | ||||||
| LaRonde 2016 Forecast | Ore Milled ('000 tonnes) | Gold (g/t), Mill Recovery | Silver (g/t), Mill Recovery | Zinc (%), Mill Recovery | Copper (%), Mill Recovery | Minesite Costs Per Tonne4 | ||||
| 2,106 | 4.28, 94.9% | 20.0, 76.0% | 0.35, 56.1% | 0.3, 80.8% | C$114 |
At LaRonde, the new cooling and ventilation infrastructure that was commissioned in 2015 has helped to enhance the productivity in the deeper portions of the mine. Connection of the 269 and 293 mining pyramids and full commissioning of the coarse ore conveyor is planned for 2016, which should improve mining flexibility. The slightly lower production guidance for 2016 (as compared to Previous Guidance) is largely due to a more conservative sequence of merging strategic mining pyramids. This year, about 89% of the ore will come from the higher grade lower mine area (below the 248 level). The increased production forecasts through 2018 largely reflect an increase in grade closer to that of the average mineral reserves.
| Canadian Malartic Forecast (50% basis) | 2015 | 2016 | 2017 | 2018 |
| Previous Guidance (oz) | 280,000 | 290,000 | 290,000 | n.a. |
| Current Guidance (oz) | 285,809 (actual) | 280,000 | 295,000 | 305,000 |
| Canadian Malartic 2016 Forecast | Ore Milled ('000 tonnes) | Gold (g/t) | Mill Recovery | Minesite Costs Per Tonne | Strip ratio |
|---|---|---|---|---|---|
| 9,505 | 1.03 | 89% | C$23* | 2.4:1.0 |
*includes the 5% NSR
At Canadian Malartic (in which Agnico Eagle has 50% ownership) guidance for 2016 has been slightly reduced as throughput levels are forecast to be approximately 53,000 tonnes per day (“tpd”). Any increase in throughput above this 53,000 tpd level remains contingent upon updating the existing operating permits. Several opportunities have been recognized to further optimize productivity, which could provide additional operational flexibility and result in increased production at the mine.
| Lapa Forecast | 2015 | 2016 | 2017 | 2018 |
| Previous Guidance (oz) | 75,000 | 50,000 | n.a. | n.a. |
4Minesite costs per tonne is a non-GAAP measure. For a reconciliation of this measure to production costs as reported in the financial statements, see “Reconciliation of Non-GAAP Financial Performance Measures” below. See also “Note Regarding Certain Measures of Performance”.
Current Guidance (oz) 90,967 (actual) 60,000 n.a. n.a.
| Lapa 2016 Forecast | Ore Milled ('000 tonnes) | Gold (g/t) | Mill Recovery | Minesite Costs Per Tonne |
|---|---|---|---|---|
| 406 | 5.3 | 86.8% | C$123 |
Under the current life of mine plan, Lapa is only expected to operate until early into the fourth quarter of 2016. Two targets have been identified through exploration as areas that could potentially support future mining activity potentially in 2018, in a restart scenario. However, additional exploration is required, and any potential production from these areas are expected to require synergies with other production opportunities such as the Bousquet Zone 5 or the Pandora project (in which the Company has 50% ownership.)
| Goldex Forecast | 2015 | 2016 | 2017 | 2018 |
| Previous Guidance (oz) | 100,000 | 100,000 | 90,000 | n.a. |
| Current Guidance (oz) | 115,426 (actual) | 105,000 | 110,000 | 130,000 |
| Goldex 2016 Forecast | Ore Milled ('000 tonnes) | Gold (g/t) | Mill Recovery | Minesite Costs Per Tonne |
|---|---|---|---|---|
| 2,323 | 1.52 | 92.6% | C$35 |
At Goldex, production in 2015 was above the Previous Guidance due to a faster than expected ramp-up in mining rates. Existing mineral reserves and exploitation of the M3 and M4 zones are expected to keep production levels and costs relatively constant through 2017. In July 2015, the Company announced approval of the Deep 1 project, which is expected to begin commissioning in 2018. Production guidance in 2018 reflects the potential to increase mill throughput levels beyond the current forecast of approximately 6,400 tpd.
| Kittila Forecast | 2015 | 2016 | 2017 | 2018 |
| Previous Guidance (oz) | 185,000 | 185,000 | 190,000 | n.a. |
| Current Guidance (oz) | 177,374 (actual) | 200,000 | 190,000 | 200,000 |
| Kittila 2016 Forecast | Ore Milled ('000 tonnes) | Gold (g/t) | Mill Recovery | Minesite Costs Per Tonne |
|---|---|---|---|---|
| 1,567 | 4.7 | 84.5% | €75 |