Agnico Eagle Reports First Quarter 2023 Results – Strong Operational Results with Record Safety Performance; Optimization Activities Progressing Well in the Abitibi Gold Belt; 2022
Stock Symbol: AEM (NYSE and TSX)
For further information: Investor Relations (416) 947-1212
(All amounts expressed in U.S. dollars unless otherwise noted)
AGNICO EAGLE REPORTS FIRST QUARTER 2023 RESULTS – STRONG OPERATIONAL RESULTS WITH RECORD SAFETY PERFORMANCE; OPTIMIZATION ACTIVITIES PROGRESSING WELL IN THE ABITIBI GOLD BELT; 2022 SUSTAINABILITY REPORT RELEASED; YAMANA TRANSACTION AND SAN NICOLAS JOINT VENTURE TRANSACTION CLOSED
Toronto (April 27, 2023) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported financial and operating results for the first quarter of 2023.
"The year is off to a good start with strong operational results and the best quarterly safety performance in the Company's over 65-year history, which positions us well to meet our full year guidance projections. Costs were better than expected, primarily due to the strong operating results, favourable currency movements and a slight easing of inflationary pressures," said Ammar Al-Joundi, Agnico Eagle's President and Chief Executive Officer. "With the completion of the acquisition of Yamana's Canadian assets on March 31st, our focus in 2023 continues to be on the optimization of our strategic positions in the Abitibi gold belt, with an aim of increasing annual gold production from this region by approximately 500,000 ounces by the end of the decade. Efforts are ongoing to evaluate several opportunities to leverage existing infrastructure which has the potential to significantly increase future gold production at lower capital intensity and with a reduced environmental footprint. If realized, these opportunities have the potential to deliver increased returns to our shareholders with reduced execution and operating risk," added Mr. Al-Joundi.
First quarter 2023 highlights – Solid operational performance and important strategic consolidations
- Strong quarterly production and costs with record safety performance – Payable gold production1 in the first quarter of 2023 was 812,813 ounces at production costs per ounce of $804, total cash costs per ounce2 of $832 and all-in sustaining costs ("AISC") per ounce3 of $1,125. These results include only the Company's 50% of the production from the Canadian Malartic mine up to March 30, 2023, and 100% thereafter
- Solid quarterly financial results – The Company reported quarterly net income of $3.87 per share in the first quarter of 2023, with adjusted net income4 of $0.58 per share. Operating cash flow was $1.30 per share. The quarterly net income of $3.87 per share includes a remeasurement gain of approximately $1.5 billion arising from the acquisition of 50% of the Canadian Malartic complex not previously owned by the Company
- Gold production, cost and capital expenditure guidance reiterated for 2023 – Expected payable gold production in 2023 remains unchanged at approximately 3.24 to 3.44 million ounces with total cash costs per ounce expected to be between $840 and $890 and AISC per ounce expected to be between $1,140 and $1,190. Total capital expenditures (excluding capitalized exploration) for 2023 are still estimated to be approximately $1.42 billion. The Company's 2023 production, costs and capital expenditure guidance assumes 50% ownership of Canadian Malartic for the first three months of 2023 and 100% ownership for the last nine months of the year
- Update on key value drivers and pipeline projects
1 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
2 Total cash costs per ounce is a non-GAAP ratio that is not a standardized financial measure under IFRS and, unless otherwise specified, is reported on a by-product basis in this news release. For the detailed calculation of production costs per ounce, the reconciliation of total cash costs to production costs and information about total cash costs per once on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". 3 AISC per ounce is a non-GAAP ratio that is not a standardized financial measure under the IFRS and, unless otherwise specified, is reported on a by-product basis in this news release. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". 4 Adjusted net income and adjusted net income per share are non-GAAP measures that are not standardized financial measures under IFRS. For a reconciliation to net income and net income per share see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
- Odyssey project – Good progress was made on underground development and surface construction activities in the first quarter of 2023. Underground development via ramp access has now passed the bottom of the Odyssey South deposit and has reached the level of the first shaft access point. Shaft sinking activities have also commenced. The first production blast occurred at the Odyssey South deposit in late March 2023. Drilling activities were focused on infilling the internal zones at the Odyssey South deposit and mineral resource expansion of the East Gouldie deposit to the east and west
- Detour Lake – In the first quarter of 2023, the mill set a record for first quarter throughput and activities continued to focus on mill process optimization and improving availability with the goal of achieving and potentially exceeding throughput of 28.0 million tonnes per annum ("Mtpa"). Step out drilling continued to the west of the resource pit shells and the Company is integrating additional drill data into a revised mineral resource model that will be used to evaluate potential underground mining scenarios
- Optimization of assets and capital infrastructure in the Abitibi region – With the Company now owning of 100% of Canadian Malartic complex, the Company expects to have up to 40,000 tonnes per day ("tpd") of excess mill capacity at Canadian Malartic Complex starting in 2028. By maximizing the mill throughput in the region, the Company believes there is potential to increase future gold production at lower capital costs and with a reduced environmental footprint. Internal evaluations are underway to assess potential production opportunities at the Macassa near surface deposits and the Amalgamated Kirkland ("AK") deposit, Upper Beaver and the Wasamac project. These evaluations are expected to be completed by year-end 2023
- Continued exploration success at Meliadine, Kittila, LaRonde Zone 5 ("LZ5")
and Goldex expected to drive future mineral reserve and mineral resource additions
- Meliadine – Drilling has targeted the vertical extensions of the mineralized zones in the central part of the Tiriganiaq and Wesmeg deposits. At Tiriganiaq, a recent intercept yielded 17.2 grams per tonne ("g/t") gold over 4.9 metres at 770 metres depth. At Wesmeg, drilling in the eastern part of the deposit continues to return wide, high-grade intersections, with recent results including 8.9 g/t gold over 7.0 metres at 532 metres depth
- Kittila – Drilling has extended the Rimpi Main Zone to the north, outside of the current mineral resources, with highlights of up to 5.0 g/t gold over 9.2
metres at 1,141 metres depth. In addition, drilling has extended the Rimpi Zone mineralization down-plunge from the Roura area within the Parallel / Sisar zones, with intercepts of up to 5.0 g/t gold over 4.9 metres at 1,199 metres depth
- LZ5 – Drilling continues to expand the mineral resource envelope which now extends to a depth of 950 metres, with highlights including 3.0 g/t gold over 30.0 metres at 671 metres depth and 3.7 g/t gold over 10.1 metres at 840 metres depth. Inferred mineral resources are expected to be added at depths between 770 and 950 metres by year-end 2023
- Goldex – Infill drilling in the South Zone Sector 3 has returned high-grade results, including 9.8 g/t gold over 15.5 metres at 1,246 metres depth and 6.0 g/t gold over 12.0 metres at 1,274 metres depth. Initial drilling in the W Zone (approximately 200 metres west of the main Goldex deposit) has returned 1.8 g/t gold over 35.0 metres at 480 metres depth in an area with historical mineralized inventory
- Acquisition of Yamana's Canadian assets and 50/50 San Nicolás copper-zinc
| Acquisition of | Yamana's |
| joint venture with Teck c |
- Yamana Transaction – The previously announced transaction to acquire the Canadian assets of Yamana Gold Inc. ("Yamana") closed on March 31, 2023 (the "Yamana Transaction"), and the Company now owns 100% of the Canadian Malartic Complex, the Wasamac project located in the Abitibi region of Quebec and several other exploration properties located in Ontario and Manitoba. The closing of the Yamana Transaction further solidifies the Company's presence in the Abitibi gold belt, a region of low political risk and high geological potential, where the Company has a strong competitive advantage from having operated in the region for over 50 years
- San Nicolás – The previously announced 50/50 joint venture agreement between Teck Resources Limited ("Teck") and Agnico Eagle in respect of the San Nicolás copper-zinc development project located in Zacatecas, Mexico was entered into on April 6, 2023. Minera San Nicolás S.A.P.I de C.V., the joint venture company that holds the project, is now working to advance permitting and development of the project and is planning to submit an Environmental Impact Assessment and permit application for San Nicolás in 2023 and is targeting completion of a feasibility study in 2024
- 2022 sustainability report published, illustrating continued commitment to
strong ESG performance and implementation of a climate strategy action plan
- In 2022, Agnico Eagle maintained or improved performance across many key ESG
indicators, including safety performance, efficient management of water resources and increased Indigenous employment. In addition, efforts were accelerated in 2022 to maintain a climate resilient business by setting an interim reduction target of 30% of absolute Scope 1 and 2 emissions by 2030, and publication of the Company's first Climate Action Report
- A quarterly dividend of $0.40 per share has been declared
First Quarter 2023 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, April 28, 2023 at 8:30 AM (E.D.T.) to discuss the Company's first quarter 2023 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 1-416-764-8659 or toll-free 1-888- 664-6392. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Via URL Entry:
To join the conference call without operator assistance, you may register and enter your phone number at https://bit.ly/3VJ2EKh to receive an instant automated call back.
Replay Archive:
Please dial 1-416-764-8677 or toll-free 1-888-390-0541, access code 175235#. The conference call replay will expire on May 28, 2023.
The webcast, along with presentation slides, will be archived for 180 days on the Company's website.
Annual Meeting
The Company will host its Annual and Special Meeting of Shareholders (the "AGM") on Friday, April 28, 2023 at 11:00 am (E.D.T). During the AGM, management will provide an overview of the Company's activities.
Hybrid Format
The AGM will be held in person at the Arcadian Court, 401 Bay Street, Simpson Tower, 8th Floor, Toronto, Ontario, M5H 2Y4 and online at: https://meetnow.global/M5UPTSH.
The Company is conducting a hybrid meeting that will allow registered shareholders and duly appointed proxyholders to participate both online and in person. The Company is providing the virtual format in order to provide shareholders with an equal opportunity to attend and participate at the AGM.
For details explaining how to attend, communicate and vote virtually at the AGM please see the Company's Management Information Circular dated March 21, 2023 filed under the Company's profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Shareholders who have questions about voting their shares or attending the AGM may contact Investor Relations by telephone at 416.947.1212, by toll-free telephone at 1.888.822.6714 or by email at [email protected] or the Company's strategic shareholder advisor and proxy solicitation agent, Laurel Hill Advisory Group, at 1.877.452.7184 (toll free in North America), at 1.416.304.0211 (for collect calls outside of North America) or by e-mail at [email protected].
First Quarter 2023 Financial and Production Results
In the first quarter of 2023, net income was $1,816.9 million ($3.87 per share). This result includes the following items (net of tax): a remeasurement gain arising from the acquisition of the remaining 50% of the Canadian Malartic complex of $1,543.4 million ($3.29 per share), transaction costs relating to the acquisition of the Canadian assets of Yamana of $12.5 million ($0.03 per share), foreign currency translation gains on deferred tax liabilities of $10.6 million ($0.02 per share), and mark-to-market gains on the Company's investment portfolio of $4.1 million ($0.01 per share).
Excluding the above items results in adjusted net income of $271.3 million or $0.58 per share for the first quarter of 2023. For the first quarter of 2022, the Company reported net income of $119.1 million ($0.31 per share).
Included in the first quarter of 2023 net income, and not adjusted above, is a non-cash stock option expense of $4.7 million ($0.01 per share).
The increase in net income in the first quarter of 2023 compared to the prior-year period is primarily due to the remeasurement gain. This gain is a result of the application of purchase accounting relating to a business combination attained in stages, which requires the remeasurement on the subsequent acquisition of the Company's previously held 50% interest in the Canadian Malartic complex to fair value.
The fair value of the Company's previously held 50% interest and the resulting gain on remeasurement, along with the fair values allocated to assets acquired and liabilities assumed are preliminary, and are subject to adjustment based on further analysis and evaluation over the course of the measurement period which may not exceed twelve months from the acquisition date.
Additionally, higher mine operating margins5 from higher sales volumes (see discussion below) and lower other expenses from lower transaction costs were partially offset by higher amortization and higher income and mining taxes.
In the first quarter of 2023, cash provided by operating activities was $649.6 million ($608.8 million before changes in non-cash components of working capital), compared to the first quarter of 2022 when cash provided by operating activities was $507.4 million ($366.0 million before changes in non-cash components of working capital).
Cash provided by operating activities (before changes in non-cash components of working capital) increased in the first quarter of 2023 when compared to the prior-year period primarily due to higher sales volumes following the merger (the "Merger") between Agnico Eagle and Kirkland Lake Gold Ltd. ("Kirkland Lake Gold") as opposed to the 58 days of production that followed the Merger in 2022.
In the first quarter of 2023, the Company's payable gold production was 812,813 ounces. This compares to quarterly payable gold production of 660,604 ounces in the prior-year period. Including the entire quarter's production from the pre-Merger Kirkland Lake Gold mines, pro forma total gold production in the first quarter of 2022 was 806,329 ounces.
5 Operating margin is a non-GAAP measure that is not a standardized measure under IFRS. For a reconciliation to net income see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
Payable gold production increased in the first quarter of 2023 when compared to the prioryear period, primarily due to the inclusion of additional days of production in the 2023 period as described above at the Detour Lake, Fosterville and Macassa mines.
In the first quarter of 2023, production costs per ounce were $804, compared to $1,002 in the prior-year period. In the first quarter of 2023, total cash costs per ounce were $832, compared to $811 in the prior-year period.
Production costs per ounce decreased in the first quarter of 2023 when compared to the prior-year period primarily as a result of the revaluation of gold inventory held by Kirkland Lake Gold on February 8, 2022. A detailed description of the minesite costs per tonne at each mine is set out below. Total cash costs per ounce increased in the first quarter of 2023 when compared to the prior year period primarily due to higher inventory adjustments and lower by-product revenues from the LaRonde mine and Pinos Altos mine.
In the first quarter of 2023, AISC per ounce were $1,125, compared to $1,079 in the prioryear period. AISC per ounce increased in the first quarter of 2023 when compared to the prior-year period primarily due to higher total cash costs per ounce and higher sustaining capital expenditures, partially offset by lower general and administrative expenses.
Financial Flexibility Remains Strong After Acquisition of Yamana's Canadian Assets
Cash and cash equivalents increased to $744.6 million at March 31, 2023, from the December 31, 2022 balance of $658.6 million, primarily due to improved operating margins. On March 30, 2023 the Company drew down $1.0 billion from its unsecured revolving bank credit facility and funded the approximately $1.0 billion of cash consideration payable in connection with the Yamana Transaction.
In addition to the quarterly dividend, the Company contributed to shareholder returns through its normal course issuer bid ("NCIB"). In the first quarter of 2023, under the NCIB, the Company repurchased 100,000 common shares for $4.8 million. From the commencement of the NCIB on May 4, 2022 until March 31, 2023, under the NCIB, the Company repurchased 1,669,620 common shares for an aggregate of $74.6 million. The NCIB permits the Company to purchase up to $500.0 million of its common shares (up to a maximum of 5% of its issued and outstanding common shares). Purchases under the NCIB may continue for up to one year from the commencement day of May 4, 2022.
The Company intends to seek approval from the TSX to renew the NCIB, pursuant to which the Company would be permitted to purchase up to the lessor of (i) 5% of its issued and outstanding common shares and (ii) the number of common shares that may be purchased by the Company for an aggregate purchase price, excluding commissions of $500.0 million. Purchases under the NCIB may continue for up to one year from the expected commencement date of May 3, 2023. If approved, purchases under the NCIB will be made through the facilities of the TSX, the NYSE or other designated exchanges and alternative trading systems in Canada and the United States in accordance with applicable regulatory requirements. All common shares purchased under the NCIB will be cancelled.
Subsequent to quarter end, on April 7, 2023, Moody's upgraded its credit rating outlook for the Company to "positive" from "stable", while affirming the credit rating at Baa2, reflecting the Company's strong business and credit profile, while maintaining low leverage and conservative financial policies. On April 20, 2023, the Company entered into a credit agreement with a group of financial institutions that provides a $600 million unsecured term credit facility (the "Term Credit Facility"). The Company expects to draw down in full on the Term Credit Facility on April 28, 2023 and will use the proceeds to partially repay the amounts drawn on the unsecured revolving bank credit facility. The Term Credit Facility matures and all indebtedness thereunder is due and payable on April 21, 2025. The Term Credit Facility is available as a single advance in US dollars through SOFR and base rate advances, priced at the applicable rate plus a margin that ranges from 0.00% to 2.00% depending on the Company's credit rating. The Term Credit Facility may be prepaid without penalty. At March 31, 2023 the Company's net debt6 totaled $1,597.9 million.
Approximately 57% of the Company's remaining 2023 estimated Canadian dollar exposure is hedged at an average floor price above 1.32 C$/US$. Approximately 29% of the Company's remaining 2023 estimated Euro exposure is hedged at an average floor price of approximately 1.03 US$/EUR. Approximately 59% of the Company's remaining 2023 estimated Australian dollar exposure is hedged at an average floor price above 1.45 A$/US$. Approximately 33% of the Company's remaining 2023 estimated Mexican peso exposure is hedged at an average floor price above 20.70 MXP/US$. The Company's full year 2023 cost guidance is based on assumed exchange rates of 1.32 C$/US$, 1.10 US$/EUR, 1.40 A$/US$ and 20.00 MXP/US$.
Including the remaining diesel purchased for the Company's Nunavut operations on the 2022 sealift (consumed to mid-year 2023), approximately 50% of the Company's diesel exposure for 2023 is hedged at an average price of $0.80 per litre, compared to the 2023 cost guidance assumption of $0.93 per litre. These hedges have partially mitigated the
6 Net debt is a non-GAAP measure that is not a standardized measure under IFRS. For a reconciliation to long-term debt, see "Reconciliation of non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
effect of inflationary pressures to date and are expected to provide some protection against inflation going forward.
The Company will continue to monitor market conditions and anticipates continuing to opportunistically add to its operating currency and diesel hedges to strategically support its key input costs. Current hedging positions are not factored into 2023 and future guidance.
Dividend Record and Payment Dates for the Second Quarter of 2023
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.40 per common share, payable on June 15, 2023 to shareholders of record as of June 1, 2023. Agnico Eagle has declared a cash dividend every year since 1983.
Expected Dividend Record and Payment Dates for the 2023 Fiscal Year
| Record Date | Payment Date |
| March 1, 2023* | March 15, 2023* |
| June 1, 2023** | June 15, 2023** |
| September 1, 2023 | September 15, 2023 |
| December 1, 2023 | December 15, 2023 |
*Paid **Declared
Dividend Reinvestment Plan
See the following link for information on the Company's dividend reinvestment plan: Dividend Reinvestment Plan
International Dividend Currency Exchange
In the first quarter of 2023, the Company and Computershare Trust Company of Canada ("Computershare") entered into a Currency Exchange Services Agreement pursuant to which Computershare will now offer shareholders of the Company outside of Canada and the United States the opportunity to receive dividends in their preferred local currency. Computershare mailed enrollment forms and an information package to shareholders on April 17, 2023, and the service will be available beginning with the dividend to be paid in the second quarter 2023 for those shareholders that have registered. Any fees payable in connection with the currency exchange service will be paid by individual shareholders who elect to enroll in the program. For more information, please contact Computershare by phone at 1.800.564.6253 or online at www.investorcentre.com or www.computershare.com/investor.
Capital Expenditures
In the first quarter of 2023, capital expenditures were $310.5 million and capitalized exploration expenditures were $31.3 million, for a total of $341.7 million. Total expected capital expenditures (including capitalized exploration) remain in line with guidance for the full year 2023.
The following table sets out capital expenditures (including sustaining capital expenditures7 and development capital expenditures7) and capitalized exploration in the first quarter of 2023.
7 Sustaining capital expenditures and development capital expenditures are non-GAAP measures that are not standardized financial measures under IFRS. See "Note Regarding Certain Measures of Performance" and "Reconciliation of Non-GAAP Performance Measures – Reconciliation of Sustaining Capital Expenditures to Consolidated Statements of Cash Flow.
Capital Expenditures
(In thousands of U.S. dollars)
Capitalized Capital Expenditures* Exploration Three Months Ended Three Months Ended
March 31, 2023 March 31, 2023 Sustaining Capital Expenditures
| LaRonde complex | 15,739 | 255 |
| Canadian Malartic complex | 16,584 | — |
| Goldex mine | 4,738 | 84 |
| Detour Lake mine | 53,284 | — |
| Macassa mine | 6,390 | 258 |
| Meliadine mine | 13,077 | 2,009 |
| Meadowbank complex | 35,631 | — |
| Hope Bay project | 2 | — |
| Fosterville mine | 7,669 | 300 |
| Kittila mine | 8,910 | 1,425 |
| Pinos Altos mine | 7,997 | 253 |
| La India mine | 27 | — |
Total Sustaining Capital 170,048 4,584 $ $
Development Capital Expenditures
| LaRonde complex | 15,294 | — |
| Canadian Malartic complex | 29,818 | 1,203 |
| Goldex mine | 8,011 | 1,278 |
| Akasaba West project | 10,369 | — |
| Detour Lake mine | 22,608 | 8,467 |
| Macassa mine | 21,050 | 7,363 |
| Meliadine mine | 16,073 | 1,807 |
| Amaruq underground project | 331 | — |
| Hope Bay project | 475 | — |
| Fosterville mine | 3,141 | 5,963 |
| Kittila mine | 10,696 | — |
| Pinos Altos mine | 2,199 | 594 |
| Other | 363 | — |
| Total Development Capital | $ 140,428 $ | 26,675 |
| Total Capital Expenditures | $ 310,476 $ | 31,259 |
- Excludes capitalized exploration
2022 Sustainability Report Illustrates Continued Commitment to Strong ESG Performance and Implementation of Climate Strategy Action Plan