Agnico Eagle Reports Third Quarter 2016 Results: Strong Operational Performance Continues; Ongoing Exploration Yields Positive Results at Amaruq, Sisar Zone at Kittila, Olmeca Zone at El Barqueno and Barsele Project in Sweden
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 THIRD QUARTER 2016 RESULTS: STRONG OPERATIONAL PERFORMANCE CONTINUES; ONGOING EXPLORATION YIELDS POSITIVE RESULTS AT AMARUQ, SISAR ZONE AT KITTILA, OLMECA ZONE AT EL BARQUENO AND BARSELE PROJECT IN SWEDEN
Toronto (October 26, 2016) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the “Company”) today reported quarterly net income of $49.4 million, or net income of $0.22 per share for the third quarter of 2016. This result includes noncash stock option expense of $3.2 million ($0.01 per share), non-cash foreign currency translation losses of $2.5 million ($0.01 per share), a non-cash foreign currency translation loss on deferred tax liabilities of $1.3 million ($0.01 per share), various markto-market and other adjustment gains of $1.1 million (nil per share), non-recurring losses of $0.7 million (nil per share) and losses on financial instruments of $0.6 million (nil per share). Excluding these items would result in adjusted net income1 of $56.6 million, or adjusted net income of $0.25 per share for the third quarter of 2016. In the third quarter of 2015, the Company reported net income of $1.3 million or $0.01 per share.
For the first nine months of 2016, the Company reported net income of $96.2 million, or $0.43 per share. This compares to the first nine months of 2015, when net income was $40.1 million, or $0.19 per share. Financial results in the 2016 period were positively affected by higher revenues as a result of higher realized gold prices (approximately 8%), silver prices (approximately 9%) and other higher by-product metals revenues.
Third quarter 2016 cash provided by operating activities was $282.9 million ($233.7 million before changes in non-cash components of working capital). This compares to cash provided by operating activities of $143.7 million in the third quarter of 2015 ($217.8 million before changes in non-cash components of working capital). The increase in cash provided by operating activities before changes in non-cash components of working capital during the current period was mainly due to higher realized gold and silver prices and higher by-product metals revenues.
1 Adjusted net income is a Non-GAAP measure. For a discussion regarding the Company’s use of non- GAAP measures, please see “Note Regarding Certain Measures of Performance”.
For the first nine months of 2016, cash provided by operating activities was $658.0 million ($593.9 million before changes in non-cash components of working capital), as compared to the first nine months of 2015 when cash provided by operating activities was $475.5 million ($547.4 million before changes in non-cash components of working capital). The increase in cash provided by operating activities before changes in noncash components of working capital during the period was mainly due to the reasons described above.
“In the third quarter of 2016, our operations continued to deliver solid production and cost performance. As a result, we now expect to exceed the upper end of our 2016 production guidance of 1.6 million ounces”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “Furthermore, our strong operating performance resulted in increased operating cash flow and an increase in our cash position which further supports our development plans to grow production to approximately 2.0 million ounces in 2020”, added Mr. Boyd.
Third Quarter 2016 Highlights Include:
- Quarterly gold production – Payable gold production2 in the third quarter of 2016 was 416,187 ounces of gold at total cash costs3 per ounce on a by-product basis of $575 and all-in sustaining costs4 on a by-product basis (“AISC”) of $821 per ounce
- Record gold production at La India and record silver production in Mexico – In the third quarter of 2016, payable gold production was a new quarterly record of 30,779 ounces at the La India mine. Silver production was a new quarterly record of 825,000 ounces at the Company’s Mexican mines
- Whale Tail drilling yields deepest intersection to date – Hole AMQ16-1045 intersected the deepest mineralization in the Whale Tail deposit to date: 5.4 grams per tonne ("g/t") gold over 3.3 metres at 658 metres depth and 5.5 g/t gold over 16.1 metres at 725 metres depth, including 13.1 g/t gold over 3.5 metres at 732 metres depth (capped gold grades over estimated true width)
2 Payable 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.
3 Total cash costs per ounce is a Non-GAAP measure. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures” below. See also “Note Regarding Certain Measures of Performance".
4All-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” below. See also “Note Regarding Certain Measures of Performance".
- Infill drilling yields widest intercept to date in the Sisar Central Zone - Hole ROD16-702D intersected 6.6 g/t gold over 12.7 metres at 1,303 metres depth (uncapped gold grade over estimated true width)
- Lapa Mine Life Extended Through Year-End 2016 – Production is now forecast to continue through year-end 2016 and the Company is evaluating a number of opportunities that could potentially see the mine life extend into 2017
- Increasing cash position reduces net debt5 – In the third quarter of 2016, net debt was reduced by approximately $154 million, to $587.9 million, at September 30, 2016. Cash and cash equivalents and short term investments totalled $627.4 million
- A quarterly dividend of $0.10 per share was declared
Third Quarter Financial and Production Highlights
In the third quarter of 2016, strong operational performance continued at the Company's mines.
Payable gold production in the third quarter of 2016 was 416,187 ounces, compared to 441,124 ounces in the third quarter of 2015. The lower level of production in the 2016 period was primarily due to lower grades at Lapa and Meadowbank. A detailed description of the production and cost performance at each mine is set out below.
Total cash costs per ounce on a by-product basis for the third quarter of 2016 were higher at $575, compared to $536 per ounce for the third quarter of 2015. The increase in total cash costs per ounce on a by-product basis in the third quarter of 2016 was a result of lower gold production at Lapa and Meadowbank compared to the third quarter of 2015.
Payable gold production for the first nine months of 2016 was 1,236,455 ounces, compared to payable gold production of 1,249,012 ounces in the comparable 2015 period. Production in the 2016 period was lower due to the reasons outlined above.
For the first nine months of 2016, total cash costs per ounce on a by-product basis were $580. This compares to total cash costs per ounce on a by-product basis of $574 in the first nine months of 2015. The slightly higher costs in the 2016 period are due to the lower levels of production compared to the 2015 period.
AISC for the third quarter of 2016 were $821, compared to $759 per ounce for the third quarter of 2015. The higher AISC in the 2016 period are primarily due to lower
5Net debt is a Non-GAAP measure. For a reconciliation of net debt to the nearest IFRS equivalent, please see “Reconciliation of Non-GAAP Financial Performance Measures” below. See also “Note Regarding Certain Measures of Performance".
production, higher total cash costs per ounce on a by-product basis and higher capital expenditures compared to the 2015 period.
For the first nine months of 2016, AISC were $821, compared to $808 per ounce for the 2015 period. The higher AISC in the 2016 period are due to the same reasons set out above.
Strong Cash Position; Net Debt Reduced
Cash and cash equivalents and short term investments increased to $627.4 million at September 30, 2016, from the June 30, 2016 balance of $473.7 million. At September 30, 2016, net debt was $587.9 million, a decrease of $154 million from June 30, 2016.
The outstanding balance on the Company’s $1.2 billion credit facility remained nil at September 30, 2016. This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.
On October 26, 2016, the Company amended its $1.2 billion credit facility to extend the maturity date from June 22, 2020 to June 22, 2021.
Total capital expenditures (including sustaining capital) made by the Company in the third quarter of 2016 were $146.8 million, including $41.8 million at Meliadine, $22.2 million at Kittila, $22.1 million at Goldex, $15.7 million at LaRonde, $14.9 million at Canadian Malartic (50% basis), $12.8 million at Meadowbank, $10.4 million at Pinos Altos, $2.7 million at La India and $2.3 million at Creston Mascota.
Total capital expenditures (including sustaining capital) for the first nine months of 2016 were $378.9 million, including $85.2 million at Meliadine, $58.0 million at Goldex, $55.1 million at Kittila, $44.8 million at Canadian Malartic (50% basis), $45.4 million at LaRonde, $38.7 million at Pinos Altos, $35.0 million at Meadowbank, $7.7 million at La India and $5.8 million at Creston Mascota.
Total sustaining capital expenditures made by the Company in the third quarter of 2016 were $80.0 million, including $18.6 million at Kittila, $15.7 million at LaRonde, $14.6 million at Canadian Malartic (50% basis), $12.8 million at Meadowbank, $8.5 million at Pinos Altos, $4.9 million at Goldex, $2.6 million at La India and $2.3 million at Creston Mascota.
Total sustaining capital expenditures for the first nine months of 2016 were $225.1 million, including $46.1 million at Kittila, $45.4 million at LaRonde, $42.9 million at Canadian Malartic (50% basis), $35.0 million at Meadowbank, $28.2 million at Pinos Altos, $14.0 million at Goldex, $7.7 million at La India and $5.8 million at Creston Mascota.
Based on the exploration success in the first nine months of the year, the 2016 expensed exploration and corporate development budget has been increased by approximately $16 million to $154 million. Additional exploration spending is expected to occur at Amaruq, Barsele, La India and Odyssey.
Quarterly Dividend Declared
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per common share, payable on December 15, 2016 to shareholders of record as of December 1, 2016. Agnico Eagle has declared a cash dividend every year since 1983.
Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend reinvestment program. Dividend Reinvestment Plan
Third Quarter 2016 Results Conference Call and Webcast Tomorrow
The Company's senior management will host a conference call on Thursday, October 27, 2016 at 11:00 AM (E.D.T.) to discuss the Company’s financial and operating results.
Via Webcast:
A live audio webcast of the conference call will be available on the Company’s website at www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 1-647-427-7450 or toll-free 1-888- 231-8191. To ensure your participation, please call approximately ten minutes prior to the scheduled start of the call.
Replay archive:
Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 38842633. The conference call replay will expire on November 24, 2016 11:59 AM (E.S.T).
The webcast, along with presentation slides, will be archived for 180 days on the Company’s website.
NORTHERN BUSINESS OPERATING REVIEW ABITIBI REGION, QUEBEC
Agnico Eagle is currently Quebec’s largest gold producer with a 100% interest in three mines (LaRonde, Goldex and Lapa) and a 50% interest in the Canadian Malartic mine. These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.
LaRonde Mine – Higher Grades Drive Strong Production in the Third Quarter of 2016
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.
The LaRonde mill processed an average of 5,677 tonnes per day (“tpd”) in the third quarter of 2016, compared to an average of 5,992 tpd in the corresponding period of 2015. Throughput in the 2016 period was negatively affected by a planned shutdown during the quarter. Minesite costs per tonne6 were approximately C$115 in the third quarter of 2016, higher than the C$101 per tonne experienced in the third quarter of 2015. The increased costs in the 2016 period were primarily due to lower throughput levels and higher underground and mill maintenance costs compared to the prior-year period.
For the first nine months of 2016, the LaRonde mill processed an average of 6,087 tpd, compared to 6,145 tpd in the first nine months of 2015. Minesite costs per tonne were approximately C$108, compared to C$101 per tonne in the first nine months of 2015. Costs were higher in the 2016 period due to the reasons described above.
LaRonde's total cash costs per ounce on a by-product basis were $541 in the third quarter of 2016, on payable production of 71,784 ounces of gold. This compares to the third quarter of 2015, when total cash costs per ounce on a by-product basis were $558, on payable production of 71,860 ounces of gold. Costs in the 2016 period were positively affected by higher by-product revenues.
In the first nine months of 2016, LaRonde produced 222,280 ounces of gold at total cash costs per ounce on a by-product basis of $537. This compares to the first nine months of 2015, when the mine produced 194,760 ounces of gold at total cash costs per ounce on a by-product basis of $620. Production in the 2016 period increased due to higher gold grades; costs were lower due to higher gold production and favourable foreign exchange rates.
6 Minesite 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”.
Studies are continuing to assess the potential to extend the mineral reserve base and carry out mining activities between the 311 and 371 levels at LaRonde. At present, the mineral reserve base extends down to the 311 level, which is 3.1 kilometres below the surface. An infill drill program is continuing from the 311 to the 371 levels, with a focus on the western portion of the deposit. Infill drilling will also be carried out on the eastern portion of the deposit as underground development extends into that area.
In the third quarter of 2016, site preparation activities continued at Bousquet Zone 5 on the Company’s adjoining Bousquet property. Previous property owners had partly exploited Bousquet Zone 5 using open pit and underground operations. The Company is evaluating the potential to mine Bousquet Zone 5 using underground ramp access. The mining method is likely to be similar to that employed at Goldex and processing could utilize excess capacity from the Lapa circuit at LaRonde.
During the quarter, 412 metres of underground development was completed and a temporary vent raise was developed which is planned to be commissioned in the fourth quarter of 2016. Internal technical studies are expected to be completed by the end of 2016. Following the completion of technical studies and permitting, Bousquet Zone 5 could potentially be in production in the second half of 2018.
Canadian Malartic Mine – BAPE Process Concludes; Extension Project Acceptable for Development
In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired all of the issued and outstanding common shares of Osisko Mining Corporation (“Osisko”) and created the Canadian Malartic General Partnership (the “Partnership”) that owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee. Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership.
During the third quarter of 2016, the Canadian Malartic mill processed an average of 53,989 tpd (on a 100% basis), compared to an average of 53,703 tpd in the corresponding period of 2015. Minesite costs per tonne in the third quarter of 2016 were approximately C$25, compared to the C$22 per tonne experienced in the third quarter of 2015. Costs were higher in the 2016 period primarily due to unplanned maintenance on the leach tank, ball mill and crusher components in the process plant and additional stripping costs. In addition, extra contractors were employed to maximize stripping activities in the north part of the pit to access higher grades. The average stripping ratio in the third quarter of 2016 was 2.10 to 1.0, compared to 2.04 to 1.0 in the prior-year period.
For the first nine months of 2016, the Canadian Malartic mill processed an average of 53,928 tpd (on a 100% basis), compared to an average of 52,139 tpd in the corresponding period of 2015. Minesite costs per tonne were approximately C$24, compared to the C$23 per tonne in the corresponding period of 2015. Costs were higher due to the reasons outlined above.
For the third quarter of 2016, Agnico Eagle’s share of production at the Canadian Malartic mine was 76,428 ounces of gold at total cash costs per ounce on a by-product basis of $613. This compares to the third quarter of 2015 when total cash costs per ounce on a by-product basis were $544 on production of 76,603 ounces of gold. Production was lower in the 2016 period due to slightly lower grades. Costs in the 2016 period were higher primarily due to contractor use at the mine, higher maintenance costs at the mill for repairs to the leach tanks and ball mill #3 and additional stripping costs; these increases were partially offset by higher throughput levels and favourable foreign exchange rates.
In the first nine months of 2016, Agnico Eagle’s share of production at the Canadian Malartic mine was 222,543 ounces of gold at total cash costs per ounce on a by-product basis of $597. This compares to production of 212,937 ounces of gold at total cash costs per ounce on a by-product basis of $593 in the prior year period. Production was higher in 2016 due to increased throughput levels and slightly higher gold grades; costs were similar to prior-year period, but affected by the factors set out above.
On August 2, 2016, the Partnership was served with a class action lawsuit with respect to allegations involving the Canadian Malartic mine. Since the spring of 2015, Canadian Malartic GP has been working collaboratively with the community of Malartic and its citizens to develop a “Good Neighbour Guide” that addresses the allegations contained in the lawsuit and is disappointed by this development. Agnico Eagle and the Partnership will take all reasonable steps necessary to defend themselves from this lawsuit. At the current time, the Company and the Partnership does not believe it is probable that any amounts will be paid with respect to these lawsuits and the amount and timing cannot be reasonably estimated.
In addition, on August 15, 2016, the Partnership received notice of an application for injunction relating to the Canadian Malartic mine, which has been filed under the Environment Quality Act (Quebec). The next hearing related to the injunction is expected to be heard in March 2017. The request for injunction aims to restrict the Canadian Malartic mine's mining operations to sound levels and mining volumes below the limits to which it is subject. Agnico Eagle and the Partnership have reviewed the injunction request, consider the request without merit and will take all reasonable steps to defend against this injunction.
The Partnership is currently analyzing the potential impacts of the injunction in the event that it were to be granted. While at this time the potential impacts cannot be definitively determined, the Company expects that if the injunction were to be granted there would be a negative impact on the operations of the Canadian Malartic mine, which could include a reduction in production and shift reductions resulting in the loss of jobs.
Following the Quebec Bureau des Audiences Publiques sur l’Environnement (“BAPE”) public hearings in June and July 2016, permitting of the Canadian Malartic extension project and Highway 117 deviation reached an important milestone with the issue of the BAPE report on October 5, 2016. The report concluded that the project is acceptable and provides several recommendations intended to enhance social acceptability. The next step is for the Ministre du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques to review the report and present his decision to Cabinet for approval. No date for the approval has been set, but the Partnership anticipates that this may occur in the first half of 2017.
The Odyssey prospect lies on the east side of the Canadian Malartic property, approximately 1.5 kilometres east of the current limit of the Canadian Malartic open pit.
The Odyssey prospect is composed of multiple mineralized bodies spatially associated with a porphyritic intrusion close to the contact of the Pontiac Group sediments and the Piché Group of volcanic rocks. They are grouped into two elongated zones — the Odyssey North and Odyssey South zones — that strike east-southeast and dip steeply south. Odyssey North has been traced from a depth of 600 to 1,300 metres below surface along a strike length of approximately 1.5 kilometres. Odyssey South currently has a strike length of 0.5 kilometres and has been located between approximately 200 and 550 metres below surface.
During the third quarter of 2016, a total of 56 drill holes (40,019 metres) were completed at Odyssey, bringing the year-to-date total to 113 holes (89,774 metres). Drilling will continue through year-end, at which time an inferred mineral resource is expected be estimated for the prospect.
Canadian Malartic Corporation
In addition to the Partnership, each of Agnico Eagle and Yamana have an indirect 50% interest in Canadian Malartic Corporation (“CMC”), which holds a portfolio of exploration properties that includes properties in the Kirkland Lake area of Ontario and the Pandora property in the Abitibi region of Quebec.
At the Pandora property, seven diamond drill holes (4,442 metres) were completed in the third quarter of 2016. A supplemental program consisting of five holes (4,800 metres) is underway. Additional exploration work at Pandora will depend on the results from the 2016 supplemental program.
At Kirkland Lake, field work on the Upper Beaver project has outlined numerous near surface targets. The 2017 budget proposal will consider funding to drill-test these and other targets on the Kirkland Lake property holdings. The updated Amalgated Kirkland geologic and mineral models have identified opportunities for growth both along strike and down dip of the currently identified mineral bodies. Testing of these new targets is also included in the 2017 budget proposal.
Goldex – Continued Strong Operating Performance; Deep Zone Remains on Schedule for 2018 Startup
The 100% owned Goldex mine in northwestern Quebec began operation in 2008.
The Goldex mill processed an average of 7,292 tpd in the third quarter of 2016. This compares to an average of 6,199 tpd in the third quarter of 2015. The higher throughput in the 2016 period was primarily due to better underground mining and milling performance and higher productivity compared to the 2015 period.
Minesite costs per tonne were approximately C$31 in the third quarter of 2016, which was lower than the C$34 per tonne in the third quarter of 2015. Costs in the 2016 period were lower primarily due to higher throughput and a reduction in production drilling and backfill costs.
For the first nine months of 2016, the Goldex mill processed an average of 7,173 tpd, compared to 6,377 tpd in the first nine months of 2015. Minesite costs per tonne were approximately C$32 in the first nine months of 2016, compared to C$34 in first nine months of 2015. The costs in the 2016 period were lower due to the reasons outlined above.
Payable gold production in the third quarter of 2016 was 32,742 ounces of gold at total cash costs per ounce on a by-product basis of $483. This compares to the third quarter of 2015, when production was 32,068 ounces of gold at total cash costs per ounce on a by-product basis of $479. The slight increase in total cash costs per ounce in the 2016 period was largely a result of lower gold grades partially offset by higher throughput levels.
In the first nine months of 2016, Goldex produced 96,534 ounces of gold at total cash costs per ounce on a by-product basis of $501. This compares to the first nine months of 2015, when the mine produced 87,780 ounces of gold at total cash costs per ounce on a by-product basis of $546. The higher production and lower costs in the 2016 period are primarily due to increased throughput levels and favourable foreign exchange rates compared to the 2015 period.
Development of the Deep 1 Zone remains on time and on budget for startup in the first quarter of 2018. In the third quarter of 2016, the first segment of the Rail-Veyor (conveyor system) ramp was completed and construction of the 120 level loading station and excavation of the 115 level rock hammer room are now in progress.
In January 2014, Agnico Eagle acquired the Akasaba West gold-copper deposit from Alexandria Minerals Corporation. Located less than 30 kilometres from Goldex, the Akasaba West deposit could potentially create flexibility and synergies for the Company's operations in the Abitibi region by using extra milling capacity at both Goldex and LaRonde, and thereby reduce overall costs. The Akasaba West deposit currently hosts a mineral reserve of approximately 141,000 ounces of gold (4.8 million tonnes of ore grading 0.92 g/t gold and 0.52% copper).
Permitting of the Akasaba project is progressing at both the provincial and federal levels. At the provincial level, following submission of the Environmental Impact Assessment (“EIA”) in August 2015 and responding to questions from the Quebec government agencies and ministries, the EIA was deemed “receivable” and the project was referred to the BAPE. The current phase of the BAPE process is a public review period that is expected to end on November 18, 2016. If the BAPE decides that a full public hearing process is warranted it is expected to take place in first quarter of 2017.
At the federal level, following submission of the EIA, the Company provided responses to questions received. The federal environmental assessment agency is expected to present its recommendations on the acceptability of the project to the Federal Minister of the Environment in the first half of 2017.
Lapa – Production to Continue Through Year-End 2016 and Opportunities Being Evaluated to Extend Mine Life into 2017
The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.
The Lapa circuit, located at the LaRonde mill, processed an average of 1,536 tpd in the third quarter of 2016. This compares to an average of 1,583 tpd in the third quarter of 2015. Minesite costs per tonne were C$113 in the third quarter of 2016, compared to C$114 in the third quarter of 2015. Costs in the 2016 period were lower primarily due to a reduction in labour costs, energy consumption and consumables compared to the same period in 2015.
For the first nine months of 2016, the Lapa mill processed an average of 1,689 tpd, compared to 1,553 tpd in the first nine months of 2015. Throughput in the 2015 period was negatively affected by to repairs being carried out on the Lapa ball mill. Minesite costs per tonne were approximately C$117, which was less than the C$119 per tonne in the first nine months of 2015 due to the reasons explained above.
Payable production in the third quarter of 2016 was 16,242 ounces of gold at total cash costs per ounce on a by-product basis of $743. This compares to the third quarter of 2015, when production was 25,668 ounces of gold at total cash costs per ounce on a byproduct basis of $522. In the 2016 period, production was lower and costs were higher primarily due to lower grades and mill recoveries compared to the 2015 period.
In the first nine months of 2016, Lapa produced 59,865 ounces of gold at total cash costs per ounce on a by-product basis of $684. This compares to the first nine months of 2015, when the mine produced 71,038 ounces of gold at total cash costs per ounce on a by-product basis of $581. The lower production and higher costs in the 2016 period are due to the reasons outlined above.
At Lapa, 2016 is the last full year of production based on the current life of mine plan. Production was expected to show a gradual decline moving into the fourth quarter of this year, with the full year production expected to total approximately 60,000 ounces of gold as per the February 2016 guidance. Production is now forecast to continue through yearend 2016. The Company is also evaluating additional target zones at depth and a number of lower grade zones that had previously been excluded from the mine plan. Should this work yield favourable results, production could potentially be extended further into 2017.
FINLAND AND SWEDEN
Agnico Eagle’s Kittila mine in Finland is the largest primary gold producer in Europe and hosts the Company’s largest mineral reserves. Exploration activities continue to expand the mineral resources and studies are underway to evaluate the potential to costeffectively increase production.
Kittila – Drilling Continues to Extend Sisar Zone Northward towards the Rimpi Deposit
The 100% owned Kittila mine in northern Finland achieved commercial production in 2009.
The Kittila mill processed an average of 4,837 tpd in the third quarter of 2016, compared to 3,937 tpd in the third quarter of 2015. The higher throughput in the 2016 period is a result of increased development leading to improved ore access and strong mining productivity.
Minesite costs per tonne at Kittila were approximately €73 in the third quarter of 2016, compared to €72 in the third quarter of 2015. Costs increased in the third quarter of 2016 due to higher contractor costs and mill maintenance costs, compared to the 2015 period. These increased costs offset the benefit of the increased throughput.
For the first nine months of 2016, the Kittila mill processed an average of 4,621 tpd, compared to 3,981 tpd in the first nine months of 2015. Minesite costs per tonne were approximately €75 in the first nine months of 2016, the same as in the comparable 2015 period. The higher throughput in the 2016 period was primarily due to the reasons outlined above.
Third quarter 2016 payable gold production at Kittila was 54,835 ounces at total cash costs per ounce on a by-product basis of $663. In the third quarter of 2015, the mine produced 46,455 ounces at total cash costs per ounce on a by-product basis of $639. The higher production in the 2016 period is a result of the increased throughput levels compared to the 2015 period and the planned 2015 shutdown. Costs increased in the third quarter of 2016 primarily due to increased contractor, mill maintenance and rehandling costs.