Operational Performance Continues; Full Year Production Guidance Increased; Nunavut Projects Advancing ON Schedule and Budget; Positive Exploration Results at Multiple Projects
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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 SECOND QUARTER 2017 RESULTS; STRONG
OPERATIONAL PERFORMANCE CONTINUES; FULL YEAR PRODUCTION
GUIDANCE INCREASED; NUNAVUT PROJECTS ADVANCING ON SCHEDULE AND
BUDGET; POSITIVE EXPLORATION RESULTS AT MULTIPLE PROJECTS
Toronto ( July 26, 2017) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the “Company”) today reported quarterly net income of $61.9 million,
or $0.27 per share, for the second quarter of 2017. This result includes non-cash foreign
currency translation gains on deferr ed tax liabilities of $12.1 million ($0.05 per share),
various mark-to-market and other adjustment losses of $10.3 million ($0.04 per share),
unrealized gains on financial instruments of $ 7.9 million ($0.03 per share) and non-cash
foreign currency translation losses of $ 2.7 million ($0.01 per share). Excluding these
items would result in adjusted net income 1 of $ 54.9 million or $ 0.24 per share for the
second quarter of 2017. In the second quarter of 2016, the Company reported net
income of $19.0 million or $0.09 per share.
Not included in the second quarter of 2017 adjusted net income above is non- cash stock
option expense of $3.8 million ($0.02 per share).
For the first six months of 2017 , the Company reported net income of $137.8 million, or
$0.60 per share. This compares with the first six months of 2016 when net income was
$46.8 million, or $0.21 per shar e. Financial results in the 2017 period were positively
affected by higher gold sales volumes and realized prices (approximately 6 % and 1 %
higher, respectively) and lower depreciation expense.
In the second quarter of 2017, cash provided by operating activities decreased to $184.0
million ($ 197.2 million before changes in non- cash components of working capital)
compared with cash provided by operating activities of $ 229.5 million in the second
quarter of 201 6 ($192.7 million before changes in non- cash components of work ing
capital). The cash provided by operating activities before changes in working capit al
during the current period were essentially the same.
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”.
2
For the first six months of 2017, cash provided by operating activities was $406.6 million
($421.2 million before changes in non-cash components of working capital), as compared
with the first six months of 2016 when cash provided by operating activities was $375.2
million ($360.2 million before changes in non -cash components of working capital). The
increase in cash provided by operating activities before changes in working capital during
the first six months of 201 7 was mainly due to a combination of higher gold and by -
product metals production and higher realized gold prices.
"As a result of continued strong production and cost performance at all of our mines, we
have increased our gold production guidance to 1.62 million ounces from 1.57 million
ounces and reduce d our total cash cost guidance from $610 per ounce to $595 per
ounce”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “ In addition to strong
operating and financial results , we continue to make very good progress on the
exploration and development front. Our Nunavut projects are advancing on schedule
and budget, and we are also generating positive exploration results at many of our
minesites, which should support future growth initiatives”, added Mr. Boyd.
Second Quarter 2017 highlights include:
• Operations continue to deliver strong performance – Payable gold production2
in the second quarter of 2017 was 427,743 ounces of gold at production costs per
ounce of $634, total cash costs 3 per ounce of $556 and all -in sustaining costs per
ounce 4 (“AISC”) of $785
• Full year production guidance increased and unit cost forecasts r educed –
Given the strong first half operational performance, 2017 production is now
expected to be 1.62 million ounces compared to previous guidance of 1.57 million
ounces. T otal cash costs per ounce are now expected to be $580 to $610
(previously $595 to $625) and AISC are expected to be $830 to $880 per ounce
(previously $850 to $900)
• Meliadine project continues to progress on schedule and budget –
Underground development is ahead of plan and engineering was 80% complete at
the end of June 2017. Construction activities are progressing well with cranes and
2Payable production of a mineral means the quantity of 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.
3Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by -
product basis. For a reconciliation to production costs and for total cash costs on a co- product basis, see
“Reconciliation of Non-GAAP Financial Performance Measures” below. See also “Note Regarding Certain
Measures of Performance” below.
4All-in-sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on
a by-product basis. 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" below.
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structural steel for the erection of surface buildings being moved to site from the
Rankin Inlet laydown facility . The first delivery of the shipping season arrived in
Rankin Inlet on June 30, 2017. Since then, three deliveries of construction
materials have been received at Rankin Inlet . Four additional deliveries of
construction materials are expected over the next two months
• Amaruq exploration program continues to yield positive results – At Amaruq,
infill drilling has been completed on the Whale Tail and V Zone deposits, and other
target areas are now being explored. Significant results include: 6.9 grams per
tonne (“g/t”) over 6 metres on the western extension of the planned Whale Tail pit
and 20.4 g/t gold over 10.4 metres at the V Zone at 225 metres depth, beneath the
planned pit outline
• Infill and exploration drilling expected to result in mineral resource additions
and conversions at multiple properties – Significant results include: 7.1 g/t gold
over 33.5 metres at the Rimpi deposit at Kittila , 23.7 g/t gold over 10.9 metres at
LaRonde 3 and 1.6 g/t gold over 18.2 metres near surface at the Bravo deposit at
Creston Mascota
• A quarterly dividend of $0.10 per share was declared
Second Quarter Financial and Production Highlights – Higher Gold Production,
Lower Production Costs – 2017 Cost Forecasts Decrease
In the second quarter of 2017, strong operational performance continued at the
Company's mines. Payable gold production was 427,743 ounces, compared to 408,932
ounces in the second quarter of 2016. The higher level of production in the 2017 period
was primarily due to higher grades mined at Meadowbank and Canadian Malartic . A
detailed description of the production of each of the Company’s mines is set out below.
In the first six months of 2017, payable gold production was 845,959 ounces, compared
to 820,268 ounces in the 2016 period. The higher level of production in the 2017 period
was primarily due to higher grades mined at Meadowbank.
Production costs per ounce for the second quarter of 2017 were $634, which was
essentially the same as the $625 in the 2016 period. Total cash costs per ounce for the
second quarter of 2017 were $556 which was 6% lower compared to $592 per ounce for
the second quarter 2016. Total cash costs per ounce in the second quarter of 2017 were
positively affected by higher production of gold at Meadowbank and Canadian Malartic.
A detailed description of the cost performance of each of the Company’s mines is set out
below.
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Production costs per ounce for the first six months of 2017 were $606, which was slightly
lower than the $ 609 in the 2016 period. Producti on costs per ounce were positively
affected by higher grades mined at Meadowbank and Canadian Malartic . Total cash
costs per ounce for the first six months of 2017 were $548 compared with $582 in the
prior-year period. Total c ash costs per ounce in the first six months of 2017 were
positively affected by higher production of gold at Meadowbank and Canadian Malartic.
The Company now forecasts a decrease in total cash costs per ounce for 2017 to $580
to $610 per ounce, which is down from previous guidance of $595 to $625 per ounce.
AISC for the second quarter of 2017 were 7% lower at $785 per ounce compared to $848
in the second quarter of 2016. The lower AISC is primarily due to lower total cash costs
per ounce and lower sustaining capital ex penditures compared to the second quarter of
2016. AISC in 2017 are now forecast to be $830 to $880 per ounce, lower than previous
guidance of $850 to $900 per ounce.
AISC for the first six months of 2017 was $764 per ounce compared to $822 in the prior -
year period. The lower AISC is primarily due to lower total cash costs per ounce and
lower sustaining capital expenditures compared to the prior-year period.
Cash Position Remains Strong
Cash and cash equivalents and short term investments in creased to $952.4 million at
June 30 2017, from the March 31, 2017 balance of $804.3 million.
On April 7 , 2017, the Company repaid the first series of maturing guaranteed senior
unsecured notes totalling $115 million. O n June 29, 2017, the Company issued, on a
private placement basis , an aggregate of $3 00 million of guaranteed senior unsecured
notes due 2025, 2027, 2029 and 2032 (the “Notes”) with a weighted av erage maturity of
10.9 years and weighted average coupon of 4.67%. Net proceeds from the sale of the
Notes were used for general corporate purposes. During the quarter , the Co mpany’s
investment grade credit rating was re-confirmed by DBRS with a stable trend.
The outstanding balance on the Company’s credit facility remained nil at June 30 , 2017.
This results in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
Approximately 35% of the C ompany’s remaining 2017 Canadian dollar exposure is
hedged at a floor price of 1.30 US$/C$. For remaining 2017 Euro exposure,
approximately 11% is hedged at a floor price of 1.10 EURO$/US$ and for remaining
2017 Mexican Peso exposure, approximately 34% is hedged at 18.60 US$/MXP.
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Capital Expenditures
Additional expenditures in 2017 for preliminary work on the road deviation at the
Canadian Malartic extension projec t are expected to be between $16 to $22 million,
reflecting the Company’s 50% interest. These additional expenditures are expected to be
offset by reduced capital expenditures at other projects such as Goldex and LaRonde
Zone 5. The forecast for 2017 capital expenditures remains unchanged at $85 9 million.
The following table sets out capi tal expenditures (including sustaining capital) in the
second quarter and first six months of 2017.
Revised 2017 Guidance – Production Increased, Costs Lowered, Depreciation
Decreased
Production for 2017 is now forecast to be 1.62 million ounces of gold (previously 1.57
million ounces) with total cash costs per ounce expected to be $580 to $610 (previously
$595 to $625) and AISC expected to be approximately $830 to $8 80 per ounce
(previously $850 to $900).
The Company expects depreciation and amortization expense to be approximately $550
million. Previous guidance was $580 to $610 million.
Capital Expenditures
(In thousands of US dollars)
Three Months Ended Six Months Ended
June 30, 2017 June 30, 2017
Sustaining Capital
LaRonde mine 22,532$ 36,337$
Canadian Malartic mine 12,628 25,070
Meadowbank mine 3,322 5,753
Kittila mine 12,254 21,935
Goldex mine 5,031 8,210
Pinos Altos mine 8,143 16,382
Creston Mascota deposit at Pinos Altos 1,382 1,964
La India mine 2,265 3,899
Development Capital
LaRonde Zone 5 4,448$ 6,871$
Canadian Malartic mine 723 1,441
Amaruq satellite deposit 38,541 50,861
Kittila mine 6,155 12,635
Goldex mine 7,086 19,641
Pinos Altos mine 6,048 6,937
La India mine 2,483 2,483
Meliadine project 93,125 141,690
Other 159 886
Total Capital Expenditures 226,325$ 362,995$
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Dividend Record and Payment Dates for the Third Quarter of 2017
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per
common shar e, payable on September 15, 2017, to shareholders of record as of
September 1, 2017. Agnico Eagle has declared a cash dividend every year since 1983.
Other Expected Dividend and Record Dates for 2017
Record Date Payment Date
December 1 December 15
Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend reinvestment
plan. Dividend Reinvestment Plan
Second Quarter 2017 Results Conference Call and Webcast Tomorrow
The Company's senior manageme nt will host a conference call on Thursday , July 27,
2017 at 10:00 AM (E.D .T.) to discuss financial results and provide an update of the
Company’s operating activities.
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- 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 50955626. The
conference call replay will expire on August 27, 2017.
The webcast, along with presentation slides will be archived for 180 days on the
Company’s website.
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NORTHERN BUSINESS 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 – Infill Drilling Expected to Upgrade Mineral Resources with
Potential for Higher Gold Grades in Western Portion of LaRonde 3 Project
The 100% owned LaRonde mine in northwestern Quebec achieved commercial
production in 1988.
Production costs per tonne in the second quarter of 2017 increased when compared to
the prior-year period due to lower tonnage as a result of a planned shutdown to perform
maintenance on the ventilation system and the timing of unsold concentrate inventory .
Production costs per ounce in the second quarter of 2017 increased when compared to
the prior-year period due to lower production and the reasons described above.
Minesite costs per tonne5 in the second quarter of 2017 increased when compared to the
prior-year period due to lower tonnage as a result of a planned shutdown to perform
maintenance on the ventilation system. Total cash costs per ounce in the second quarter
of 2017 decreased when compared to the prior -year period due to higher by-product
metal revenues.
5Minesite 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” below.
LaRonde Mine - Operating Statistics
Three Months E nded Three Months E nded
June 30, 2017 June 30, 2016
Tonnes of ore milled (thousands of tonnes) 520 569
Tonnes of ore milled per day 5,708 6,253
Gold grade (g/t) 4.51 4.31
Gold production (ounces) 72,090 75,159
Production costs per tonne (C$) 118$ 100$
Minesite costs per tonne (C$) 113$ 106$
Production costs per ounce of gold produced ($ per ounce): 647$ 539$
Total cash costs per ounce of gold produced ($ per ounce): 482$ 543$
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Production costs per tonne for the first six months of 2017 increased when compared to
the prior-year period due to lower tonnage as a result of a planned shutdown to perform
maintenance on the ventilation system and the timing of unsold concentrate inventory .
Production costs per ounce for the first six months of 2017 increased due to the reasons
described above.
Minesite costs per tonne for the first six months of 2017 increased when compared to the
prior-year period due to lower tonnage as a result of a planned shutdown to perform
maintenance on the ventilation system . Total cash costs per ounce for the first six
months of 2017 decreased when compared to the prior -year period due to higher gold
production from higher gold grades and higher by-product metal revenues.
At the LaRonde 3 project, studies are ongoing to evaluate the potential to mine below the
currently planned 311 level (a depth of 3.1 kilometres). The current mineral resources in
the western portion of the deposit are all in the inferred mineral resource category,
extending to the 371 level.
Selected recent drill results are set out in the table below ; drill hole collar coordinates are
set out in a table in the Appendix of this news release. Pierce points for all of these holes
are shown on the LaRonde Composite Longitudinal Section. All intercepts reported for
the LaRonde mine show capped gold grades over estimated true widths.
Recent exploration and infill drill results from LaRonde 3 (below Level 311)
Drill hole From
(metres)
To
(metres)
Depth of
midpoint
below
surface
(metres)
Estimated
true width
(metres)
Gold grade
(g/t)
(uncapped)
Gold
grade
(g/t)
(capped)
Silver
grade (g/t)
(uncapped)
Copper
grade
(%)
Zinc
grade
(%)
LR-290-075A 482.1 497.5 3,240 10.9 28.8 22.1 33.6 0.35 0.10
LR-290-076 415.7 423.0 3,137 4.3 15.1 13.0 83.7 0.56 10.07
LR-290-077A 548.7 555.1 3,292 3.5 5.9 5.9 15.7 0.12 0.71
LR-293-021A 345.0 361.5 3,123 11.9 12.6 12.6 16.0 0.25 0.03
LR-293-022 378.6 396.6 3,163 10.9 25.6 23.7 15.6 0.30 0.02
* Holes at LaRonde 3 use a capping factor of 80 g/t gold and 1,000 g/t silver. None of the silver values in
this table were capped.
An infill drill program is continuing from the 311 to the 371 levels, with a focus on the
western portion of the deposit where recent drilling has continued to encounter higher -
LaRonde Mine - Operating Statistics
Six Months E nded Six Months E nded
June 30, 2017 June 30, 2016
Tonnes of ore milled (thousands of tonnes) 1,079 1,147
Tonnes of ore milled per day 5,960 6,302
Gold grade (g/t) 4.56 4.27
Gold production (ounces) 151,002 150,496
Production costs per tonne (C$) 112$ 102$
Minesite costs per tonne (C$) 111$ 104$
Production costs per ounce of gold produced ($ per ounce): 603$ 574$
Total cash costs per ounce of gold produced ($ per ounce): 473$ 536$