Agnico Eagle Reports Third Quarter 2017 Results Including Record Quarterly GOLD Production; Improved 2017 Production and Cost Guidance; Nunavut Projects Remain ON Schedule and ON Budget
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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 THIRD QUARTER 2017 RESULTS INCLUDING RECORD
QUARTERLY GOLD PRODUCTION; IMPROVED 2017 PRODUCTION AND COST
GUIDANCE; NUNAVUT PROJECTS REMAIN ON SCHEDULE AND ON BUDGET;
DIVIDEND INCREASED BY 10%
Toronto (October 25, 2017) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the " Company") today reported quarterly net income of $71.0 million,
or $0.31 per share, for the third quarter of 2017. This result includes non- cash foreign
currency translation gains on deferred tax liabilities of $5.7 million ($0.0 3 per share) ,
unrealized gains on financial instruments (net of tax) of $5.3 million ($0.02 per share),
non-cash foreign currency translation losses of $4.3 million ($0.02 per share) and various
mark-to-market and other adjustment losses (net of tax) of $2.2 million ($0.01 per share).
Excluding these items would r esult in adjusted net income 1 of $66.5 million or $0.29 per
share for the third quarter of 2017. In the third quarter of 2016, the Company reported
net income of $49.4 million or $0.22 per share.
Not included in the third quarter of 2017 adjusted net inc ome is non- cash stock option
expense of $3.7 million ($0.02 per share).
For the first nine months of 2017, the Company reported net income of $208.8 million, or
$0.91 per share. This compares with the first nine months of 2016 when net income was
$96.2 million, or $0.43 per shar e. Financial results in the 2017 period were positively
affected by higher gold sales volumes (approximately 3%) and lower depreciation
expense partly offset by lower realized gold prices.
In the third quarter of 2017, cash provi ded by operating activities decreased to $194.1
million ($207.9 million before changes in non- cash components of working capital)
compared with cash provided by operating activities of $282.9 million in the third quarter
of 2016 ($233.7 million before changes in non-cash components of working capital). The
decrease in cash provided by operating activities before changes in non- cash
1Adjusted net income is a non- GAAP measure. For a discussion regarding the Company 's use of non-
GAAP measures, see "Note Regarding Certain Measures of Performance".
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components of working capital during the current period was largely due to lower realized
gold prices.
For the first nine months of 2017, cash provided by operating activities was $600.6
million ($629.9 million before changes in non- cash components of working capital), as
compared with the first nine months of 2016 when cash provided by operating activities
was $658.0 million ($ 593.9 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 nine months of 2017 was mainly due to a combination of higher
gold and by-product metals sales volumes partly offset by lower realized gold prices.
"We continued to see strong operating performance in the third quarter, culminating in
record gold production and strong cash flow generation. Given these strong results, we
have increased our 2017 production guidance and have increased our dividend by 10% ",
said Sean Boyd, Agnico Eagle' s Chief Executive Officer. " Our major projects in Nunavut
continue to advance on time and on budget and we are excited by the significant growth
in gold production and the related cash flows that these projec ts are forecast to provide",
added Mr. Boyd.
Third quarter 2017 highlights include:
• Continued strong operating performance yields record quarterly gold
production – Payable gold production 2 in the third quarter of 2017 was 454,362
ounces at production costs per ounce of $578, total cash costs3 per ounce of $546
and all-in sustaining costs per ounce 4 ("AISC") of $789
• Higher than expected grades and tonnage drive record quarterly gold
production at the LaRonde mine – Payable gold production in the third quarter
of 2017 was 105,345 ounces at production costs per ounce of $377 and total cash
costs per ounce of $328
• Full year production guidance increased and unit cost forecasts reduced –
Given the st rong nine month operational performance, 2017 production is now
expected to exceed 1.68 million ounces of gold compared to previous guidance of
1.62 million ounces of gold. Total cash costs per ounce are now expected to be
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 in thi s
news release on a by -product basis. For a reconciliation to production costs and for total cash costs on a
co-product basis, see "Reconciliation of N on-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 in
this news release 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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$570 to $600 (previously $580 to $610) and AISC are expected to be $820 to
$870 per ounce (previously $830 to $880)
• Meliadine project continues to advance on schedule and on budget – Surface
construction activities are progressing well , with outside cladding and roofing
expected to be c ompleted on the mill facility, multi- service building and
powerhouse in November 2017. Underground development is on plan and critical
mining equipment, which was received during the 2017 summer sealift, is currently
being commissioned
• Drilling at Amaruq extends Whale Tail mineralization at depth, and
demonstrates continuity and improving grades in the eastern part of V Zone
– Significant results include: 7.3 grams per tonne ( "g/t") over 16.1 metres at a
depth of 627 metres at Whale Tail and 20.6 g/t gold over 6.2 metres at the V Zone
at 452 metres depth, beneath the current planned pit outline
• Quarterly dividend increased by 10% – Company has declared an $0.11
quarterly dividend. The previous quarterly dividend was $0.10
Third Q uarter Financial and Production Highlights – Record Gold Production,
Lower Production Costs – 2017 Cost Forecasts Decrease
In the third quarter of 2017, strong operational performance continued at the Company 's
mines. Payable gold production was 454,362 ounces, compared to 416, 187 ounces in
the prior-year period. The higher level of production in the 2017 period was primarily due
to higher grades mined at LaRonde, Meadowbank and Canadian Malartic . A detailed
description of the production of each of the Company's mines is set out below.
In the first nine months of 2017, payable gold production was 1,300,321 ounces,
compared to 1,236,455 ounces in the prior -year period. The higher level of production in
the 2017 period was primarily due to higher grades mined at LaRonde, Meadowbank and
Canadian Malartic.
Production costs per ounce for the third quarter of 2017 were $578, which was 13%
lower, compared to $666 in the prior-year period. Total cash costs per ounce for the third
quarter of 2017 were $546 , which was 5% lower compared to $575 per ounce in the
prior-year period. Production costs per ounce and t otal cash costs per ounce in the third
quarter of 2017 were positively affected by record quarterly production. A detailed
description of the cost performance of each of the Company's mines is set out below.
Production costs per ounce for the first nine months of 2017 were $596, which was 5%
lower, compared to $628 in the prior-year period. Total cash costs per ounce for the first
nine months of 2017 were $547, compared with $580 in the prior-year period. Production
costs per ounce and t otal cash costs per ounce in the first nine months of 2017 were
positively affected by higher production of gold at LaRonde, Meadowbank, and Canadian
Malartic. The Company now forecasts a decr ease in total cash costs per ounce for 2017
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to $570 to $600 per ounce, which is down from previous guidance of $580 to $610 per
ounce.
AISC for the third quarter of 2017 were $789 , which was 4% lower, compared to $821 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.
AISC for the first nine months of 2017 was $772 , compared to $821 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. The Company now
forecasts a decrease in AISC for 2017 to $820 to $870 per ounce, which is down from
previous guidance of $830 to $880 per ounce.
Cash Position Remains Strong
Cash and cash equivalents and short term investments decreased to $865.6 million at
September 30, 2017, from the June 30, 2017 balance of $952.4 million due to the
ongoing investment in the Company's growth projects.
The outstanding balance on the Company 's credit facility remained nil at September 30,
2017. This results in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
On October 25, 2017, the Com pany amended its $1.2 billion credit facility to extend the
maturity date from June 22, 2021 to June 22, 2022.
The Company 's $500 million short form base shelf prospectus expired on October 4,
2017. The Company intends to file a new base shelf prospectus , on substantially the
same terms , qualifying up to $500 million of debt securities, common shares and
warrants. The Company has no present intention to offer securities pursuant to the new
base shelf prospectus. It has been t he Company's practice to mai ntain a $500 million
base shelf prospectus since 2002. The notice set out in this paragraph does not
constitute an offer of any securities for sale or an offer to sell or the solicitation of an offer
to buy any securities.
Approximately 35% of the Company 's remaining 2017 Canadian dollar exposure is
hedged at a floor price of 1.30 US$/C$. Approximately 11% of the Company's remaining
2017 Euro exposure is hedged at a floor price of 1.10 EUR$/US$. Approximately 31% of
the Company 's remaining 2017 Mexican Peso exposure is hedged at a floor price of
18.60 US$/MXP.
Capital Expenditures
The total estimated initial capital costs at both the Meliadine an d Amaruq projects in
Nunavut remain unchanged at $900 million and $330 million, respectively. The forecast
for the Company’s total 2017 capital expenditures is now approximately $89 5 million,
which is an increase of approximately $3 6 million over the previous forecast. The
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increase is largely due to an acceleration of capital spending at the Meliadine and
Amaruq projects due to good progress made in 2017 on development and construction
activities at both projects . The following table sets out capital expenditures (including
sustaining capital expenditures) in the third quarter and first nine months of 2017.
Revised 2017 Guidance – Production Increased and Costs Lowered for the Sixth
Year in a Row
Production for 2017 is now forecast ed to exceed 1.68 million ounces of gold (previously
1.62 million ounces) with total cash costs per ounce expected to be $570 t o $600
(previously $580 to $610) and AISC expected to be $820 to $870 per ounce (previously
$830 to $880).
Dividend Record and Payment Dates for the Fourth Quarter of 2017
Agnico Eagle's Board of Directors has increased the dividend by 10% and has declared a
quarterly cash dividend of $0.11 per common shar e, payable on December 15, 2017 to
shareholders of record as of December 1, 2017. The previous quarterly dividend was
$0.10 per common share. Agnico Eagle has declared a cash dividend every year since
1983.
Capital Expenditures
(In thousands of US dollars)
Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2017
Sustaining Capital
LaRonde mine 13,908$ 50,245$
Canadian Malartic mine 15,527 40,597
Meadowbank mine 10,959 16,712
Kittila mine 14,465 36,400
Goldex mine 10,140 18,352
Pinos Altos 11,103 27,485
Creston Mascota deposit at Pinos Altos 2,343 4,307
La India mine 2,510 6,409
Development Capital
LaRonde Zone 5 5,447$ 12,319$
Canadian Malartic mine 6,516 7,957
Amaruq satellite deposit 25,762 76,623
Kittila mine 6,979 19,614
Goldex mine 4,290 23,929
Pinos Altos 1,563 8,500
Creston Mascota deposit at Pinos Altos 446 446
La India mine 112 2,595
Meliadine project 144,714 286,404
Other - 885
Total Capital Expenditures 276,784$ 639,779$
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Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend reinvestment
plan. Dividend Reinvestment Plan
Third Quarter 2017 Results Conference Call and Webcast Tomorrow
The Company's senior management will host a conference call on Thursday , October 26,
2017 at 11:00 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 50998337. The
conference call replay will expire on November 26, 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 cur rently 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 – Higher than Expected Grades and Tonnage Drive Record Quarterly
Gold Production
The 100% owned LaRonde mine in northwestern Quebec achieved commercial
production in 1988.
Production costs per tonne i n the third quarter of 2017 decreased when compared to the
prior-year period due to higher tonnage and the timing of unsold concentrate inventory .
Production costs per ounce in the third quarter of 2017 decreased when compared to the
prior-year period due to higher gold production and the reasons described above.
Minesite costs per tonne 5 in the third quarter of 2017 decreased when compared to the
prior-year period due to higher tonnage of ore milled. Total cash costs per ounce in the
third quarter of 2017 decreased when compared to the prior -year period due to higher
production and 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
All results exclude pre-commercial production tonnes and ounces Three Months E nded Three Months E nded
from LaRonde Zone 5 September 30, 2017 September 30, 2016
Tonnes of ore milled (thousands of tonnes) 582 522
Tonnes of ore milled per day 6,326 5,677
Gold grade (g/t) 5.87 4.47
Gold production (ounces) 105,345 71,784
Production costs per tonne (C$) 93$ 121$
Minesite costs per tonne (C$) 101$ 115$
Production costs per ounce of gold produced ($ per ounce): 377$ 684$
Total cash costs per ounce of gold produced ($ per ounce): 328$ 541$
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Production costs per tonne for the first nine months of 2017 decreased when compared
to the prior -year period due to the timing of unsold concentrate inventory. Production
costs per ounce for the first nine months of 2017 decreased when compared to the prior-
year period due to higher production and the reason described above.
Minesite costs per tonne for the first nine months of 2017 were essentially the same
when compared to the prior -year period. Total cash costs per ounce for the first nine
months of 2017 decreased when compared to the prior -year period due to higher gold
production and higher by-product metal revenues.
The record gol d production in the third quarter of 2017 was largely a result of higher
tonnage and grades being sequenced from the 293 pyramids during the quarter. This
was particularly evident in September, when production totaled 46,100 ounces of gold at
a grade of 6.88 g/t gold. Gold grades for the remainder of the year are expected to return
to the previously forecasted 2017 level of approximately 4.77 g/t.
At the LaRonde 3 project, the Company is evaluating 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.
An infill drill program is continuing from the 311 to the 340 levels, with a focus on the
western portion of the deposit where recent drilling has continued to encounter higher -
grade mineralization (f or additional details on this drilling see the Company 's news
release dated July 26, 2017). These new high- grade interc epts support the geological
model and are expected to result in conversion of inferred mineral resources to indicated
mineral resources in the western portion of the LaRonde 3 project in the year -end 2017
mineral resource update.
LaRonde Zone 5 – Initial Production Permit Received; Start -up on Schedule for
Early Third Quarter 2018
In 2003, the Company acquired the LaRonde Zone 5 project. The project lies adjacent to
and west of the LaRonde mining complex and previous operators mined the deposit by
open pit. In Fe bruary 2017, the Company approved LaRonde Zone 5 for development
LaRonde Mine - Operating Statistics
All results exclude pre-commercial production tonnes and ounces Nine Months E nded Nine Months E nded
from LaRonde Zone 5 September 30, 2017 September 30, 2016
Tonnes of ore milled (thousands of tonnes) 1,661 1,668
Tonnes of ore milled per day 6,084 6,087
Gold grade (g/t) 5.02 4.33
Gold production (ounces) 256,347 222,280
Production costs per tonne (C$) 105$ 108$
Minesite costs per tonne (C$) 107$ 108$
Production costs per ounce of gold produced ($ per ounce): 510$ 609$
Total cash costs per ounce of gold produced ($ per ounce): 413$ 537$