Agnico Eagle Reports First Quarter 2018 Results; Nunavut Development Projects Progressing ON Budget and ON Schedule; Exploration Drilling Yields Favourable Results at Multiple
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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 FIRST QUARTER 2018 RESULTS; NUNAVUT
DEVELOPMENT PROJECTS PROGRESSING ON BUDGET AND ON SCHEDULE;
EXPLORATION DRILLING YIELDS FAVOURABLE RESULTS AT MULTIPLE
PROJECTS
Toronto (April 26, 2018) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the "Company") today reported quarterly net income of $44.9 million, or
$0.19 per share, for the first quarter of 2018. This result includes non-cash foreign currency
translation gains on deferred tax liabilities of $6.7 million ($0.03 per share), mark-to-market
adjustments and derivative gains on financial instruments of $0.5 million (nil per share) and
non-cash foreign currency translation gains of $3.5 million ($0.01 per share). Excluding
these items would result in adjusted net income1 of $34.2 million or $0.15 per share for the
first quarter of 2018. In the first quarter of 2017, the Company reported net income of $76.0
million or $0.33 per share.
Included in the first quarter of 2018 net income and not adjusted above is non-cash stock
option expense of $7.8 million ($0.03 per share).
In the first quarter of 2018, cash provided by operating activities decreased by 7% to $207.7
million ($180.5 million before changes in non- cash components of working capital) ,
compared with cash provided by operating activities of $222.6 million in the first quarter of
2017 ($224.7 million before changes in non- cash components of working capital). The
decrease in cash provided by operating activities before changes in non-cash components
of working capital during the current period was mainly due to lower gold sales volumes
and higher costs, partially offset by higher realized gold prices. The higher costs were
primarily a result of the strengthening of local currencies against the U.S. dollar and higher
costs at several operations, principally at Meadowbank.
"Our operations continued to deliver strong cash flow in the first quarter with unit production
costs on the lower end of full year guidance and gold production tracking slightly above full
year guidance. We remain focused on optimizing unit costs and increasing production as
1Adjusted 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".
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we transition through 2018 and begin to see the positive results of our growth phase in
2019", said Sean Boyd, Agnico Eagle's Chief Executive Officer. "During the first quarter,
we continued to make very good progress at our Nunavut growth projects, with Amaruq
permitting activities advancing as expected and development of the underground
exploration ramp proceeding as planned. Construction activities and underground
development remain on schedule and on budget at Meliadine", added Mr. Boyd.
First quarter 2018 highlights include:
• Solid operational performance – Payable gold production2 in the first quarter of
2018 was 389,278 ounces at production costs per ounce of $759, total cash costs3
per ounce of $648 and all-in sustaining costs per ounce4 ("AISC") of $889
• Production and cost guidance reiterated for 2018 – Full year pr oduction
guidance is unchanged at 1.53 million ounces of gold at total cash costs per ounce
of $625 to $675 and AISC of $890 to $940 per ounce
• Nunavut development projects progressing on schedule and on budget –
Amaruq permitting is on track for approval in the second quarter of 2018 and the
underground exploration ramp is proceeding as planned. Meliadine construction
and development is progressing well and procurement activities for the 2018 barge
season are now complete
• Infill drilling at the East Malartic property yields favo urable results, potential
development options under review – Recent drilling at East Malartic has returned
significant intersections of 2.5 grams per tonne ("g/t") gold over 37.7 metres at 238
metres depth, including 3.6 g/t go ld over 10.6 metres. Studies are underway to
evaluate potential mining scenarios at both East Malartic and the neighbou ring
Odyssey project. Permitting activities to provide ramp access to both projects are
currently underway
• Acquisition of Yamana Gold Inc.'s ("Yamana") 50% interest in the Canadian
exploration assets of Canadian Malartic Corporation ("CMC") completed in
late March 2018 – Agnico Eagle now owns the exploration assets of CMC, which
include the Kirkland Lake and Hammond Reef projects. At Kirkland Lake, a 25,700
2Payable 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.
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".
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".
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metre drill program will be carried out in 2018 to further evaluate known deposits
and test new target areas
• Monetization of non- core assets – The Company is assessing opportunities to
monetize non-core assets, including the West Pequop Joint Venture, Summit and
PQX properties in Nevada, the Cobalt mining properties in the historic Cobalt silver
district in Ontario, and its equity investment in Belo Sun Mining Corp. ("Belo Sun")
which it disposed of this month as previously announced
• A quarterly dividend of $0.11 per share was declared
First Quarter Financial and Production Highlights
In the first quarter of 2018, stable operational performance continued at the Company's
mines, which led to payable gold production of 389,278 ounces , compared to 418,216
ounces in the first quarter of 2017. This lower level of production in the 20 18 period was
primarily due to reduced throughput levels at Meadowbank as the mine transitions through
the last full year of mining at site and at Lapa as mill processing did not resume until March
2018. A detailed description of the production of each mine is set out below.
Production costs per ounce for the first quarter of 2018 were $759, compared to $578 for
the first quarter of 2017. Total cash costs per ounce for the first quarter of 2018 were $648,
compared to $539 for the first quarter of 2017. Production costs per ounce and total cash
costs per ounce in the first quarter of 2018 were affected by lower gold production levels
at Meadowbank and Lapa, the strengthening of local currencies against the U.S. dollar and
higher costs at several mines (principally at Meadowbank) compared to the first quarter of
2017. The impact of the strengthening of the local currencies was approximately $40 per
ounce.
AISC for the first quarter of 2018 were $889, compared to $741 for the first quarter of 2017.
The higher AISC is primarily due to expected lower gold production and higher total cash
costs per ounce compared to the first quarter of 2017. A detailed description of the cost
performance of each mine is set out below.
Cash Position Remains Strong
Cash and cash equivalents and short -term investments decreased to $464.8 million at
March 31, 2018, from the December 31, 2017 balance of $643.9 million due to the ongoing
investment in the Company 's growth projects and the recent acquisition of the Kirkland
Lake and Hammond Reef projects.
The outstanding balance on the Company's credit facility remained nil at March 31, 2018.
This resul ts in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
Subsequent to the quarter end , on April 5, 2018, the Company issued notes to certain
institutional investors totalling $350 million. The notes consist of $45 million at 4.38% due
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2028, $55 million at 4.48% due 2030 and $250 million at 4.63% due 2033. The terms of
the notes are substantially the same as the terms of the outstanding notes of the Company.
The Company previously announced its intention to issue these notes in its news release
dated February 14, 2018.
Approximately 40% of the Company's remaining 2018 Canadian dollar exposure is hedged
at an average floor price of 1.28 C$/US$, of which about one third are designated for capital
expenditures at Meliadine. Approximately 10% of the Company's remaining 2018 Mexican
peso exposure is hedged at an average floor price of 19. 00 MXN/US$. The Company's
remaining 2018 Euro exposure is currently unhedged. The Company’s full year 2018 cost
guidance was based on assumed exchange rates of 1.25 C$/US$ and 18.0 MXN/US$.
Agnico Eagle anticipates adding to its operating currency hedges, pending market
conditions.
Monetization of Non-Core Assets
The Company has been assessing the opportunity to monetize several non-core assets in
its portfolio, including the West Pequop Joint Venture, Summit and PQX properties in
Nevada, the Cobalt mining properties in the historic Cobalt silver district in Ontario and its
equity investment in Belo Sun which it disposed of this month.
West Pequop Joint Venture, Summit and PQX Properties
The Company has entered into an agreement with a subsidiary of Newmont Mining Corp
("Newmont"), whereby Newmont will purchase Agnico Eagle's 51% interest in the West
Pequop Joint Venture, and the Company's 100% interest in the Summit and PQX
properties in northeastern Nevada (collectively, the "Nevada Properties"). The Nevada
Properties are adjacent to Newmont's Long Canyon mine.
Under the purchase and sale agreement, the Company will receive a cash payment of $35
million and be granted a 0.8% net smelter return ("NSR") royalty on the Nevada Properties
held by the West Pequop Joint Venture and a 1.6% NSR on the Summit and PQX
properties. The sale is expected to close in the second quarter of 2018.
Cobalt Mining Properties
In the mid-1950's, five mining companies merged to become Cobalt Consolidated Mining
Company ("CCMC"), one of the predecessors to Agnico Eagle. CCMC and, later, Agnico
Eagle operated 25 mines in the Cobalt area and produced approximately 30 million ounces
of silver and 3.2 million pounds of cobalt between 1957 and 1989.
The Company currently has two sizeable land packages in the Cobalt region, the Coleman
property (178 claims covering approximately 1,750 hectares) and the South Lorrain
Property (37 claims covering approximately 350 hectares).
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The Company has initiated a strategic review of its Cobalt properties with the intent to
realize value for the historical property portfolio. The Company expects that the outcome
of such review may result in the sale of all or a portion of its Cobalt properties.
Disposition of Investment in Belo Sun
The Company reviews its portfolio of equity investments in junior mining companies on an
ongoing basis. As previously announced, the Company has disposed of 44,551,000
common shares of Belo Sun for aggregate proceeds of C$14,924,585. For further details,
please see the Company’s new release dated April 20, 2018.
Capital Expenditures
Total capital expenditures (including sustaining capital) in 2018 remain forecast to be
approximately $1.08 billion. The following table sets out capital expenditures (including
sustaining capital) in the first quarter of 2018.
Capital Expenditures
(In thousands of US dollars)
Three Months Ended
March 31, 2018
Sustaining Capital
LaRonde mine 15,397$
Canadian Malartic mine 16,118
Meadowbank mine 2,890
Kittila mine 9,798
Goldex mine 5,112
Pinos Altos mine 7,175
Creston Mascota mine 502
La India mine 1,430
Total Sustaining Capital 58,422
Development Capital
LaRonde mine 842$
LaRonde Zone 5 7,653
Canadian Malartic mine 5,211
Meadowbank mine 14,976
Kittila mine 18,579
Goldex mine 8,312
Pinos Altos mine -
Creston Mascota mine 3,061
La India mine 561
Meliadine project 61,330
Other 480
Total Development Capital 121,005
Total Capital Expenditures 179,427$
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Dividend Record and Payment Dates for the Second Quarter of 2018
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.11 per
common share, payable on June 15, 2018 to shareholders of record as of June 1, 2018.
Agnico Eagle has declared a cash dividend every year since 1983.
Other Expected Dividend and Record Dates for 2018
Record Date Payment Date
August 31 September 14
November 30 December 14
Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan:
Dividend Reinvestment Plan
First Quarter 2018 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, April 27, 2018 at
8:30 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 five 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 7288308. The
conference call replay will expire on May 27, 2018.
The webcast, along with presenta tion slides, will be archived for 180 days on the
Company's website.
Annual Meeting
The Company's Annual and Special Meeting of Shareholders (the "AGM") will be held on
Friday, April 27, 2018 at 11:00 am (E.D.T) . The AGM will be held at the Delta Toronto
Hotel (SoCo Ballroom) - 75 Lower Simcoe St, Toronto, ON M5J 3A6.
During the AGM, management will provide an overview of the Company 's activities. For
those unable to attend in person, the alternatives to participate are listed below.
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Via Webcast:
A live audio webcast of the AGM 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 five minutes prior to the
scheduled start of the AGM.
Replay archive:
Please dial 1 -416-849-0833 or toll -free 1 -855-859-2056, access code 9189563. The
conference call replay will expire on May 27, 2018.
The webcast, along with present ation 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 – Higher Grades Drive Strong First Quarter Performance as the Mine
Enters its Thirtieth Year of Production
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production
in 1988.
Production costs per tonne in the first quarter of 2018 increased when compared to the
prior-year period due to higher underground and mill maintenance costs, lower throughput
and the timing of unsold inventory. Production costs per ounce in the first quarter of 2018
increased when compared to the prior-year period due to the reasons described above and
the strengthening of the Canadian dollar relative to the U.S. dollar between periods,
partially offset by higher gold production. For the remainder of the year, grades are
expected to be more in line with 2018 guidance and mill throughput is expected to increase
from levels seen in the first quarter of 2018.
Minesite costs per tonne5 in the first quarter of 2018 increased when compared to the prior-
year period due to lower throughput levels and higher underground and mill maintenance
costs. Minesite costs per tonne are expected to be in line with guidance over the balance
of 2018. Total cash costs per ounce in the first quarter of 2018 decreased when compared
to the prior -year period due to higher gold production and higher by -product metal
revenues.
Gold production in the first quarter of 2018 increased when compared to the prior -year
period due to higher grades resulting from the mining sequenc e in the lower part of the
mine.
5Minesite costs per tonne is a Non-GAAP measure. For a reconciliation of this measure to production costs,
see "Reconciliation of Non -GAAP Financial Performance Measures" below. See also "Note Regarding
Certain Measures of Performance".
LaRonde Mine - Operating Statistics
Three Months E nded Three Months E nded
March 31, 2018 March 31, 2017
Tonnes of ore milled (thousands of tonnes) 531 559
Tonnes of ore milled per day 5,901 6,215
Gold grade (g/t) 5.49 4.61
Gold production (ounces) 89,785 78,912
Production costs per tonne (C$) 155$ 106$
Minesite costs per tonne (C$) 121$ 109$
Production costs per ounce of gold produced ($ per ounce): 723$ 562$
Total cash costs per ounce of gold produced ($ per ounce): 427$ 464$