Three-Year Guidance Outlines Growing Production with Stable to Declining Unit Costs; Meliadine Mill Commissioning Underway with Project Ahead of Schedule and Under Budget; Year-over-Year
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 FOURTH QUARTER AND FULL YEAR 2018 RESULTS -
THREE-YEAR GUIDANCE OUTLINES GROWING PRODUCTION WITH STABLE TO
DECLINING UNIT COSTS; MELIADINE MILL COMMISSIONING UNDERWAY WITH
PROJECT AHEAD OF SCHEDULE AND UNDER BUDGET; YEAR-OVER-YEAR
INCREASE IN MINERAL RESERVES AND MINERAL RESOURCES; QUARTERLY
DIVIDEND INCREASED
Toronto (February 14, 2019) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the "Company") today reported quarterly net loss of $393.7 million, or a
loss of $ 1.68 per share, for the fourth quarter of 2018. This result includes impairment
losses of $389.7 million ($1.66 per share), non-cash foreign currency translation losses on
deferred tax liabilities and non-recurring tax adjustments of $14.4 million ($0.06 per share),
losses due to change of reclamation estimates relating to closed sites (net of tax) of $12.4
million ($0.05 per share), derivative losses on financial instruments, mark -to-market and
other adjustments of $8.3 million ($0.04 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
income1 of $33.8 million or $0.14 per share for the fourth quarter of 2018. For the fourth
quarter of 2017, the Company reported net income of $37.5 million or $0.16 per share.
The impairment losses of $389.7 million ($1.66 per share) include an impairment of goodwill
relating to the Canadian Malartic mine of $250.0 million ($1.07 per share), an asset
impairment relating to the El Barqueno project of $100.7 million ($0.43 per share) and an
impairment of goodwill relating to the La India mine of $39.0 million ($0.16 per share).
Included in the fourth quarter of 2018 net income, and not adjusted above, is non-cash stock
option expense of $3.9 million ($0.02 per share).
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 full year 2018, the Company reported net loss of $326.7 million, or a loss of $1.40
per share. This compares with the full year 2017, when net income was $240.8 million, or
$1.05 per share.
In the fourth quarter of 2018, cash provided by operating activities was $140.3 million
($150.4 million before changes in non-cash components of working capital), as compared
with the fourth quarter of 2017 when cash provided by operating activities was $166.9 million
($209.5 million before changes in non-cash components of working capital).
For the full year 2018, cash provided by operating activities was $605.7 million ($645.5
million before changes in non-cash components of working capital), as compared with the
full year 2017 when cash provided by operating activities was $767.6 million ($839.4 million
before changes in non-cash components of working capital).
The decrease in cash provided by operating activities during the fourth quarter of 2018
compared to the prior year period was mainly due to lower gold sales volumes, lower
realized gold prices, lower by -product revenue and expected higher costs at several
operations, principally at LaRonde, Meadowbank and the Company's Mexican operations.
Lower gold sales were mainly as a result of the expected lower gold production in the period
primarily due to reduced throughput levels at Meadowbank as the mine transitions through
the last full year of mining at site.
The decrease in cash provided by operating activities for the full year 2018 compared to the
prior year period was mainly due to lower gold sales volumes, lower by-product revenue and
expected higher costs at several operations, principally at Meadowbank, Kittila and the
Company's Mexican operations, partially offset by slightly higher realized gold prices. Lower
gold sales were largely as a result of the expected lower gold production in the period
primarily due to reduced throughput levels at Meadowbank as described above.
"From an operational standpoint, 2018 was another strong year as we exceeded production
forecasts at lower than expected unit costs for a seventh consecutive year while growing
gold reserves and successfully advancing our Nunavut development projects", said Sean
Boyd, Agnico Eagle's Chief Exec utive Officer. "With the start of new operations at both
Meliadine and Amaruq this year, we anticipate record gold production in 2019 with further
production growth in 2020 and beyond. This growing production platform should result in
increased cash flow allowing us to advance our project pipeline, reduce debt and increase
dividends", added Mr. Boyd.
Fourth quarter of 2018 and full year 2018 highlights include:
• Strong quarterly operational performance; annual gold production and costs
better than forecast for seventh consecutive year - Payable gold production2 in
2 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.
3
the fourth quarter of 2018 was 410,712 ounces at production costs per ounce of
$693, total cash costs per ounce 3 of $608 and all -in sustaining costs per ounce 4
("AISC") of $852. Payable gold production for the full year 2018 was 1,626,669
ounces at production costs per ounce of $713, with total cash costs per ounce of
$637, compared to the most recent guidance of 1,600,000 ounces of gold at total
cash costs per ounce of $650. AISC for the full year 2018 were $877, compared to
the most recent guidance of $915 per ounce
• Increased gold production guidance in 2019 with further gold production
growth forecast through 2021 - The gold production forecast for 2019 is now 1.75
million ounces, compared to the most recent guidance of 1.70 million ounces. The
mid-point of gold production guidance for 2020 is unchanged at 2.0 million ounces,
and the mid-point of gold production guidance for 2021 is 2.05 million ounces
• Unit costs expected to be stable to declining through 2021 as gold production
increases - In 2019, total cash costs per ounce are forecast to be between $620 and
$670 and AISC are forecast to be between $875 and $925 per ounce as the Nunavut
business transitions from the Meadowbank deposit to Amaruq and Meliadine. With
much higher gold production expected in 2020, total cash costs per ounce are
forecast to decline to between $600 and $650, while AISC are forecast to decline to
between $840 and $890 per ounce. The Company expects total cash costs per
ounce and AISC to decline further in 2021
• Meliadine project ahead of schedule and under budget with commissioning of
the mill now underway; Amaruq project remains on track for production start-
up in the third quarter of 2019 - Commercial production at Meliadine is now
expected to be achieved early in the second quarter of 2019 (compared to previous
guidance of late in the second quarter of 2019). Developme nt activities at Amaruq
are progressing as planned. Open pit mining has commenced at the Whale Tail pit
and commissioning of the long-haul truck fleet is underway
• Year over year increase in gold reserves and average grade - 2018 gold mineral
reserves, net of 2018 gold production, increased by 7% to 22.0 million ounces of gold
(254 million tonnes grading 2.70 grams per tonne ("g/t") gold), while the gold reserve
grade increased by approximately 8% from the previous year. A large portion of the
increase comes from LaRonde 3, the Kittila shaft expansion, the acquisition of the
remaining 50% interest in the Kirkland Lake assets and a new open pit mine plan at
Amaruq. Gold contained in measured and indicated mineral resources and inferred
3 Total 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 Perf ormance Measures" below. See also "Note Regarding Certain
Measures of Performance".
4 All-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".
4
mineral resources increased by 9% and 19%, respectively; however, the grades of
these mineral resources decreased as high grade resources were transferred to
mineral reserves in 2018
• Dividend increased by 14% - A quarterly dividend of $0.125 per share has been
declared. The previous quarterly dividend was $0.11 per share.
• Exploration Continues to Focus on Organic Growth Opportunities
• Meliadine drilling extends Tiriganiaq mineralized zones - Drilling has
encountered mineralization outside the known mineral resource areas. Highlights
include: 29.1 g/t gold over 3.8 metres at 626 metres depth and 40.0 g/t gold over
2.8 metres at 748 metres depth. These new areas are expected to increase
inferred mineral resources in 2019 with additional diamond drilling
• Amaruq drilling enha nces open pit mineral reserves and underground
potential - Drilling has resulted in the addition of 0.5 million ounces of gold
reserves at open pit depths. Exploration also continued to demonstrate the
extension of high-grade mineralization below the proposed open pits at both the
Whale Tail and V Zone deposits. At Whale Tail, drilling intersected up to 11.3 g/t
gold over 8.1 metres at 278 metres depth, while drilling at V Zone encountered up
to 27.4 g/t gold over 6.4 metres at 613 metres depth. The Company continues to
evaluate the potential for an underground operation at Amaruq, which could run
partially concurrent with the open pit mine that is currently under development
• Initial mineral resources declared at Santa Gertrudis; exploration outlines
high-grade mineralization and potential for growth - Drilling in 2018 outlined
an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes
grading 1.09 g/t gold). In addition, drilling outlined high-grade mineralization with
values of up to 12.1 g/t gold over 5.1 metres at 99 metres depth and 9.7 g/t gold
over 15.0 metres at 33 metres depth. Work in 2019 will focus on expanding the
mineral resources, testing the extensions of the high- grade structures and
evaluating the economic potential of the project
Fourth Quarter and Full Year 2018 Financial and Production Highlights
In the fourth quarter of 2018, strong operational performance continued at the Company's
mines, which led to payable gold production of 410,712 ounces, compared to 413,212
ounces in the fourth quarter of 2017. For the full year 2018, payable gold production was
1,626,669 ounces, compared to 1,713,533 ounces in the prior-year period.
The lower level of gold production in the fourth quarter of 2018 and the full year 2018, when
compared with the prior-year periods, was expected and primarily due to reduced throughput
levels at Meadowbank as the mine transitions through the last full year of mining at site. A
detailed description of the production at each mine is set out below.
5
Production costs per ounce in the fourth quarter of 2018 were $693, compared to $697 in the
prior-year period. Total cash costs per ounce in the fourth quarter of 2018 were $608,
compared to $592 in the prior-year period.
Production costs per ounce for the full year 2018 were $713, compared to $621 in the prior-
year period. Total cash costs per ounce for the full year 2018 were $637, compared to $558
in the prior-year period.
Production costs per ounce and total cash costs per ounce in the fourth quarter of 2018 and
the full year 2018, when compared to the prior -year periods, were negatively affected by
lower gold production levels at Meadowbank and higher costs at several mines, partially
offset by the weakening of local currencies against th e U.S. dollar. In addition, total cash
costs per ounce were negatively affected by lower by-product revenues.
AISC in the fourth quarter of 2018 were $852 per ounce, compared to $905 in the prior-year
period. The lower AISC when compared to the prior -year period is primarily due to lower
sustaining costs, partially offset by expected lower gold production and higher total cash
costs per ounce compared to the fourth quarter of 2017.
AISC for the full year 2018 were $877 per ounce, compared to $804 in the prior-year period.
The higher AISC when compared to the prior-year period is primarily due to expected lower
gold production and higher total cash costs per ounce, partially offset by lower sustaining
costs. A detailed description of the cost performance of each mine is set out below.
In the fourth quarter of 2018, a total impairment loss of $389.7 million was incurred in
connection with an impairment review performed under International Financial Reporting
Standards ("IFRS"). After more than four years of strong operational performance at
Canadian Malartic, an impairment loss relating to goodwill of $250.0 million was realized in
the quarter as goodwill is not amortized over the life of mine under IFRS. The Company
continues to see encouraging drill results at the East Malartic and Odyssey projects with
drilling ongoing to extend and upgrade the mineral resources in these zones.
Although the El Barqueno project continues to have geological potential, an asset
impairment of $100.7 million was realized in the quarter as current development studies
indicate that the project does not meet the Company's investment criteria. As a result, the
carrying value of the property has been reduced while exploration activity continues in 2019.
The La India mine has been in operation since 2014 and as a result an impairment loss
relating to goodwill of $39.0 million was realized in the quarter as goodwill is not amortized
under IFRS. Exploration is ongoing to discover and expand other satellite zones similar to El
Cochi and El Realito (which each declared initial mineral reserves at December 31, 2018).
6
Liquidity and Hedges - Existing Cash and Undrawn Credit Facility Provide Financial
Flexibility
The Company continues to maintain its investment grade balance sheet and has sufficient
financial flexibility to finance currently planned capital requirements at its various mines and
development projects from operating cash flow, cash and cash equivalents, short term
investments and undrawn credit lines.
Cash and cash equivalents and short -term investments decreased to $307.9 million at
December 31, 2018, from the September 30, 2018 balance of $533.4 million, as a result of
capital spending primarily at the Company's Nunavut projects.
The outstanding balance on the Company's credit facility remained nil at December 31,
2018. This results in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
On December 14, 2018, the Company amended its $1.2 billion credit facility to extend the
maturity date from June 22, 2022 to June 22, 2023.
Approximately 40% of the Company' s 2019 Canadian dollar exposure is hedged at an
average floor price of approximately 1.29 C$/US$. Approximately 50% of the Company's
2019 Mexican peso exposure is hedged at an average floor price of approximately 19.00
MXP/US$. Approximately 15% of the C ompany's 2019 Euro exposure is hedged at an
average floor price of approximately 1.17 US$/EUR. The Company's full year 2019 cost
guidance is based on assumed exchange rates of 1.28 C$/US$, 18.00 MXP/US$ and 1.18
US$/EUR. The Company anticipates adding to its operating currency hedges, subject to
market conditions.
Approximately 40% of the Company's diesel exposure relating to its Nunavut operations for
the July 2019 to July 2020 consumption period is hedged at prices better than the 2019 cost
guidance assumption of C$0.85 per litre (excluding transportation costs). The Company
anticipates adding to its diesel hedges, subject to market conditions.
Capital Expenditures
Total capital expenditures (including sustaining capital) for the full year 2018 were $1.07
billion, compared to guidance of $1.08 billion. The following table sets out capital
expenditures (including sustaining capital) in the fourth quarter and the full year 2018.
7
Capital Expenditures
(In thousands of US dollars)
Three Months Ended Twelve Months Ended
December 31, 2018 December 31, 2018
Sustaining Capital
LaRonde mine $ 20,278 $ 67,314
LaRonde Zone 5 917 3,058
Canadian Malartic mine 7,998 50,860
Meadowbank mine — 14,876
Kittila mine 16,384 54,331
Goldex mine 6,308 21,477
Pinos Altos mine 12,193 35,070
Creston Mascota mine 1,520 4,167
La India mine 1,923 7,345
Total Sustaining Capital $ 67,521 $ 258,498
Development Capital
LaRonde mine $ 3,031 $ 10,174
LaRonde Zone 5 1,691 21,418
Canadian Malartic mine 13,073 31,973
Amaruq satellite deposit 50,480 171,277
Amaruq underground ramp 7,500 16,200
Kittila mine 41,995 119,373
Goldex mine 7,618 31,380
Pinos Altos mine 3,463 5,227
Creston Mascota mine 412 15,333
La India mine 211 1,852
Meliadine project 91,884 388,736
Other 1,032 3,135
Total Development Capital $ 222,390 $ 816,078
Total Capital Expenditures $ 289,911 $ 1,074,576
Quarterly Dividend Increased by 14%
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.125 per
common share, payable on March 15, 2019 to shareholders of record as of March 1, 2019.
Agnico Eagle has now declared a cash dividend every year since 1983.
8
Expected Dividend Record and Payment Dates for 2019
Record Date Payment Date
March 1* March 15*
May 31 June 14
August 30 September 16
November 29 December 16
*Declared
Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan:
Dividend Reinvestment Plan
Fourth Quarter 2018 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, February 15, 2019
at 11:00 AM (E.S.T.) to discuss the Company's fourth quarter and full year 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 1-647-427-7450 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 1796279. The
conference call replay will expire on Friday, March 15, 2019.
The webcast along with presentation slides will be archived for 180 days on the Company's
website.