Agnico Eagle Reports First Quarter 2019 Results; Solid Production and Cost Performance; Nunavut Development Projects Advancing as Planned with Meliadine Expected to Achieve Commercial
Stock Symbol: AEM (NYSE and TSX)
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AGNICO EAGLE REPORTS FIRST QUARTER 2019 RESULTS; SOLID PRODUCTION
AND COST PERFORMANCE; NUNAVUT DEVELOPMENT PROJECTS ADVANCING
AS PLANNED WITH MELIADINE EXPECTED TO ACHIEVE COMMERCIAL
PRODUCTION IN MAY; EXPLORATION DRILLING CONTINUES TO ADVANCE
PROJECT PIPELINE
Toronto (April 25, 2019) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico
Eagle" or the "Company") today reported quarterly net income of $37.0 million or $0.16 per
share, for the first quarter of 2019. This result includes derivative gains on financial
instruments, mark-to-market and other adjustments of $4.0 million ($0.02 per share), non-
cash foreign currency translation gains on deferred tax liabilities and non-recurring tax gains
of $3.2 million ($0.01 per share) and non- cash foreign currency translation losses of $2.2
million ($0.01 per share). Excluding these items would result in adjusted net income 1 of
$32.0 million or $0.14 per share for the first quarter of 2019. In the first quarter of 2018, the
Company reported net income of $44.9 million or $0.19 per share.
Included in the first quarter of 2019 net income, and not adjusted above, is non-cash stock
option expense of $6.2 million ($0.03 per share).
In the first quarter of 2019, cash provided by operating activities was $148.7 million ($170.8
million before changes in non-cash components of working capital), as compared with the
first quarter of 2018 when cash provided by operating activities was $207.7 million ($180.5
million before changes in non-cash components of working capital).
The decrease in net income and cash provided by operating activities during the first
quarter of 2019 compared to the prior year period was mainly due to lower gold sales
volumes, lower realized gold prices and lower by-product revenue, partially offset by
lower costs at several operations, principally at Goldex, Kittila, Pinos Altos and Creston
Mascota. Lower gold sales were as a result of the expected lower gold production in the
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".
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period primarily due to reduced throughput levels at Meadowbank as the mine transitions
to the Amaruq satellite deposit in the second half of 2019.
"Operationally, 2019 is off to a very good start with strong production and cost performance
in the first quarter from Goldex, Kittila, Pinos Altos and Creston Mascota. We have also seen
significant exploration results from several of our key pipeline projects in the first quarter",
said Sean Boyd, Agnico Eagle's Chief Executive Officer. "With commercial production
expected shortly at Meliadine, and Amaruq on schedule for st art-up in the third quarter of
2019, we anticipate higher gold production to result in increased earnings and cash flow in
the second half of the year. This should allow the Company to continue to advance its
development pipeline, increase financial flexibility and potentially raise dividends", added Mr.
Boyd.
First quarter 2019 highlights include:
• Solid quarterly production and cost performance – Payable gold production2 in
the first quarter of 2019 was 398,217 ounces (including 17,582 ounces of pre-
commercial gold production at the Meliadine project) at production costs per ounce of
$727, total cash costs per ounce 3 of $623 and all -in sustaining costs per ounce 4
("AISC") of $836. Production costs, total cash costs and AISC per ounce exclude the
pre-commercial production ounces relating to the Meliadine project
• Meliadine mine expected to achieve commercial production in May 2019 –
Commissioning of the process plant commenced in the first quarter of 2019, and pre-
commercial gold production totaled 17,582 ounces for the quarter. Mill throughput is
expected to average approximately 3,000 tonnes per day ("tpd") in the second quarter
of 2019, and the plant has operated at 3,700 tpd on several occasions. Three
underground mining areas are now in operation, with operations in a fourth area
expected to commence in the second quarter of 2019
• Amaruq remains on schedule to begin production in the third quarter of 2019 –
Dewatering of Whale Lake commenced early in the first quarter of 2019, followed by
the ramp-up of open pit mining activities. The long-haul truck fleet is performing as
planned with ore being mined and trucked to the Meadowbank mill where it is being
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 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 Performance 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".
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stockpiled for future processing. Underground ramp development is progressing on
schedule
• A quarterly dividend of $0.125 per share was declared
• Exploration drilling continues to enhance organic growth opportunities
• Amaruq drilling continues to infill and expand known mineralized zones
– At Whale Tail, results continue to demonstrate the extension of high-grade
mineralization below the proposed pit outline, including 14.5 grams per tonne
("g/t") gold over 7.3 metres at 396 metres depth. Drilling at the V Zone
continued to expand the known mineral resources. Highlights include 29.8 g/t
gold over 3.4 metres at 357 metres depth
• Santa Gertrudis drilling discovers new high-grade structure at Trinidad
and further extends known resource areas – Highlights include 14.7 g/t
gold over 11.5 metres at 170 metres depth at Trinidad and 5.1 g/t gold over 4.5
metres at 33 metres depth at Greta. Additional work is planned to test new
targets and further expand the mineral resource potential
• Kirkland Lake drilling expands near -surface deposits at Upper Beaver
and extends mineralization at depth – Shallow drilling has yielded 3.63 g/t
gold and 0.21% copper over 14.0 metres at 102 metres depth, while deeper
drilling has encountered 7.62 g/t gold and 0.36% copper over 3.4 metres at
1,983 metres depth, approximately 400 metres below any previous
intersection
First Quarter Financial and Production Highlights
In the first quarter of 2019, solid operational performance continued at the Company's mines,
which led to payable gold production of 398,217 ounces (including 17,582 ounces of pre-
commercial gold production at the Meliadine project), compared to 389,278 ounces in the
first quarter of 2018.
The lower level of gold production, in the first quarter of 2019 (when excluding the Meliadine
project pre-commercial production ounces), when compared with the prior-year period, was
primarily due to expected reduced throughput levels at Meadowbank as the mine transitions
to the Amaruq satellite deposit in the second half of 2019. A detailed description of the
production of each mine is set out below.
Production costs per ounce in the first quarter of 2019 were $727, compared to $759 in the
prior-year period. Total cash costs per ounce in the first quarter of 2019 were $623,
compared to $648 in the prior-year period.
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Production costs per ounce and total cash costs per ounce in the first quarter of 2019 were
lower, when compared to the prior-year period, primarily due to lower costs at several mines
and the weakening of local currencies against the U.S. dollar, partially offset by lower gold
production. The lower total cash costs per ounce in the first quarter of 2019, when compared
to the prior-year period, were partially offset by lower by-product revenues.
AISC in the first quarter of 2019 were $836 per ounce, compared to $889 in the prior-year
period. The lower AISC when compared to the prior -year period is primarily due to lower
sustaining capital and lower total cash costs per ounce compared to the first quarter of 2018.
A detailed description of the cost performance at each mine is set out below.
Cash Position Remains Strong
Cash and cash equivalents and short-term investments decreased to $196.5 million at March
31, 2019, from the December 31, 2018 balance of $307.9 million, primarily as a result of the
capital spending at the Company's Nunavut projects.
The outstanding balance on the Company's credit facility remained nil at March 31, 2019.
This r esults in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
Approximately 35% of the Company's remaining 2019 Canadian dollar exposure is hedged
at an average floor price of approximately 1.29 C$/US$. Approximately 45% of the
Company's remaining 2019 Mexican peso exposure is hedged at an average floor price of
approximately 19.00 MXP/US$. Approximately 15% of the Company's remaining 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). Th e Company
anticipates adding to its diesel hedges, subject to market conditions.
Capital Expenditures
Total capital expenditures (including sustaining capital) in 2019 remain forecast to be
approximately $660 million. Pre- commercial production at Meliadine and Amaruq are
incorporated in, and netted against, the total 2019 capital expenditure forecast. As a result,
some variability is likely depending on the timing of the achievement of commercial
production, prevailing gold prices and foreign exchange rates.
Total development capital expenditures related to the construction of the Company's new
Nunavut mines, Amaruq and Meliadine, are expected to be below the combined capital
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expenditure forecast of $1.23 billion. At Amaruq, total development capital expenditures are
forecast to be approximately $350 million and at Meliadine, total capital expenditures are
expected to be below the 2018 forecast of $900 million, primarily due to strong project
execution which has resulted in lower contingency costs and owners' costs.
The following table sets out capital expenditures (including sustaining capital) in the first
quarter of 2019.
Capital Expenditures
(In thousands of US dollars)
Three Months Ended
March 31, 2019
Sustaining Capital
LaRonde mine $ 16,522
LaRonde Zone 5 mine 1,368
Canadian Malartic mine 7,506
Meadowbank mine —
Kittila mine 13,123
Goldex mine 4,834
Pinos Altos mine 4,612
Creston Mascota mine —
La India mine 663
Total Sustaining Capital $ 48,628
Development Capital
LaRonde mine $ 2,475
LaRonde Zone 5 mine 74
Canadian Malartic mine 8,222
Amaruq satellite deposit 50,627
Amaruq underground project
5,085
Kittila mine 16,354
Goldex mine 5,882
Pinos Altos mine 3,666
Creston Mascota mine —
La India mine 1,119
Meliadine project 48,585
Other 495
Total Development Capital $ 142,584
Total Capital Expenditures $ 191,212
2019 Production and Cost Guidance Unchanged
Production guidance for 2019 remains unchanged at 1.75 million ounces of gold (including
pre-commercial production from Meliadine of approximately 60,000 ounces of gold and from
Amaruq of approximately 40,000 ounces of gold). The Company anticipates that total cash
costs per ounce and AISC for 2019 will continue to be in the range of $620 to $670 and $875
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and $925, respectively. Approximately 55% of expected gold production in 2019 is
anticipated to occur in the second half of 2019.
2019 Tax Guidance
Income and mining taxes expense for the first quarter of 2019 was $15.5 million, or an
effective tax rate of 29%. The tax rate is lower than prior guidance partly due to the
distribution of earnings by jurisdiction in the first quarter of 2019. The Company anticipates
the overall effective tax rate to increase over the remainder of 2019 to the previous guidance
range of approximately 45% to 50% for the full year 2019. The anticipated increase in the
tax rate is due to the expected higher percentage of to tal gold production coming from
Canada.
As previously outlined in the Company's news release dated February 14, 2019, the
Company expects its effective tax rates by jurisdiction for the full year 2019 to be:
Canada - 40% to 50%
Mexico - 35% to 40%
Finland - 20%
Dividend Record and Payment Dates for the Second Quarter of 2019
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.125 per
common share, payable on June 14, 2019, to shareholders of record as of May 31, 2019.
Agnico Eagle has declared a cash dividend every year since 1983.
Other Expected Dividend and Record Dates for 2019
Record Date Payment Date
August 30 September 16
November 29 December 16
Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan:
Dividend Reinvestment Plan
First Quarter 2019 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, April 26, 2019 at
8:30 AM (E.D.T.) to discuss the Company's financial and operating results.
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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 7073579. The
conference call replay will expire on May 27, 2019.
The webcast, along with presentation 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 begin on
Friday, April 26, 2019 at 11:00 am (E.D.T). The AGM will be held at the Arcadian Court,
401 Bay Street, Simpson Tower, 8th Floor, Toronto, Ontario, M5H 2Y4.
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 set out below.
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 5296987. The
conference call replay will expire on May 27, 2019.
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
Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in the
LaRonde, Goldex and LaRonde Zone 5 mines 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 – Strong Unit Cost Performance; Lower Grades Due to Mine
Sequencing with Grade Profile Expected to Improve in the Second Half of 2019
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production
in 1988.
LaRonde Mine - Operating Statistics
Three Months Ended Three Months Ended
March 31, 2019 March 31, 2018
Tonnes of ore milled (thousands of tonnes) 547 531
T onnes of ore milled per day 6,078 5,901
Gold grade (g/t) 4.65 5.49
Gold production (ounces) 77,433 89,785
Production costs per tonne (C$) $ 150 $ 155
Minesite costs per tonne (C$) $ 118 $ 121
Production costs per ounce of gold produced ($ per ounce) $ 798 $ 723
T otal cash costs per ounce of gold produced ($ per ounce) $ 488 $ 427
Production costs per tonne in the first quarter of 2019 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 first quarter of 2019 increased when compared to the
prior-year period due to lower gold production.
Minesite costs per tonne5 in the first quarter of 2019 decreased when compared to the prior-
year period due to higher tonnage. Total cash costs per ounce in the first quarter of 2019
increased when compared to the prior-year period due to lower gold production and lower
by-product metal revenues.
Gold production in the first quarter of 2019 decreased when compared to the prior -year
period due to lower grades r esulting from the mining sequence, partially offset by higher
tonnage. Grades are anticipated to increase in the second half of 2019 and are expected to
average approximately 5.22 g/t gold for the full year 2019, consistent with the 2019 guidance
set out in the Company's February 14, 2019 news release.
5 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" below.