Agnico Eagle Reports Fourth Quarter and Full Year 2019 Results – Record Annual and Quarterly GOLD Production; Production Guidance Outlines 18% Growth Through 2022 with Declining Unit
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 2019 RESULTS –
RECORD ANNUAL AND QUARTERLY GOLD PRODUCTION; PRODUCTION
GUIDANCE OUTLINES 18% GROWTH THROUGH 2022 WITH DECLINING UNIT
COSTS IN 2021 AND 2022; PIPELINE PROJECTS CONTINUE TO ADVANCE;
QUARTERLY DIVIDEND INCREASED
Toronto (February 13, 2020) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the "Company") today reported quarterly net income of $331.7 million, or
net income of $1.39 per share, for the fourth quarter of 2019. Thi s result includes an
impairment reversal (net of tax) relating to the Meliadine mine of $223.4 million ($0.93 per
share), non- cash foreign currency translation gains on deferred tax liabilities and non-
recurring tax adjustments of $10.6 million ($0.05 per share), mark-to-market gains and other
adjustments of $7.2 million ($0.03 per share) and derivative gains on financial instruments of
$3.1 million ($0.01 per share). Excluding these items would result in adjusted net income1 of
$87.4 million or $0.37 per share for the fourth quarter of 2019. For the fourth quarter of
2018, the Company reported a net loss of $393.7 million or a loss of $1.68 per share.
Included in the fourth quarter of 2019 net income, and not adjusted above, is a non- cash
stock option expense of $3.2 million ($0.01 per share).
For the full year 2019, the Company reported net income of $473.2 million, or $2.00 per
share. This compares with the full year 2018, when the company reported a net loss of
$326.7 million, or loss of $1.40 per share.
In the fourth quarter of 2019, cash provided by operating activities was $257.5 million
($263.8 million before changes in non-cash components of working capital), as compared
with the fourth quarter of 2018 when cash provided by operating activities was $140.3 million
($150.4 million before changes in non-cash components of working capital).
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 2019, cash provided by operating activities was a record $881.7 million
($867.3 million before changes in non-cash components of working capital), as compared
with the full year 2018 when cash provided by operating activities was $605.7 million ($645.5
million before changes in non-cash components of working capital).
The increase in net income and cash provided by operating activities during th e fourth
quarter of 2019 and for the full year 2019, compared to the prior year periods, was mainly
due to higher gold sales volumes and higher realized gold prices, partially offset by higher
costs relating to the slower than expected ramp up at the Amaruq satellite deposit and the
Meliadine mine. Higher gold sales volumes were largely a result of the increased production
due to the completion of the Meliadine project in 2019.
"With two new mines coming into production in Nunavut, 2019 was a pivotal year for the
Company. We set new records for both annual gold production and cash provided by
operating activities. Despite setting these production and cash flow records, the production
ramp up in Nunavut has been slower than expected, which has resulted in higher than
anticipated costs in the fourth quarter of 2019 and slight revisions to our 2020 production
guidance," said Sean Boyd, Agnico Eagle's Chief Executive Officer. "In 2020, we have put
plans in place to improve productivity and optimize the operations as they continue to ramp
up and we expect quarterly production growth and lower costs as we move through the year.
We remain confident in our business with 18% production growth forecast through 2022 and
our confidence is demonstrated with a further 14% increase in our quarterly dividend," added
Mr. Boyd.
Fourth quarter of 2019 and full year 2019 highlights include:
• Record quarterly and annual gold production – Payable gold production2 in the
fourth quarter of 2019 was 494,678 ounces (including pre- commercial production
ounces of 3,137 (50% basis) at Canadian Malartic from the Barnat deposit) at
production costs per ounce of $763, total cash costs per ounce 3 of $745 and all-in
sustaining costs per ounce4 ("AISC") of $1,039. Payable gold production for the full
year 2019 was 1,782,147 ounces (including pre- commercial production ounces of
47,281 at Meliadine, 35,281 at Amaruq and 3,137 at Canadian Malartic from the
Barnat deposit), at production costs per ounce of $735 and total cash costs per ounce
of $673, compared to the most recent guidance of 1.77 to 1.78 million ounces of gold
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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at total cash costs per ounce of $620 to $670. AISC for the full year 2019 were $938,
compared to the most recent guidance of $875 to $925 per ounce
• Gold production is forecast to increase by 18% from 2019 to 2022 – The gold
production forecast for 2020 is now 1.875 million ounces, compared to the most
recent guidance of 1.9 to 2.0 million ounces. The gold production guidance for 2020
was reduced largely due to revisions to the mine plans at the Nunavut operations and
LaRonde. The mid- point of gold production guidance for 2021 is essentially
unchanged at 2.05 million ounces and the mid-point of gold production guidance for
2022 is 2.10 million ounces
• Unit costs expected to decline from 2020 to 2022 – In 2020, total cash costs per
ounce are forecast to be between $725 and $775 and AISC are forecast to be
between $975 and $1,025 per ounce. Costs in 2020 are forecast to increase over
2019 largely due to the ongoing ramp up of the Nunavut operations and a more
conservative mining plan at LaRonde. The Company expects production to increase
and costs to be reduced after the first quarter of the year as plans are i n place to
resolve the key outstanding ramp up issues in Nunavut and LaRonde infrastructure
upgrades are completed. Total cash costs per ounce and AISC are expected to
continue to decline from 2020 through 2022
• 2019 gold mineral reserves declined slightly while gold grades increased 5%;
Measured and indicated mineral resources increased by 4% and inferred
mineral resources increased by 19% – The increase in inferred mineral resources
was largely due to additions at East Gouldie and East Malartic. The average gold
mineral reserve grade in 2019 increased from 2.7 grams per tonne ("g/t") to 2.83 g/t,
which is the fourth consecutive year of improvement. Average mineral resource
grades for the year-ended 2019 were essentially unchanged from the previous year
• Dividend increased by 14% – A quarterly dividend of $0.20 per share has been
declared. The previous quarterly dividend was $0.175 per share
• Project pipeline shows potential to support future production growth
• Meliadine Phase 2 expansion approved – The current Meliadine mill has shown
that it can operate well in excess of its nameplate 3,750 tonnes per day ("tpd")
capacity. As a result, the Company has decided to accelerate the Phase 2
expansion to utilize this extra mill capacity. The initial source of open pit ore will
be from two pits developed on the Tiriganiaq deposit, which contain probable
mineral reserves of 590,412 ounces of gold (3.8 million tonnes grading 4.89 g/t
gold). Approximately 16,500 pre- commercial gold ounces are expected to be
produced from Tiriganiaq pits in 2020
• Amaruq underground project continues to advance – Amaruq mineral
reserves increased 15% year-over-year to 3.3 million ounces of gold (26 million
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tonnes grading 3.96 g/t gold), with the addition of initial underground probable
mineral reserves in the Whale Tail deposit of 577,000 ounces of gold (3.3 million
tonnes grading 5.43 g/t gold). The Company believes that there is good potential
for the Amaruq underground to contribute to its production profile starting in 2022
• Underground mineral resources expanded at Canadian Malartic – An initial
inferred mineral resource of 1.4 million ounces of gold (12.8 million tonnes grading
3.34 g/t gold) (50% basis), has been declared at the East Gouldie Zone, which
was discovered in late 2018. Drilling highlights from 2019 include 8.6 g/t gold over
25.8 metres at 1,071 metres depth. At East Malartic, inferred mineral resources of
1.2 million ounces of gold (50% basis) were added with the inclusion of deeper
portions of the deposit between 1,000 metres to 1,800 metres depth, increasing
total inferred mineral resources at East Malartic to 2.6 million ounces of gold (39.4
million tonnes grading 2.05 g/t gold) (50%)
• Drilling at Santa Gertrudis extends high- grade mineral resources – The
Amelia deposit continues to grow with an updated inferred mineral resource of
70,000 ounces of gold (1.6 million tonnes grading 1.38 g/t gold) at open pit depth,
as well as an initial underground inferred mineral resource of 451,000 ounces of
gold (3.1 million tonnes grading 4.58 g/t gold) in higher-grade sulphide material
Fourth Quarter and Full Year 2019 Financial and Production Highlights
In the fourth quarter of 2019, strong operational performance continued at the Company's
mines, which led to record quarterly payable gold production of 494,678 ounces, which
includes the pre- commercial production from the Barnat deposit at Canadian Malartic.
Excluding the pre-commercial production ounces at Barnat, payable gold production was
491,541 ounces, compared to 410,712 ounces in the fourth quarter of 2018.
For the full year 2019, payable gold production was a record 1,782,147 ounces, which
includes the pre-commercial production ounces at the Meliadine mine, the Amaruq satellite
deposit and the Barnat deposit. Excluding the pre-commercial production ounces, payable
gold production was 1,696,443 ounces, compared to 1,626,669 ounces in 2018.
The higher level of gold production in the fourth quarter of 2019 and the full year 2019, when
compared with the prior -year periods, was primarily due to the start of production at the
Meliadine mine in 2019. A detailed description of the production at each mine is set out
below.
Production costs per ounce in the fourth quarter of 2019 were $763, compared to $693 in the
prior-year period. Total cash costs per ounce in the fourth quarter of 2019 were $745,
compared to $608 in the prior-year period.
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Production costs per ounce for the full year 2019 were $735, compared to $713 in the prior-
year period. Total cash costs per ounce for the full year 2019 were $673, compared to $637
in the prior-year period.
Production costs per ounce and total cash costs per ounce in the fourth quarter of 2019 and
the full year 2019 increased when compared to the prior-year periods primarily due to higher
costs relating to the slower than expected ramp up at the Amaruq satellite deposit and the
Meliadine mine, partially offset by higher gold production.
AISC in the fourth quarter of 2019 was $1,039 per ounce, compared to $852 in the prior-year
period. AISC for the full year 2019 was $938 per ounce, compared to $877 in the prior-year
period.
AISC in the fourth quarter of 2019 and for the full year 2019 increased when compared to the
prior-year periods primarily due to higher total cash costs per ounce and higher sustaining
capital costs, partially offset by expected higher gold production. A detailed description of the
cost performance of each mine is set out below.
In the fourth quarter of 2019, an impairment reversal, net of tax, of $223.4 million relating to
the Meliadine mine was recorded in connection with an impairment review performed under
International Financial Reporting Standards. The impairment reversal was recognized as a
result of various factors including the decrease in project risk.
Cash Position Continues to Grow, Resulting in Increasing Financial Flexibility
Cash and cash equivalents and short -term investments increased to $327.9 million at
December 31, 2019, from the September 30, 2019 balance of $265.2 million.
The outstanding balance on the Company's credit facility remained nil at December 31,
2019. This results in available credit lines of approximately $1.2 billion, not including the
uncommitted $300 million accordion feature.
With the upcoming debt maturity of $360 million of notes due in April 2020, the Company is
evaluating various options to maintain financial flexibility. The Company remains committed
to maintaining an investment grade balance sheet and expects to reduce gross debt in 2020
while maintaining strong liquidity.
Approximately 16% of the Company's 2020 Canadian dollar exposure is hedged at an
average floor price of approximately 1.30 C$/US$. Approximately 8% of the Company's
2020 Mexican peso exposure is hedged at an average floor price of approximately 19.40
MXP/US$. The Company's 2020 Euro exposure is currently unhedged. The Company's full
year 2020 cost guidance is based on assumed exchange rates of 1.30 C$/US$, 18.00
MXP/US$ and 1.15 US$/EUR. The Company anticipates adding to its operating currency
hedges, subject to market conditions.
6
Approximately 77% of the Company's diesel exposure relating to its Nunavut operations for
2020 is hedged at prices better than the 2020 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 2019 were $824.8
million, compared to guidance of $790 million. The increase in capital expenditures
compared to the previous guidance primarily related to additional spending at Kittila and the
Amaruq satellite deposit. Approximately $16 million of additional capital expenditures at
Kittila was due to the acceleration of costs in connection with tailings storage and the
expansion project. At Amaruq, additional capital costs totaling $13 million were incurred in
the fourth quarter of 2019, primarily related to additional mobile equipment and increased
stripping costs.
The following table sets out capital expenditures (including sustaining capital) in the fourth
quarter and the full year 2019.
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Capital Expenditures
(In thousands of US dollars)
Three Months Ended Twelve Months Ended
December 31, 2019 December 31, 2019
Sustaining Capital
LaRonde mine $ 18,794 $ 72,165
LaRonde Zone 5 2,140 6,207
Canadian Malartic mine 13,960 45,880
Meadowbank Complex 18,801 18,801
Meliadine mine 12,554 30,937
Kittila mine 17,490 78,182
Goldex mine 7,795 22,711
Pinos Altos mine 9,511 28,098
Creston Mascota mine — —
La India mine 3,479 10,851
Total Sustaining Capital $ 104,524 $ 313,832
Development Capital
LaRonde mine $ 10,481 $ 20,011
LaRonde Zone 5 — 2,770
Canadian Malartic mine 9,554 37,171
Meadowbank Complex 17,556 174,866
Amaruq underground project 8,300 38,400
Meliadine mine 6,015 91,554
Kittila mine 37,023 101,597
Goldex mine 4,056 21,223
Pinos Altos mine 2,645 13,861
Creston Mascota mine — —
La India mine 931 4,516
Other 2,984 5,027
Total Development Capital $ 99,545 $ 510,996
Total Capital Expenditures $ 204,069 $ 824,828
Senior Management Changes
As we continue to position Agnico Eagle for the future, some changes to our senior
management team were made at the end of 2019. These changes are part of our leadership
development and succession plan, which is designed to ensure we have the right leaders in
the right roles to build on our long-term success.
Don Allan retired as Senior Vice-President, Corporate Development and his responsibilities
were transferred to Jean Robitaille, who was appointed Senior Vice-President – Corporate
Development, Business Strategy and Technical Services. Jean's mandate will be to increase
alignment between these functions as we continue to advance and build our pipeline of
sustainable, high quality projects.
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Transitioning to her retirement at the end of 2020, Louise Grondin's respons ibilities for
Environment and Sustainable Development were transferred to Carol Plummer, who was
appointed Senior Vice-President, Sustainability. For 2020, Louise will remain as Senior Vice-
President, People and Culture.
Quarterly Dividend Increased by 14%
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.20 per
common share, payable on March 16, 2020 to shareholders of record as of February 28,
2020. Agnico Eagle has now declared a cash dividend every year since 1983.
Expected Dividend Record and Payment Dates for 2020
Record Date Payment Date
February 28* March 16*
June 1 June 15
August 31 September 15
November 25 December 15
*Declared
Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan:
Dividend Reinvestment Plan
Fourth Quarter 2019 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, February 14, 2020
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: