Operating Results with Record Safety Performance; Reintegration of Nunavummiut Workforce Underway at Meliadine and Meadowbank; Underground Development and Surface
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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 SECOND QUARTER 2021 RESULTS – STRONG
OPERATING RESULTS WITH RECORD SAFETY PERFORMANCE; REINTEGRATION
OF NUNAVUMMIUT WORKFORCE UNDERWAY AT MELIADINE AND
MEADOWBANK; UNDERGROUND DEVELOPMENT AND SURFACE
CONSTRUCTION PROCEEDING AS PLANNED AT ODYSSEY
Toronto (July 28, 2021) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)
("Agnico Eagle" or the "Company") today reported quarterly net income of $189.6 million,
or net income of $0.78 per share, for the second quarter of 2021. This result includes
non-cash mark -to-market gains on warrants of $15.9 million ($0.07 per share), fore ign
currency translation gains on deferred tax liabilities of $9.3 million ($0.04 per share),
derivative gains on financial instruments of $1.8 million ($0.01 per share), non -cash
foreign currency translation losses of $2.4 million ($0.01 per share) and va rious other
adjustment losses of $2.7 million ($0.02 per share). Excluding these items would result
in adjusted net income 1 of $167.7 million or $0.69 per share for the second quarter of
2021. For the second quarter of 2020, the Company reported net inc ome of $105.3
million or net income of $0.44 per share.
Included in the second quarter of 2021 net income, and not adjusted above, are non -
cash stock option expense of $3.9 million ($0.02 per share) and workforce costs of
employees affected by the COVID-19 pandemic (primarily Nunavut-based) of $2.5 million
($0.01 per share).
In the first six months of 2021, the Company reported net income of $325.7 million, or net
income of $1.34 per share. This compares with the first six months of 2020, when net
income was $83.7 million, or net income of $0.35 per share.
The increase in net income in the second quarter of 2021, compared to the prior -year
period, is primarily due to higher mine operating margins (from higher sales volumes and
higher realized metal prices) and lower losses in non -cash items related to mark -to-
market adjustments on financial instruments owned by the Company, partially offset by
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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higher amortization of property, plant and mine development due to higher production
volumes and the contri bution of the Hope Bay mine, higher exploration expenses, and
higher income and mining taxes driven by higher operating margins. In the second
quarter of 2020, gold production and sales were negatively affected by COVID -19 related
reductions in mining activities.
The increase in net income in the first six months of 2021, compared to the prior -year
period, is primarily due to the reasons described above partially offset by higher general
and administration costs related to a health care donation of $8.0 m illion spread over
several years that was expensed in the first quarter of 2021.
In the second quarter of 2021, cash provided by operating activities was $406.9 million
($432.2 million before changes in non-cash components of working capital), compared to
the second quarter of 2020 when cash provided by operating activities was $162.6 million
($185.2 million before changes in non -cash components of working capital). The cash
provided by operating activities in the second quarter of 2021 resulted in anothe r strong
quarter of free cash-flow2 generation.
In the first six months of 2021, cash provided by operating activities was $763.3 million
($847.4 million before changes in non-cash components of working capital), compared to
the first six months of 2020 when cash provided by operating activities was $326.0 million
($389.9 million before changes in non-cash components of working capital).
The increase in cash provided by operating activities in the second quarter of 2021,
compared to the prior -year p eriod, is primarily due to an increase in mine operating
margins, partially offset by higher cash taxes related to the higher mine operating
margins. The higher mine operating margins were primarily a result of strong operating
performance from the Compan y's key mines in the second quarter of 2021, and higher
average realized metal prices. In the second quarter of 2020, gold production was
negatively affected by COVID -19 related reductions in mining activities at seven of the
Company's eight mines.
The i ncrease in cash provided by operating activities in the first six months of 2021,
compared to the prior -year period, is primarily due to an increase in mine operating
margins due to the reasons described above, partially offset by higher cash taxes related
to the higher mine operating margins and payments for deferred taxes related to the
2020 tax year in the first quarter of 2021.
"In the second quarter of 2021, the Company posted record safety performance with solid
operational results which resulted in another strong quarter of cash flow generation. The
Company remains on track to hit its production and cost guidance for 2021 and we
expect to see growing gold output in the second half of the year, which should lead to
continued strong cash flow generati on in 2021," said Sean Boyd, Agnico Eagle's Chief
2 Free cash flow 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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Executive Officer. "Our sound operational platform and stable financial position has
given us the flexibility to increase our exploration spending in 2021, and advance our
pipeline of development projects, which is expected to provide additional shareholder
value in the coming months and years," added Mr. Boyd.
Second quarter of 2021 highlights include:
• Strong operating results and record safety performance in the second quarter
of 2021 – Payable gold production3 was 500,698 ounces (excluding 25,308 ounces of
payable gold production at Hope Bay, and including 9,053 ounces and 348 ounces of
pre-commercial production of gold at the Tiriganiaq open pit at Meliadine and Amaruq
underground project, respectivel y) at production costs per ounce of $834, total cash
costs per ounc e4 of $739 and all -in sustaining costs ("AISC") per ounc e5 of $1,021.
Including Hope Bay, payable gold production in the second quarter of 2021 was
526,006 ounces at production costs per ounce of $827, total cash costs per ounce of
$748 and AISC per ounce of $1,037. Production costs per ounce, total cash costs per
ounce and AISC per ounce exclude the pre -commercial production of gold at
Tiriganiaq and Amaruq underground
• Operating results positively affected by better than expected maintenance
performance and higher than forecast production at the LaRonde Complex and
Meliadine mine – In the second quarter of 2021, scheduled maintenance programs
were performed at LaRonde, G oldex, Meliadine, Amaruq and Kittila. In all instances,
the maintenance programs went better than planned, allowing for a prompt
resumption of operations at all five mines. In the second quarter of 2021, production
was also positively affected by higher than forecast tonnage and grade at LaRonde,
and an 8% increase in forecast grades at Meliadine. In May 2021, the Meliadine mine
established new monthly records for mill throughput (5,178 tonnes -per-day ("tpd"))
and gold production (35,810 ounces)
• Reintegration of Nunavummiut workforce underway at Meliadine and
Meadowbank mines – At the end of June 2021, the Company began the gradual
reintegration of the local workforce at two of its Nunavut operations, following
consultation with local government and heal th authorities. The Nunavummiut
workforce is expected to be fully reintegrated by the end of the third quarter of 2021,
3Payable 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.
4Total 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".
5AISC per ounce is a non -GAAP measure and, unless otherwise specified, is reporte d 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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which is expected to result in cost savings of approximately $4 million per quarter
(before tax)
• Production and cost guidance maintain ed for 2021 – Expected gold production in
2021 is unchanged at approximately 2,047,500 ounces, while total cash costs per
ounce and AISC per ounce continue to be forecast in the range of $700 to $750 and
$950 to $1,000, respectively. Estimated payable gol d production and costs for 2021
exclude any contribution from Hope Bay. Quarterly production guidance for Hope Bay
is unchanged at approximately 18,000 to 20,000 ounces of gold at total cash costs
per ounce of $950 to $975 and AISC per ounce of $1,525 to $1,575
• Capital expenditures for 2021 remain unchanged – Total capital expenditures for
2021 are still estimated to be approximately $803.0 million. Capital spending levels in
the first half of 2021 were lower than forecast largely due to the timing of
expenditures. Capital spending is expected to return to more normalized levels over
the balance of the year
• Cost inflation expected to be minimal in 2021 – With rising prices for many
commodities, cost pressures are gradually being pushed downstream and are starting
to be reflected in the prices for certain goods and services used by the Company.
Despite the inflationary pressures faced year -to-date, the Company is expected to
remain on track to achieve its 2021 cost guidance on the back of a number of
collaborative efforts and initiatives. In addition, the Company does not anticipate any
abnormal impact on labour costs as a result of wage inflation, other than contract
exploration drilling and other select contractor groups at this time
• Demonstrating Str ong ESG Performance – In the second quarter of 2021, the
Company registered its best quarterly safety performance in its 64 -year history. In an
effort to reduce its long-term carbon footprint, the Company signed a memorandum of
understanding in July 2021 with the consortium of Tugliq Energy Corp. and Hiqiniq
Energy Corporation (a wholly -owned subsidiary of Kitikmeot Corporation) to jointly
work to develop a renewable energy plan for the Hope Bay project. For the second
consecutive year, the Company receiv ed a Towards Sustainable Mining® award from
the Mining Association of Canada to honour the Company's innovative community
development work at Pinos Altos which helped 300 families in Mexico gain access to
clean, sustainable drinking water
• Odyssey project development and construction on target – Ramp development is
advancing ahead of schedule and at lower unit costs; the first underground
exploration bay is complete; the shaft collar (30 metres) was excavated and the
concrete lining installed; the head fram e foundations are in progress and the head
frame construction is expected to start in the fourth quarter of 2021. All surface
construction activities and the purchase of long lead items are on target; shaft sinking
is expected to resume in the second half of 2022. Underground exploration drilling
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will target the upper levels of the Odyssey South Zone and the Internal Zones.
Surface drilling is ongoing to infill and expand the East Gouldie Zone
• Drilling confirms extension of mineralization at Pinos Altos and La India camps
– Drilling at Cubiro and Pinos Altos Deep confirms and extends high -grade gold
mineralization laterally and at depth; infill and step -out drilling confirms and extends
the Chipriona sulphide deposit near surface
• Positive exploration results at several minesites and projects in the first half of
2021 – Highlights include discovery of a new mineralized horizon 400 metres south of
the East Gouldie deposit; additional high -grade gold -copper in the footwall zone at
Upper Beaver in Kirkland Lake; exploration at Hope Bay confirmed the expansion
potential of the Doris and Madrid deposits; and drilling at Kittila yielded the deepest
ore grade intersection at the mine. For more information on the latest results see the
Company's news release dated July 8, 2021
• A quarterly dividend of $0.35 per share has been declared
Second Quarter 2021 Financial and Production Highlights
In the second quarter of 2021, the Company's payable gold production was 500,698
ounces (excluding 25,308 ounces of payable gold production at Hope Bay, and including
9,053 ounces and 348 ounces of pre -commercial production of gold at the Tiriganiaq
open pit at Meliadine and Amaruq underground project, respectively). This compares to
quarterly payable gold production of 331,064 ounces in the prior -year period (which
included 2,651 ounces of pre -commercial production of gold at the Barnat deposit at
Canadian Malartic). Including the Hope Bay mine, the Company's quarterly gold
production was 526,006 ounces in the second quarter of 2021.
In the first six months of 2021, the Company's payable gold production was a record
1,005,243 ounces (excluding 37,567 oun ces of payable gold production at Hope Bay,
and including 17,176 ounces and 348 ounces of pre-commercial production of gold at the
Tiriganiaq open pit at Meliadine and Amaruq underground project, respectively). This
compares to payable gold production of 742,430 ounces in the prior -year period (which
included 5,625 ounces of pre -commercial production of gold at the Barnat deposit at
Canadian Malartic). Including the Hope Bay mine, the Company's payable gold
production was 1,042,810 ounces in the first six months of 2021.
The higher gold production in the second quarter of 2021 and the first six months of
2021, when compared to the prior -year periods, was primarily due to strong performance
at the Company's key mines, including higher than forecast tonnage and grade at the
LaRonde Complex and higher than expected grade at the Meliadine mine, partially offset
by lower production at La India related to water conservation efforts and at Creston
Mascota where only residual leaching remains. In the second quart er of 2020 and the
first six months of 2020, gold production was negatively affected by COVID -19 related
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reductions in mining activities which impacted seven of the Company's eight operations.
A detailed description of the production at each mine is set out below.
Production costs per ounce in the second quarter of 2021 were $834 (excluding the Hope
Bay mine), compared to $854 in the prior -year period. Total cash costs per ounce in the
second quarter of 2021 were $739 (excluding the Hope Bay mine), compa red to $825 in
the prior -year period. Including the Hope Bay mine, production costs per ounce were
$827 and total cash costs per ounce were $748 in the second quarter of 2021.
Production costs per ounce in the first six months of 2021 were $808 (excluding the Hope
Bay mine), compared to $864 in the prior -year period. Total cash costs per ounce in the
first six months of 2021 were $734 (excluding the Hope Bay mine), compared to $832 in
the prior -year period. Including the Hope Bay mine, production costs per ounce were
$819 and total cash costs per ounce were $741 in the first six months of 2021.
In the second quarter and first six months of 2021, production costs per ounce decreased
when compared to the prior -year periods primarily due to higher gold pro duction and
lower costs per tonne at the Meadowbank Complex and Meliadine mine, partially offset
by the strengthening of the Canadian dollar against the U.S. dollar. In the second quarter
and first six months of 2021, total cash costs per ounce decreased when compared to the
prior-year periods primarily due to higher gold production, higher by -product revenues
from higher realized metal prices and higher sales volumes and lower minesite costs per
tonne at the Meadowbank Complex and Meliadine mine, partiall y offset by the
strengthening of the Canadian dollar against the U.S. dollar.
AISC per ounce in the second quarter of 2021 were $1,021 (excluding the Hope Bay
mine), compared to $1,142 in the prior -year period. Including the Hope Bay mine, AISC
per ounce were $1,037 in the second quarter of 2021.
AISC per ounce in the first six months of 2021 were $1,008 (excluding the Hope Bay
mine), compared to $1,118 in the prior -year period. Including the Hope Bay mine, AISC
per ounce were $1,022 in the first six months of 2021.
AISC in the second quarter and first six months of 2021 decreased when compared to
the prior-year periods primarily due to lower total cash costs per ounce, partially offset by
higher sustaining capital expenditures at the LaRonde Complex, C anadian Malartic mine
and Goldex mine related to the temporary suspension of activities due to COVID -19 in
the prior-year periods.
Cash Position – Strong Financial Flexibility
Cash and cash equivalents and short -term investments increased to $280.9 milli on at
June 30, 2021, from the March 31, 2021 balance of $132.0 million, primarily due to the
strong free cash flow generation in the quarter. As of June 30, 2021, the outstanding
balance on the Company's unsecured revolving bank credit facility was nil, a nd available
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liquidity under this facility was approximately $1.2 billion, not including the uncommitted
$300 million accordion feature.
Approximately 54% of the Company's remaining 2021 estimated Canadian dollar
exposure is hedged at an average floor price above 1.27 C$/US$. Approximately 50% of
the Company's remaining 2021 estimated Mexican peso exposure is hedged at an
average floor price above 20.75 MXP/US$. Approximately 11% of the Company's
remaining 2021 estimated Euro exposure is hedged at an average floor price of
approximately 1.20 US$/EUR. The Company's full year 2021 cost guidance is based on
assumed exchange rates of 1.30 C$/US$, 20.00 MXP/US$ and 1.20 US$/EUR.
Approximately 50% of the Company's diesel exposure relating to its Nuna vut operations
(excluding Hope Bay) for 2021 is hedged at an average floor price below $0.45 per litre,
which is lower than the 2021 cost guidance assumption of $0.50 per litre (excluding
transportation costs). These hedges will offset a portion of the ex pense related to the
2021 sealift diesel purchases, which commenced in July.
The Company will continue to monitor market conditions and anticipates continuing to
opportunistically add to its operating currency and diesel hedges to strategically support
its key input costs.
Capital Expenditures
Total capital expenditures (including sustaining capital) in the second quarter of 2021
were $209.3 million (excluding Hope Bay), lower than forecast primarily due to the timing
of expenditures. Including Hope Bay, the total capital expenditures in the second quarter
of 2021 were $220.3 million. Capital spending is expected to return to more normalized
levels over the balance of the year and the total capital expenditures (including sustaining
capital) in 2021 rem ain forecast to be approximately $803.0 million, excluding the Hope
Bay mine. Pre -commercial production at the Tiriganiaq open pit at Meliadine is
incorporated in, and netted against, the total 2021 capital expenditure forecast. As a
result, some variabi lity is likely depending on the timing of the achievement of
commercial production, prevailing gold prices and foreign exchange rates.
The following table sets out capital expenditures (including sustaining capital) in the
second quarter of 2021 and the first six months of 2021.
Capital Expenditures
(In thousands of U.S. dollars)
Three Months
Ended Six Months Ended
June 30, 2021 June 30, 2021
Sustaining Capital
LaRonde Complex $ 27,959 $ 49,531
Canadian Malartic mine 20,758 40,313
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Capital Expenditures
(In thousands of U.S. dollars)
Three Months
Ended Six Months Ended
June 30, 2021 June 30, 2021
Meadowbank Complex 17,945 25,287
Meliadine mine 12,887 23,095
Kittila mine 7,280 17,924
Goldex mine 9,214 16,384
Pinos Altos mine 3,876 7,994
La India mine 1,350 3,205
Total Sustaining Capital $ 101,269 $ 183,733
Development Capital
LaRonde Complex $ 13,704 $ 22,489
Canadian Malartic mine 11,403 19,051
Meadowbank Complex 4,475 8,506
Amaruq underground project 25,725 36,074
Meliadine mine 15,359 29,209
Kittila mine 21,203 35,583
Goldex mine 4,439 8,493
Pinos Altos mine 6,364 7,917
La India mine 1,971 3,645
Other 3,378 9,467
Total Development Capital $ 108,021 $ 180,434
Total Capital Expenditures - excluding Hope Bay $ 209,290 $ 364,167
Hope Bay mine Sustaining Capital $ 9,664 $ 16,397
Hope Bay mine Development Capital 1,328 2,762
Total Capital Expenditures - including Hope Bay $ 220,282 $ 383,326
2021 Production and Cost Guidance Unchanged
Production guidance for 2021 remains unchanged at approximately 2,047,500 ounces of
gold (including approximately 30,000 ounces and 350 ounces of pre -commercial gold
production from the Tiriganiaq open pit at Meliadine and Amaruq underground project,
respectively). The Company anticipates that total cash costs per ounce and AISC per
ounce for 2021 will continue to be in the range of $700 to $750 and $950 to $1,000,
respectively. Estimated payable gold production and costs for 2021 exclude any
contribution from Hope Bay.
Quarterly production guidance for Hope Bay is unchanged at approximately 18,000 to
20,000 ounces of gold at total cash costs per ounce of $950 to $975 and AISC per ounce
of $1,525 to $1,575.