Agnico Eagle Reports Second Quarter 2023 Results – Record Quarterly GOLD Production and Solid Cost Performance Drive Strong Quarterly Earnings and Operating Cash Flow; Well Positioned to Achieve Annual
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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 2023 RESULTS – RECORD QUARTERLY
GOLD PRODUCTION AND SOLID COST PERFORMANCE DRIVE STRONG QUARTERLY
EARNINGS AND OPERATING CASH FLOW; WELL POSITIONED TO ACHIEVE ANNUAL
PRODUCTION AND COST GUIDANCE
Toronto (July 26, 2023) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico
Eagle" or the "Company") today reported financial and operating results for the second quarter of
2023.
"Agnico Eagle delivered another strong operational quarter, with record quarterly gold production
and better than expected costs driving solid financial results. With this excellent start to the year,
we are tracking very well to meet our annual production and cost guidance. I would also like to
commend our team for one of the best quarter ly safety performances in the Company's history,"
said Ammar Al-Joundi, Agnico Eagle's President and Chief Executive Officer. "In June we released
an update on the Odyssey project at Canadian Malartic, which highlighted an improved production
profile, a mine life extension to 2042 and a significant geological upside. We continue to advance
the various studies of our key pipeline projects in the Abitibi Gold Belt, with the objective of
leveraging our existing infrastructure and generating value for our sha reholders. We expect to
report the results of these ongoing studies through the first half of 2024. Finally, in the second
quarter, we had strong exploration results from Detour, Meliadine, Kittila and at Hope Bay, with the
intersection of higher grade mineralization at the Madrid deposit," added Mr. Al-Joundi.
Second quarter 2023 highlights
• Record quarterly gold production and solid cost performance – Record quarterly gold
production reflects 100% ownership of Canadian Malartic for the full quarter, combined with
a strong operational performance at all producing sites. Payable gold production 1 in the
1 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.
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second quarter of 2023 was 873,204 ounces at production costs per ounce of $851, total
cash costs per ounce2 of $840 and all-in sustaining costs ("AISC") per ounce3 of $1,150
• Operational performance drives strong quarterly financial results – The Company
reported quarterly net income of $0.66 per share in the second quarter of 2023 , with
adjusted net income4 of $0.65 per share. Operating cash flow was $1.46 per share
• Strong operating and safety performance at all mine sites – Gold production and costs
in the second quarter of 2023 were better than anticipated, reflecting strong operating
performance across the Company 's mines, despite the challenges related to wildfires in
northern Ontario and Quebec and the caribou migration in Nunavut. Lower than expected
costs reflect a strong operating performance, favourable foreign exchange rates and the
easing of certain inflationary pressures
• Important milestones achieved across the portfolio – At the Canadian Malartic complex,
the team celebrated production of its seventh million ounce in June. In addition, Detour
Lake, Goldex and Macassa each achieved record quarterly mill t hroughput rates, while
Meliadine recorded its best ever monthly mill throughput in May 2023
• Gold production, cost and capital expenditure guidance reiterated for 2023 –
Expected payable gold production in 2023 remains unchanged at approximately 3.24 to
3.44 million ounces with total cash costs per ounce expected to be between $840 and $890
and AISC per ounce expected to be between $1,140 and $1,190. Total capital expenditures
(excluding capitalized exploration) for 2023 are still estimated to be approximat ely $1.42
billion. The Company's 2023 production guidance assumes Kittila operates at an annual
rate of 1.6 million tonnes per annum ("Mtpa"). A decision by the Supreme Court of Finland
(the "SAC") to either maintain the 1.6 Mtpa permit or revert to the 2.0 Mtpa permit is
expected in the third quarter of 2023
• Solid cash flow generation strengthens the Company's balance sheet and liquidity
position – During the second quarter of 2023, the Company repaid $900 million of the
amounts drawn on its unsecured revolving bank credit facility. The amount repaid on the
unsecured revolving bank credit facility was repaid using $300 million in cash on hand and
2 Total cash costs per ounce is a non- GAAP ratio that is not a standardized financial measure under IFRS
and, unless otherwise specified, is reported on a by -product basis in this news release. For the detailed
calculation of production costs per ounce, the recon ciliation of total cash costs to production costs and
information about total cash costs per once on a co- product basis, see "Reconciliation of Non- GAAP
Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
3 AISC per ounce is a non- GAAP ratio that is not a standardized financial measure under the IFRS and,
unless otherwise specified, is reported on a by -product basis in this news release. 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 Adjusted net income and adjusted net income per share are non-GAAP measures that are not standardized
financial measures under IFRS. For a reconciliation to net income and net income per share see
"Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain
Measures of Performance".
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$600 million drawn on an unsecured term loan facility (the "Term Loan Facility") which the
Company entered into in the quarter. Additionally on June 30, 2023, the Company repaid
the $100 million 4.54% Series A senior notes at maturity. As at June 30, 2023, the
Company's long term debt was $1,942.0 million and its net debt5 was $1,509.5 million.
• Update on key value drivers and pipeline projects
• Odyssey mine at the Canadian Malartic complex – In June 2023, the Company
released the results of a new internal study reflecting significant project
advancements, an improved valuation and opportunities to further enhance value
(see the news release dated June 20, 2023). Shaft sinking activities ramped up
through the quarter, with approximately 60 metres sunk as at June 30, 2023.
Production via the ramp at the Odyssey South deposit increased through the quarter
and remains on schedule to reach a planned rate of 3,500 tonnes per day ("tpd") in
2024. Drilling activities focused on infilling the internal zones at the Odyssey South
deposit and mineral resource expansion of the East Gouldie deposit to the east and
west
• Detour Lake – In the second quarter of 2023, the mill set a record for quarterly
throughput, with an improved mill availability of 92.8%. The continued focus on mill
process optimization and mill availability is tracking well to reach and potentially
exceed, throughput of 28.0 Mtpa. The Company is advancing the underground
mining scenario study based on a revised mineral resource model and expects to
report the results of this study in the first half of 2024
• Optimization of assets and infrastructure in the Abitibi Gold Belt – The
Company continued to advance several internal evaluations to assess potential
production opportunities at the Macassa Near Surface and the Amalgamated
Kirkland ("AK") deposits, and at the Upper Beaver and Wasamac projects. These
evaluations include an assessment of ore transportation via rail or truck to the
Company's existing processing facilities in the region, with a goal of increasing
future gold production at lower capital costs and with a reduced environmental
footprint. The results of these evaluations are expected to be reported in the first
half of 2024
• Positive exploration results at Detour, Meliadine, Kittila and Hope Bay
• Based on exploration success in the first half of 2023, a supplemental
exploration budget of $32 million has been approved – The Company's
exploration program returned positive results in the first half of 2023 at several key
operating sites and projects, showing excellent potential to identify additional
mineral resources and replace mineral reserves. These results support the focused
addition of supplemental budgets. An update on selected exploration programs and
budgets is set out in the sections below
5 Net debt is a non-GAAP measure that is not a standardized measure under IFRS. For a reconciliation to
long-term debt, see "Reconciliation of non- GAAP Financial Performance Measures" below. See also "Note
Regarding Certain Measures of Performance".
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• Detour – Drilling continues to investigate the deposit below the West Pit mineral
reserve and the western plunge extension of the mineralization to confirm the
mineralized zones potentially amenable to underground mining. Drill results below
the West pit reserve continue to demonstrate potential for a higher grade envelope
with a recent intercept yielding 12.9 grams per tonne ("g/t") gold over 12.9 metres
at 400 metres depth, while two kilometres west of the open pit mineral reserves
mineralization remains open with a recent intercept returning 2.8 g/t gold over 14.4
metres at 1,061 metres depth
• Meliadine – Drilling continues to investigate the vertical extension s of the
mineralized zones in the central part of the Tiriganiaq, Wesmeg and Wesmeg North
deposits. At Wesmeg North, a recent intercept yielded 6.3 g/t gold over 7.4 metres
at 558 metres depth. Approximately 1.5 kilometres southeast of Tiriganiaq at the F-
Zone deposit, a recent intercept yielded 6.4 g/t gold over 16.0 metres at 167 metres
depth in the upper portion of the deposit
• Kittila – Drilling has extended the Rimpi Main Zone to the north, outside of the
current mineral resources, with a recent intercept yielding 7.2 g/t gold over 4.5
metres at 1,102 metres depth. In the Roura area close to the shaft bottom, a recent
intercept in the Main Zone yielded 7.7 g/t gold over 7.3 metres at 1,152 metres
depth. At shallow depth in the Rimpi area, the Parallel / Sisar Zone was identified
in an area that has received limited drilling to date, yielding 3.1 g/t gold over 4.5
metres at 142 metres depth and opening a new near -surface target area for future
exploration
• Hope Bay project – A total of nine exploration drill rigs were operating at the Doris
and Madrid deposits and regionally during the second quarter. At Doris, drilling in
the BCO Zone continued to return good grades and thicknesses to further confirm
the potential to expand the zone along strike. At Madrid, drilling focused on a two-
kilometre long, previously untested gap between the Suluk and Patch 7 zones, with
new highlight intercepts of 10.0 g/t gold over 14.0 metres at 677 metres depth and
13.7 g/t gold over 4.6 metres at 697 metres depth. This drilling confirms the potential
of Madrid/Suluk/Patch 7 as it extends the high- grade Patch 7 Zone by 500 metres
vertically and by 900 metres laterally at depth
• A quarterly dividend of $0.40 per share has been declared
Second Quarter 2023 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Thursday, July 27, 2023 at 11:00
AM (E.D.T.) to discuss the Company's second quarter 2023 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 1-416-764-8659 or toll-free 1-888-664-6392.
To ensure your participation, please call approximately five minutes prior to the scheduled start of
the call.
Via URL Entry:
To join the conference call without operator assistance, you may register and enter your phone
number at https://bit.ly/3CqLElb to receive an instant automated call back.
Replay Archive:
Please dial 1-416-764-8677 or toll-free 1-888-390-0541, access code 008251#. The conference
call replay will expire on August 27, 2023.
The webcast, along with presentation slides, will be archived for 180 days on the Company's
website.
Second Quarter 2023 Financial and Production Results
In the second quarter of 2023 , net income was $326.8 million ( $0.66 per share). This result
includes the following items (net of tax): derivative gains on financial instruments of $20.1 million
($0.04 per share), a non-cash fair value adjustment on inventory sold during the quarter related to
the acquisition of the remaining 50% of Canadian Malartic included in production costs of $13.7
million ($0.03 per share), foreign currency translation gains on deferred tax liabilities of $9.6 million
($0.02 per share), non -cash foreign currency translation losses of $4.0 million ($0.01 per share)
and various other adjustment losses of $7.5 million ($0.01 per share).
Excluding the above items results in adjusted n et income of $322.4 million or $0.65 per share for
the second quarter of 2023. For the second quarter of 2022, the Company reported net income of
$290.4 million ($0.64 per share).
Included in the second quarter of 2023 net income, and not adjusted above, is a non -cash stock
option expense of $2.5 million ($0.01 per share).
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In the first six months of 2023, the Company reported net income of $2,143.7 million ($4.45 per
share) compared to the first six months of 2022, when net income was $409.5 million ($0.97 per
share).
The increase in net income in the second quarter of 2023 compared to the prior-year period is due
to a gain on derivative financial instruments, higher mine operating margins 6 from higher sales
volumes resulting from the acquisition of the remaining 50% of Canadian Malartic and lower income
and mining tax expenses, partially offset by higher amortization.
The increase in net income in the first six months of 2023 is primarily due to a remeasurement gain
resulting from the application of purchase accounting relating to a business combination attained
in stages, which requires the remeasurement of the Company's previously held 50% interest in the
Canadian Malartic complex to fair value. The fair value of the Company's previous ly held 50%
interest and the resulting gain on remeasurement, along with the fair values allocated to assets
acquired and liabilities assumed are preliminary, and are subject to adjustment based on further
analysis and evaluation over the course of the measurement period which may not exceed 12
months from the acquisition date.
In the second quarter of 2023, cash provided by operating activities was $722.0 million ($693.0
million before changes in non- cash components of working capital), compared to the se cond
quarter of 2022 when cash provided by operating activities was $633.3 million ($706.0 million
before changes in non-cash components of working capital). Cash provided by operating activities
(before changes in non- cash components of working capital) was slightly lower in the second
quarter of 2023 when compared to the prior -year period as higher revenues from higher sales
volumes and metals prices was more than offset by higher production costs and higher financing
costs.
In the first six months of 2023 , cash provided by operating activities was $1,371.6 million
($1,301.8 million before changes in non-cash components of working capital), compared to the first
six months of 2022 when cash provided by operating activities was $1,140.7 million
($1,072.0 million before changes in non-cash components of working capital). Cash provided by
operating activities (before changes in non- cash components of working capital) increased when
compared to the prior -year period primarily due to higher sales volumes from a full six months
contribution in 2023 from the Detour Lake, Macassa and Fosterville mines as opposed to 149 days
in the first six months of 2022 following the closing of the merger (the "Merger") with Kirkland Lake
Gold Ltd. and higher sales volumes from the acquisition of the remaining 50% of the Canadian
Malartic complex.
6 Operating margin is a non- GAAP me asure that is not a standardized measure under IFRS. For a
reconciliation to net income see "Reconciliation of Non-GAAP Financial Performance Measures" below. See
also "Note Regarding Certain Measures of Performance".
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In the second quarter of 2023 , the Company's payable gold production was a record 873,204
ounces. This compares to quarterly payable gold production of 858,170 ounces in the prior-year
period as the additional production from the acquisition of the remaining 50% of the Canadian
Malartic complex was partially offset by lower production at the Detour Lake and LaRonde mines.
In the first six months of 2023, the Company's payable gold production was 1,686,017 ounces
compared to the first six months of 2022 when payable gold production was 1,518,774 ounces.
The increase in payable gold production is a result of additional days of production in 2023 at the
Detour Lake, Macassa and Fosterville mines as described above and the additional production
from the acquisition of the remaining 50% of the Canadian Malartic complex, partially offset by
lower production at the Detour Lake and LaRonde mines.
In the second quarter of 2023, production costs per ounce were $851 , compared to $766 in the
prior-year period and total cash costs per ounce were $840, compa red to $726 in the prior-year
period. P roduction costs per ounce increased when compared to the prior -year period primarily
due to higher minesite costs per tonne related to inflation. A detailed description of the minesite
costs per tonne at each mine i s set out below. Total cash costs per ounce increased when
compared to the prior -year period primarily due to higher minesite costs per tonne related to
inflation, higher royalties resulting from the acquisition of the remaining 50% of the Canadian
Malartic complex and a lower fair value adjustment impacting inventory in the second quarter of
2023.
In the first six months of 2023, production costs per ounce were $828, compared to $869 in the
prior-year period and total cash costs per ounce were $836, comp ared to $763 in the prior-year
period. Production costs per ounce decreased when compared to the prior -year period primarily
due to the increase in payable gold production during the period. Total cash costs per ounce
increased when compared to the prior-year period primarily due to the lower fair value adjustment
impacting inventory in the current year.
In the second quarter of 2023, AISC per ounce were $1,150, compared to $1,026 in the prior-year
period. AISC per ounce increased in the second quarter of 2023 when compared to the prior-year
period primarily due to the same reasons that caused higher total cash costs per ounce.
In the first six months of 2023, AISC per ounce were $1,138, compared to $1,051 in the prior-year
period. AISC per ounce increased when compared to the prior -year period primarily due to the
same reasons that caused higher total cash costs and higher sustaining capital expenditures per
ounce.
Solid Cash Flow Generation Continues to Support Investment Grade Balance Sheet;
Financial Flexibility Strengthened with Increased Liquidity
With the strong cash-flow generation during the second quarter, the Company used cash on hand
to repay $300 million of the $1.0 billion drawn from its unsecured revolving bank credit facility used
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to fund the cash consideration paid in connection with the acquisition of Yamana's Canadian assets
on March 31, 2023 (the "Yamana Transaction"). On April 20, 2023, the Company entered into a
credit agreement with a group of financial institutions that provides the $600 million Term Loan
Facility. The Company drew down in full on the Term Loan Facility on April 28, 2023 and used the
proceeds to partially repay the amounts drawn on the unsecured revolving bank credit facility. The
Term Loan Facility matures and all indebtedness thereunder is due and payable on April 21, 2025.
The Term Loan Facility is available as a single advance in US dollars through SOFR and base rate
advances, priced at the applicable rate plus a margin that ranges from 0.00% to 2.00% depending
on the Company's credit rating. The Term Loan Facility may be prepaid without penalty.
As of June 30, 2023, the outstanding balance on the Company's unsecured revolving bank credit
facility was $100 million, and available liquidity under this facility was approximately $1.1 billion,
not including the uncommitted $600 million accordion feature. Additionally on June 30, 2023, the
Company repaid out of available cash the $100 million 4.54% Series A senior notes at maturity,
further reducing the Company's indebtedness.
Cash and cash equivalents decreased to $432.5 million at June 30, 2023, from the March 31, 2023
balance of $744.6 million, primarily due to debt repayment, partially offset by higher cash flow from
operations (higher sales volumes and realized gold prices). At June 30, 2023 the Company's long
term debt was $1,942.0 million and net debt decreased to $1,509.5 million from the March 31, 2023
balance of $1,597.9 million.
On April 7, 2023, Moody's upgraded its credit rating outlook for the Company to "positive" from
"stable", while affirming the credit rating at Baa2. On June 20, 2023, Fitch Ratings affirmed its
credit rating for Agnico Eagle at BBB+ with a Stable Outlook. These investment grade credit ratings
reflect the Company's strong business and credit profile, while maintaining low leverage and
conservative financial policies and recognizing the benefits of the Company's size and scale and
operations in favourable mining jurisdictions.
In May 2023, the Company received approval from the TSX to renew its normal course issuer bid
("NCIB") pursuant to which the Company is permitted to purchase up to the lesser of (i) 5% of its
issued and outstanding common shares and (ii) the number of common shares that may be
purchased by the Company for an aggregate purchase price, excluding commissions, of $500.0
million. Purchases under the NCIB may continue for up to one year from the commencement date
of May 4, 2023. Purchases under the NCIB will be made through the facilities of the TSX, the
NYSE or other designated exchanges and alternative trading systems in Canada and the United
States in accordance with applicable regulatory requirements. All common shares purchased
under the NCIB will be cancelled.
Agnico Eagle believes that the NCIB provides a flexible tool as part the Company's overall capital
allocation program and objectives and generates value for shareholders. In the second quarter of
2023, no purchases were made under the NCIB.