AGNICO EAGLE MINES LIMITED Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, April 27, 2017 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $76.0 million, or $0.33 per share, for the first quarter of 2017. This result includes non-cash foreign currency translation gains on deferred tax liabilities of $7.9 million ($0.03 per share), non-recurring gains of $3.5 million ($0.02 per share), unrealized gains on financial instruments of $2.8 million ($0.01 per share), various mark-to-market and other adjustment losses of $1.4 million ($0.01 per share) and non-cash foreign currency translation losses of $0.9 million (nil per share). Excluding these items would result in adjusted net income(1 )of $64.1 million or $0.28 per share for the first quarter of 2017. In the first quarter of 2016, the Company reported net income of $27.8 million or $0.13 per share.
Not included in the first quarter of 2017 adjusted net income above is non-cash stock option expense of $7.6 million ($0.03 per share).
In the first quarter of 2017, cash provided by operating activities increased by greater than 50% to $222.6 million ($224.7 million before changes in non-cash components of working capital) compared with cash provided by operating activities of $145.7 million in the first quarter of 2016 ($167.5 million before changes in non-cash components of working capital). The increase in cash provided by operating activities before changes in working capital during the current period was mainly due to a combination of higher gold sales volumes and realized prices (approximately 7% and 3%, respectively).
_________________________________
(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".
"Operationally, 2017 has started strongly with solid performance on both the production and cost fronts. Higher gold production at lower costs has resulted in stronger cash flow generation and has allowed us to increase our production guidance for the year", said Sean Boyd, Agnico Eagle's Chief Executive Officer. "In the first quarter we also made very good progress at several of our growth projects with Meliadine progressing as expected, the Canadian Malartic extension receiving government approval and the Goldex Deep project ahead of schedule and under budget", added Mr. Boyd.
First Quarter 2017 highlights include:
-- Strong production and cost performance continue - Payable gold
production(2 )in the first quarter of 2017 was 418,216 ounces of gold at
production costs per ounce of $578, total cash costs(3 )per ounce of
$539 and all-in sustaining costs per ounce(4 )("AISC") of $741
-- Full year production guidance increased - Production is now expected to
exceed 1.57 million ounces compared to previous guidance of 1.55 million
ounces. The increase reflects the extension of the mine life at Lapa to
the end of the second quarter of 2017
-- Canadian Malartic Extension project receives Government of Quebec
approval - Production activities at the project are currently forecast
to begin in late 2019, subject to obtaining ancillary certificates of
authorization and the progress of the road diversion
-- Goldex Deep 1 production expected to come in ahead of schedule and under
budget - At the end of the first quarter of 2017 construction was 75%
complete, while mine infrastructure development was 100% complete. Deep
1 is now expected to start ramping up production in the third quarter of
2017, approximately one quarter ahead of schedule. Production guidance
at Goldex is unchanged at this time but will be reviewed next quarter
-- Exploration drilling at Amaruq extends and infills Whale Tail Deposit to
the west and infills V Zone - Recent drilling indicates the potential to
increase the depth of the western part of the Whale Tail pit, and expand
the Whale Tail pit farther to the west. An infill drill program in the
near-surface portion of the V Zone has confirmed high gold grades in
multiple lenses
-- Meliadine project on schedule and budget - Underground development is 5%
above plan and engineering was 67% complete at the end of March 2017.
Construction activities are progressing well with the concrete batch
plant being commissioned and pile installation restarted in March. Full
camp facilities are expected to be completed in May ahead of the barge
season
-- A quarterly dividend of $0.10 per share was declared
_________________________________
(2)Payable production of a mineral means the quantity of 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".
4All-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".
First Quarter Financial and Production Highlights - Higher Gold Production, Lower Production Costs
In the first quarter of 2017, strong operational performance continued at the Company's mines, which led to payable gold production of 418,216 ounces compared to 411,336 ounces in the first quarter of 2016. The higher level of production in the 2017 period was primarily due to higher grades at LaRonde and Meadowbank. A detailed description of the production of each mine is set out below.
Production costs per ounce for the first quarter of 2017 were $578, which was lower than the $593 in the 2016 period. Production costs per ounce were positively affected by higher gold production levels at LaRonde and Meadowbank. Total cash costs per ounce for the first quarter of 2017 were 6% lower at $539 compared to $573 per ounce for the first quarter 2016. Total cash costs per ounce in the first quarter of 2017 were positively affected by a combination of higher production of gold and by-product metals at LaRonde and higher production levels at Meadowbank compared to the first quarter of 2016. A detailed description of the cost performance of each mine is set out below.
AISC for the first quarter of 2017 were 7% lower at $741 per ounce compared to $797 in the first quarter of 2016. The lower AISC is primarily due to lower total cash costs per ounce and lower sustaining capital expenditures compared to the first quarter of 2016. AISC in 2017 remain forecast to be between $850 and $900 per ounce, but will be reviewed on an ongoing basis through 2017.
Cash Position Remains Strong
Cash and cash equivalents and short term investments increased to $804.3 million at March 31, 2017, from the December 31, 2016 balance of $548.4 million. The increase in cash and cash equivalents was largely as a result of the issuance of common shares announced in the Company's news release of March 27, 2017, but also due to strong cash generation at the mines.
The outstanding balance on the Company's credit facility remained nil at March 31, 2017. This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.
Capital Expenditures
Total capital expenditures (including sustaining capital) in 2017 remain forecast to be approximately $850 million. The following table sets out capital expenditures (including sustaining capital) in the first quarter of 2017.
Capital Expenditures
--------------------
(In thousands of US dollars)
---------------------------
Three Months
Ended
March 31,
2017
----------
Sustaining Capital
------------------
LaRonde mine $13,805
Canadian Malartic mine 12,442
Goldex mine 3,179
Meadowbank mine 2,431
Kittila mine 9,681
Pinos Altos 8,239
Creston Mascota deposit Pinos
Altos 582
La India mine 1,634
Development Capital
-------------------
Canadian Malartic mine $718
Goldex mine 12,555
Meadowbank mine 12,320
Meliadine project 48,565
Kittila mine 6,480
Pinos Altos 889
Other 3,150
Total Capital Expenditures $136,670
========
Revised 2017 Guidance - Production Increased
Production for 2017 is now forecast to exceed 1.57 million ounces of gold as a result of the Lapa mine life extension to the end of the second quarter of 2017 (previously 1.555 million ounces). Total cash costs per ounce in 2017 remain forecast to be between $595 and $625 per ounce. Production and total cash costs will be reviewed on an ongoing basis through 2017.
Dividend Record and Payment Dates for the Second Quarter of 2017
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per common share, payable on June 15, 2017 to shareholders of record as of June 1, 2017. Agnico Eagle has declared a cash dividend every year since 1983.
Other Expected Dividend and Record Dates for 2017
Record Date Payment Date
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September 1 September 15
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December 1 December 15
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Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan: Dividend Reinvestment Plan
First Quarter 2017 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, April 28, 2017 at 8:30 AM (E.D.T.) to discuss the Company's financial and operating results.
Via Webcast:
A live audio webcast of the conference call 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 call.
Replay archive:
Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 50920688. The conference call replay will expire on May 28, 2017.
The webcast, along with presentation slides, will be archived for 180 days on the Company's website.
Annual Meeting
The Company's Annual Meeting of Shareholders (the "AGM") will begin on Friday, April 28, 2017 at 11:00 am (E.D.T). The AGM will be held at the Sheraton Centre Toronto Hotel (Grand Ballroom) - 123 Queen Street West, Toronto, ON.
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 listed 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 50915952. The conference call replay will expire on May 28, 2017.
The webcast, along with presentation slides, will be archived for 180 days on the Company's website.
NORTHERN BUSINESS REVIEW
ABITIBI REGION, QUEBEC
Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in three mines (LaRonde, Goldex and Lapa) 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 - Higher Grades From Lower Mine Drive Strong First Quarter Performance
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988. The LaRonde mine produced its five millionth ounce in 2016.
LaRonde Mine - Operating Statistics
-----------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 559 577
Tonnes of ore milled per day 6,215 6,341
Gold grade (g/t) 4.61 4.24
Gold production (ounces) 78,912 75,337
Production costs per tonne (C$) $106 $105
Minesite costs per tonne (C$) $109 $103
Production costs per ounce of gold produced ($ per ounce): $562 $609
Total cash costs per ounce of gold produced ($ per ounce): $464 $529
Production costs per tonne in the first quarter of 2017 were essentially the same when compared to the prior-year period. Production costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher production.
Minesite costs per tonne(5 )in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels and higher costs in the mill. Total cash costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher gold production from the lower mine and higher by-product metal revenues.
At the LaRonde 3 project, studies are continuing to assess the potential to extend the mineral reserve base and carry out phased mining activities between a depth of 3.1 kilometres and 3.7 kilometres.
In 2016, the first mineral reserves were declared in the eastern portion of LaRonde 3 and additional inferred mineral resources were declared in the western portion of LaRonde 3. Further drilling is being carried out to assess the vertical extent of the mineralization.
_____________________________
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".
LaRonde Zone 5 - Permit Received for Surface Construction
In 2003, the Company acquired the LaRonde Zone 5 project from Barrick Gold Corporation. The property lies adjacent to and west of the LaRonde mining complex and previous operators exploited the deposit by open pit. In February 2017 LaRonde Zone 5 was approved by Agnico Eagle's Board of Directors for development (subject to permitting approval). Permits are expected to be received by mid-2018 with underground mining expected to commence shortly thereafter.
In the first quarter of 2017, the certificate of authorization for surface construction was received and mobilization is currently underway. For additional details on the project see the Company's news release dated February 15, 2017.
Canadian Malartic Mine - Canadian Malartic Extension Project Receives Government of Quebec Approval
In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired all of the issued and outstanding common shares of Osisko Mining Corporation and created the Canadian Malartic General Partnership (the "Partnership"). The Partnership owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee. Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership. All volume numbers in this section reflect the Company's 50% interest in the Canadian Malartic mine except as noted.
Canadian Malartic Mine - Operating Statistics
---------------------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 2,433 2,380
Tonnes of ore milled per day 27,029 26,157
Gold grade (g/t) 1.03 1.07
Gold production (ounces) 71,382 73,613
Production costs per tonne (C$) $18 $21
Minesite costs per tonne (C$) $22 $24
Production costs per ounce of gold produced ($ per ounce): $455 $554
Total cash costs per ounce of gold produced ($ per ounce): $556 $557
Production costs per tonne in the first quarter of 2017 decreased when compared to the prior-year period due to a higher amount of stripping costs being capitalized and timing of unsold inventory. The average stripping ratio in the first quarter of 2017 was 1.95 to 1.0. Production costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to the reasons described above.
Minesite costs per tonne in the first quarter of 2017 were lower when compared to the prior-year period due to a higher amount of stripping costs being capitalized. Total cash costs per ounce in the first quarter of 2017 were essentially the same when compared to the prior-year period.
On April 10, 2017, the Quebec Superior Court dismissed the application for an interlocutory injunction. No dates have been set for the hearing of the application for a permanent injunction to restrict the Canadian Malartic mine's mining operations to sound levels and mining volumes below the limits to which it is subject. For additional information see the Company's Annual Information Form for the year ended December 31, 2016.
On April 19, 2017, the Government of Quebec announced the issuance of two decrees authorizing the Partnership to carry out the proposed expansion of the Canadian Malartic mine and the diversion of Highway 117 in Malartic (the "Project"). The preparatory work for the Project will begin after obtaining the certificates of authorization to be issued by the Ministry of Sustainable Development, Environment and Climate Change.
Diversion plans will include a temporary bridge over Highway 117 to minimize the impact of the construction work on local traffic. The road construction is expected to occur over a two-year period. The Company's most recent production guidance assumes a modest contribution from the Project in late 2019.
The approval of the Project provides greater operating flexibility and allows for mill throughput of 55,000 tonnes per day ("tpd"). The decree sets the maximum extraction rate at 241,000 tpd (ore and waste) as long as noise and dust thresholds are not exceeded.
Drilling at Odyssey Focused on Internal Zones and Infilling the South Zone
At the Canadian Malartic mine, exploration programs are ongoing to evaluate several targets that are underground or close to current pit limits. In addition, the Partnership continues to explore the Odyssey project, which is located approximately 1.5 kilometres east of the current limit of the Canadian Malartic open pit. Both of these opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.
During the first quarter of 2017, 34 holes (totaling 22,676 metres) were drilled at Odyssey with a primary focus on further defining the internal mineralized zones between the Odyssey North and South Zones and expanding the mineral resources in Odyssey South.
Drilling carried out to date suggests that these internal zones could increase the mineral resources and enhance the economics of the project by adding higher grade mineral resources that would require minimal additional infrastructure to access.
Lapa - Mine Life Extended into Second Quarter 2017
The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.
Lapa Mine - Operating Statistics
--------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 130 161
Tonnes of ore milled per day 1,439 1,769
Gold grade (g/t) 4.25 5.00
Gold production (ounces) 15,360 21,709
Production costs per tonne (C$) $133 $109
Minesite costs per tonne (C$) $134 $121
Production costs per ounce of gold produced ($ per ounce): $839 $589
Total cash costs per ounce of gold produced ($ per ounce): $854 $668
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due lower throughput levels and the timing of unsold inventory. Production costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production.
Minesite costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels and timing of unsold inventory. Total cash costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production.
During the quarter, additional target zones at depth were approved for mining from the Zone Deep East and Zone 7 Deep areas. Under the current mine plan, Lapa is expected to operate until the end of the second quarter of 2017. Total gold production for 2017 is now forecast to be 30,000 ounces, up from the previous forecast of 15,000 ounces.
Goldex - Production from Goldex Deep 1 Now Expected to Begin in the Third Quarter of 2017
The 100% owned Goldex mine in northwestern Quebec began production from the M and E satellite zones in September 2013.
Goldex Mine - Operating Statistics
----------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 642 636
Tonnes of ore milled per day 7,135 6,991
Gold grade (g/t) 1.68 1.71
Gold production (ounces) 32,671 32,340
Production costs per tonne (C$) $35 $34
Minesite costs per tonne (C$) $37 $34
Production costs per ounce of gold produced ($ per ounce): $516 $486
Total cash costs per ounce of gold produced ($ per ounce): $532 $506
During the first quarter of 2017, approximately 58,000 tonnes of development ore from the Deep 1 project was milled and yielded 2,395 ounces of pre-commercial gold production. The revenue from the pre-commercial gold production was deducted from the capital expenditures of the project. The Company expects approximately 7,000 ounces of pre-commercial gold production from the Deep 1 project in 2017 (the table above includes pre-commercial production).
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting development ore tonnage) and lower productivity from smaller stopes. Production costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production (after deducting development ore ounces).
Minesite costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting development ore tonnage) and lower productivity from smaller stopes. Total cash costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production (after deducting development ore ounces).
Construction of the Deep 1 project is now 75% complete with remaining activities focused on the rock hammer room and the dump loop for the Rail-Veyor ore transport system. Mine infrastructure development is 100% complete and production from the Deep 1 Zone is expected to start ramping up in the third quarter of 2017, which is approximately one quarter ahead of schedule. The Deep 1 project initial capital costs are expected to be below the July 2015 budget of $135 to $140 million, largely due to the positive foreign exchange rate movements. Production guidance at Goldex is unchanged at this time.
An internal technical study is underway to evaluate the potential to mine a portion of the Deep 2 Zone, which starts below the Deep 1 Zone at 1200 metres below surface.
Drilling is underway on the South Zone, which is accessible from the Deep 1 Zone infrastructure. The South Zone consists of quartz veins that have higher grades than those in the primary mineralized zones at Goldex. The Company is evaluating the potential for the South Zone to provide incremental ore feed to the Goldex mill.
At the adjoining Joubi property, exploration activities by previous operators focused on the evaluation of quartz vein mineralization within a quartz diorite body. A six-hole drill program is planned to evaluate the potential for bulk mining within the Joubi intrusive body.
Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014. Located less than 30 kilometres from Goldex, the Akasaba West deposit could create flexibility and synergies for the Company's operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs. The public hearing process has been completed at Akasaba and permitting activities are expected to continue through 2017. The Company expects to begin sourcing open pit ore from Akasaba West in 2019 after the necessary permits are received.
NUNAVUT REGION
Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential. With the Company's largest producing mine (Meadowbank) and two significant development assets (the Meliadine project and the Amaruq satellite deposit at Meadowbank) and other exploration projects, Nunavut has the potential to be a strategic operating platform with the ability to generate strong production and cash flows over several decades.
Meadowbank - Near-term Options to Extend Production Remain Under Review
The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010. The mine produced its two millionth ounce of gold in 2015.
Meadowbank Mine - Operating Statistics
--------------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 926 946
Tonnes of ore milled per day 10,287 10,390
Gold grade (g/t) 3.11 2.58
Gold production (ounces) 85,370 72,311
Production costs per tonne (C$) $77 $73
Minesite costs per tonne (C$) $74 $77
Production costs per ounce of gold produced ($ per ounce): $632 $722
Total cash costs per ounce of gold produced ($ per ounce): $590 $788
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower amount of stripping costs being capitalized and timing of unsold inventory. Production costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher production.
Minesite costs per tonne in the first quarter of 2017 decreased when compared to the prior-year period due lower total tonnage mined. Total cash costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher production and the reason described above.
Studies are ongoing to reduce the potential production gap between the end of the mine life at Meadowbank and the start of operations at Amaruq in 2019.
Amaruq Satellite Deposit - Exploration Drilling Extends and Infills Whale Tail Deposit to the West and Infills V Zone
Agnico Eagle has a 100% interest in the Amaruq satellite deposit which is located approximately 50 kilometres northwest of the Meadowbank mine. Amaruq is situated on a 116,717-hectare property near the 77,411-hectare Meadowbank property. A significant gold discovery was made on the Amaruq property in 2013, and activities since that time have focused on the development of satellite mineralization to feed the existing 11,000 tpd Meadowbank mill.
At December 31, 2016, the Amaruq deposit contained an open pit indicated mineral resource of 2.1 million ounces gold (16.9 million tonnes grading 3.88 grams per tonne ("g/t") gold); an open pit inferred mineral resource of 763,000 ounces gold (4.9 million tonnes grading 4.81 g/t gold); and an underground inferred mineral resource of 1.4 million ounces gold (6.8 million tonnes grading 6.22 g/t gold).
In 2016, the Company completed an internal technical study on Amaruq. Based on this study, the Company has approved the project for development pending the receipt of the required permits.
Agnico Eagle is working closely with the Nunavut Impact Review Board ("NIRB") and the Nunavut Water Board ("NWB") on the Amaruq Phase I (Whale Tail pit) joint permitting process. NIRB/NWB has coordinated the technical review of Amaruq Phase I, which is underway; technical meetings and a prehearing conference will be held in Baker Lake, Nunavut, from April 28, 2017 to May 2, 2017. The final public hearing is expected to take place in September 2017. The Whale Tail pit permitting is on schedule and permits are expected to be received by the third quarter of 2018.
In the internal technical study, a conventional open pit mining operation is contemplated to begin on the Whale Tail satellite deposit (Phase I) in the third quarter of 2019 followed by the V Zone pit (Phase II) in 2020. The Whale Tail and V Zone planned pits extend to depths of approximately 250 metres and 150 metres, respectively, and both pits are open for expansion.
The plan set out in the study contemplates the production of approximately 2.0 million ounces of gold between 2019 and 2024, with pre-mining activities starting in 2018 at the Whale Tail deposit. This represents less than 50 percent of the currently known mineral resource base. Initial capital costs are estimated to be approximately $330 million. For additional details on the project see the Company's news release dated February 15, 2017.
Approximately $78 million will be spent on capital costs at Amaruq in 2017, primarily on completion of the all-weather exploration road, additional technical studies and the procurement of materials and equipment for the 2018 construction season. By the end of the first quarter of 2017, 39 kilometres of the exploration road from Meadowbank to Amaruq had been completed; the 64-kilometre road is expected to be completed as an exploration road by the fourth quarter of 2017. Development of the Amaruq exploration ramp has been permitted and planning is underway, construction of the ramp will begin when the road is completed, allowing for the planned bulk sample collection.
With the development of the Amaruq satellite deposit, the Meadowbank life of mine is expected to extend through 2024. This will allow the exploration team to evaluate the full potential of the Amaruq property.
First Quarter 2017 Amaruq Work Program - Primary Focus on Infill and Step-Out Drilling
The first phase of a planned $22-million, 75,000-metre drill program commenced in early February 2017. In the first quarter of 2017, 119 holes (17,900 metres) were drilled. The first quarter 2017 drill program was focused primarily on the conversion of inferred mineral resources at the IVR zone and Whale Tail deposit and a possible expansion of the Whale Tail open-pit limit towards the west.
Recent intercepts from the project are set out in the table below and the drill hole collars are located on the Amaruq project local geology map. The pierce points are shown on the Amaruq project composite longitudinal section. All intercepts reported for the Amaruq project show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.
Recent exploration drill results from the Whale Tail (WT) deposit and V Zone (V), Amaruq project
Drill hole Location From To Depth of Estimated Gold grade Gold
(metres) (metres) midpoint true width (g/t) grade (g/t)
below (metres) (uncapped) (capped)*
surface
(metres)
--- -------
AMQ17-1075 V-WT 35.4 38.4 30 2.9 47.8 14.7
---------- ---- ---- ---- --- --- ---- ----
and V-WT 71.0 77.4 61 6.4 5.4 5.4
--- ---- ---- ---- --- --- --- ---
AMQ17-1095 V-WT 13.5 17.5 12 3.8 9.0 9.0
---------- ---- ---- ---- --- --- --- ---
AMQ17-1099 V 179.1 190.0 153 10.2 4.8 4.8
---------- --- ----- ----- --- ---- --- ---
AMQ17-1108 V 37.5 48.0 34 9.5 6.7 6.7
---------- --- ---- ---- --- --- --- ---
AMQ17-1109 WT 175.5 180.0 139 4.2 10.9 10.9
---------- --- ----- ----- --- --- ---- ----
AMQ17-1111 V 46.3 49.9 43 3.1 12.6 12.6
---------- --- ---- ---- --- --- ---- ----
AMQ17-1129 V 93.0 106.0 87 11.8 4.3 4.3
---------- --- ---- ----- --- ---- --- ---
AMQ17-1143 V 86.0 93.9 75 7.4 17.1 10.7
---------- --- ---- ---- --- --- ---- ----
AMQ17-1160 WT 256.9 271.0 218 13.6 6.1 6.1
---------- --- ----- ----- --- ---- --- ---
including 266.0 271.0 222 4.8 10.3 10.3
--------- ----- ----- --- --- ---- ----
AMQ17-1161 V 21.8 25.9 20 3.7 26.9 14.7
---------- --- ---- ---- --- --- ---- ----
and V 36.1 39.1 31 2.8 74.1 12.7
--- --- ---- ---- --- --- ---- ----
and V 48.9 57.0 43 7.3 2.6 2.6
--- --- ---- ---- --- --- --- ---
* Holes at the Whale Tail
deposit use a capping
factor of 80 g/t gold.
Holes at the IVR deposit
(including the V Zone) use
a capping factor of 60 g/
t gold.
[Amaruq local geology map]
[Amaruq Composite Longitudinal Section]
Recent exploration drilling in the Whale Tail deposit has probed the area around the western, shallower part of the planned Whale Tail pit. The highlight of the exploration work at Amaruq in the first quarter of 2017 is hole AMQ17-1109 intersecting 10.9 g/t gold over 4.2 metres at 139 metres depth, just below the shallower part of the pit, suggesting a potential to increase the depth of the western part of the Whale Tail pit. To date, the Whale Tail deposit has been defined over at least 2.3 kilometres of strike length and extends from surface to 732 metres depth; it remains open at depth and along strike.
The V Zone represents a second source of open pit ore at the Amaruq project. An infill drill program in the near-surface portion of the V Zone has confirmed high gold grades over multiple lenses that generally strike northeast and dip shallowly to the southeast. The V Zone has been traced to 542 metres below surface and remains open at depth.
At the northwest margin of the planned V Zone pit, which is considered to be the base of the V Zone lenses, there was a significant intersection confirming grades in the area: hole AMQ17-1108 intersected 6.7 g/t gold over 9.5 metres at 34 metres depth. Approximately 300 metres to the southeast, at the southern margin of the planned V Zone pit, hole AMQ17-1099 intersected 4.8 g/t gold over 10.2 metres at 153 metres depth, which is below the planned pit bottom at this location. This confirms and extends the V Zone underground mineral resources. Approximately 100 metres south of hole 1099, in an area between the V Zone and Whale Tail deposit, hole AMQ17-1075 intersected 14.7 g/t gold over 2.9 metres at 30 metres depth, and 5.4 g/t gold over 6.4 metres at 61 metres depth, while hole AMQ17-1095 intersected 9.0 g/t gold over 3.8 metres at 12 metres depth in this area. These three intercepts suggest a potential amalgamation of the two pits, which will need to be investigated further.
Some of the highest gold grades encountered recently in the V Zone were from conversion drilling in the southeast portion of the planned pit, which is considered to be the upper parts of the V Zone lenses. Hole AMQ17-1161 had three shallow intercepts: 14.7 g/t gold over 3.7 metres at 20 metres depth, 12.7 g/t gold over 2.8 metres at 31 metres depth, and 2.6 g/t gold over 7.3 metres at 43 metres depth. Approximately 70 metres to the south, close to the margin of the planned pit, hole AMQ17-1143 intersected 10.7 g/t gold over 7.4 metres at 75 metres depth.
Drilling to test regional exploration targets is expected to begin in the second quarter of 2017.
Meliadine Project - Construction Activities Progressing on Schedule and on Budget
Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010, and is one of Agnico Eagle's largest gold projects in terms of mineral resources. The Company owns 100% of the 111,757 hectare property.
In February 2017, the Company's Board of Directors approved the construction of the Meliadine project. The mine is expected to begin operation in the third quarter of 2019, and the current mine plan will be focused on the Tiriganiaq and nearby Wesmeg-Normeg mineralized zones that will be accessed from the Tiriganiaq underground infrastructure.
Over an estimated 14-year mine life, approximately 5.3 million ounces of gold are expected to be produced at Meliadine. This represents approximately half of the currently known mineral reserve and mineral resource base.
At December 31, 2016, the Meliadine property was estimated to hold proven and probable mineral reserves of 3.4 million ounces (14.5 million tonnes grading 7.32 g/t gold), indicated mineral resources of 3.3 million ounces (20.8 million tonnes grading 4.95 g/t gold) and inferred mineral resources of 3.6 million ounces (14.7 million tonnes grading 7.51 g/t gold). In addition, there are numerous other known gold occurrences along the 80-kilometre-long greenstone belt that require further evaluation.
For additional details on the project see the Company's news release dated February 15, 2017.
In the first quarter of 2017, approximately 1,200 metres of underground development was completed, which was 5% above plan. Construction activities are progressing well with the commissioning of the concrete batch plant underway and the resumption of pile installation at the end of March. Full camp facilities are expected to be completed in May ahead of critical barge season. At the end of the first quarter, approximately 67% of the engineering work was completed. The Company expects to complete approximately 80% of the engineering work by the end of August 2017.
2017 Meliadine Work Program and Additional Opportunities to Create Value
The estimated capital budget for 2017 is unchanged at $360 million. Key elements of this program include:
-- 5,600 metres of underground development (including the start of a second
ramp system from underground)
-- Approximately 12,500 metres of conversion drilling and 14,000 metres of
underground delineation drilling (drilling is expected to begin in the
second quarter of 2017)
-- Completion of the camp complex in May 2017
-- All piling installation is expected to be completed by the end of the
second quarter of 2017, with subsequent concrete work expected to be
carried out in the second and third quarter of 2017
-- Steel and building erection is expected to begin in August 2017
-- Closing in of the process plant, power plant, and multi service building
by the end of 2017
-- Installation of underground mine ventilation and heating by the fourth
quarter of 2017
-- Completion of the fuel farm in Rankin Inlet and onsite in the fourth
quarter of 2017
-- Construction of second ramp portal between the second and fourth
quarters 2017
The Company believes that there are numerous opportunities to create additional value both at the mine and on the large land package. Opportunities currently being reviewed include:
-- Optimization of the current mine plan (advance Phase 2 pit development)
-- Potential to optimize labour costs once the mine is in operation
(reduction of headcount at site via improved telecommunications)
-- Minesite exploration upside through mineral resource conversion and
expansion of known ore zones (most zones are open below a depth of 450
metres)
-- Potential for the discovery of new deposits along the 80 kilometre-long
greenstone belt. Regional exploration programs are expected to
recommence in 2017
FINLAND AND SWEDEN
Agnico Eagle's Kittila mine in Finland is the largest primary gold producer in Europe and hosts the Company's largest mineral reserves. Exploration activities continue to expand the mineral resources, and studies are underway to evaluate the potential to cost-effectively increase production.
Kittila - Improved Continuity and Understanding of Sisar Top Zone
The 100% owned Kittila mine in northern Finland achieved commercial production in 2009. The Kittila mine produced its one millionth ounce in 2016.
Kittila Mine - Operating Statistics
-----------------------------------
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
-------------- --------------
Tonnes of ore milled (thousands of tonnes) 423 432
Tonnes of ore milled per day 4,697 4,749
Gold grade (g/t) 4.29 4.12
Gold production (ounces) 51,621 48,127
Production costs per tonne (EUR) EUR 78 EUR 75
Minesite costs per tonne (EUR) EUR 75 EUR 72
Production costs per ounce of gold produced ($ per ounce): $696 $749
Total cash costs per ounce of gold produced ($ per ounce): $668 $726
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels as a result of accelerating a portion of a planned shutdown from the second quarter to the first quarter and higher re-handling and contractor costs. Production costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher production.
Minesite costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to lower throughput levels as a result of accelerating a portion of a planned shutdown from the second quarter to the first quarter and higher re-handling and contractor costs. Total cash costs per ounce in the first quarter of 2017 decreased when compared to the prior-year period due to higher production.
The main target of exploration at Kittila continues to be the Sisar Zone, which is subparallel to and slightly east of the main Kittila mineralization. Sisar has been located between approximately 800 metres and 1,910 metres below surface, forming a roughly triangular shape that remains open at depth and along strike to the north and south. The initial mineral reserves in the Sisar Zone were estimated as of December 31, 2016, and were the result of conversion drilling in 2016. Sisar and to a smaller extent Rimpi added 338,000 ounces of gold in mineral reserves at Kittila at year-end 2016, before deducting the gold in ore mined.
Drilling from the exploration ramp is ongoing to infill and extend the Sisar Zone mineralization. In addition, underground ramp construction that began a year ago is extending farther into the upper portion of the Sisar Zone, which is located approximately 150 to 200 metres from existing underground infrastructure. The ramp extension will allow for more deep drilling platforms to investigate the Sisar Zone.
In the first quarter of 2017, 16 holes (5,201 metres) were drilled in the Sisar Top and Central Zones. Assays are pending for many of the holes.
Selected recent drill results are set out in the table below; drill hole collar coordinates are set out in a table in the Appendix of this news release. Pierce points for all these holes are shown on the Kittila Composite Longitudinal Section. All intercepts reported for the Kittila mine show uncapped grades over estimated true widths, based on a current geological interpretation that is being updated as new information becomes available with further drilling.
Recent exploration drill results from the Sisar Zone at the Kittila mine
Drill hole Zone From To Depth of Estimated Gold grade
(metres) (metres) midpoint true width (g/t)
below (metres) (uncapped)
surface
(metres)
--- -------
RIE16-501 Sisar Top 218.0 223.0 815 4.6 5.1
--------- --------- ----- ----- --- --- ---
RIE16-623 Sisar Top 233.0 239.8 1,003 4.7 6.9
--------- --------- ----- ----- ----- --- ---
and Sisar Top 251.0 261.0 1,012 7.1 7.1
--- --------- ----- ----- ----- --- ---
RIE16-624 Sisar Top 214.0 228.5 980 10.5 6.0
--------- --------- ----- ----- --- ---- ---
and Sisar Top 244.4 249.5 991 3.7 6.9
--- --------- ----- ----- --- --- ---
ROD14-005F Sisar Central 687.3 702.0 1,329 5.4 3.7
---------- ------------- ----- ----- ----- --- ---
[Kittila - Composite Longitudinal Section]
For the purposes of description, the zone has been divided into two depths, referred to as "Sisar Top" (approximately 800 to 1,000 metres below surface) and "Sisar Central" (approximately 1,000 to 1,400 metres below surface). Some of the Sisar mineralized lenses extend between the Sisar Top and Sisar Central.
Recent intercepts from the Sisar Zone at approximately 1,000 metres below surface fill in a gap in the Sisar mineral reserves, and show that the Sisar Zone in this area comprises up to five subparallel lenses in close proximity, approximately 200 metres east of the main Kittila ore zone. There is a dominant Sisar lens, with additional lenses to its east and west sides. The best recent result in this area at the base of the Sisar Top Zone was hole RIE16-623 that intersected 6.9 g/t gold over 4.7 metres at 1,003 metres depth, and 7.1 g/t gold over 7.1 metres at 1,012 metres depth. Approximately 50 metres to the south, hole RIE16-624 intersected 6.0 g/t gold over 10.5 metres at 980 metres depth and 6.9 g/t gold over 3.7 metres at 991 metres depth. These four intercepts are from three different lenses that are approximately 10 metres apart at the 1,000-metre depth. Together, they fill in a gap in the Sisar mineral reserves in this area. Approximately 120 metres to the south of hole RIE16-624, conversion hole RIE16-501 intersected 5.1 g/t gold over 4.6 metres at 815 metres depth confirming and extending the Sisar mineral reserves in the area.
Infill drilling has yielded another intercept in Sisar Central. Hole ROD14-005F intersected 3.7 g/t gold over 5.4 metres at 1,329 metres depth, confirming the continuity of the Sisar Zone in this area. The Sisar Central Zone is approximately 150 metres east of the Main Zone at this depth.
In 2017, approximately $7.9 million will be spent on further deep drilling at Kittla (which includes the Sisar Zone). The goal of this program is to expand the mineral resources in the northern part of the property and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.
Studies are ongoing to evaluate the economics of increasing throughput rates at Kittila to 2.0 million tonnes per annum. The Company expects that this increased mining rate scenario could be supported by the development of the Rimpi and Sisar Zones.
SOUTHERN BUSINESS REVIEW
Agnico Eagle's Southern Business operations are focused in Northern Mexico, with two operations (Pinos Altos and Creston Mascota) in Chihuahua State and the La India mine in Sonora State. These operations have been the source of growing precious metals production (gold and silver), stable operating costs and strong free cash flow since 2009.
Pinos Altos - Record Mill Performance in March
The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.
Pinos Altos Mine - Operating Statistics
---------------------------------------
Three Three
Months Months
Ended Ended
March 31, March 31,
2017 2016
--------- ---------
Tonnes of ore processed (thousands of tonnes) 553 502
Tonnes of ore processed per day 6,149 5,516
Gold grade (g/t) 2.71 3.07
Gold production (ounces) 45,360 48,117
Production costs per tonne $43 $48
Minesite costs per tonne $48 $50
Production costs per ounce of gold produced ($ per ounce): $523 $496
Total cash costs per ounce of gold produced ($ per ounce): $358 $343
Production costs per tonne in the first quarter of 2017 decreased when compared to the prior-year period due to higher throughput and variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore, routine fluctuations in the waste to ore stripping ratio in the open pit mine and favourable foreign exchange rates. Production costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower gold production, a lower amount of stripping costs being capitalized and timing of unsold inventory.
Minesite costs per tonne in the first quarter of 2017 decreased when compared to the prior-year period due to higher throughput and variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore and routine fluctuations in the waste to ore stripping ratio in the open pit mine and favourable foreign exchange rates. Total cash costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower gold production, a lower amount of stripping costs being capitalized and timing of unsold inventory.
During the first quarter of 2017 the first cell of the Phase III heap leach pad was completed and ore stacking commenced at the end of March 2017. Work on the second cell is expected to be completed during the second quarter of 2017.
Construction of a silver flotation circuit is progressing on schedule for start-up in the third quarter of 2017. The circuit will be used to recover additional silver before the tailings are sent for impoundment.
Creston Mascota - Drilling Extends High Grade Zone at Bravo
The 100% owned Creston Mascota open pit heap leach, located less than 7 kilometres from Pinos Altos, has been operating since late 2010.
Creston Mascota deposit at Pinos Altos - Operating Statistics
-------------------------------------------------------------
Three Three
Months Months
Ended Ended
March 31, March 31,
2017 2016
--------- ---------
Tonnes of ore processed (thousands of tonnes) 524 516
Tonnes of ore processed per day 5,817 5,672
Gold grade (g/t) 1.16 1.18
Gold production (ounces) 11,244 11,551
Production costs per tonne $13 $11
Minesite costs per tonne $13 $12
Production costs per ounce of gold produced ($ per ounce): $621 $500
Total cash costs per ounce of gold produced ($ per ounce): $525 $460
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to higher costs associated with longer haulage distances for ore and waste (ore is now being trucked to the Phase IV leach pad), a lower amount of stripping costs being capitalized and timing of unsold inventory. Waste haulage costs are expected to decline as permits have now been received to store material in an unused portion of the pit. Production costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production and the reasons described above.
Minesite costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to higher costs associated with the longer haulage distances for ore and waste and a lower amount of stripping costs being capitalized. Total cash costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to reasons described above.
Exploration drilling in the first quarter of 2017 was mainly at the Bravo Zone, immediately adjacent to the Creston Mascota pit, including 3,383 metres of conversion and step-out exploration drilling in 30 holes. Bravo is a shallowly north west-dipping, almost stratiform zone of quartz breccia, vein and stockwork with significant gold and silver grades over thicknesses up to 20 metres.
The collars of these four holes were within 50 metres of each other, approximately 600 metres from the margin of the currently-planned Creston Mascota pit.
Selected recent drill results from the Bravo Zone are set out in the table below, and the collar coordinates are in a separate table in the appendix of this news release. Hole locations are also shown on the Creston Mascota area local geology map. All intercepts reported for the Bravo Zone show uncapped and capped grades over estimated true widths.
Recent exploration drill results from Bravo Zone at Creston Mascota
Drill hole From To Depth of Estimated Gold grade Gold grade Silver grade Silver
(metres) (metres) midpoint below true width (g/t) (g/t) (g/t) grade (g/t)
surface metres) (metres) (uncapped) (capped) (uncapped) (capped)
--- -------------- ------- --------- ------- --------- -------
BRV17-135 72.4 84.9 86 12.5 3.9 2.1 49 40
--------- ---- ---- --- ---- --- --- --- ---
BRV17-140 63.2 82.5 88 19.2 3.1 2.4 101 61
--------- ---- ---- --- ---- --- --- --- ---
including 79.1 82.5 95 3.4 7.6 7.6 231 217
--------- ---- ---- --- --- --- --- --- ---
BRV17-146 87.0 93.9 105 6.6 5.1 4.3 94 94
--------- ---- ---- --- --- --- --- --- ---
BRV17-149 85.6 90.2 96 4.6 9.8 7.0 366 152
--------- ---- ---- --- --- --- --- --- ---
Cut-off value 0.30 g/t
gold, maximum 3.0-m
internal dilution
Holes at the Bravo Zone
use a capping factor of
10 g/t gold and 250 g/t
silver
Highlights from recent drilling at the Bravo Zone include hole BRV17-149 that yielded 9.8 g/t gold and 366 g/t silver over 4.6 metres at 85.5 metres core length. Another high-grade intercept was in hole BRV17-140 that intersected 3.1 g/t gold and 101 g/t silver over 19.2 metres at 63.2 metres core length, including 7.6 g/t gold and 231 g/t silver over 3.4 metres. Holes BRV17-135 and BRV17-146 also had high-grade intersections.
The results of the current drill program have the potential to increase the gold and silver grades of the Bravo Zone mineral resources at Creston Mascota and extend its high-grade structure to the west and northwest.
The Company believes that the Bravo Zone could potentially extend the life of the Creston Mascota heap leach facility. In addition, the Company believes that the Madrono and Cubiro Zones may have higher grade areas that could potentially provide additional feed to the Pinos Altos mill. A total of 36,000 metres of exploration drilling is planned at the Pinos Altos - Creston Mascota complex in 2017.
[Creston Mascota - Local Geology Map]
La India - Exploration Focused on Extending Near-Pit Mineralization and Delineation of Additional Mineral Reserves and Resources
The 100% owned La India mine in Sonora, Mexico, located approximately 70 kilometres from the Company's Pinos Altos mine, achieved commercial production in February 2014.
La India Mine - Operating Statistics
------------------------------------
Three Three
Months Months
Ended Ended
March 31, March 31,
2017 2016
--------- ---------
Tonnes of ore processed (thousands of tonnes) 1,402 1,396
Tonnes of ore processed per day 15,575 15,344
Gold grade (g/t) 0.74 0.84
Gold production (ounces) 26,296 28,231
Production costs per tonne $9 $8
Minesite costs per tonne $10 $8
Production costs per ounce of gold produced ($ per ounce): $499 $387
Total cash costs per ounce of gold produced ($ per ounce): $438 $360
Production costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to higher costs associated with slightly more waste stripping, longer haulage distances for both ore and waste from the Main Zone pit and timing of unsold inventory. Waste rock haulage costs are expected to decline with the recent permitting approval of a new waste rock disposal area closer to the Main Zone pit. Production costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower production and the reasons described above.
Minesite costs per tonne in the first quarter of 2017 increased when compared to the prior-year period due to higher costs associated with slightly more waste stripping, longer haulage distances for both ore and waste from the Main Zone pit and timing of unsold inventory. Total cash costs per ounce in the first quarter of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.
During the quarter, infill drilling was carried out on the Main Zone to evaluate the potential to extend mineral reserves and mineral resources below the current pit design. Additional holes are planned for the second half of 2017.
Drilling was also carried at the nearby El Realito project during the quarter, with encouraging results. Additional exploration work is planned at El Realito and drilling commenced on the Cerro de Oro, and El Cochi areas late in the first quarter of 2017. All three areas are being drilled to evaluate the potential to increase mineral reserves and mineral resources in close proximity to the existing mining areas.
Given the increases in mineral reserves and mineral resources in 2016 and ongoing exploration that appears to show the potential for further increases, the Company is evaluating location options to construct additional pad capacity. Basic engineering work is underway to fully evaluate these areas.
El Barqueno - 2017 Exploration Focused on Infill Drilling and Testing New Targets
Agnico Eagle acquired its 100% interest in the El Barqueno project in November 2014. The 63,997-hectare property is in the Guachinango gold-silver mining district of Jalisco State in west-central, Mexico, approximately 150 kilometres west of the state capital of Guadalajara.
The El Barqueno project contains a number of known mineralized zones and several prospects. The project contains 301,100 ounces of gold in indicated mineral resources (8.4 million tonnes grading 1.11 g/t gold) and 362,000 ounces of gold in inferred mineral resources (7.2 million tonnes grading 1.56 g/t gold).
Approximately 45,000 metres of additional drilling is expected to be completed by the end of 2017 at El Barqueno, principally at the Olmeca, Azteca-Zapoteca and Peña de Oro sectors in the central El Barqueno property, and the El Rayo prospects and the Tecolote-Tortuga areas in the south area of the El Barqueno project. Exploration expenditures in 2017 are expected to total approximately $16.8 million.
At the end of the first quarter of 2017, approximately 5,619 metres of drilling had been completed with a focus on the Olmeca and Azteca-Zapoteca zones. Negotiations continue to finalize long-term land agreements for key areas for future exploration around the project.
While it is too early to estimate the full extent of the mineral resources and the number of deposits with economic potential at El Barqueno, the Company has the experience of developing cost-efficient mining operations in Mexico and increasing their size through successful exploration as well as metallurgical innovation.
Agnico Eagle believes that El Barqueno ultimately has the potential to be developed into a series of open pits utilizing heap leach and/or mill processing, similar to the Pinos Altos mine. Conceptual mine design studies and additional metallurgical testing are ongoing at El Barqueno.
About Agnico Eagle
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States and Sweden. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
Further Information
For further information regarding Agnico Eagle, contact Investor Relations at info@agnicoeagle.com or call (416) 947-1212.
Note Regarding Certain Measures of Performance
This news release discloses certain measures, including "total cash costs per ounce", "all-in sustaining costs per ounce", "minesite costs per tonne" and "adjusted net income" that are not standardized measures under IFRS. These data may not be comparable to data reported by other issuers. For a reconciliation of these measures to the most directly comparable financial information reported in the consolidated financial statements prepared in accordance with IFRS, other than adjusted net income, see "Reconciliation of Non-GAAP Financial Performance Measures" below. The total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). The total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis except that no adjustment is made for by-product metal revenues. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The total cash costs per ounce of gold produced is intended to provide information about the cash-generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash-generating capabilities at various gold prices.
The Company calculates all-in sustaining costs per ounce of gold produced on a by-product basis as the aggregate of total cash costs per ounce on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock options) and reclamation expenses, and then dividing by the number of ounces of gold produced. The all-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as the all-in sustaining costs per ounce of gold produced on a by-product basis, except that the total cash costs per ounce on a co-product basis are used, meaning no adjustment is made for by-product metal revenues. All-in sustaining costs per ounce is used to show the full cost of gold production from current operations. Management is aware that these per ounce measures of performance can be affected by fluctuations in foreign exchange rates and, in the case of total cash costs per ounce of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne (discussed below) as well as other data prepared in accordance with IFRS.
Minesite costs per tonne are calculated by adjusting production costs as recorded in the consolidated statements of income for unsold concentrate inventory production costs, and then dividing by tonnes of ore processed. As the total cash costs per ounce of gold produced can be affected by fluctuations in by?product metal prices and foreign exchange rates, management believes that minesite costs per tonne provides additional information regarding the performance of mining operations, eliminating the impact of varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure of performance can be impacted by fluctuations in processing levels and compensates for this inherent limitation by using this measure in conjunction with production costs prepared in accordance with IFRS.
Adjusted net income is calculated by adjusting the basic net income per share as recorded in the consolidated statements of income for foreign currency translation gains and losses, mark-to-market adjustments, non-recurring gains and losses and unrealized gains and losses on financial instruments. Management uses adjusted net income to evaluate the underlying operating performance of the Company and to assist with the planning and forecasting of future operating results. Management believes that adjusted net income is a useful measure of performance because foreign currency translation gains and losses, mark-to-market adjustments, non-recurring gains and losses and unrealized gains and losses on financial instruments do not reflect the underlying operating performance of the Company and may not be indicative of future operating results.
Management also performs sensitivity analyses in order to quantify the effects of fluctuating foreign exchange rates and metal prices. This news release also contains information as to estimated future total cash costs per ounce, all-in sustaining costs per ounce and minesite costs per tonne. The estimates are based upon the total cash costs per ounce, all-in sustaining costs per ounce and minesite costs per tonne that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable IFRS measure.
Forward-Looking Statements
The information in this news release has been prepared as at April 27, 2017. Certain statements contained in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" under the provisions of Canadian provincial securities laws and are referred to herein as "forward-looking statements". When used in this news release, the words "anticipate", "could", "estimate", "expect", "forecast", "future", "plan", "possible", "potential", "will" and similar expressions are intended to identify forward-looking statements. Such statements include, without limitation: the Company's forward-looking production guidance, including estimated ore grades, project timelines, drilling results, metal production, life of mine estimates, total cash costs per ounce, all-in sustaining costs per ounce, minesite costs per tonne, other expenses and cash flows; the estimated timing and conclusions of technical reports and other studies; the methods by which ore will be extracted or processed; statements concerning the Company's plans to build operations at Meliadine, Amaruq and LaRonde Zone 5, including the timing and funding thereof; statements concerning other expansion projects, recovery rates, mill throughput, optimization and projected exploration expenditures, including costs and other estimates upon which such projections are based; statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future mineral reserves, mineral resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of mineral reserves and mineral resources; statements regarding the Company's ability to obtain the necessary permits and authorizations in connection with its exploration, development and mining operations and the anticipated timing thereof; statements regarding anticipated future exploration; the anticipated timing of events with respect to the Company's mine sites and statements regarding the sufficiency of the Company's cash resources and other statements regarding anticipated trends with respect to the Company's operations, exploration and the funding thereof. Such statements reflect the Company's views as at the date of this news release and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material factors and assumptions used in the preparation of the forward looking statements contained herein, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in management's discussion and analysis ("MD&A") and the Company's Annual Information Form ("AIF") for the year ended December 31, 2016 filed with Canadian securities regulators and that are included in its Annual Report on Form 40-F for the year ended December 31, 2016 ("Form 40-F") filed with the U.S. Securities and Exchange Commission (the "SEC") as well as: that there are no significant disruptions affecting operations; that production, permitting, development and expansion at each of Agnico Eagle's properties proceeds on a basis consistent with current expectations and plans; that the relevant metal prices, foreign exchange rates and prices for key mining and construction supplies will be consistent with Agnico Eagle's expectations; that Agnico Eagle's current estimates of mineral reserves, mineral resources, mineral grades and metal recovery are accurate; that there are no material delays in the timing for completion of ongoing growth projects; that the Company's current plans to optimize production are successful; and that there are no material variations in the current tax and regulatory environment. Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward looking statements. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, project development, capital expenditures and other costs; foreign exchange rate fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; the unfavorable outcome of litigation involving the Partnership; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's currency, fuel and by-product metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company's ability to achieve the expectations set forth in the forward-looking statements contained in this news release, see the AIF and MD&A filed on SEDAR at www.sedar.com and included in the Form 40-F filed on EDGAR at www.sec.gov, as well as the Company's other filings with the Canadian securities regulators and the SEC. Other than as required by law, the Company does not intend, and does not assume any obligation, to update these forward-looking statements.
Notes to Investors Regarding the Use of Mineral Resources
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources
This news release uses the terms "measured mineral resources" and "indicated mineral resources". Investors are advised that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission (the "SEC") does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into mineral reserves.
Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources
This news release also uses the term "inferred mineral resources". Investors are advised that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legally mineable.
Scientific and Technical Data
The scientific and technical information contained in this news release relating to Quebec operations has been approved by Christian Provencher, Eng., Vice-President, Canada; relating to Nunavut operations has been approved by Dominique Girard, Eng., Vice-President, Nunavut Operations; relating to the Finland operations has been approved by Francis Brunet, Eng., Corporate Director Mining; relating to Southern Business operations has been approved by Carol Plummer, Eng., Vice-President, Project Development, Southern Business; and relating to exploration has been approved by Alain Blackburn, Eng., Senior Vice-President, Exploration and Guy Gosselin, Eng. and P.Geo., Vice-President, Exploration. Each of them is a "Qualified Person" for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101").
Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Agnico Eagle reports mineral reserve and mineral resource estimates in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Best Practice Guidelines for Exploration and Best Practice Guidelines for Estimation of Mineral Resources and Mineral Reserves, in accordance with NI 43-101. These standards are similar to those used by the SEC's Industry Guide No. 7, as interpreted by Staff at the SEC ("Guide 7"). However, the definitions in NI 43-101 differ in certain respects from those under Guide 7. Accordingly, mineral reserve information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. A "final" or "bankable" feasibility study is required to meet the requirements to designate mineral reserves under Industry Guide 7. Agnico Eagle uses certain terms in this news release, such as "measured", "indicated", "inferred" and "resources" that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC.
In prior periods, mineral reserves for all properties were typically estimated using historic three-year average metals prices and foreign exchange rates in accordance with the SEC guidelines. These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices. Given the current commodity price environment, Agnico Eagle has decided to use price assumptions that are below the three-year averages.
The assumptions used for the December 2016 mineral reserves estimate at all longer life mines and advanced projects reported by the Company (other than the Meliadine project, the Canadian Malartic mine and the Upper Beaver project) were $1,150 per ounce gold, $16.50 per ounce silver, $0.95 per pound zinc, $2.15 per pound copper and foreign exchange rates of C$1.20 per $1.00, 16.00 Mexican pesos per $1.00 and $1.15 per EUR1.00 for all mines and projects other than the Lapa and Meadowbank mines in Canada, and the Creston Mascota mine and Santo Niño pit at the Pinos Altos mine in Mexico; due to the shorter remaining mine life for the Lapa and Meadowbank mines in Canada, and the Creston Mascota mine and Santo Niño pit at the Pinos Altos mine in Mexico, the foreign exchange rates used were C$1.30 per $1.00 and 16.00 Mexican pesos per $1.00 (other assumptions unchanged). At the Meliadine project, the same assumptions at December 2015 were used to estimate the December 2016 mineral reserves, which were $1,100 per ounce gold and an foreign exchange rate of C$1.16 per $1.00.
The Partnership, owned by Agnico Eagle (50%) and Yamana Gold Inc. ("Yamana") (50%), which owns and operates the Canadian Malartic mine, and Canadian Malartic Corporation ("CMC"), owned by Agnico Eagle (50%) and Yamana (50%), which owns and manages the Upper Beaver project in Kirkland Lake, have estimated the December 2016 mineral reserves of the Canadian Malartic mine and the Upper Beaver project using the following assumptions: $1,200 per ounce gold; a cut-off grade at the Canadian Malartic mine between 0.33 g/t and 0.37 g/t gold (depending on the deposit); a C$125/tonne net smelter return (NSR) for the Upper Beaver project; and an foreign exchange rate of C$1.25 per $1.00.
NI 43-101 requires mining companies to disclose mineral reserves and mineral resources using the subcategories of "proven mineral reserves", "probable mineral reserves", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources". Mineral resources that are not mineral reserves do not have demonstrated economic viability.
A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of modifying factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The mineral reserves presented in this news release are separate from and not a portion of the mineral resources.
Modifying factors are considerations used to convert mineral resources to mineral reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
A proven mineral reserve is the economically mineable part of a measured mineral resource. A proven mineral reserve implies a high degree of confidence in the modifying factors. A probable mineral reserve is the economically mineable part of an indicated and, in some circumstances, a measured mineral resource. The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.
A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.
Investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
A feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors, together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a pre-feasibility study.
Additional Information
Additional information about each of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4(a), (c) and (d) can be found in Technical Reports, which may be found at www.sedar.com. Other important operating information can be found in the Company's AIF, MD&A and Form 40-F.
Property/Project name Date of most recent
and location Technical Report (NI
43-101) filed on
SEDAR
--- -----
LaRonde, Bousquet & March 23, 2005
Ellison, Quebec, Canada
-----------------------
Canadian Malartic, Quebec, Canada June 16, 2014
--------------------------------- -------------
Kittila, Kuotko and March 4, 2010
Kylmakangas, Finland
--------------------
Meadowbank, Nunavut, February 15, 2012
Canada
------
Goldex, Quebec, Canada October 14, 2012
---------------------- ----------------
Lapa, Quebec, Canada June 8, 2006
-------------------- ------------
Meliadine, Nunavut, Canada February 11, 2015
-------------------------- -----------------
Hammond Reef, Ontario, Canada July 2, 2013
----------------------------- ------------
Upper Beaver (Kirkland Lake property),
Ontario, Canada November 5, 2012
-------------------------------------- ----------------
Pinos Altos and Creston Mascota, Mexico March 25, 2009
--------------------------------------- --------------
La India, Mexico August 31, 2012
---------------- ---------------
Appendix: Selected drill collar coordinates
Sisar Zone exploration drill collar coordinates of selected holes
Drill collar coordinates*
------------------------
Drill hole ID UTM UTM Elevation Azimuth Dip Length
North East (metres (degrees) (metres)
above sea
level)
--- -----
RIE16-501 7538699 2558639 585 104 -2 308
--------- ------- ------- --- --- --- ---
RIE16-623 7538805 2558701 655 088 -35 330
--------- ------- ------- --- --- --- ---
RIE16-624 7538805 2558701 655 103 -31 311
--------- ------- ------- --- --- --- ---
ROD14-005F 7538298 2558630 529 089 -60 879
---------- ------- ------- --- --- --- ---
* Finnish Coordinate System
KKJ Zone 2
Bravo Zone drill collar coordinates
Drill collar coordinates*
------------------------
Drill hole ID UTM North UTM East Elevation Azimuth Dip Length
(metres (degrees) (degrees) (metres)
above sea
level)
--- -----
BRV17-135 3135129 760144 1,599 090 -45 123
--------- ------- ------ ----- --- --- ---
BRV17-140 3135176 760147 1,605 090 -46 132
--------- ------- ------ ----- --- --- ---
BRV17-146 3135221 760142 1,620 090 -55 126
--------- ------- ------ ----- --- --- ---
BRV17-149 3135173 760106 1,588 089 -45 120
--------- ------- ------ ----- --- --- ---
*Coordinate System UTM Nad 27
Zone
AGNICO EAGLE MINES LIMITED
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS
(thousands of United States dollars, except where noted)
(Unaudited)
Three Months Ended
March 31,
---------
2017 2016
---- ----
Operating margin(i)by mine:
Northern Business
LaRonde mine $70,702 $48,055
Lapa mine 6,205 10,806
Goldex mine 20,854 22,184
Meadowbank mine 57,473 33,329
Canadian Malartic mine(ii) 51,586 41,740
Kittila mine 29,841 24,086
Southern Business
Pinos Altos mine 42,033 35,820
Creston Mascota deposit at Pinos Altos 8,057 8,989
La India mine 20,369 21,549
------
Total operating margin(i) 307,120 246,558
Amortization of property, plant and mine development 132,509 145,631
Exploration, corporate and other 71,964 73,730
------ ------
Income (loss) before income and mining taxes 102,647 27,197
Income and mining taxes expense (recovery) 26,697 (591)
------ ----
Net income for the period $75,950 $27,788
======= =======
Net income per share - basic (US$) $0.33 $0.13
Net income per share - diluted (US$) $0.33 $0.13
Cash flows:
Cash provided by operating activities $222,611 $145,704
Cash used in investing activities $(153,687) $(107,595)
Cash provided by (used in) financing activities $181,571 $(1,588)
Realized prices (US$):
Gold (per ounce) $1,223 $1,192
Silver (per ounce) $17.62 $15.09
Zinc (per tonne) $2,782 $1,540
Copper (per tonne) $6,277 $4,297
Payable production(iii):
Gold (ounces):
Northern Business
LaRonde mine 78,912 75,337
Lapa mine 15,360 21,709
Goldex mine 32,671 32,340
Meadowbank mine 85,370 72,311
Canadian Malartic mine(ii) 71,382 73,613
Kittila mine 51,621 48,127
Southern Business
Pinos Altos mine 45,360 48,117
Creston Mascota deposit at Pinos Altos 11,244 11,551
La India mine 26,296 28,231
------ ------
Total gold (ounces) 418,216 411,336
------- -------
Silver (thousands of ounces):
Northern Business
LaRonde mine 272 247
Lapa mine 1 3
Goldex mine - -
Meadowbank mine 71 43
Canadian Malartic mine(ii) 84 77
Kittila mine 3 3
Southern Business
Pinos Altos mine 583 587
Creston Mascota deposit at Pinos Altos 56 48
La India mine 128 117
--- ---
Total silver (thousands of ounces) 1,198 1,125
----- -----
Zinc (tonnes) 1,005 614
Copper (tonnes) 1,272 1,154
Payable metal sold:
Gold (ounces):
Northern Business
LaRonde mine 85,456 75,257
Lapa mine 15,407 19,836
Goldex mine 33,212 31,955
Meadowbank mine 90,555 71,589
Canadian Malartic mine(ii)(iv) 63,860 65,085
Kittila mine 53,900 50,725
Southern Business
Pinos Altos mine 45,133 43,224
Creston Mascota deposit at Pinos Altos 11,626 11,845
La India mine 25,680 26,165
------ ------
Total gold (ounces) 424,829 395,681
------- -------
Silver (thousands of ounces):
Northern Business
LaRonde mine 288 232
Lapa mine - 1
Goldex mine - -
Meadowbank mine 63 43
Canadian Malartic mine(ii)(iv) 79 73
Kittila mine 2 3
Southern Business
Pinos Altos mine 606 530
Creston Mascota deposit at Pinos Altos 50 48
La India mine 129 86
--- ---
Total silver (thousands of ounces): 1,217 1,016
----- -----
Zinc (tonnes) 2,136 605
Copper (tonnes) 1,229 1,156
Total cash costs per ounce of gold produced - co-product basis (US$)(v):
Northern Business
LaRonde mine $662 $670
Lapa mine 855 668
Goldex mine(vi) 532 506
Meadowbank mine 603 797
Canadian Malartic mine(ii) 575 572
Kittila mine 669 727
Southern Business
Pinos Altos mine 594 530
Creston Mascota deposit at Pinos Altos 618 527
La India mine 525 424
---
Weighted average total cash costs per ounce of gold produced $616 $631
==== ====
Total cash costs per ounce of gold produced - by-product basis (US$)(v):
Northern Business
LaRonde mine $464 $529
Lapa mine 854 668
Goldex mine(vi) 532 506
Meadowbank mine 590 788
Canadian Malartic mine(ii) 556 557
Kittila mine 668 726
Southern Business
Pinos Altos mine 358 343
Creston Mascota deposit at Pinos Altos 525 460
La India mine 438 360
---
Weighted average total cash costs per ounce of gold produced $539 $573
==== ====
Notes:
(i) Operating margin is calculated as
revenues from mining operations less
production costs.
(ii) On June 16, 2014, Agnico Eagle
and Yamana jointly acquired 100% of
Osisko by way of a plan of
arrangement under the Canada Business
Corporation Act (the "Osisko
Arrangement"). As a result of the
Osisko Arrangement, Agnico Eagle and
Yamana each indirectly own 50% of
Osisko (now Canadian Malartic
Corporation) and the Partnership,
which now holds the Canadian Malartic
mine. The information set out in this
table reflects the Company's 50%
interest in the Canadian Malartic
mine since the date of acquisition.
(iii) Payable production (a non-GAAP
non-financial performance measure)
is the quantity of mineral produced
during a period contained in
products that have been or will be
sold by the Company, whether such
products are sold during the period
or held as inventories at the end of
the period.
(iv) The Canadian Malartic mine's
payable metal sold excludes the 5.0%
net smelter royalty in favour of
Osisko Gold Royalties Ltd.
(v) Total cash costs per ounce of
gold produced is not a recognized
measure under IFRS and this data may
not be comparable to data reported
by other gold producers. Total cash
costs per ounce of gold produced is
reported on both a by-product basis
(deducting by-product metal
revenues from production costs) and
co-product basis (without deducting
by-product metal revenues). Total
cash costs per ounce of gold
produced on a by-product basis is
calculated by adjusting production
costs as recorded in the condensed
interim consolidated statements of
income for by-product metal
revenues, unsold concentrate
inventory production costs,
smelting, refining and marketing
charges and other adjustments, and
then dividing by the number of
ounces of gold produced. Total cash
costs per ounce of gold produced on
a co-product basis is calculated in
the same manner as total cash costs
per ounce of gold produced on a by-
product basis except that no
adjustment for by-product metal
revenues is made. Accordingly, the
calculation of total cash costs per
ounce of gold produced on a co-
product basis does not reflect a
reduction in production costs or
smelting, refining and marketing
charges associated with the
production and sale of by-product
metals. The Company believes that
these generally accepted industry
measures provide a realistic
indication of operating performance
and provide useful comparison points
between periods. Total cash costs
per ounce of gold produced is
intended to provide information
about the cash generating
capabilities of the Company's mining
operations. Management also uses
these measures to monitor the
performance of the Company's mining
operations. As market prices for
gold are quoted on a per ounce
basis, using the total cash costs
per ounce of gold produced on a by-
product basis measure allows
management to assess a mine's cash
generating capabilities at various
gold prices. Management is aware
that these per ounce measures of
performance can be affected by
fluctuations in exchange rates and,
in the case of total cash costs of
gold produced on a by-product
basis, by-product metal prices.
Management compensates for these
inherent limitations by using these
measures in conjunction with
minesite costs per tonne as well as
other data prepared in accordance
with IFRS. Management also performs
sensitivity analyses in order to
quantify the effects of fluctuating
metal prices and exchange rates.
(vi) The Goldex mine's per ounce of
gold produced calculations exclude
2,395 ounces of payable gold
production and the associated costs
related to the Deep 1 Zone which
were produced prior to the
achievement of commercial
production.
AGNICO EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, except share amounts, IFRS basis)
(Unaudited)
As at March
31, As at December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $793,187 $539,974
Short-term investments 11,145 8,424
Restricted cash 379 398
Trade receivables 9,613 8,185
Inventories 420,066 443,714
Income taxes recoverable 447 -
Available-for-sale securities 126,000 92,310
Fair value of derivative financial
instruments 2,650 364
Other current assets 130,087 136,810
-------
Total current assets 1,493,574 1,230,179
Non-current assets:
Restricted cash 770 764
Goodwill 696,809 696,809
Property, plant and mine
development 5,124,758 5,106,036
Other assets 81,358 74,163
------
Total assets $7,397,269 $7,107,951
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $215,677 $228,566
Reclamation provision 11,251 9,193
Interest payable 26,379 14,242
Income taxes payable 31,714 35,070
Finance lease obligations 5,089 5,535
Current portion of long-term debt 130,013 129,896
Fair value of derivative financial
instruments 223 1,120
---
Total current liabilities 420,346 423,622
Non-current liabilities:
Long-term debt 1,073,359 1,072,790
Reclamation provision 269,629 265,308
Deferred income and mining tax
liabilities 822,265 819,562
Other liabilities 33,168 34,195
------
Total liabilities 2,618,767 2,615,477
EQUITY
Common shares:
Outstanding -231,081,041 common
shares issued, less 868,101 shares
held in trust 5,205,803 4,987,694
Stock options 184,409 179,852
Contributed surplus 37,254 37,254
Deficit (690,859) (744,453)
Accumulated other comprehensive
income 41,895 32,127
------
Total equity 4,778,502 4,492,474
--------- ---------
Total liabilities and equity $7,397,269 $7,107,951
========== ==========
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(thousands of United States dollars, except per share amounts, IFRS basis)
(Unaudited)
Three Months Ended
March 31,
=========
2017 2016
---- ----
REVENUES
Revenues from
mining
operations $547,459 $490,531
COSTS, EXPENSES AND OTHER
INCOME
Production(i) 240,339 243,973
Exploration and
corporate
development 25,313 28,385
Amortization of
property, plant
and mine
development 132,509 145,631
General and
administrative 30,754 24,823
Finance costs 19,706 17,801
Gain on
derivative
financial
instruments (3,800) (9,621)
Gain on sale of
available-for-
sale securities (76) (119)
Environmental
remediation 328 5,093
Foreign currency
translation
loss 852 6,770
Other (income)
expenses (1,113) 598
------ ---
Income before
income and
mining taxes 102,647 27,197
Income and
mining taxes
expense
(recovery) 26,697 (591)
------ ----
Net income for
the period $75,950 $27,788
======= =======
Net income per
share -basic $0.33 $0.13
Net income per
share -diluted $0.33 $0.13
Weighted average number of
common shares outstanding
(in thousands):
Basic 226,883 219,681
Diluted 229,345 221,906
Note:
(i)Exclusive of amortization,
which is shown separately.
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, IFRS basis)
(Unaudited)
Three Months Ended
March 31,
=========
2017 2016
---- ----
OPERATING ACTIVITIES
Net income for the period $75,950 $27,788
Add (deduct) items not affecting cash:
Amortization of property, plant
and mine development 132,509 145,631
Deferred income and mining taxes 531 (16,986)
Gain on sale of available-for-
sale securities (76) (119)
Stock-based compensation 15,390 9,786
Foreign currency translation loss 852 6,770
Other (111) (4,159)
Adjustment for settlement
of reclamation provision (306) (1,232)
Changes in non-cash working capital
balances:
Trade receivables (1,428) 2,073
Income taxes (3,803) (13,724)
Inventories 7,936 24,611
Other current assets 5,219 4,020
Accounts payable and accrued
liabilities (21,159) (46,336)
Interest payable 11,107 7,581
-------------
Cash provided by operating
activities 222,611 145,704
------- -------
INVESTING ACTIVITIES
Additions to property,
plant and mine
development (128,639) (100,694)
Net (purchases) sales of
short-term investments (2,721) 2,235
Net proceeds from sale of
available-for-sale
securities and other
investments 191 299
Purchases of available-
for-sale securities and
other investments (22,537) (9,445)
Decrease in restricted
cash 19 10
--- ---
Cash used in investing
activities (153,687) (107,595)
-------- --------
FINANCING ACTIVITIES
Dividends paid (19,458) (14,846)
Repayment of finance lease
obligations (1,682) (2,514)
Proceeds from long-term
debt - 75,000
Repayment of long-term
debt - (130,000)
Repurchase of common
shares for stock-based
compensation plans (24,238) (14,895)
Proceeds on exercise of
stock options 10,913 64,424
Common shares issued 216,036 21,243
------- ------
Cash provided by (used in)
financing activities 181,571 (1,588)
------- ------
Effect of exchange rate
changes on cash and cash
equivalents 2,718 2,075
----- -----
Net increase in cash and
cash equivalents during
the period 253,213 38,596
Cash and cash equivalents,
beginning of period 539,974 124,150
------- -------
Cash and cash equivalents,
end of period $793,187 $162,746
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $6,867 $8,880
====== ======
Income and mining taxes
paid $30,363 $53,317
======= =======
AGNICO EAGLE MINES LIMITED
RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES
(thousands of United States dollars, except where noted)
(Unaudited)
Total Production Costs
by Mine Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
--- -------------- --------------
(thousands of United States dollars)
LaRonde mine $ 44,365 $ 45,854
Lapa mine 12,887 12,784
Goldex mine 16,865 15,732
Meadowbank mine 53,978 52,210
Canadian Malartic mine(i) 32,501 40,814
Kittila mine 35,919 36,027
Pinos Altos mine 23,732 23,856
Creston Mascota deposit at Pinos
Altos 6,978 5,781
La India mine 13,114 10,915
------ ------
Production costs per
the condensed interim
consolidated
statements of income $ 240,339 $ 243,973
=== ======= === =======
Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced (ii) by Mine and Reconciliation of Production Costs to Minesite Costs per Tonne(iii) by Mine
(thousands of United States dollars, except as noted)
LaRonde Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 78,912 75,337
Production costs $44,365 $562 $45,854 $609
Inventory and other
adjustments(iv) 7,840 100 4,619 61
-------------
Cash operating costs
(co-product basis) $52,205 $662 $50,473 $670
By-product metal revenues (15,585) (198) (10,646) (141)
-------------
Cash operating costs
(by-product basis) $36,620 $464 $39,827 $529
======= ==== ======= ====
LaRonde Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore milled (thousands of
tonnes) 559 577
Production costs $44,365 $79 $45,854 $79
Production costs (C$) C $59,224 C $106 C $60,732 C $105
Inventory and other
adjustments (C$)(v) 1,496 3 (1,504) (2)
----- --- ------ ---
Minesite operating
costs (C$) C $60,720 C $109 C $59,228 C $103
=== ======= === ==== === ======= === ====
Lapa Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 15,360 21,709
Production costs $12,887 $839 $12,784 $589
Inventory and other
adjustments(iv) 242 16 1,727 79
-------------
Cash operating costs
(co-product basis) $13,129 $855 $14,511 $668
By-product metal revenues (14) (1) (13) -
-------------
Cash operating costs
(by-product basis) $13,115 $854 $14,498 $668
======= ==== ======= ====
Lapa Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore milled (thousands of
tonnes) 130 161
Production costs $12,887 $99 $12,784 $79
Production costs (C$) C $17,259 C $133 C $17,516 C $109
Inventory and other
adjustments (C$)(v) 61 1 1,965 12
--- --- ----- ---
Minesite operating
costs (C$) C $17,320 C $134 C $19,481 C $121
=== ======= === ==== === ======= === ====
Goldex Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii)(vi) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Adjusted gold production (ounces) 30,276 32,340
Production costs $16,865 $557 $15,732 $486
Inventory and other
adjustments(iv) (752) (25) 624 20
-------------
Cash operating costs
(co-product basis) $16,113 $532 $16,356 $506
By-product metal revenues (8) - (6) -
-------------
Cash operating costs
(by-product basis) $16,105 $532 $16,350 $506
======= ==== ======= ====
Goldex Mine Three Months Ended Three Months Ended
Per Tonne(iii)(vii) March 31, 2017 March 31, 2016
------------------ -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Adjusted tonnes of ore milled
(thousands of tonnes) 584 636
Production costs $16,865 $29 $15,732 $25
Production costs (C$) C $22,303 C $38 C $21,364 C $34
Inventory and other
adjustments (C$)(v) (973) (1) 342 -
---- --- --- ---
Minesite operating
costs (C$) C $21,330 C $37 C $21,706 C $34
=== ======= === === === ======= === ===
Meadowbank Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 85,370 72,311
Production costs $53,978 $632 $52,210 $722
Inventory and other
adjustments(iv) (2,515) (29) 5,446 75
-------------
Cash operating costs
(co-product basis) $51,463 $603 $57,656 $797
By-product metal revenues (1,107) (13) (659) (9)
-------------
Cash operating costs
(by-product basis) $50,356 $590 $56,997 $788
======= ==== ======= ====
Meadowbank Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore milled (thousands of
tonnes) 926 946
Production costs $53,978 $58 $52,210 $55
Production costs (C$) C $71,414 C $77 C $69,120 C $73
Inventory and other
adjustments (C$)(v) (3,141) (3) 3,938 4
------ --- ----- ---
Minesite operating
costs (C$) C $68,273 C $74 C $73,058 C $77
=== ======= === === === ======= === ===
Canadian Malartic Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(i)(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 71,382 73,613
Production costs $32,501 $455 $40,814 $554
Inventory and other
adjustments(iv) 8,564 120 1,309 18
-------------
Cash operating costs
(co-product basis) $41,065 $575 $42,123 $572
By-product metal revenues (1,354) (19) (1,095) (15)
-------------
Cash operating costs
(by-product basis) $39,711 $556 $41,028 $557
======= ==== ======= ====
Canadian Malartic Mine Three Months Ended Three Months Ended
Per Tonne(i)(iii) March 31, 2017 March 31, 2016
---------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore milled (thousands of
tonnes) 2,433 2,380
Production costs $32,501 $13 $40,814 $17
Production costs (C$) C $42,996 C $18 C $50,594 C $21
Inventory and other adjustments
(C$)(v) 11,133 4 6,951 3
------ --- ----- ---
Minesite operating
costs (C$) C $54,129 C $22 C $57,545 C $24
=== ======= === === === ======= === ===
Kittila Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 51,621 48,127
Production costs $35,919 $696 $36,027 $749
Inventory and other
adjustments(iv) (1,392) (27) (1,024) (22)
-------------
Cash operating costs
(co-product basis) $34,527 $669 $35,003 $727
By-product metal revenues (46) (1) (47) (1)
-------------
Cash operating costs
(by-product basis) $34,481 $668 $34,956 $726
======= ==== ======= ====
Kittila Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore milled (thousands of
tonnes) 423 432
Production costs $35,919 $85 $36,027 $83
Production costs (EUR) 33,104 EUR 78 32,202 75
EUR
EUR
EUR
Inventory and other
adjustments (EUR)(v) (1,340) (3) (1,093) (3)
------ --- ------ ---
Minesite operating costs (EUR) 31,764 EUR 75 31,109 72
EUR
EUR
EUR
=== === ===
Pinos Altos Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 45,360 48,117
Production costs $23,732 $523 $23,856 $496
Inventory and other
adjustments(iv) 3,211 71 1,635 34
-------------
Cash operating costs
(co-product basis) $26,943 $594 $25,491 $530
By-product metal revenues (10,695) (236) (8,972) (187)
-------------
Cash operating costs
(by-product basis) $16,248 $358 $16,519 $343
======= ==== ======= ====
Pinos Altos Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore processed (thousands of
tonnes) 553 502
Production costs $23,732 $43 $23,856 $48
Inventory and other
adjustments(v) 2,841 5 1,296 2
----- --- ----- ---
Minesite operating
costs $26,573 $48 $25,152 $50
======= === ======= ===
Creston Mascota deposit
at Pinos Altos Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces) 11,244 11,551
Production costs $6,978 $621 $5,781 $500
Inventory and other
adjustments(iv) (31) (3) 310 27
-------------
Cash operating costs
(co-product basis) $6,947 $618 $6,091 $527
By-product metal revenues (1,044) (93) (782) (67)
-------------
Cash operating costs
(by-product basis) $5,903 $525 $5,309 $460
====== ==== ====== ====
Creston Mascota deposit
at Pinos Altos Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore processed (thousands of
tonnes) 524 516
Production costs $6,978 $13 $5,781 $11
Inventory and other
adjustments(v) (95) - 195 1
--- --- --- ---
Minesite operating
costs $6,883 $13 $5,976 $12
====== === ====== ===
La India Mine Three Months Ended Three Months Ended
Per Ounce of Gold
Produced(ii) March 31, 2017 March 31, 2016
----------------- -------------- --------------
(thousands) ($ per ounce) (thousands) ($ per
ounce)
Gold production (ounces)(ii) 26,296 28,231
Production costs $13,114 $499 $10,915 $387
Inventory and other
adjustments(iv) 686 26 1,054 37
-------------
Cash operating costs
(co-product basis) $13,800 $525 $11,969 $424
By-product metal revenues (2,280) (87) (1,796) (64)
Cash operating costs
(by-product basis) $11,520 $438 $10,173 $360
======= ==== ======= ====
La India Mine Three Months Ended Three Months Ended
Per Tonne(iii) March 31, 2017 March 31, 2016
------------- -------------- --------------
(thousands) ($ per tonne) (thousands) ($ per
tonne)
Tonnes of ore processed (thousands of
tonnes) 1,402 1,396
Production costs $13,114 $9 $10,915 $8
Inventory and other
adjustments(v) 369 1 819 -
--- --- --- ---
Minesite operating
costs $13,483 $10 $11,734 $8
======= === ======= ===
Notes:
(i) On June 16, 2014, Agnico Eagle
and Yamana jointly acquired 100% of
Osisko by way of the Osisko
Arrangement. As a result of the
Osisko Arrangement, Agnico Eagle and
Yamana each indirectly own 50% of
Osisko (now Canadian Malartic
Corporation) and the Partnership,
which now holds the Canadian
Malartic mine. The information set
out in this table reflects the
Company's 50% interest in the
Canadian Malartic mine since the
date of acquisition.
(ii) Total cash costs per ounce of
gold produced is not a recognized
measure under IFRS and this data may
not be comparable to data reported
by other gold producers. Total cash
costs per ounce of gold produced is
reported on both a by-product basis
(deducting by-product metal
revenues from production costs) and
co-product basis (without deducting
by-product metal revenues). Total
cash costs per ounce of gold
produced on a by-product basis is
calculated by adjusting production
costs as recorded in the condensed
interim consolidated statements of
income for by-product metal
revenues, inventory production
costs, smelting, refining and
marketing charges and other
adjustments, and then dividing by
the number of ounces of gold
produced. Total cash costs per ounce
of gold produced on a co-product
basis is calculated in the same
manner as total cash costs per ounce
of gold produced on a by-product
basis except that no adjustment for
by-product metal revenues is made.
Accordingly, the calculation of
total cash costs per ounce of gold
produced on a co-product basis does
not reflect a reduction in
production costs or smelting,
refining and marketing charges
associated with the production and
sale of by-product metals. The
Company believes that these
generally accepted industry measures
provide a realistic indication of
operating performance and provide
useful comparison points between
periods. Total cash costs per ounce
of gold produced is intended to
provide information about the cash
generating capabilities of the
Company's mining operations.
Management also uses these measures
to monitor the performance of the
Company's mining operations. As
market prices for gold are quoted on
a per ounce basis, using the total
cash costs per ounce of gold
produced on a by-product basis
measure allows management to assess
a mine's cash generating
capabilities at various gold prices.
Management is aware that these per
ounce measures of performance can be
affected by fluctuations in exchange
rates and, in the case of total cash
costs of gold produced on a by-
product basis, by-product metal
prices. Management compensates for
these inherent limitations by using
these measures in conjunction with
minesite costs per tonne as well as
other data prepared in accordance
with IFRS. Management also performs
sensitivity analyses in order to
quantify the effects of fluctuating
metal prices and exchange rates.
(iii) Minesite costs per tonne is not
a recognized measure under IFRS and
this data may not be comparable to
data reported by other gold
producers. This measure is
calculated by adjusting production
costs as shown in the condensed
interim consolidated statements of
income for inventory production
costs, and then dividing by tonnes
of ore milled. As the total cash
costs per ounce of gold produced
measure can be affected by
fluctuations in by-product metal
prices and exchange rates,
management believes that the
minesite costs per tonne measure
provides additional information
regarding the performance of mining
operations, eliminating the impact
of varying production levels.
Management also uses this measure to
determine the economic viability of
mining blocks. As each mining block
is evaluated based on the net
realizable value of each tonne
mined, in order to be economically
viable the estimated revenue on a
per tonne basis must be in excess of
the minesite costs per tonne.
Management is aware that this per
tonne measure of performance can be
impacted by fluctuations in
processing levels and compensates
for this inherent limitation by
using this measure in conjunction
with production costs prepared in
accordance with IFRS.
(iv) Under the Company's revenue
recognition policy, revenue is
recognized when legal title and risk
is transferred. As total cash costs
per ounce of gold produced are
calculated on a production basis, an
inventory adjustment is made to
reflect the portion of production
not yet recognized as revenue. Other
adjustments include the addition of
smelting, refining and marketing
charges to production costs.
(v) This inventory and other
adjustment reflects production costs
associated with the portion of
production still in inventory.
(vi) The Goldex mine's per ounce of
gold produced calculations exclude
2,395 ounces of payable gold
production and the associated costs
related to the Deep 1 Zone which
were produced prior to the
achievement of commercial
production.
(vii) The Goldex mine's per tonne
calculations exclude 57,730 tonnes
and the associated costs related to
the Deep 1 Zone which were processed
prior to the achievement of
commercial production.
Reconciliation of Production Costs to All-in Sustaining Costs per Ounce of Gold Produced
----------------------------------------------------------------------------------------
Three Months Three Months
Ended March Ended March
31, 2017 31, 2016
------------- -------------
Production costs per the condensed
interim consolidated statements of
income (thousands of United States
dollars) $240,339 $243,973
-------- --------
Adjusted gold production (ounces)(i) 415,821 411,336
------- -------
Production costs per ounce of adjusted
gold production(i) $578 $593
Adjustments:
Inventory and other
adjustments(ii) 38 38
Total cash costs per ounce of gold
produced (co-product basis)(iii) $616 $631
By-product metal revenues (77) (58)
--- ---
Total cash costs per ounce of gold
produced (by-product basis)(iii) $539 $573
==== ====
Adjustments:
Sustaining capital expenditures
(including capitalized
exploration) 125 161
General and administrative
expenses (including stock
options) 74 60
Non-cash reclamation provision
and other 3 3
All-in sustaining costs per ounce of
gold produced (by-product basis) $741 $797
==== ====
By-product metal revenues 77 58
All-in sustaining costs per ounce of
gold produced (co-product basis) $818 $855
==== ====
Notes:
(i) The Company's per ounce of gold produced calculations exclude 2,395 ounces of payable gold production and the
associated costs related to the Goldex mine's Deep 1 zone which were produced prior to the achievement of
commercial production.
(ii) Under the Company's revenue recognition policy, revenue is recognized when legal title and risk is
transferred. As total cash costs per ounce of gold produced are calculated on a production basis, this inventory
adjustment reflects the sales margin on the portion of production not yet recognized as revenue.
(iii) Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be
comparable to data presented by other gold producers. Total cash costs per ounce of gold produced is presented
on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis
(without deducting by-product metal revenues). Total cash costs per ounce of gold produced on a by-product
basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statements
of income for by-product metal revenues, inventory production costs, smelting, refining and marketing charges
and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of
gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold
produced on a by-product basis except that no adjustment for by-product metal revenues is made. Accordingly,
the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a
reduction in production costs or smelting, refining and marketing charges associated with the production and
SOURCE Agnico Eagle Mines Limited
