EX-99.1 2 a19-4871_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Stock Symbol:

AEM (NYSE and TSX)

 

 

For further information:

Investor Relations

 

(416) 947-1212

 

(All amounts expressed in U.S. dollars unless otherwise noted)

 

AGNICO EAGLE REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS - THREE-YEAR GUIDANCE OUTLINES GROWING PRODUCTION WITH STABLE TO DECLINING UNIT COSTS; MELIADINE MILL COMMISSIONING UNDERWAY WITH PROJECT AHEAD OF SCHEDULE AND UNDER BUDGET; YEAR-OVER-YEAR INCREASE IN MINERAL RESERVES AND MINERAL RESOURCES; QUARTERLY DIVIDEND INCREASED

 

Toronto (February 14, 2019) — Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net loss of $393.7 million, or a loss of $1.68 per share, for the fourth quarter of 2018.  This result includes impairment losses of $389.7 million ($1.66 per share), non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments of $14.4 million ($0.06 per share), losses due to change of reclamation estimates relating to closed sites (net of tax) of $12.4 million ($0.05 per share), derivative losses on financial instruments, mark-to-market and other adjustments of $8.3 million ($0.04 per share) and non-cash foreign currency translation losses of $2.7 million ($0.01 per share).  Excluding these items would result in adjusted net income1 of $33.8 million or $0.14 per share for the fourth quarter of 2018.  For the fourth quarter of 2017, the Company reported net income of $37.5 million or $0.16 per share.

 

The impairment losses of $389.7 million ($1.66 per share) include an impairment of goodwill relating to the Canadian Malartic mine of $250.0 million ($1.07 per share), an asset impairment relating to the El Barqueno project of $100.7 million ($0.43 per share) and an impairment of goodwill relating to the La India mine of $39.0 million ($0.16 per share).

 

Included in the fourth quarter of 2018 net income, and not adjusted above, is non-cash stock option expense of $3.9 million ($0.02 per share).

 


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”.

 


 

For the full year 2018, the Company reported net loss of $326.7 million, or a loss of $1.40 per share.  This compares with the full year 2017, when net income was $240.8 million, or $1.05 per share.

 

In the fourth quarter of 2018, cash provided by operating activities was $140.3 million ($150.4 million before changes in non-cash components of working capital), as compared with the fourth quarter of 2017 when cash provided by operating activities was $166.9 million ($209.5 million before changes in non-cash components of working capital).

 

For the full year 2018, cash provided by operating activities was $605.7 million ($645.5 million before changes in non-cash components of working capital), as compared with the full year 2017 when cash provided by operating activities was $767.6 million ($839.4 million before changes in non-cash components of working capital).

 

The decrease in cash provided by operating activities during the fourth quarter of 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower realized gold prices, lower by-product revenue and expected higher costs at several operations, principally at LaRonde, Meadowbank and the Company’s Mexican operations.  Lower gold sales were mainly as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site.

 

The decrease in cash provided by operating activities for the full year 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower by-product revenue and expected higher costs at several operations, principally at Meadowbank, Kittila and the Company’s Mexican operations, partially offset by slightly higher realized gold prices.  Lower gold sales were largely as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as described above.

 

“From an operational standpoint, 2018 was another strong year as we exceeded production forecasts at lower than expected unit costs for a seventh consecutive year while growing gold reserves and successfully advancing our Nunavut development projects”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “With the start of new operations at both Meliadine and Amaruq this year, we anticipate record gold production in 2019 with further production growth in 2020 and beyond.  This growing production platform should result in increased cash flow allowing us to advance our project pipeline, reduce debt and increase dividends”, added Mr. Boyd.

 

Fourth quarter of 2018 and full year 2018 highlights include:

 

·                  Strong quarterly operational performance; annual gold production and costs better than forecast for seventh consecutive year - Payable gold production2 in

 


2 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.

 

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the fourth quarter of 2018 was 410,712 ounces at production costs per ounce of $693, total cash costs per ounce3 of $608 and all-in sustaining costs per ounce4 (“AISC”) of $852.  Payable gold production for the full year 2018 was 1,626,669 ounces at production costs per ounce of $713, with total cash costs per ounce of $637, compared to the most recent guidance of 1,600,000 ounces of gold at total cash costs per ounce of $650.  AISC for the full year 2018 were $877, compared to the most recent guidance of $915 per ounce

 

·                  Increased gold production guidance in 2019 with further gold production growth forecast through 2021 - The gold production forecast for 2019 is now 1.75 million ounces, compared to the most recent guidance of 1.70 million ounces.  The mid-point of gold production guidance for 2020 is unchanged at 2.0 million ounces, and the mid-point of gold production guidance for 2021 is 2.05 million ounces

 

·                  Unit costs expected to be stable to declining through 2021 as gold production increases - In 2019, total cash costs per ounce are forecast to be between $620 and $670 and AISC are forecast to be between $875 and $925 per ounce as the Nunavut business transitions from the Meadowbank deposit to Amaruq and Meliadine.  With much higher gold production expected in 2020, total cash costs per ounce are forecast to decline to between $600 and $650, while AISC are forecast to decline to between $840 and $890 per ounce.  The Company expects total cash costs per ounce and AISC to decline further in 2021

 

·                  Meliadine project ahead of schedule and under budget with commissioning of the mill now underway; Amaruq project remains on track for production start-up in the third quarter of 2019 - Commercial production at Meliadine is now expected to be achieved early in the second quarter of 2019 (compared to previous guidance of late in the second quarter of 2019).  Development activities at Amaruq are progressing as planned.  Open pit mining has commenced at the Whale Tail pit and commissioning of the long-haul truck fleet is underway

 

·                  Year over year increase in gold reserves and average grade - 2018 gold mineral reserves, net of 2018 gold production, increased by 7% to 22.0 million ounces of gold (254 million tonnes grading 2.70 grams per tonne (“g/t”) gold), while the gold reserve grade increased by approximately 8% from the previous year.  A large portion of the increase comes from LaRonde 3, the Kittila shaft expansion, the acquisition of the remaining 50% interest in the Kirkland Lake assets and a new open pit mine plan at Amaruq.  Gold contained in measured and indicated mineral resources and inferred

 


3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis.  For a reconciliation to production costs and for total cash costs on a co-product basis, see “Reconciliation of Non-GAAP Financial Performance Measures” below.  See also “Note Regarding Certain Measures of Performance”.

4 All-in-sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis.  For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see “Reconciliation of Non-GAAP Financial Performance Measures” below.  See also “Note Regarding Certain Measures of Performance”.

 

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mineral resources increased by 9% and 19%, respectively; however, the grades of these mineral resources decreased as high grade resources were transferred to mineral reserves in 2018

 

·                  Dividend increased by 14% - A quarterly dividend of $0.125 per share has been declared.  The previous quarterly dividend was $0.11 per share.

 

·                  Exploration Continues to Focus on Organic Growth Opportunities

 

·                  Meliadine drilling extends Tiriganiaq mineralized zones - Drilling has encountered mineralization outside the known mineral resource areas.  Highlights include: 29.1 g/t gold over 3.8 metres at 626 metres depth and 40.0 g/t gold over 2.8 metres at 748 metres depth.  These new areas are expected to increase inferred mineral resources in 2019 with additional diamond drilling

 

·                  Amaruq drilling enhances open pit mineral reserves and underground potential - Drilling has resulted in the addition of 0.5 million ounces of gold reserves at open pit depths.  Exploration also continued to demonstrate the extension of high-grade mineralization below the proposed open pits at both the Whale Tail and V Zone deposits.  At Whale Tail, drilling intersected up to 11.3 g/t gold over 8.1 metres at 278 metres depth, while drilling at V Zone encountered up to 27.4 g/t gold over 6.4 metres at 613 metres depth.  The Company continues to evaluate the potential for an underground operation at Amaruq, which could run partially concurrent with the open pit mine that is currently under development

 

·                  Initial mineral resources declared at Santa Gertrudis; exploration outlines high-grade mineralization and potential for growth - Drilling in 2018 outlined an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold).  In addition, drilling outlined high-grade mineralization with values of up to 12.1 g/t gold over 5.1 metres at 99 metres depth and 9.7 g/t gold over 15.0 metres at 33 metres depth.  Work in 2019 will focus on expanding the mineral resources, testing the extensions of the high-grade structures and evaluating the economic potential of the project

 

Fourth Quarter and Full Year 2018 Financial and Production Highlights

 

In the fourth quarter of 2018, strong operational performance continued at the Company’s mines, which led to payable gold production of 410,712 ounces, compared to 413,212 ounces in the fourth quarter of 2017.  For the full year 2018, payable gold production was 1,626,669 ounces, compared to 1,713,533 ounces in the prior-year period.

 

The lower level of gold production in the fourth quarter of 2018 and the full year 2018, when compared with the prior-year periods, was expected and primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site.  A detailed description of the production at each mine is set out below.

 

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Production costs per ounce in the fourth quarter of 2018 were $693, compared to $697 in the prior-year period.  Total cash costs per ounce in the fourth quarter of 2018 were $608, compared to $592 in the prior-year period.

 

Production costs per ounce for the full year 2018 were $713, compared to $621 in the prior-year period.  Total cash costs per ounce for the full year 2018 were $637, compared to $558 in the prior-year period.

 

Production costs per ounce and total cash costs per ounce in the fourth quarter of 2018 and the full year 2018, when compared to the prior-year periods, were negatively affected by lower gold production levels at Meadowbank and higher costs at several mines, partially offset by the weakening of local currencies against the U.S. dollar.  In addition, total cash costs per ounce were negatively affected by lower by-product revenues.

 

AISC in the fourth quarter of 2018 were $852 per ounce, compared to $905 in the prior-year period.  The lower AISC when compared to the prior-year period is primarily due to lower sustaining costs, partially offset by expected lower gold production and higher total cash costs per ounce compared to the fourth quarter of 2017.

 

AISC for the full year 2018 were $877 per ounce, compared to $804 in the prior-year period.  The higher AISC when compared to the prior-year period is primarily due to expected lower gold production and higher total cash costs per ounce, partially offset by lower sustaining costs.  A detailed description of the cost performance of each mine is set out below.

 

In the fourth quarter of 2018, a total impairment loss of $389.7 million was incurred in connection with an impairment review performed under International Financial Reporting Standards (“IFRS”).  After more than four years of strong operational performance at Canadian Malartic, an impairment loss relating to goodwill of $250.0 million was realized in the quarter as goodwill is not amortized over the life of mine under IFRS.  The Company continues to see encouraging drill results at the East Malartic and Odyssey projects with drilling ongoing to extend and upgrade the mineral resources in these zones.

 

Although the El Barqueno project continues to have geological potential, an asset impairment of $100.7 million was realized in the quarter as current development studies indicate that the project does not meet the Company’s investment criteria.  As a result, the carrying value of the property has been reduced while exploration activity continues in 2019.

 

The La India mine has been in operation since 2014 and as a result an impairment loss relating to goodwill of $39.0 million was realized in the quarter as goodwill is not amortized under IFRS.  Exploration is ongoing to discover and expand other satellite zones similar to El Cochi and El Realito (which each declared initial mineral reserves at December 31, 2018).

 

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Liquidity and Hedges - Existing Cash and Undrawn Credit Facility Provide Financial Flexibility

 

The Company continues to maintain its investment grade balance sheet and has sufficient financial flexibility to finance currently planned capital requirements at its various mines and development projects from operating cash flow, cash and cash equivalents, short term investments and undrawn credit lines.

 

Cash and cash equivalents and short-term investments decreased to $307.9 million at December 31, 2018, from the September 30, 2018 balance of $533.4 million, as a result of capital spending primarily at the Company’s Nunavut projects.

 

The outstanding balance on the Company’s credit facility remained nil at December 31, 2018.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

 

On December 14, 2018, the Company amended its $1.2 billion credit facility to extend the maturity date from June 22, 2022 to June 22, 2023.

 

Approximately 40% of the Company’s 2019 Canadian dollar exposure is hedged at an average floor price of approximately 1.29 C$/US$.  Approximately 50% of the Company’s 2019 Mexican peso exposure is hedged at an average floor price of approximately 19.00 MXP/US$.  Approximately 15% of the Company’s 2019 Euro exposure is hedged at an average floor price of approximately 1.17 US$/EUR.  The Company’s full year 2019 cost guidance is based on assumed exchange rates of 1.28 C$/US$, 18.00 MXP/US$ and 1.18 US$/EUR.  The Company anticipates adding to its operating currency hedges, subject to market conditions.

 

Approximately 40% of the Company’s diesel exposure relating to its Nunavut operations for the July 2019 to July 2020 consumption period is hedged at prices better than the 2019 cost guidance assumption of C$0.85 per litre (excluding transportation costs).  The Company anticipates adding to its diesel hedges, subject to market conditions.

 

Capital Expenditures

 

Total capital expenditures (including sustaining capital) for the full year 2018 were $1.07 billion, compared to guidance of $1.08 billion.  The following table sets out capital expenditures (including sustaining capital) in the fourth quarter and the full year 2018.

 

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Capital Expenditures

(In thousands of US dollars)

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31, 2018

 

December 31, 2018

 

Sustaining Capital

 

 

 

 

 

LaRonde mine

 

$

20,278

 

$

67,314

 

LaRonde Zone 5

 

917

 

3,058

 

Canadian Malartic mine

 

7,998

 

50,860

 

Meadowbank mine

 

 

14,876

 

Kittila mine

 

16,384

 

54,331

 

Goldex mine

 

6,308

 

21,477

 

Pinos Altos mine

 

12,193

 

35,070

 

Creston Mascota mine

 

1,520

 

4,167

 

La India mine

 

1,923

 

7,345

 

Total Sustaining Capital

 

$

67,521

 

$

258,498

 

 

 

 

 

 

 

Development Capital

 

 

 

 

 

LaRonde mine

 

$

3,031

 

$

10,174

 

LaRonde Zone 5

 

1,691

 

21,418

 

Canadian Malartic mine

 

13,073

 

31,973

 

Amaruq satellite deposit

 

50,480

 

171,277

 

Amaruq underground ramp

 

7,500

 

16,200

 

Kittila mine

 

41,995

 

119,373

 

Goldex mine

 

7,618

 

31,380

 

Pinos Altos mine

 

3,463

 

5,227

 

Creston Mascota mine

 

412

 

15,333

 

La India mine

 

211

 

1,852

 

Meliadine project

 

91,884

 

388,736

 

Other

 

1,032

 

3,135

 

Total Development Capital

 

$

222,390

 

$

816,078

 

Total Capital Expenditures

 

$

289,911

 

$

1,074,576

 

 

Quarterly Dividend Increased by 14%

 

Agnico Eagle’s Board of Directors has declared a quarterly cash dividend of $0.125 per common share, payable on March 15, 2019 to shareholders of record as of March 1, 2019.  Agnico Eagle has now declared a cash dividend every year since 1983.

 

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Expected Dividend Record and Payment Dates for 2019

 

Record Date

 

Payment Date

March 1*

 

March 15*

May 31

 

June 14

August 30

 

September 16

November 29

 

December 16

 


*Declared

 

Dividend Reinvestment Plan

 

Please see the following link for information on the Company’s dividend reinvestment plan: Dividend Reinvestment Plan

 

Fourth Quarter 2018 Results Conference Call and Webcast Tomorrow

 

Agnico Eagle’s senior management will host a conference call on Friday, February 15, 2019 at 11:00 AM (E.S.T.) to discuss the Company’s fourth quarter and full year financial and operating results.

 

Via Webcast:

 

A live audio webcast of the conference call will be available on the Company’s website www.agnicoeagle.com.

 

Via Telephone:

 

For those preferring to listen by telephone, please dial 1-647-427-7450 or toll-free 1-888-231-8191.  To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

 

Replay Archive:

 

Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 1796279.  The conference call replay will expire on Friday, March 15, 2019.

 

The webcast along with presentation slides will be archived for 180 days on the Company’s website.

 

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New Three-Year Guidance -  Forecast Shows Production Growth Through 2021

 

The Company is announcing its detailed production and cost guidance for 2019, and mine by mine production forecasts for 2019 through 2021.  Gold production in 2019 is now forecast to be 1.75 million ounces (the mid-point of the previous guidance was 1.7 million ounces).  Given the expected start up and expansions at several operations, the Company is providing a range of gold production guidance for 2020 and 2021.  Gold production in 2020 is now forecast to be between 1.96 million and 2.04 million ounces (mid-point of 2.0 million ounces), which compares to previous guidance of between 1.95 and 2.05 million ounces (mid-point of 2.0 million ounces).  Gold production guidance in 2021 is forecast to be between 2.01 million and 2.09 million ounces (mid-point of 2.05 million ounces).

 

The increased gold production guidance for 2019 is primarily due to advancing the expected start-up of commercial production at Meliadine to early in the second quarter of 2019 (previously the end of the second quarter of 2019), and a slight increase in gold production at Meadowbank (due to extended mining activities and the processing of stockpiles).

 

Total cash costs per ounce in 2019 are expected to be between $620 and $670 using a C$/US$ foreign exchange rate assumption of 1.28.  Despite general industry cost pressures (primarily energy and labour), the Company expects a similar total cash cost per ounce for 2019 as compared to 2018.  At all mine sites, the Company is focused on reducing costs and beating the inflation rate through productivity improvements and innovation initiatives.  In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, total cash costs per ounce are forecast to decline to between $600 and $650, largely due to higher gold production volumes.  The Company expects total cash costs per ounce to decline further in 2021 based on the same foreign exchange rate assumption.

 

AISC for 2019 are expected to be between $875 and $925 per ounce.  In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, AISC are forecast to decline to between $840 and $890 per ounce, largely due to higher gold production.  The Company expects AISC to decline further in 2021 based on the same foreign exchange rate assumption.

 

In 2019, the Company expects to have four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex, which includes the Amaruq satellite deposit) each with annual production rates of approximately 250,000 to 400,000 ounces of gold.  In addition, at Kittila, with the ongoing expansion, annual gold production in 2021 and beyond is expected to increase by approximately 25-30% over current levels, to more than 250,000 ounces as new sources of ore are developed underground.

 

With the construction of the Meliadine and Amaruq projects, 2018 was a peak year for development capital spending.  With both of these projects expected to achieve commercial production in 2019, development capital spending is forecast to decline significantly.  At budget assumptions for the gold price and foreign exchange rates ($1,225 per ounce of gold,

 

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1.28 C$/US$, 1.18 US$/EUR, 18.00 MXP/US$), the Company is forecasting a return to free cash flow generation in the second half of 2019.

 

Using the budget assumptions described above, total capital expenditures are forecast to be approximately $660 million in 2019.  Annual sustaining capital expenditures (included in the above) for 2019 and beyond are expected to remain stable at approximately $300 to $325 million.  Based on the extensive list of high quality development growth opportunities, which are set out below, and depending on prevailing gold prices and the timing of project approvals, the Company expects that total future growth and sustaining capital expenditures in 2020 and 2021 could be in the range of $500 to $700 million per year.

 

Near-Term Potential to Increase Life of Mine Production (2021 to 2023)

 

The Company is evaluating several potential opportunities (none of which has yet been approved for construction, with the exception of the construction of the new Kittila shaft) at a number of existing operations to build further value and enhance the gold production profile in 2021 and beyond.  These opportunities are set out in the table below with certain projects discussed in more detail below.

 

Minesite/Region

 

Opportunity

LaRonde Complex

 

Evaluating phased development of LaRonde 3 (located below a depth of 3.1 kilometres) where recent drilling has resulted in significant mineral resource conversion. In addition, other production opportunities such as Bousquet 11-3 are also being evaluated

LaRonde Zone 5 (“LZ5”)

 

Potential to mine additional ounces from LZ5 and other nearby satellite zones

Goldex

 

Potential for increased throughput from Deep Zone 1 and potential for advanced development of Deep Zone 2. Also potential for increased gold production from the South Zone and Akasaba West

Canadian Malartic (50%)

 

Potential production from Odyssey and East Malartic underground zones

Meadowbank Complex

 

Potential to develop the higher grade underground deposits at Amaruq

Meliadine

 

Advancement of Phase 2 pit implementation and testing the depth and lateral extensions of the Wesmeg, Normeg and Tiriganiaq zones

Kittila

 

Expansion to 2.0 million tonnes per annum (“mtpa”), including optimization of the Rimpi and Sisar zones via the new shaft currently under construction

Pinos Altos/Creston Mascota

 

Potential development of the Cubiro, and Reyna de Plata satellite zones.

La India

 

Potential development of the El Realito and El Cochi satellite zones

 

Drilling is ongoing at LaRonde 3, with a focus on mineral resource to mineral reserves conversion.  At year-end 2018, approximately 800,000 ounces of gold (3.2 million tonnes grading 7.9 g/t gold) were converted to mineral reserves at LaRonde 3.  The Company continues to evaluate a phased approach to development between level 311 (a depth of 3.1 kilometres) and level 340 (a depth of 3.4 kilometres).  The Company is also studying the best design approaches to LaRonde 3 and the current western pyramid with consideration of potential seismic risk and ventilation requirements in the deeper portion of the mine.

 

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Work is underway at Amaruq to evaluate the potential for an underground operation, which could run partially concurrent with the open pit mine that is currently under development.  Preliminary evaluation work suggests the potential to selectively mine higher grade portions of the underground mineral resources (approximately 1.0 million ounces of gold) from 2022 through 2028.

 

There may also be potential to mine the bottom of the Whale Tail open pit from underground, which would provide quicker access to higher grades and reduce overall stripping costs.  Underground ramp development is ongoing and the permitting process for open pit mining activities at the V Zone and underground commenced on October 15, 2018, with issuance of the permit expected in late 2020.

 

At present, the Amaruq underground deposit contains indicated mineral resources of 676,000 ounces of gold (4.6 million tonnes grading 4.56 g/t gold) and inferred mineral resources of 1.95 million ounces of gold (11.7 million tonnes grading 5.19 g/t gold).  Drilling is ongoing to expand and upgrade these mineral resources.  A production decision for the Amaruq underground project is expected to be made later this year.

 

At Canadian Malartic, the Canadian Malartic General Partnership (the “Partnership”) is evaluating the potential for underground mining of the Odyssey and East Malartic deposits from surface to a depth of 600 metres.  These deposits could provide higher grade tonnes that could potentially supplement open pit production at Canadian Malartic.  On a 50% basis, Odyssey contains inferred mineral resources of 809,000 ounces of gold (11.5 million tonnes grading 2.19 g/t gold); and East Malartic has indicated mineral resources of 361,000 ounces gold (5.3 million tonnes grading 2.13 g/t gold) and inferred mineral resources of 1.4 million ounces of gold (22.0 million tonnes grading 1.98 g/t gold).  Drilling is ongoing to extend and upgrade the mineral resources in these zones.  The permit and Certificate of Authorization was received in December 2018, which allows for the development of an underground ramp at Odyssey .

 

At Goldex, the Company continues to evaluate the potential for the development of the Deep 2 Zone which hosts mineral reserves of 79,000 ounces of gold (1.4 million tonnes grading 1.7 g/t gold), indicated mineral resources of 159,000 ounces of gold (2.0 million tonnes grading 2.47 g/t gold) and inferred mineral resources of 303,000 ounces of gold (8.2 million tonnes grading 1.15 g/t gold).  In addition, mining activities have commenced in the South Zone, which contains mineral reserves of 10,000 ounces of gold (89,000 tonnes grading 3.38 g/t gold), indicated mineral resources of 73,000 ounces of gold (555,000 tonnes grading 4.09 g/t gold) and inferred mineral resources of 243,000 ounces of gold (1.4 million tonnes grading 5.41 g/t gold).  Future exploration is expected to focus on the conversion of portions of the above mineral resources into mineral reserves.

 

Development of the Akasaba West open pit has been postponed until 2021 based on the prioritization of development capital spending.  Akasaba West contains mineral reserves of 147,000 ounces of gold and 25,800 tonnes of copper (5.4 million tonnes grading 0.84 g/t

 

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gold and 0.48% copper) and is expected to contribute approximately 20,000 ounces of gold per year to the Goldex production profile once in production.

 

An expansion is underway at Kittila to increase throughput rate to 2.0 mtpa from the current rate of 1.6 mtpa.  This expansion includes the construction of a 1,044-metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades over a period from 2018 to 2021.

 

The expansion project is expected to result in a 50,000 to 70,000 ounce annual increase in gold production with reduced operating costs starting in 2021.  In addition, the shaft is expected to provide access to the mineral resources located below 1,150 metres depth, where recent exploration programs have shown promising results.

 

Development Pipeline Expected to Provide Further Production Growth Beyond 2023

 

Agnico Eagle has a strong pipeline of development projects that could provide further gold production growth beyond 2023.  These opportunities are typically at an earlier stage than those outlined above.  A summary of the longer-term opportunities is presented in the following table with certain projects discussed in further detail below.

 

Minesite/Region

 

Opportunity

Goldex

 

Evaluation of the Deep 3 Zone (below 1,500 metres)

Canadian Malartic (50%)

 

Evaluation of the potential for production from deeper portions of the Odyssey and East Malartic underground zones

Kittila

 

Further optimization of underground mine and development of the lower mine with shaft access

Meadowbank Complex

 

Continued evaluation of the regional potential at Amaruq

Meliadine

 

Further drill testing of known zones and gold occurrences on the 80-kilometre-long greenstone belt

Barsele

 

Testing additional mineralized zones and evaluation of production potential

Santa Gertrudis

 

Evaluation of known mineralized trends with a view to potentially restart operations at this past producing heap leach mine

Kirkland Lake

 

Potential production scenario at Upper Beaver and potential synergies from development of other properties such as Upper Canada

Hammond Reef

 

Potential for production in a higher gold price environment

 

In the Kirkland Lake camp in Ontario, the Company is evaluating potential development strategies.  One scenario under evaluation is to develop the Upper Beaver deposit as a stand-alone operation, which could have potential synergies with the LaRonde operations given its copper content.  Upper Beaver has mineral reserves of 1.4 million ounces of gold and 20,000 tonnes of copper (8.0 million tonnes grading 5.43 g/t gold and 0.25% copper), indicated mineral resources of 403,000 ounces of gold and 5,000 tonnes of copper (3.6 million tonnes grading 3.45 g/t gold and 0.14% copper) and inferred mineral resources of 1.4 million ounces of gold and 17,000 tonnes of copper (8.7 million tonnes grading 5.07 g/t gold and 0.20% copper).

 

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Another scenario under evaluation is to develop both the Upper Beaver and Upper Canada deposits using a central mill facility.  While the Company continues its evaluation, an initial review of this scenario shows the potential for consolidated annual gold production from these deposits of approximately 250,000 ounces of gold.  Upper Canada has open pit and underground inferred mineral resources of 1.8 million ounces of gold (12.1 million tonnes grading 4.50 g/t gold).

 

Additional drilling is planned in 2019 and the permitting process for both projects is expected to commence in the first quarter of 2019.  Production activities could commence as early as 2024.

 

At the Hammond Reef project in Ontario, agreements with local First Nations are in place and the Environmental Impact Assessment is nearing completion.  In 2019, the Company will be evaluating optimization opportunities to improve project economics.  Hammond Reef contains measured and indicated mineral resources of 4.5 million ounces of gold (208.0 million tonnes grading 0.67 g/t gold).

 

At the Santa Gertrudis project in Sonora State Mexico, the Company completed a total of 31,127 metres of drilling in 2018 leading to the estimation of an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold) at December 31, 2018.  This drilling confirmed the historical mineralization and outlined several high-grade feeder zones.

 

The Company is currently evaluating a potential production scenario that utilizes a heap leach for lower grade mineralization and a small mill facility to process higher-grade ore.  The Company believes that the Santa Gertrudis project has the potential to be a similar size operation to La India.

 

Three-Year Guidance Plan Outlines a Growing Production Profile with Stable to Declining Unit Costs

 

Mine by mine production and cost guidance for 2019, and mine by mine production forecasts for 2020 and 2021 are set out below.  Evaluation of opportunities to further optimize and improve production and unit cost forecasts is ongoing.

 

13


 

Estimated Payable Gold Production

 

 

 

 

 

 

 

2020

 

2021

 

 

 

2018

 

2019

 

Forecast

 

Forecast

 

 

 

Actual

 

Forecast*

 

Range

 

Mid-Point

 

Range

 

Mid-Point

 

Northern Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LaRonde

 

343,686

 

340,000

 

340,000

 

350,000

 

345,000

 

338,000

 

347,000

 

342,500

 

LaRonde Zone 5

 

18,620

 

40,000

 

42,500

 

47,500

 

45,000

 

40,000

 

45,000

 

42,500

 

Lapa

 

34,026

 

 

 

 

 

 

 

 

Canadian Malartic (50%)

 

348,600

 

330,000

 

345,000

 

355,000

 

350,000

 

345,000

 

355,000

 

350,000

 

Goldex

 

121,167

 

115,000

 

117,500

 

122,500

 

120,000

 

115,000

 

120,000

 

117,500

 

Kittila

 

188,979

 

175,000

 

210,000

 

220,000

 

215,000

 

240,000

 

250,000

 

245,000

 

Meadowbank

 

248,997

 

65,000

 

 

 

 

 

 

 

Amaruq deposit

 

n/a

 

165,000

 

268,000

 

277,000

 

272,500

 

342,000

 

360,000

 

351,000

 

Meliadine project

 

n/a

 

230,000

 

380,000

 

390,000

 

385,000

 

360,000

 

370,000

 

365,000

 

 

 

1,304,075

 

1,460,000

 

1,703,000

 

1,762,000

 

1,732,500

 

1,780,000

 

1,847,000

 

1,813,500

 

Southern Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pinos Altos

 

181,057

 

165,000

 

147,000

 

153,000

 

150,000

 

145,000

 

148,000

 

146,500

 

Creston Mascota

 

40,180

 

35,000

 

20,000

 

25,000

 

22,500

 

 

 

 

La India

 

101,357

 

90,000

 

90,000

 

100,000

 

95,000

 

85,000

 

95,000

 

90,000

 

 

 

322,594

 

290,000

 

257,000

 

278,000

 

267,500

 

230,000

 

243,000

 

236,500

 

Total Gold Production

 

1,626,669

 

1,750,000

 

1,960,000

 

2,040,000

 

2,000,000

 

2,010,000

 

2,090,000

 

2,050,000

 

 


* The 2019 forecast includes anticipated 40,000 pre-commercial production ounces at Amaruq and 60,000 pre-commercial production ounces at Meliadine

 

14


 

Total cash costs per ounce on a by-product basis of gold produced ($ per ounce):

 

 

 

 

 

2019

 

 

 

2018

 

Forecast

 

 

 

Actual

 

(mid-point)

 

Northern Business

 

 

 

 

 

LaRonde mine

 

$

445

 

$

467

 

LaRonde Zone 5 mine

 

732

 

811

 

Lapa mine

 

872

 

 

Canadian Malartic mine (50%)

 

559

 

576

 

Goldex mine

 

646

 

682

 

Kittila mine

 

853

 

822

 

Meadowbank mine

 

814

 

990

 

Amaruq deposit

 

n/a

 

812

 

Meliadine project

 

n/a

 

612

 

 

 

$

639

 

$

642

 

Southern Business

 

 

 

 

 

Pinos Altos mine

 

548

 

604

 

Creston Mascota mine

 

841

 

763

 

La India mine

 

685

 

721

 

 

 

$

628

 

$

660

 

Total

 

$

637

 

$

645

 

 

Currency and commodity assumptions used for 2019 cost estimates and sensitivities are presented in the table below:

 

2019 commodity and currency
price assumptions

 

Approximate impact on total cash
costs per ounce basis

Silver ($/oz)

 

16.00

 

$

1 / oz change in silver price

 

$

2

Copper ($/lb)

 

2.75

 

10% change in copper price

 

$

1

Zinc ($/lb)

 

1.25

 

10% change in zinc price

 

$

2

Diesel (C$/ltr)

 

0.85

 

10% change in diesel price

 

$

5

C$/US$

 

1.28

 

1.0% change in C$/US$

 

$

4

US$/EUR

 

1.18

 

1.0% change in US$/EUR

 

$

1

MXP/US$

 

18.00

 

10% change in MXP/US$

 

$

3

 

In 2020, the estimated mid-point production level is currently forecast to be approximately 2.0 million ounces of gold, which is unchanged from the February 2018 forecast.  In 2021, the estimated mid-point production level is currently forecast to be approximately 2.05 million ounces of goldThe Company is evaluating potential opportunities to further optimize and improve production levels in 2021 and beyond (see discussion below for additional details).

 

15


 

Depreciation Guidance

 

Agnico Eagle expects its 2019 depreciation and amortization expense to be between $580 and $630 million.

 

The Meliadine project is expected to achieve commercial production in the second quarter of 2019 and, as a result, the Company’s 2019 depreciation and amortization expense is expected to be higher than previous years.

 

General & Administrative Cost Guidance

 

Agnico Eagle expects 2019 general and administration expenses to be between $75 and $85 million, excluding share based compensation.  In 2019, share based compensation expense is expected to be between $30 and $40 million (including non-cash stock option expense of between $15 and $20 million).

 

Please see the supplemental financial data section of the Financial and Operating Database on the Company’s website for additional historical financial data.

 

Tax Guidance

 

For 2019, the Company expects its effective tax rates to be:

 

Canada - 40% to 50%

Mexico - 35% to 40%

Finland - 20%

 

The Company’s overall tax rate is expected to be between 45% and 50% for the full year 2019.  This is a higher range than previous years as a result of the expectation of a higher percentage of total gold production coming from Canada.

 

Updated Three Year Guidance Plan

 

Since the prior three-year gold production guidance of February 14, 2018 (“Previous Guidance”), there have been several operating developments resulting in changes to the overall three-year production profile.  Descriptions of these changes are set out below.

 

Northern Business

 

ABITIBI REGION, QUEBEC

 

LaRonde Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

350,000

 

360,000

 

360,000

 

n.a.

 

Current Guidance (oz)

 

343,686 (actual)

 

340,000

 

345,000

 

342,500

 

 

16


 

LaRonde
Forecast 2019

 

Ore Milled
(‘000
tonnes)

 

Gold
(g/t)

 

Gold Mill
Recovery
(%)

 

Silver
(g/t)

 

Silver Mill
Recovery
(%)

 

Zinc (%)

 

Zinc Mill
Recovery
(%)

 

Copper
(%)

 

Copper Mill
Recovery
(%)

 

Minesite
Costs per
Tonne
(C$)
5

 

 

 

2,133

 

5.22

 

95

%

18.15

 

77.1

%

0.69

%

69.4

%

0.23

%

80.3

%

$

120

 

 

At LaRonde, the lower gold production guidance for 2019 and 2020 (as compared to Previous Guidance) is primarily due to minor changes to the mining sequence related to merging the Eastern and Western pyramids and the planned development of LaRonde 3.

 

LaRonde Zone 5 Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

20,000

 

32,500

 

42,500

 

n.a.

 

Current Guidance (oz)

 

18,620(actual)

 

40,000

 

45,000

 

42,500

 

 

LaRonde Zone 5 Forecast 2019

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite
Cost Per Tonne
(C$)

 

 

 

655

 

2.00

 

95

%

$

63

 

 

At LaRonde Zone 5, commercial production was achieved in June 2018 and designed mining rates were achieved within the first six months of operation with lower dilution, which has led to slightly improved anticipated production through 2021.

 

Canadian Malartic Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

325,000

 

325,000

 

345,000

 

n.a.

 

Current Guidance (oz)

 

348,600 (actual)

 

330,000

 

350,000

 

350,000

 

 

Canadian Malartic Forecast 2019

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne
(C$)

 

 

 

10,000

 

1.16

 

88.5

%

$

25

 

 

At Canadian Malartic (in which Agnico Eagle has 50% ownership), there is a slight increase in guidance for 2019 and 2020 compared to the Previous Guidance.  Gold production in 2020 and 2021 is expected to increase primarily due to the mining of higher grades in the Barnat pit.

 

Goldex Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

115,000

 

115,000

 

130,000

 

n.a.

 

Current Guidance (oz)

 

121,167 (actual)

 

115,000

 

120,000

 

117,500

 

 


5 Minesite costs per tonne is a non-GAAP measure.  For a reconciliation of this measure to production costs as reported in the financial statements, see “Reconciliation of Non-GAAP Financial Performance Measures” below.  See also “Note Regarding Certain Measures of Performance” below.

 

17


 

Goldex Forecast 2019

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne
(C$)

 

 

 

2,450

 

1.57

 

93

%

$

41

 

 

At Goldex, guidance in 2019 is unchanged from Previous Guidance.  The slightly lower 2020 guidance reflects a change to the timing of the expected start-up of operations at the Akasaba West deposit.  However, the Company believes that there is potential to improve the currently expected production from for the Deep 1 and the South zones in 2020 and 2021.

 

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to 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.

 

NUNAVUT REGION

 

Meadowbank Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

220,000

 

60,000

 

 

n.a.

 

Current Guidance (oz)

 

248,997 (actual)

 

65,000

 

 

 

 

Meadowbank Forecast 2019

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne
(C$)

 

 

 

1,203

 

1.86

 

90.4

%

$

70

 

 

At Meadowbank, guidance for 2019 has increased over Previous Guidance due to a slight increase in the expected grade of the remaining Meadowbank stockpiles and the availability of extra tonnage from the Portage Pit.  Gold production at Meadowbank is expected to end late in the second quarter of 2019, and gold production is forecast to be higher in the first quarter of 2019.

 

Amaruq Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

n.a.

 

162,500

 

265,000

 

332,500

 

Current Guidance (oz)

 

n.a.

 

165,000

 

272,500

 

351,000

 

 

18


 

Amaruq Forecast 2019*

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne

 

 

 

1,130

 

3.70

 

93

%

$

115

 

 


* 2019 Amaruq guidance in the above table excludes estimated pre-commercial production tonnes.  Estimated pre-commercial production is expected to be approximately 40,000 ounces of gold.

 

At Amaruq, commercial production is currently expected to be achieved early in the third quarter of 2019.  For the period of 2019 through 2021, the increase over Previous Guidance is largely due to a more robust mining plan, and the Company continues to investigate additional opportunities to optimize mining activities.

 

Increased pit sizes and improved modelling as well as delineation drilling in 2018 resulted in the addition of 0.5 million ounces of gold reserves at Amaruq at open pit depths.  These additional mineral reserves have added one year of mine life to the project with improved operating costs.  Additional details on the project (including updated operational parameters) are in the table below.  For details on the capital cost see the discussion on capital expenditures below.

 

Amaruq Project Details

 

Previous Guidance
February 14, 2018

 

Updated Life of Mine

Estimated Open-Pit Production*

 

2.09 million gold ounces

 

2.49 million gold ounces

Minesite costs per tonne (Life of Mine)

 

Approximately C$115 to C$120 per tonne milled

 

Approximately C$110 to C$120 per tonne milled

Average total cash costs on a by-product basis (Life of Mine)

 

Approximately $800 to $840 per ounce of gold produced

 

Approximately $800 to $830 per ounce of gold produced

Mine life

 

Approximately 6 years

 

Approximately 7 years

Initial capital costs

 

Approximately $330 million

 

Approximately $350 million

Sustaining capital costs

 

Approximately $25 million per year

 

Approximately $25 million per year

 


* Production forecast includes estimated pre-commercial production of approximately 40,000 ounces of gold.

 

19


 

Meliadine Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

n.a.

 

170,000

 

385,000

 

360,000

 

Current Guidance (oz)

 

n.a.

 

230,000

 

385,000

 

365,000

 

 

Meliadine Forecast 2019**

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne
(C$)

 

 

 

628

 

8.88

 

94.8

%

$

212

 

 


** 2019 Meliadine guidance in the above table excludes estimated pre-commercial production tonnes.  Estimated pre-commercial production is expected to be approximately 60,000 ounces of gold.

 

Given the progress of construction and development activities in 2018, Meliadine is now expected to begin commercial production early in the second quarter of 2019.  This results in a significant increase to the 2019 gold production forecast compared to Previous Guidance.

 

Minesite costs at Meliadine are expected to decline as the mine reaches full production capacity.  Minesite costs per tonne over the life of mine were previously estimated at C$185.

 

FINLAND

 

Kittila Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

190,000

 

190,000

 

215,000

 

n.a.

 

Current Guidance (oz)

 

188,979 (actual)

 

175,000

 

215,000

 

245,000

 

 

Kittila Forecast 2019

 

Ore Milled
(‘000 tonnes)

 

Gold (g/t)

 

Gold Mill
Recovery (%)

 

Minesite Costs
per Tonne
(EUR)

 

 

 

1,544

 

4.10

 

86

%

79

 

 

At Kittila, guidance for 2019 is below the Previous Guidance due to a slightly longer scheduled mill shutdown than previously anticipated (now 60 days).  The shutdown will occur in the second quarter of 2019 to allow for autoclave relining.

 

The new production guidance for 2021 reflects the positive impact of the shaft expansion project that was announced in 2018.

 

Southern Business

 

Pinos Altos Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

170,000

 

165,000

 

145,000

 

n.a.

 

Current Guidance (oz)

 

181,057 (actual)

 

165,000

 

150,000

 

146,500

 

 

20


 

Pinos Altos Forecast 2019

 

Total Ore
(‘000 tonnes)

 

Gold (g/t)

 

Gold
Recovery
(%)

 

Silver (g/t)

 

Silver Mill
Recovery
(%)

 

Minesite
Costs per
Tonne

 

 

 

2,390

 

2.28

 

94.2

%

59.00

 

50.3

%

$

57

 

 

At Pinos Altos, guidance for 2019 is unchanged from the Previous Guidance.  The 2019 production guidance includes the first production from the lower grade Sinter satellite deposit.  Initial mineral reserves were declared at December 31, 2018 at Reyna de Plata at open pit depths, effectively extending the mine life at Pinos Altos.  Studies are ongoing to evaluate the potential to develop the Cubiro satellite zone.

 

Creston Mascota Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

35,000

 

30,000

 

12,500

 

n.a.

 

Current Guidance (oz)

 

40,180 (actual)

 

35,000

 

22,500

 

 

 

Creston Mascota Forecast 2019

 

Total Ore
(‘000 tonnes)

 

Gold (g/t)

 

Gold
Recovery
(%)

 

Silver (g/t)

 

Silver
Recovery
(%)

 

Minesite
Costs per
Tonne

 

 

 

874

 

2.06

 

60.5

%

49.98

 

30

%

$

38

 

 

At Creston Mascota, 2019 is expected to be the last year of mining activities.  Mining is expected to continue until early in the fourth quarter of 2019, with leaching activities expected to continue through 2020.  Costs are expected to decline once mining activities have ceased.

 

La India Forecast

 

2018

 

2019

 

2020

 

2021

 

Previous Guidance (oz)

 

90,000

 

90,000

 

100,000

 

n.a.

 

Current Guidance (oz)

 

101,357 (actual)

 

90,000

 

95,000

 

90,000

 

 

La India Forecast 2019

 

Total Ore
(‘000 tonnes)

 

Gold (g/t)

 

Gold
Recovery
(%)

 

Silver (g/t)

 

Silver
Recovery
(%)

 

Minesite
Costs per
Tonne

 

 

 

6,000

 

0.72

 

64.8

%

2.30

 

16

%

$

11

 

 

At La India, current guidance is essentially in line with the Previous Guidance.  Studies are ongoing to evaluate the potential to develop other satellite zones such as El Cochi and El Realito (which declared initial mineral reserves at December 31, 2018).

 

21


 

Capital Expenditures Expected to Decline Significantly After Startup of Nunavut Operations in 2019; Sustaining Capital Costs Stable through 2020

 

Based on the Company’s budget assumptions, the Company expects to fund its capital expenditures in 2019, which are estimated to total approximately $660.0 million, from operating cash flow and expected cash balances.

 

The estimated capital expenditures for 2019 include approximately $287.7 million of sustaining capital at the Company’s operating mines and $344.2 million on growth projects, as set out in the table below.  Additionally, approximately $28.1 million is estimated to be spent on capitalized exploration, approximately $66.4 million on expensed exploration and approximately $37.0 million on corporate development, project evaluations and technical services.

 

Estimated 2019 Capital Expenditures

(In thousands of US dollars)

 

 

 

 

 

 

 

Capitalized Exploration

 

 

 

Sustaining

 

Development

 

 

 

Non-

 

 

 

Capital

 

Capital

 

Sustaining

 

sustaining

 

 

 

 

 

 

 

 

 

 

 

LaRonde mine

 

$

71,300

 

$

12,200

 

$

1,200

 

 

LaRonde Zone 5 mine

 

6,600

 

2,800

 

 

 

Canadian Malartic mine (50%)

 

47,000

 

35,700

 

2,300

 

 

Meadowbank/Amaruq Complex*

 

18,700

 

110,900

 

 

4,400

 

Amaruq Underground project

 

 

23,000

 

 

 

Kittila mine

 

69,700

 

85,100

 

9,300

 

 

Goldex mine

 

17,100

 

17,400

 

 

4,800

 

Pinos Altos mine

 

23,800

 

10,200

 

200

 

 

Creston Mascota mine

 

 

 

 

 

La India mine

 

9,100

 

11,700

 

700

 

 

Meliadine project*

 

23,100

 

33,300

 

3,000

 

2,200

 

Other

 

1,300

 

1,900

 

 

 

Total Capital Expenditures

 

$

287,700

 

$

344,200

 

$

16,700

 

$

11,400

 

 


*2019 forecast capital expenditures relating to Amaruq and Meliadine incorporate anticipated pre-production gold ounces of 40,000 and 60,000, respectively.

 

The construction of the Company’s new Nunavut mines, Amaruq and Meliadine, are expected to be below the combined capital forecast of $1.23 billion.

 

At Amaruq, total development capital is forecast to be approximately $350 million, which will depend in part on the timing of pre-production credits in advance of commercial production.  Previous guidance was $330 million as reported in the Company’s news release dated February 14, 2018.  The difference in Amaruq capital costs is primarily due to scope changes

 

22


 

to the project related to the completion of detailed engineering work following the submission of the Meadowbank technical report dated February 14, 2018.  Capital costs for the Amaruq underground project are not included in the capital costs discussed above.

 

At Meliadine, total capital expenditures are expected to be below the 2018 forecast of $900 million, primarily due to strong project execution which has resulted in lower contingency costs and owners costs.

 

2019 Exploration Program and Budget - Main Focus on Amaruq, Canadian Malartic, Kittila, Goldex, Satellite Targets at La India and Santa Gertrudis

 

A large component of the 2019 exploration program will be focused on the Amaruq satellite deposit at Meadowbank, which is part of the Meadowbank Complex in Nunavut, the Canadian Malartic and Goldex mines in the Abitibi region of northwest Quebec, the Sisar Zone at the Kittila mine in Finland, satellite targets at the La India mine in Mexico and the Santa Gertrudis project in Sonora State, Mexico.  The goal of these exploration programs is to delineate mineral reserves and mineral resources that can supplement the Company’s existing production profile.

 

At the Amaruq satellite deposit at Meadowbank, the Company expects to spend $8.1 million for 32,800 metres of exploration drilling, in addition to $4.4 million for 20,300 metres of conversion drilling.  The goals of the exploration program are to:

 

·                  Test for westerly and easterly extensions of the Whale Tail deposit

·                  Extend the known mineral resources of the Whale Tail North structure toward the east to fill the gap with the V Zone

·                  Test for deep extensions of the V Zone

·                  Test new concepts regionally to potentially outline additional sources of open pit ore

 

At the Canadian Malartic mine, the Company expects to spend $2.3 million for 29,000 metres of exploration and conversion drilling focused on increasing the known mineralization.

 

At Kittila, the Company expects to spend $9.3 million for 42,400 metres of further deep drilling focused on the Main Zone in the Roura and Rimpi areas and the Sisar Zone.  The goal of this program is to further explore the Kittila mineral reserve and mineral resource potential and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.  Outside of the mining licence areas, the Company expects to spend $1.1 million for 4,000 metres of diamond drilling for exploration along the Suurikuusikko, Kapsa and Hanhimaa Trends.

 

At the Goldex mine, the Company expects to spend $4.8 million for a combination of 7,000 metres of surface and underground exploration drilling and 46,800 metres of conversion

 

23


 

drilling.  At the adjacent Joubi property, the Company expects to spend $0.9 million for 6,000 metres of exploration drilling.

 

At La India, the Company expects to spend $2.8 million for 10,000 metres of regional drilling that will target mineral resource expansion at the Tarachi and Chipriona satellite targets.  In addition, focused on El Realito and other targets, the Company expects to spend $2.4 million for 10,000 metres of mine-site exploration and $0.7 million for 2,000 metres of conversion drilling to extend the life of mine.

 

At the Santa Gertrudis project in Sonora, Mexico, the Company expects to spend $8.2 million for approximately 29,000 metres of drilling that will be focused on expanding the mineral resource, testing the extensions of high-grade structures and exploring new targets to be outlined by a target-generation initiative.  The economic potential of Santa Gertrudis will also be evaluated.

 

2019 Global Exploration Program and Corporate Development Budget

 

 

 

Expensed Exploration

 

Capitalized Exploration

 

 

 

US$ millions

 

000 metres

 

US$ millions

 

000 metres

 

Nunavut

 

 

 

 

 

 

 

 

 

Amaruq

 

$

8.1

 

32.8

 

$

4.4

 

20.3

 

Meliadine

 

1.4

 

5.0

 

5.2

 

22.5

 

Other

 

1.3

 

3.0

 

 

 

 

 

Nunavut subtotal

 

10.8

 

40.8

 

9.6

 

42.8

 

Quebec

 

 

 

 

 

 

 

 

 

LaRonde

 

0.6

 

3.6

 

1.2

 

11.0

 

Goldex

 

0.9

 

6.0

 

4.8

 

53.8

 

Other

 

0.8

 

2.4

 

 

 

 

 

Quebec subtotal

 

2.3

 

12.0

 

6.0

 

64.8

 

Canadian Malartic projects*

 

 

 

 

 

 

 

 

 

Canadian Malartic mine*

 

 

 

2.3

 

29.0

 

Others

 

1.8

 

18.3

 

 

 

 

 

Canadian Malartic subtotal

 

1.8

 

18.3

 

2.3

 

29.0

 

Ontario

 

 

 

 

 

 

 

 

 

Kirkland Lake projects

 

4.5

 

16.5

 

 

 

 

 

Hammond Reef

 

0.8

 

 

 

 

 

 

 

Ontario subtotal

 

5.3

 

16.5

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

 

Kittila incl. Kuotko

 

1.1

 

4.0

 

9.3

 

42.4

 

Barsele

 

3.4

 

11.0

 

 

 

 

 

Europe subtotal

 

4.5

 

15.0

 

9.3

 

42.4

 

Mexico

 

 

 

 

 

 

 

 

 

Pinos Altos, Creston Mascota

 

2.9

 

11.0

 

0.2

 

 

La India

 

5.2

 

20.0

 

0.7

 

2.0

 

El Barqueno

 

2.2

 

5.0

 

 

 

 

 

Santa Gertrudis

 

8.2

 

29.0

 

 

 

 

 

Other

 

3.2

 

7.5

 

 

 

 

 

Mexico subtotal

 

21.7

 

72.5

 

0.9

 

2.0

 

USA

 

5.2

 

 

 

 

 

 

 

G&A, land fees, etc.

 

14.8

 

 

 

 

 

 

 

Total Exploration

 

$

66.4

 

185.3

 

$

28.1

 

181.0

 

 

 

 

 

 

 

 

 

 

 

Total Corporate Development, Project Evaluations and Technical Services

 

$

37.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Exploration and Corporate Development

 

$

103.4

 

 

 

 

 

 

 

 

24


 


*For the Canadian Malartic Mine operations and projects, in which Agnico Eagle holds a 50% indirect interest, the expenses in this table represent 50% of the total expenses, but the metres represent 100% of the metres of drilling.

 

Mineral Reserve Gold Ounces Increase by 7% at Higher Grade in 2018 Due to Drill Results, Acquisitions and Updated Mine Plans at Certain Projects

 

At December 31, 2018, the Company’s proven and probable mineral reserves (net of 2018 gold production) totalled 254 million tonnes of ore grading 2.70 g/t gold, containing approximately 22.0 million ounces of gold.  This is an increase of approximately 1.5 million ounces of gold (7%) compared with the prior year.  The ore extracted from mines in 2018 contained 1.8 million ounces of gold in-situ (30.4 million tonnes grading 1.86 g/t gold).  The Company’s overall mineral reserve gold grade improved 8% to 2.70 g/t from 2.49 g/t, largely due to increases in the mineral reserve at mines and projects with higher-than-average grades including Upper Beaver, Amaruq, LaRonde and Kittila as well as a decrease in mineral reserves at the Canadian Malartic mine (which has lower-than-average gold grade) and the extraction of ore in 2018 grading lower than the Company’s average grade.  Agnico Eagle has one of the highest mineral reserve grades among its North American peers.

 

Highlights from the December 31, 2018 Mineral Reserve statement include:

 

·                  Increase of 0.5 million ounces of gold in mineral reserves at Amaruq, part of the Meadowbank complex, to 2.9 million ounces of gold (24.9 million tonnes grading 3.59 g/t gold) at open pit depth

·                  Increase of 0.4 million ounces of gold in mineral reserves at LaRonde (net of 2018 gold production) to 3.1 million ounces of gold (16.4 million tonnes grading 5.85 g/t gold, 18.2 g/t silver, 0.26% copper and 0.9% zinc) due to conversion of LaRonde 3 mineral resources below 3.1 kilometres depth

·                  Increase of 0.3 million ounces of gold in mineral reserves (net of 2018 gold production) at Kittila to 4.4 million ounces of gold (30.5 million tonnes grading 4.50 g/t gold) as a result of the shaft expansion project

·                  Increase of 0.7 million ounces of gold in mineral reserves at the Upper Beaver project in Kirkland Lake, doubling the mineral reserves to 1.4 million ounces of gold (8.0 million tonnes grading 5.43 g/t gold), as a result of acquiring the remaining 50% of the project in March 2018

·                  Initial mineral reserves in the Reyna de Plata Zone of the Pinos Altos mine complex and at El Realito at La India

 

25


 

The Company’s December 31, 2018 gold reserves are set out below, compared with the gold reserves a year earlier:

 

 

 

Proven & Probable
Mineral Reserve
(000s gold ounces)

 

Average Gold Mineral
Reserve Grade
(g/t)

 

Gold Mineral Reserves
By Mine or Deposit

 

2018

 

2017

 

Change
(000s oz
gold)

 

2018

 

2017

 

Change
(g/t
gold)

 

Northern Business

 

 

 

 

 

 

 

 

 

 

 

 

 

LaRonde

 

3,081

 

2,647

 

434

 

5.85

 

5.39

 

0.46

 

LaRonde Zone 5

 

681

 

401

 

280

 

2.25

 

2.00

 

0.25

 

Canadian Malartic (50%)

 

2,780

 

3,189

 

(409

)

1.10

 

1.10

 

 

Goldex

 

962

 

917

 

46

 

1.58

 

1.57

 

0.01

 

Akasaba West

 

147

 

145

 

2

 

0.84

 

0.87

 

(0.03

)

Lapa

 

 

15

 

(15

)

 

3.75

 

 

Meadowbank mine

 

98

 

345

 

(247

)

1.89

 

2.28

 

(0.39

)

Amaruq

 

2,882

 

2,366

 

516

 

3.59

 

3.67

 

(0.08

)

Meadowbank (incl. Amaruq)

 

2,979

 

2,710

 

269

 

3.49

 

3.40

 

0.09

 

Meliadine

 

3,753

 

3,677

 

75

 

6.97

 

7.12

 

(0.15

)

Upper Beaver (100% in 2018)*

 

1,395

 

698

 

698

 

5.43

 

5.43

 

 

Kittila

 

4,414

 

4,090

 

324

 

4.50

 

4.74

 

(0.24

)

Subtotal

 

20,192

 

18,490

 

1,703

 

2.98

 

2.78

 

0.20

 

Southern Business

 

 

 

 

 

 

 

 

 

 

 

 

 

Pinos Altos

 

1,184

 

1,273

 

(89

)

2.15

 

2.41

 

(0.26

)

Creston Mascota

 

82

 

113

 

(31

)

1.77

 

1.47

 

0.30

 

La India

 

581

 

679

 

(98

)

0.74

 

0.69

 

0.05

 

Subtotal

 

1,847

 

2,064

 

(218

)

1.34

 

1.30

 

0.04

 

Total Mineral Reserves

 

22,039

 

20,554

 

1,485

 

2.70

 

2.49

 

0.21

 

 


*At the Upper Beaver project, the Company held 50% interest at year-end 2017, which increased to 100% interest at year-end 2018.  The total gold ounces in mineral reserves at this project reflect the percent of interest held by the Company in each year.

 

Amounts set out in the table and in this news release have been rounded to the nearest thousand.  See “Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2018)” at the end of this news release for more details.  Mineral reserves are in-situ, taking into account all mining recoveries, before mill or heap leach recoveries.

 

The economic parameters used to estimate mineral reserves and mineral resources for all properties remained unchanged from a year ago, and are set out in the table below.  In prior years, the economic parameters were determined using historic three-year average metals prices and foreign exchange rates in accordance with the U.S. Securities and Exchange Commission (the “SEC”) guidelines.  These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve estimation, which the SEC has

 

26


 

interpreted to mean historic three-year average prices.  Given the current commodity price environment, Agnico Eagle continues to use more conservative gold and silver prices.

 

Assumptions used for the December 31, 2018 mineral reserves estimate at all mines and advanced projects reported by the Company

 

 

 

Metal prices

 

Exchange rates

 

 

 

Gold
(US$/oz)

 

Silver
(US$/oz)

 

Copper
(US$/lb)

 

Zinc
(US$/lb)

 

C$ per
US$1.00

 

Mexican
peso per
US$1.00

 

US$ per
€1.00

 

Long-life operations and projects

 

 

 

 

 

 

 

 

 

C$

1.20

 

MXP

16.00

 

US$

1.15

 

Short-life operations -Meadowbank mine, Sinter and Creston Mascota (Bravo) satellite operation at Pinos Altos

 

$

1,150

 

$

16.00

 

$

2.50

 

$

1.00

 

C$

1.25

 

MXP

17.00

 

Not applicable

 

Upper Canada, Upper Beaver*, Canadian Malartic mine**

 

$

1,200

 

Not applicable

 

$

2.75

 

Not applicable

 

C$

1.25

 

Not
applicable

 

Not applicable

 

 


*The Upper Beaver project has a net smelter return (NSR) cut-off value of C$125/tonne

**The Canadian Malartic mine uses a cut-off grade between 0.37 g/t and 0.38 g/t gold (depending on the deposit)

 

The above metal price assumptions are below the three-year historic gold and silver price averages (from January 1, 2016 to December 31, 2018) of approximately $1,259 per ounce and $16.63 per ounce, respectively.  The mineral resources at all properties (except Canadian Malartic) are estimated using 75% of the cut-off grades used to estimate the mineral reserves.  At the Canadian Malartic mine, the mineral resources are estimated using 80% of the cut-off grades used to estimate the mineral reserves.

 

At LaRonde, indicated mineral resources were converted to mineral reserves in LaRonde 3 (below 3.1 kilometres depth) resulting in the addition of approximately 800,000 ounces of gold (3.2 million tonnes grading 7.94 g/t gold).  This was offset by approximately 360,000 ounces of in-situ gold mined at LaRonde, resulting in a net increase of 434,000 ounces of gold in mineral reserves at LaRonde.

 

At the adjacent LaRonde Zone 5 mine, there was an addition of 255,000 ounces of gold to mineral reserves (2.8 million tonnes grading 2.85 g/t gold) in levels 36 to 48 beneath the current workings; included in this amount are 140,000 ounces of gold in an area beneath the nearby Zone 11-3.  The combination of lowering the cut-off grade and mine dilution added approximately 42,000 ounces of gold, while 20,000 ounces of in-situ gold was mined in 2018, resulting in a net increase of 280,000 ounces of gold in mineral reserves at LaRonde Zone 5.

 

The Kittila shaft expansion project has resulted in the addition of 515,000 ounces of gold to mineral reserves in the Roura and Suuri zones below 675 metres depth.  Conversion and

 

27


 

exploration drilling added another 32,000 ounces of gold, while 223,000 ounces of in-situ gold were mined in 2018, resulting in a net increase of 324,000 ounces of gold in mineral reserves at Kittila.

 

The acquisition by the Company in March 2018 of the remaining 50% of the Kirkland Lake project led to a doubling of the mineral reserves at the Upper Beaver property, resulting in a net increase of 698,000 ounces of gold (4.0 million tonnes grading 5.43 g/t gold) in mineral reserves at Upper Beaver.

 

At the Amaruq satellite deposit at Meadowbank, mineral reserves increased by 516,000 ounces of gold due to a combination of factors.  Increasing the Whale Tail and V Zone pit sizes in the mine plan added 240,000 ounces of gold, and improved 3D geological modelling methods added 197,000 ounces of gold, while delineation drilling added another 72,000 ounces of gold.  However, at the nearby Meadowbank mine, 269,000 ounces of in-situ gold was mined in 2018 and there were other adjustments as the Meadowbank mine enters its last partial year of production.  The result is a net increase of 269,000 ounces of gold in mineral reserves at the Meadowbank complex (including Amaruq).

 

At the Meliadine project, remodelling the underground zones coupled with the results of a conversion drill program resulted in a net increase of 75,000 ounces of gold in mineral reserves.

 

At the Canadian Malartic mine, the net decrease of 409,000 ounces of gold in mineral reserves (reflecting Agnico Eagle’s 50% interest) is largely due to the mining of 395,000 ounces of in-situ gold in 2018.

 

There are initial mineral reserves at the Reyna de Plata Zone of 72,000 ounces of gold (2.3 million tonnes grading 0.96 g/t gold and 29.3 g/t silver) at open pit depth, as part of the total Pinos Altos estimate.  The La India mine is reporting its first mineral reserves at the El Realito Zone of 84,000 ounces of gold and 418,000 ounces of silver (3.3 million tonnes grading 0.80 g/t gold and 3.96 g/t silver).

 

It is the Company’s goal to maintain its global mineral reserves at approximately 10 to 15 times its annual gold production rate.  The current mineral reserves are within this range when compared to the Company’s projected annual 2019 gold production guidance.

 

In addition to gold, Agnico Eagle’s proven and probable mineral reserves include by-product metals of approximately 44 million ounces of silver at the Pinos Altos, LaRonde, La India and Creston Mascota mines (59.4 million tonnes grading an average of 23.0 g/t silver), plus 140,000 tonnes of zinc and 43,000 tonnes of copper at the LaRonde mine (16.4 million tonnes grading 0.86% zinc and 0.26% copper), 26,000 tonnes of copper at the Akasaba West project (5.4 million tonnes grading 0.48% copper) and 20,000 tonnes of copper at the Upper Beaver project (8.0 million tonnes grading 0.25% copper).

 

28


 

At a gold price of $1,250 per ounce (leaving all other assumptions unchanged), the Company estimates there would be an approximate 4.2% increase in the gold contained in proven and probable mineral reserves.  Conversely, using a gold price of $1,050 (leaving all other assumptions unchanged), the Company estimates there would be an approximate 6.0% decrease in the gold contained in proven and probable mineral reserves.  For the Canadian Malartic mine and Upper Beaver project only, the above sensitivity was calculated using a 10% variation in the assumed mineral reserve gold price of $1,200 per ounce.

 

Acquisitions and Conversion Drilling Increases Gold in Measured and Indicated Mineral Resources by 9% to 17.4 Million Ounces

 

Highlights from the December 31, 2018 Measured and Indicated Mineral Resource statement include:

 

·                  At the Hammond Reef project, the remaining 50% interest was purchased, adding 2.3 million ounces of gold in measured and indicated mineral resources

 

·                  The same transaction doubled the mineral resources at the Kirkland Lake assets, adding 495,000 ounces of gold in indicated mineral resources

 

The Company’s measured and indicated mineral resources now total 399 million tonnes grading 1.36 g/t gold, or 17.4 million ounces of gold.  This represents a 9% increase in ounces of gold, but a decrease in grade to 1.36 g/t gold compared with 1.60 g/t gold a year earlier (see the Company’s new release dated February 14, 2018 for details).

 

The main increases in measured and indicated mineral resources were the result of increasing ownership of Ontario properties in 2018.  The addition of the remaining 50% interest in the Hammond Reef property in March added 2.3 million ounces of gold in measured and indicated mineral resources to 208 million tonnes grading 0.67 g/t gold (4.5 million ounces of gold) at open pit depths.  The same transaction resulted in doubling of the mineral resources at the Kirkland Lake assets, adding 495,000 ounces of gold in indicated mineral resources at Upper Beaver, AK and Anoki-McBean, all at underground depths.  The low gold grade of the acquired mineral resources at Hammond Reef decreased the overall grade of the Company’s updated measured and indicated mineral resources.

 

Two other properties increased measured and indicated mineral resources.  East Malartic reported initial indicated mineral resources of 5.3 million tonnes grading 2.13 g/t gold (361,000 ounces of gold) at underground depths mainly due to: the conversion of inferred mineral resources as well as the assignment of the Barnat Deep area mineral resources to East Malartic.  At Amaruq, the underground indicated mineral resources, particularly at Whale Tail, expanded but this increase was largely offset by the conversion to mineral reserves in the expanded open pit plans; the net gain was 110,000 ounces of gold in indicated mineral resources at Amaruq.

 

The conversion of indicated mineral resources in LaRonde 3 to mineral reserves led to a depletion of 839,000 ounces of gold in indicated mineral resources at LaRonde.  Because of

 

29


 

the shaft expansion project at Kittila, 515,000 ounces of gold in indicated mineral resources moved to mineral reserves.

 

Gold in Inferred Mineral Resources Increases 19% to 18.1 Million Ounces

 

Highlights from the December 31, 2018 Inferred Mineral Resource statement include:

 

·                  The 100%-owned Santa Gertrudis project declared initial inferred mineral resources of 962,000 ounces of gold

 

·                  Exploration added inferred mineral resources at Amaruq, leading to a net gain 325,000 ounces of gold

 

The Company’s inferred mineral resources now total 209 million tonnes grading 2.69 g/t gold, or approximately 18.1 million ounces of gold.  This represents an approximate 19% increase in ounces of gold, but a decrease in grade to 2.69 g/t gold compared with 2.87 g/t gold in the December 2017 inferred mineral resources (see the Company’s news release dated February 14, 2018 for details).

 

As with measured and indicated mineral resources, the increase to inferred mineral resources was mainly due to increasing ownership of Ontario properties and discovery success, partially offset by conversion to indicated mineral resources.

 

The addition of the remaining 50% interest in the Kirkland Lake assets added 2.0 million ounces of gold in inferred mineral resources at Upper Beaver, Upper Canada, AK and Anoki-McBean.  Confirmation and exploration drilling at the 100%-owned Santa Gertrudis project in Sonora, Mexico, acquired in late 2017, led to initial inferred mineral resources of 962,000 ounces of gold (27 million tonnes grading 1.09 g/t gold).

 

Exploration drilling added inferred mineral resources at the Amaruq and Meliadine mine developments.  However, substantial amounts of these gains were offset by conversion to indicated mineral resources.  The net change at Amaruq was a gain of 325,000 ounces of gold in inferred mineral resources to 2.1 million ounces of gold (12.6 million tonnes grading 5.12 g/t gold), almost wholly at underground depths.

 

The distribution of mineral resources by property is set out in the following table.  For full details including tonnage and grade, see the “Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2018)” below.

 

30


 

December 31, 2018 Mineral Resources*

 

 

 

Measured & Indicated
Mineral Resources

 

Inferred Mineral
Resources

 

 

 

(000 oz gold)

 

(000 oz gold)

 

Northern Business

 

 

 

 

 

LaRonde

 

509

 

874

 

LaRonde Zone 5

 

510

 

498

 

Ellison

 

68

 

254

 

Canadian Malartic (50%)

 

439

 

107

 

Odyssey (50%)

 

68

 

809

 

East Malartic (50%)

 

361

 

1,403

 

Goldex

 

1,683

 

1,338

 

Akasaba West

 

46

 

0

 

Lapa

 

0

 

0

 

Zulapa

 

0

 

39

 

Meadowbank

 

131

 

4

 

Amaruq

 

1,132

 

2,069

 

Meadowbank Complex (incl. Amaruq)

 

1,263

 

2,073

 

Meliadine

 

3,179

 

2,598

 

Hammond Reef

 

4,501

 

12

 

Upper Beaver (Kirkland Lake)

 

403

 

1,416

 

Amalgamated Kirkland (Kirkland Lake)

 

265

 

406

 

Anoki/McBean (Kirkland Lake)

 

320

 

382

 

Upper Canada (Kirkland Lake)

 

0

 

1,752

 

Kittila

 

1,599

 

1,019

 

Kuotko

 

0

 

29

 

Kylmäkangas

 

0

 

250

 

Barsele (55%)

 

176

 

1,005

 

Subtotal Northern Business

 

15,393

 

16,265

 

 

 

 

 

 

 

Southern Business

 

 

 

 

 

Pinos Altos

 

1,091

 

302

 

Creston Mascota

 

28

 

13

 

La India

 

267

 

30

 

Tarachi

 

294

 

68

 

Chipriona

 

0

 

160

 

El Barqueno Gold

 

318

 

322

 

Santa Gertrudis

 

0

 

962

 

Subtotal Southern Business

 

1,998

 

1,857

 

Total Mineral Resources

 

17,390

 

18,122

 

 


*Ownership of mines and projects is 100% unless otherwise indicated. Where Agnico Eagle’s interest is less than 100%, the stated mineral resources reflect the Company’s interest.

 

31


 

NORTHERN BUSINESS REVIEW

 

ABITIBI REGION, QUEBEC

 

Agnico Eagle is currently Quebec’s largest gold producer with a 100% interest in the LaRonde, Goldex and LaRonde Zone 5 mines and a 50% interest in the Canadian Malartic mine.  These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.

 

LaRonde Mine - Conversion Drilling Results in Significant Mineral Reserve Additions at LaRonde 3

 

The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.

 

LaRonde Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

515

 

585

 

Tonnes of ore milled per day

 

5,598

 

6,359

 

Gold grade (g/t)

 

5.14

 

5.14

 

Gold production (ounces)

 

81,022

 

92,523

 

Production costs per tonne (C$)

 

$

136

 

$

117

 

Minesite costs per tonne (C$)

 

$

117

 

$

110

 

Production costs per ounce of gold produced ($ per ounce):

 

$

666

 

$

592

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

441

 

$

386

 

 

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to slightly higher labour costs (due to an increase in the ratio of the Company’s employees compared to contractors), higher underground costs, lower tonnage and the timing of unsold concentrate inventory.  Production costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above and lower gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to slightly higher labour costs as described above, higher underground costs and lower tonnage.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above, lower gold production and lower by-product metal revenues.

 

Gold production in the fourth quarter of 2018 decreased when compared to the prior-year period due to lower tonnage resulting from the mining sequence.

 

32


 

LaRonde Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

2,108

 

2,246

 

Tonnes of ore milled per day

 

5,775

 

6,153

 

Gold grade (g/t)

 

5.32

 

5.05

 

Gold production (ounces)

 

343,686

 

348,870

 

Production costs per tonne (C$)

 

$

139

 

$

108

 

Minesite costs per tonne (C$)

 

$

119

 

$

108

 

Production costs per ounce of gold produced ($ per ounce):

 

$

664

 

$

532

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

445

 

$

406

 

 

Production costs per tonne for the full year 2018 increased when compared to the prior-year period due to slightly higher labour costs, higher underground costs, lower tonnage and the timing of unsold concentrate inventory.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above and lower gold production.

 

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to slightly higher labour costs, higher underground costs and lower tonnage.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

 

Gold production for the full year 2018 decreased when compared to the prior-year period due to lower tonnage, partially offset by higher grades resulting from the mining sequence.

 

Approximately 800,000 ounces of gold at LaRonde 3, between level 311 (a depth of 3.1 kilometres) and level 340 (a depth of 3.4 kilometres), was converted from mineral resources to mineral reserves as a result of conversion.  Development plans are underway to deepen the ramp while engineering and construction work for ventilation and cooling of the deeper portion of the mine are ongoing.

 

As the Company mines deeper at LaRonde, the risks of more frequent and larger seismic events increases.  As a result, the Company is studying various design approaches to LaRonde 3.  In addition, the Company continues to adjust the mining methods, ground support and protocols to address seismic activity in the deeper portions of the mine.

 

Following the successful deployment of the LTE network at LaRonde Zone 5, an LTE network was deployed at the LaRonde mine below level 269 in the fourth quarter of 2018.  Extension of the network in the ramp area from level 269 to surface and at LaRonde 3 will take place throughout 2019.  The LTE network will facilitate the integration of automation technologies currently being tested at LZ5 which are expected to allow the Company to maintain similar historical productivity levels at LaRonde 3.

 

After performing a geological and engineering review of Zone 11-3, which is at depth in the past producing Bousquet 2 mine, the Company has added approximately 140,000 ounces of

 

33


 

gold into mineral reserves included with the LZ5 property at December 31, 2018.  The zone, comprised of 1.2 million tonnes grading 3.77 g/t gold, will provide production flexibility to the LaRonde Complex.

 

An exploration program is also underway at Zone 6 where drilling has encountered encouraging massive sulphide mineralization.  Zone 6 is located approximately 200 metres north of, and parallel to LaRonde 3.

 

LaRonde Zone 5 - Operations Reached Full Production Rates Within the First Year of Operation; Reviewing Opportunities to Further Enhance Productivity

 

The Company acquired the LaRonde Zone 5 project in 2003.  The property lies adjacent to and west of the LaRonde Complex and previous operators exploited the deposit by open pit.  In February 2017, LZ5 was approved by Agnico Eagle’s Board of Directors for development.  Commercial production was achieved on June 1, 2018.

 

In the fourth quarter of 2018, mining continued at LZ5 with ore primarily processed from October to November and ore stockpiled at surface in December as the mill processed ore from Lapa.

 

LaRonde Zone 5 Mine - Operating Statistics

 

 

 

Three Months Ended

 

 

 

December 31, 2018

 

Tonnes of ore milled (thousands of tonnes)

 

115

 

Tonnes of ore milled per day

 

2,091

 

Gold grade (g/t)

 

2.90

 

Gold production (ounces)

 

10,196

 

Production costs per tonne (C$)

 

$

73

 

Minesite costs per tonne (C$)

 

$

75

 

Production costs per ounce of gold produced ($ per ounce):

 

$

620

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

641

 

 


* Milling operations occurred for 55 days in the period

 

 

Production costs per tonne in the fourth quarter of 2018 were C$73.  Production costs per ounce in the fourth quarter of 2018 were $620.  Minesite costs per tonne in the fourth quarter of 2018 were C$75.  Total cash costs per ounce in the fourth quarter of 2018 were $641.  Gold production in the fourth quarter of 2018 was 10,196 ounces of gold.

 

34


 

LaRonde Zone 5 Mine - Operating Statistics

 

 

 

Year Ended

 

 

 

December 31, 2018

 

Tonnes of ore milled (thousands of tonnes)

 

225

 

Tonnes of ore milled per day

 

1,940

 

Gold grade (g/t)

 

2.76

 

Gold production (ounces)

 

18,620

 

Production costs per tonne (C$)

 

$

76

 

Minesite costs per tonne (C$)

 

$

80

 

Production costs per ounce of gold produced ($ per ounce):

 

$

698

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

732

 

 


** Milling operations occurred for 116 days in the period

 

 

 

 

 

Production costs per tonne for the full year 2018 were C$76.  Production costs per ounce for the full year 2018 were $698.  Minesite costs per tonne for the full year 2018 were C$80.  Total cash costs per ounce for the full year 2018 were $732.  Gold production for the full year 2018 was 18,620 ounces of gold.

 

In its first year of operation, the mine achieved its designed production rate of 1,975 tonnes per day with lower than expected dilution and slightly higher than expected mill recoveries.  The Company is currently evaluating opportunities to further enhance productivity.  Under the current LZ5 mine plan, a total of approximately 350,000 ounces of gold are expected to be mined through 2026.  The Company is evaluating scenarios to integrate the additional mineral reserves in the down plunge of the LZ5 deposit into the mine plan along with the potential to process additional tonnage through the LaRonde Complex.

 

The Company is also evaluating the potential to extend operations at depth and along strike onto the Ellison property, which adjoins LZ5 to the west.  Ellison hosts an indicated mineral resource of 68,000 ounces of gold (665,000 tonnes grading 3.19 g/t gold) as of December 31, 2018.

 

Integration and pilot testing of automated mining equipment (two trucks and one scoop tram) began in the fourth quarter of 2018 at LZ5 and will continue in 2019.

 

Canadian Malartic Mine - Record Annual Production Driven By Record Mill Throughput and Higher Grades

 

In June 2014, Agnico Eagle and Yamana Gold Inc. (“Yamana”) acquired Osisko Mining Corporation and created 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.

 

35


 

Canadian Malartic Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes) (100%)

 

5,084

 

5,229

 

Tonnes of ore milled per day (100%)

 

55,261

 

56,842

 

Gold grade (g/t)

 

1.18

 

1.09

 

Gold production (ounces)

 

84,732

 

80,743

 

Production costs per tonne (C$)

 

$

26

 

$

28

 

Minesite costs per tonne (C$)

 

$

25

 

$

25

 

Production costs per ounce of gold produced ($ per ounce):

 

$

604

 

$

722

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

562

 

$

628

 

 

Production costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to the timing of inventory, partially offset by higher costs for contractors, fuel and tires and lower throughput levels.  Production costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reasons described above and higher gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 were the same when compared to the prior-year period.  Total cash costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

 

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher grades.

 

Canadian Malartic Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes) (100%)

 

20,484

 

20,358

 

Tonnes of ore milled per day (100%)

 

56,121

 

55,774

 

Gold grade (g/t)

 

1.20

 

1.09

 

Gold production (ounces)

 

348,600

 

316,731

 

Production costs per tonne (C$)

 

$

25

 

$

24

 

Minesite costs per tonne (C$)

 

$

25

 

$

24

 

Production costs per ounce of gold produced ($ per ounce):

 

$

573

 

$

595

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

559

 

$

576

 

 

Production costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

 

Minesite costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2018 decreased when

 

36


 

compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

 

Gold production for the full year 2018 increased when compared to the prior-year period due to record annual mill throughput levels

and higher grades.

 

Work on the Barnat extension project is proceeding on budget and on schedule.  Work is primarily focused on the Highway 117 road deviation, overburden stripping and tailings expansion.  The highway deviation is expected to be completed in late 2019.  Production activities at Barnat are scheduled to begin in late 2019, following completion of the highway deviation.

 

Exploration programs are ongoing to evaluate several deposits to the east of the Canadian Malartic open pit, including the Odyssey, East Malartic, Sladen and Sheehan zones.  These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.  In the fourth quarter of 2018, 14 drill holes (5,460 metres) were completed at the Odyssey Zone and an additional 13 drill holes (17,416 metres) were completed at the East Malartic area.  Additional exploration will be carried out in 2019 to assess the potential of these zones.

 

The permit allowing for the development of an underground ramp at the Odyssey project was received in December 2018.

 

As part of ongoing stakeholder engagement, the Partnership is in discussions with four First Nations groups concerning a potential memorandum of understanding, which is expected to also include a financial component.  As with the Good Neighbour Guide and other community relations efforts at Canadian Malartic, the Company is working collaboratively with stakeholders to establish cooperative relationships that support the long-term potential of the mine.

 

Lapa Mine - Operations Completed in December of 2018; Site Reclamation Now Underway

 

The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.

 

37


 

Lapa Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

69

 

 

Tonnes of ore milled per day

 

1,865

 

 

Gold grade (g/t)

 

4.31

 

 

Gold production (ounces)

 

7,307

 

 

Production costs per tonne (C$)

 

$

198

 

$

 

Minesite costs per tonne (C$)

 

$

99

 

$

 

Production costs per ounce of gold produced ($ per ounce):

 

$

1,443

 

$

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

713

 

$

 

 


* Milling operations occurred for 37 days in the period

 

In the fourth quarter of 2018, the Lapa mill processed ore for 37 days as the mining operations were finally completed, therefore, the operating statistics in the above table are not meaningfully comparable to the prior-year period.

 

Lapa Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

311

 

398

 

Tonnes of ore milled per day

 

1,808

 

1,458

 

Gold grade (g/t)

 

4.24

 

4.24

 

Gold production (ounces)

 

34,026

 

48,410

 

Production costs per tonne (C$)

 

$

115

 

$

128

 

Minesite costs per tonne (C$)

 

$

123

 

$

120

 

Production costs per ounce of gold produced ($ per ounce):

 

$

819

 

$

801

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

872

 

$

755

 

 


** Milling operations occurred for 172 days in the period

 

For the full year 2018, the Lapa mill processed ore for 172 days as the mining operations were finally completed, therefore, the operating statistics in the above table are not meaningfully comparable to the prior-year period.

 

Mining and processing operations at Lapa ended in December 2018 and, as a result, the Lapa mill circuit at LaRonde is now fully available to process LZ5 ore.  Closure activities for the underground infrastructure are currently underway with surface work expected to begin in the second quarter of 2019.

 

Goldex Mine - Annual Records Set for Gold Production and Tonnage Hoisted and Milled

 

The 100% owned Goldex mine in northwestern Quebec began production from the M and E zones in September 2013.  Commercial production from the Deep 1 Zone commenced on July 1, 2017.

 

38


 

Goldex Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

711

 

593

 

Tonnes of ore milled per day

 

7,728

 

6,446

 

Gold grade (g/t)

 

1.49

 

1.50

 

Gold production (ounces)

 

31,508

 

27,033

 

Production costs per tonne (C$)

 

$

37

 

$

47

 

Minesite costs per tonne (C$)

 

$

36

 

$

43

 

Production costs per ounce of gold produced ($ per ounce):

 

$

625

 

$

806

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

624

 

$

719

 

 

Production costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to lower trucking costs and increased Rail-Veyor productivity, the timing of inventory and higher throughput levels, partially offset by higher contractor and consumable costs.  Production costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reasons described above and higher gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reasons described above.

 

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher throughput levels as a result of higher utilization of the Rail-Veyor system as the Deep 1 Zone continues to ramp up.

 

Goldex Mine - Operating Statistics

All metrics exclude pre-production tonnes and ounces

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

2,625

 

2,396

 

Tonnes of ore milled per day

 

7,192

 

6,564

 

Gold grade (g/t)

 

1.54

 

1.53

 

Gold production (ounces)

 

121,167

 

110,906

 

Production costs per tonne (C$)

 

$

39

 

$

38

 

Minesite costs per tonne (C$)

 

$

39

 

$

37

 

Production costs per ounce of gold produced ($ per ounce):

 

$

648

 

$

640

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

646

 

$

610

 

 

Production costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to higher costs relating to contractors, maintenance and consumables, partially offset by higher gold production.

 

39


 

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to higher costs relating to contractors, maintenance and consumables, partially offset by higher throughput levels .  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

 

Gold production for the full year 2018 increased when compared to the prior-year period (after deducting pre-commercial ounces for the full year 2017) due to higher throughput levels.  As stope development in the higher grade Deep 1 Zone continues to mature through 2019, utilization of the Rail-Veyor system is expected to continue to increase and lead to a reduction in unit costs.

 

In 2018, the exploration ramp for the Deep 2 Zone was extended to below the 125 level.  Work on the exploration ramp for the Deep 2 Zone has now been put on hold to focus on further stope development at the Deep 1 Zone, and additional development in 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.  Additional development continued at level 106 as a result of better than expected grades, which allows for the potential to increase mining throughput from the South Zone.  A longitudinal test stope was mined in December.

 

Akasaba West

 

The Company 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 using extra milling capacity at both Goldex and LaRonde, while reducing overall unit costs.

 

The Company continues to review the timeline for the integration of the Akasaba West project into the Goldex production profile.  Over a five-year mine life, total production is expected to be approximately 115,000 ounces of gold and 21,000 tonnes of copper at total cash costs per ounce of $550 to $600.

 

Kirkland Lake Project - 2018 Drilling Focused on the Upper Beaver and Upper Canada Deposits

 

The Kirkland Lake project in northeastern Ontario covers approximately 27,073 hectares, a large property measuring approximately 35 kilometres long by 17 kilometres wide, mostly on private lands held as either mining leases or patented claims.  The properties have been owned 100% by Agnico Eagle since March 28, 2018, when the Company completed the acquisition of Yamana’s indirect 50% interest in the Ontario exploration assets of Canadian Malartic Corporation that it did not previously own.  Mineral reserves and mineral resources have been outlined on the Upper Beaver property and mineral resources are estimated on

 

40


 

several other deposits at the Kirkland Lake project, including Upper Canada, Anoki and McBean, and Amalgamated Kirkland.

 

The land package that makes up the Kirkland Lake project was formerly owned by a succession of junior exploration companies.  The Kirkland Lake - Larder Lake district has produced almost 46 million ounces of gold from 61 mines between 1911 and 2017 and currently hosts two operating mines.

 

A $5.6-million exploration program on the Kirkland Lake project was carried out from July to December 2018.  In the fourth quarter of 2018, 15 holes (7,751 metres) were completed.  The total drilling in 2018 on this project was 37 holes (19,505 metres), of which 7,285 metres were to extend the Upper Beaver deposit at depth as well as explore for new, near-surface mineralization, and 12,220 metres tested satellite targets around the Upper Canada deposit.

 

In addition, the Company is completing a technical review of the exploration data for the Upper Beaver and Upper Canada deposits, and updating the geological models.  Environmental baseline studies continue at Upper Beaver.  The Company is investigating various opportunities and potential synergies in terms of engineering concepts for future development of the Upper Beaver and Upper Canada deposits.

 

Selected recent intercepts from the Kirkland Lake project are set out in the table below.  The drill hole coordinates are set out in a table in the Appendix of this news release.  The drill hole collars are located on the Upper Beaver / Upper Canada local geology map.  All intercepts reported for the Kirkland Lake 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 Upper Beaver (UB) deposit and Upper Canada (UC) deposits at the Kirkland Lake project

 

Drill hole

 

Deposit

 

From
(metres)

 

To
(metres)

 

Depth of
mid-point
below
surface
(metres)

 

Estimated
true width
(metres)*

 

Gold grade
(g/t)
(uncapped)

 

Gold grade
(g/t)
(capped)**

 

Copper
grade (%)
(uncapped)

 

KLUC18-506

 

UC, Northland

 

100.0

 

129.5

 

89

 

20.7

 

1.1

 

1.1

 

 

 

KLUC18-510

 

UC, Northland

 

75.5

 

140.5

 

72

 

44.0

 

2.8

 

1.3

 

 

 

KLUC18-512

 

UC, K Zone

 

216.0

 

220.5

 

152

 

4.1

 

3.9

 

3.9

 

 

 

KLUC18-517

 

UC, H Zone

 

409.2

 

413.0

 

295

 

2.8

 

31.1

 

12.7

 

 

 

KLUC18-518

 

UC, Northland

 

2.3

 

260.5

 

91

 

181.6

 

0.6

 

0.6

 

 

 

including

 

UC, Northland

 

6.0

 

14.0

 

6

 

5.6

 

2.5

 

2.5

 

 

 

and including

 

UC, Northland

 

119.3

 

132.5

 

87

 

9.3

 

2.2

 

2.2

 

 

 

KLUC18-519

 

UC, Northland

 

2.3

 

154.1

 

57

 

97.2

 

0.9

 

0.5

 

 

 

including

 

UC, Northland

 

96.6

 

106.6

 

74

 

6.4

 

9.0

 

3.4

 

 

 

KLUB18-327W4

 

UB, Deep East Porphyry

 

1,779.5

 

1,783.5

 

1,598

 

3.1

 

15.4

 

15.4

 

0.1

 

and

 

UB, Deep East Porphyry

 

1,812.0

 

1,828.5

 

1,630

 

12.8

 

4.6

 

4.6

 

0.2

 

including

 

UB, Deep East Porphyry

 

1,812.0

 

1,821.0

 

1,628

 

7.0

 

7.2

 

7.2

 

0.3

 

KLUB18-327W5

 

UB, Deep East Porphyry

 

1,875.0

 

1,881.0

 

1,732

 

4.2

 

4.7

 

4.7

 

0.4

 

including

 

UB, Deep East Porphyry

 

1,875.0

 

1,879.0

 

1,729

 

2.8

 

6.0

 

6.0

 

0.4

 

KLUB18-328W4

 

UB, Deep East Porphyry

 

1,703.6

 

1,717.5

 

1,547

 

9.9

 

2.5

 

2.5

 

0.2

 

KLUB18-328W5

 

UB, Deep East Porphyry

 

1,641.0

 

1,648.5

 

1,472

 

5.7

 

3.5

 

3.5

 

0.0

 

and

 

UB, Deep East Porphyry

 

1,737.0

 

1,747.0

 

1,551

 

7.5

 

4.2

 

4.2

 

2.1

 

including

 

UB, Deep East Porphyry

 

1,737.0

 

1,742.0

 

1,549

 

3.8

 

6.5

 

6.5

 

1.9

 

 

41


 


*Estimated true width values are preliminary

**Holes at the Upper Canada deposit’s Northland Zone use a capping factor of 10 g/t gold, and at H Zone use a capping factor of 80 g/t gold; there is no reported assay above the capping factor at K Zone.  Holes at the Upper Beaver deposit use a capping factor of 75 g/t gold.

 

[Upper Beaver / Upper Canada Local Geology Map]

 

 

The Kirkland Lake project lies within the southern Abitibi Greenstone Belt, approximately 110 kilometres west of the LaRonde mine in northwestern Quebec.  The area is underlain by an east-west-trending linear Timiskaming assemblage comprised of volcanic and sedimentary rocks as well as synvolcanic intrusion emplacements consisting typically of diorite, syenite, quartz-feldspar porphyries and monzonite.

 

Agnico Eagle is focusing on the Upper Beaver and Upper Canada deposits, which are in close proximity to each other.

 

The Upper Beaver deposit is atypical of the district.  Gold-copper mineralization is mainly hosted in the Upper Beaver alkalic intrusive complex and is associated with disseminated pyrite and chalcopyrite, and magnetite-sulphide veining in strongly sodic-altered rock.  The mineralization occurs as elongated tabular bodies that strike northeast, dip steeply northwest and plunge 65° to the northeast.  The mineralization has been defined along a 400-metre strike length from surface to a depth of 1,700 metres.

 

42


 

The 2018 exploration program at Upper Beaver included 6,000 metres of drilling to test for extensions of the deep inferred mineral resource between 1,300 and 1,785 metres depth.  The most significant results from the deposit were from four deep wedged holes on the Deep East Porphyry Zone of the Upper Beaver deposit.  The results confirm the interpretation of multiple mineralized gold-copper zones at depth over a distance of 230 metres down-plunge.  Wedge-hole KLUB18-328W5 also identified a new footwall zone outside the actual interpreted mineralized solids, intersecting 4.2 g/t gold and 2.1% copper over 7.5 metres at 1,551 metres depth, including 6.5 g/t gold and 1.9% copper over 3.8 metres.

 

Other highlights from the deep drilling include hole KLUB18-327W4 that intersected 15.4 g/t gold and 0.1% copper over 3.1 metres at 1,598 metres depth, and 7.2 g/t gold and 0.3% copper over 7.0 metres at 1,628 metres depth.  Another wedge from the same hole, KLUB18-327W5, intersected 4.7 g/t gold and 0.4% copper over 4.2 metres at 1,732 metres depth.  Current drilling is targeting the down-plunge extension of the Deep East Porphyry Zone, with an approximate step-out of 250 metres.

 

The Upper Canada deposit lies approximately 6 kilometres southwest of the Upper Beaver deposit, and 1.6 kilometres north of the main Larder Cadillac Deformation Zone, within a 300- to 400-metre-wide strongly altered deformation corridor.  Host rocks are primarily volcanic (trachyte) tuffs and sediments that have been intruded by syenite bodies.  Gold mineralization is associated with intensely altered shear zones with fine pyrite and ancillary sulphide mineralization.  En-echelon higher-grade lenses are present within a broader envelope of lower grade mineralization.

 

One of the lenses is the Northland Zone, where recent drilling returned wide, low- to medium-grade intercepts in an area located 500 metres north of the main mineralized corridor at Upper Canada.  The results open new possibilities for near-surface mineralization away from the historical mine workings.  The understanding of the geometry of this zone is preliminary at this time.  Recent highlights include hole KLUC18-510 that intersected 1.3 g/t gold over 44.0 metres at 72 metres depth  and hole KLUC18-519 that intersected 3.4 g/t gold over 6.4 metres at 74 metres depth.

 

At Upper Canada’s H Zone, hole KLUC18-517 intersected 12.7 g/t gold over 2.8 metres at 295 metres depth, approximately 125 metres east of historic underground infrastructure, in an area without known mineralization.  Follow-up drilling will be required to determine if this intersection points to a new mineralized zone along the H Zone.

 

Hole KLUC18-512 intersected 3.9 g/t gold over 4.1 metres at 152 metres depth in one of the K Zones, approximately 1,200 metres west of the main L Zone of the Upper Canada deposit.  This shallow intersection is in an area where there has been no historic mining.

 

The drill results presented in this news release for the Kirkland Lake project are not included in the current mineral reserve and mineral resource estimate; these results and the outcome of ongoing drilling are expected to have a positive impact on the next estimate a year from now.

 

43


 

In 2019, the Company expects to spend $5.8 million to follow up on the positive recent exploration results and data compilation at the Kirkland Lake project.  This will include a 16,500-metre exploration drill program targeting the Upper Beaver deposit area as well as mineralized zone extensions at Upper Canada, including the newly-expanded Northland Zone.  The drilling and additional studies in 2019 are expected to result in a new mineral resource estimate at year end 2019.

 

NUNAVUT REGION

 

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential.  With the Company’s Meadowbank mine, two significant development assets (Meliadine 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 gold production and cash flows over several decades.

 

Meadowbank Mine - Produced Three Millionth Ounce of Gold

 

The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010.  The mine produced its three millionth ounce of gold in the fourth quarter of 2018.

 

Meadowbank Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

700

 

992

 

Tonnes of ore milled per day

 

7,609

 

10,783

 

Gold grade (g/t)

 

2.80

 

2.94

 

Gold production (ounces)

 

59,664

 

85,046

 

Production costs per tonne (C$)

 

$

82

 

$

72

 

Minesite costs per tonne (C$)

 

$

83

 

$

76

 

Production costs per ounce of gold produced ($ per ounce):

 

$

743

 

$

653

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

734

 

$

653

 

 

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period primarily due to higher re-handling costs, the timing of inventory and lower throughput levels.  Production costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period as expected due to the reasons described above and lower gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period primarily due to higher re-handling costs and lower throughput levels.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period as expected due to the reasons described above and lower gold production.

 

44


 

During the fourth quarter of 2018, mining activities were carried out at both the Vault and Portage deposits and in addition, ore was sourced from the marginal stockpile.  Gold production in the fourth quarter of 2018 decreased when compared to the prior-year period as expected due to anticipated lower grades from processing the marginal ore stockpile.

 

Meadowbank Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

3,262

 

3,853

 

Tonnes of ore milled per day

 

8,937

 

10,556

 

Gold grade (g/t)

 

2.56

 

3.12

 

Gold production (ounces)

 

248,997

 

352,526

 

Production costs per tonne (C$)

 

$

83

 

$

76

 

Minesite costs per tonne (C$)

 

$

82

 

$

76

 

Production costs per ounce of gold produced ($ per ounce):

 

$

848

 

$

636

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

814

 

$

614

 

 

Production costs per tonne for the full year 2018 increased when compared to the prior-year period primarily due to higher re-handling costs, the timing of inventory and lower throughput levels.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period as expected due to the reasons described above and lower gold production.

 

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period primarily due to higher re-handling costs, the timing of inventory and lower throughput levels.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period as expected due to the reasons described above and lower gold production.

 

Gold production for the full year 2018 decreased when compared to the prior-year period as expected due to anticipated lower grades and processing ore that was harder than previously anticipated from the Vault pit, which resulted in lower throughput levels.

 

Amaruq Project - Open Pit Mineral Reserves Increased; On Schedule for Production Startup Early in the Third Quarter of 2019; Underground Potential Continues to Grow

 

Agnico Eagle has a 100% interest in the Amaruq project, approximately 50 kilometres northwest of the Meadowbank mine.  Amaruq is situated on a 94,548-hectare property, almost adjacent to the 51,943-hectare Meadowbank property.  Development of the Amaruq project was approved in February 2017 by the Company’s Board of Directors as a satellite deposit to supply ore to the existing Meadowbank mill.

 

On July 11, 2018, the Minister of Crown-Indigenous Relations and Northern Affairs Canada (formerly Indigenous and Northern Affairs Canada) approved Agnico Eagle’s Type A Water Licence for the Whale Tail pit, which had been issued by the Nunavut Water Board on May

 

45


 

30, 2018.  This approval authorized the Company to commence development activities on the Whale Tail pit.

 

In late July 2018, the Company began construction activities.  Work carried out in the fourth quarter of 2018 included:

 

·                  Completion of the secant wall at the Whale Tail dyke with the grout curtain now 90% complete.  The pumping system is being installed, including the water treatment plant, which is necessary to start the dewatering in February 2019

 

·                  Continuation of Whale Tail pit stripping activities, with the first ore being mined and stockpiled

 

·                  Commissioning of the long-haul truck fleet now underway

 

·                  Completion of the Amaruq production road widening

 

·                  Construction began on the Mammoth waste rock storage facility and the Northeast dykes

 

·                  Continuation of the infrastructure work on the permanent camp at Amaruq and advancing the mechanical shop.  Work was also done on the emulsion storage building

 

·                  Continuation of the modifications to the process plant at Meadowbank; 99% of the structural work was completed as of year-end 2018.  The gravity concentrators and high-intensity grinding mill are now in place

 

·                  Completion of a new sulphur dioxide (SO2) plant (used in the cyanide destruction process).  Commissioning of this new SO2 circuit at Meadowbank began in early January

 

During the fourth quarter of 2018, 348 metres of ramp development was completed.  The total ramp development for the full year 2018 was 1,214 metres, reaching a depth of 134 metres below surface.  The first Alimak ventilation raise to surface was also completed.

 

Given the ongoing positive drill results from the deeper portions of the Whale Tail and V-Zone deposits, and the potential to develop an underground mining scenario at Amaruq, in the third quarter of 2018 the Company began capitalizing underground ramp expenditures at Amaruq, which totalled $7.5 million in the fourth quarter of 2018 ($16.2 million for the second half of 2018).

 

Based on the 2018 exploration program, the mineral reserves estimate for Amaruq as of December 31, 2018 has increased to 2.9 million ounces of gold (24.9 million tonnes grading 3.59 g/t gold) all at open pit depths, while the indicated mineral resources estimate has increased to 1.1 million ounces of gold (8.9 million tonnes grading 3.97 g/t gold).  The inferred mineral resources estimate also increased to 2.1 million ounces of gold (12.6 million tonnes grading 5.12 g/t gold).  For more details, see the description of the Company’s new mineral reserves and mineral resources estimates in “Detailed Mineral Reserves and Mineral Resources Data”.

 

46


 

Open pit mining activities are expected to accelerate once the dewatering of Whale Tail Lake is completed early in the second quarter of 2019.  Initial production from the Whale Tail deposit is expected to begin in the third quarter of 2019.

 

Work is ongoing at Amaruq to evaluate the potential for an underground operation, which could run partially concurrent with the open pit mine that is currently under development. There may also be potential to mine the bottom of the of the Whale Tail open pit from underground, which would provide quicker access to higher grades and reduce overall stripping costs.

 

A production decision for the Amaruq underground project is expected to be made later this year, and approximately 1,440 metres of underground ramp development is planned for 2019.

 

The Whale Tail expansion permitting process for open pit mining activities at the V Zone and underground commenced on October 15, 2018, with a submission of a Project Description to the Nunavut Planning Commission for screening.  The Company subsequently received a positive notice indicating that the proposal conforms to the Land Use Plan.  The Environmental Assessment addendum related to Whale Tail expansion will be submitted to the Nunavut Impact Review Board in accordance with the permitting process.  The Company anticipates the issuance of the permits in late 2020.

 

The Company is also waiting for approval for the permit required to allow for in-pit tailings disposal.  Receipt of this permit is expected in second quarter of 2019.

 

Exploration Drilling Continues to Expand Known Mineralized Zones at Amaruq

 

Exploration continues at depth in both the Whale Tail deposit and V Zone, as well as conversion drilling of underground mineral resources close to the planned Whale Tail pit bottom.  In the fourth quarter of 2018, exploration drilling consisted of five holes (2,211 metres), conversion drilling consisted of 24 holes (8,883 metres) and delineation drilling consisted of ten holes (888 metres).  For the full year, exploration drilling consisted of 105 holes (35,248 metres), conversion drilling consisted of 85 holes (32,751 metres) and delineation drilling consisted of 159 holes (15,240 metres).  Results of the exploration program at the Amaruq project were last reported in the Company’s news release dated October 24, 2018.

 

Selected recent intercepts from the Amaruq project are set out in the table below.  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.

 

47


 

Recent exploration and conversion drill results from the Whale Tail (WT) deposit and V Zone at the Amaruq project

 

Drill hole

 

Zone

 

Purpose

 

From
(metres)

 

To (metres)

 

Depth of
mid-point
below
surface
(metres)

 

Estimated
true width
(metres)

 

Gold grade
(g/t)
(uncapped)

 

Gold grade
(g/t)
(capped)*

 

AMQ18-1564C

 

V Zone

 

exploration

 

537.0

 

541.1

 

455

 

3.6

 

25.5

 

11.8

 

AMQ18-1803

 

V Zone

 

conversion

 

252.4

 

256.1

 

192

 

3.6

 

20.6

 

19.6

 

AMQ18-1886B

 

V Zone

 

exploration

 

621.5

 

626.4

 

534

 

3.8

 

43.4

 

7.4

 

and

 

V Zone

 

exploration

 

636.0

 

639.6

 

545

 

3.1

 

42.3

 

24.3

 

AMQ18-1895A

 

V Zone

 

exploration

 

916.1

 

919.6

 

707

 

3.0

 

32.6

 

21.8

 

AMQ18-1899

 

V Zone

 

conversion

 

584.4

 

595.2

 

538

 

8.8

 

5.9

 

5.9

 

and

 

V Zone

 

conversion

 

616.4

 

622.9

 

566

 

5.6

 

4.1

 

4.1

 

and

 

V Zone

 

conversion

 

633.0

 

641.3

 

582

 

7.5

 

9.8

 

9.8

 

including

 

V Zone

 

conversion

 

638.2

 

641.3

 

584

 

2.8

 

15.3

 

15.3

 

AMQ18-1902

 

V Zone

 

conversion

 

674.0

 

682.4

 

613

 

6.4

 

40.9

 

27.4

 

and

 

V Zone

 

conversion

 

698.2

 

706.5

 

635

 

7.2

 

4.6

 

4.6

 

AMQ18-1903

 

WT

 

conversion

 

396.0

 

408.0

 

312

 

8.5

 

6.1

 

6.1

 

including

 

WT

 

conversion

 

398.1

 

402.0

 

311

 

2.8

 

11.1

 

11.1

 

AMQ18-1904

 

WT North

 

conversion

 

632.1

 

636.0

 

515

 

3.0

 

22.6

 

22.6

 

AMQ18-1909A

 

WT

 

conversion

 

428.2

 

431.4

 

364

 

3.1

 

32.9

 

10.2

 

and

 

WT

 

conversion

 

523.9

 

534.2

 

442

 

8.9

 

9.1

 

9.1

 

AMQ18-1914

 

WT

 

conversion

 

455.5

 

460.0

 

356

 

3.4

 

12.7

 

12.7

 

AMQ18-1915

 

WT

 

conversion

 

386.9

 

398.3

 

278

 

8.1

 

11.3

 

11.3

 

including

 

WT

 

conversion

 

386.9

 

393.6

 

276

 

4.7

 

15.1

 

15.1

 

and

 

WT

 

conversion

 

415.2

 

422.6

 

297

 

3.7

 

8.7

 

8.7

 

and

 

WT

 

conversion

 

429.2

 

445.3

 

311

 

8.1

 

9.1

 

9.1

 

including

 

WT

 

conversion

 

429.2

 

438.1

 

308

 

4.5

 

13.0

 

13.0

 

AMQ18-1919

 

WT

 

conversion

 

490.0

 

497.1

 

384

 

7.0

 

4.8

 

4.8

 

and

 

WT North

 

conversion

 

596.0

 

600.0

 

462

 

3.1

 

31.3

 

31.3

 

 


*Holes at the Whale Tail deposit use a capping factor of 80 g/t gold. Holes at V Zone use a capping factor of 60 g/t gold.

 

48


 

[Amaruq Project Local Geology Map]

 

 

[Amaruq Project Composite Longitudinal Section]

 

 

Whale Tail Deposit Conversion Results

 

The Whale Tail deposit has been defined over at least 2.3 kilometres of strike length and extends from surface to 915 metres depth.

 

The conversion drilling program in the fourth quarter of 2018 targeted areas beneath the eastern, central and western side of the Whale Tail pit.  The results continue to demonstrate the extension of high-grade mineralization below the proposed pit outline.  The level of confidence in the Whale Tail geological model continues to improve.  The intensive drill program is providing additional information that will be used to further refine the geological and structural models, and to confirm multiple high-grade intervals.

 

49


 

Hole AMQ18-1903 intersected 6.1 g/t gold over 8.5 metres at 312 metres depth, including 11.1 g/t gold over 2.8 metres, confirming the thickness and geometry in the mineral resources 29 metres directly below the pit footprint.

 

The eastern part of the Whale Tail ore shoot was part of the conversion drill program in 2018 and returned positive results in terms of both grade and thickness.  Hole AMQ18-1915 intersected three mineralized intervals: 11.3 g/t gold over 8.1 metres at 278 metres depth, including 15.1 g/t gold over 4.7 metres; 8.7 g/t gold over 3.7 metres at 297 metres depth; and 9.1 g/t gold over 8.1 metres at 311 metres depth, including 13.0 g/t gold over 4.5 metres.  The results confirm the high-grade folded structure of the ore shoot close to the base of the pit, while updating the understanding of the ore shoot’s geometry.

 

Deeper in the same ore shoot, hole AMQ18-1919 intersected 4.8 g/t gold over 7.0 metres at 384 metres depth, showing significant thickness at the base of the mineral resource outline, with the potential to slightly expand the mineral resources at depth.  The same hole had a deeper, narrow high-grade intercept in Whale Tail North: 31.3 g/t gold over 3.1 metres at 462 metres depth, which could locally expand inferred mineral resources in that area.  Approximately 130 metres to the northeast, hole AMQ18-1904 also intersected the Whale Tail North structure, yielding 22.6 g/t gold over 3.0 metres at 515 metres depth.

 

Approximately 150 metres to the northeast of AMQ18-1919, hole AMQ18-1909A intersected two mineralized intervals: 10.2 g/t gold over 3.1 metres at 364 metres depth; and 9.1 g/t gold over 8.9 metres at 442 metres depth, demonstrating mineral resources thicker and richer than expected.  This could represent a wider, tightly folded portion and/or an eastern extension of the high-grade folded ore shoot structure, with potential downward extension of the ore shoot below 400 metres.

 

The Whale Tail deposit remains open to the west at depth, and to the east along a shallow plunge corresponding to the main ore shoot.  The drill program for 2019 will continue to test the Whale Tail deposit and the parallel Whale Tail North structure to its north at depth, to expand the mineral resources and continue to convert inferred mineral resources to indicated mineral resources.

 

V Zone - Drilling Extends Ore Shoot at Depth

 

The V Zone consists of a series of parallel stacked mineralized structures striking northeast from near surface to as deep as 707 metres below surface; the dip of the structures is approximately 30 degrees near surface and steepens to 60 to 70 degrees at depth, where there are at least two sub-parallel structures.

 

A mineralized corridor 100 to 150 metres wide, locally more than 300 metres wide, plunging shallowly to the northeast is interpreted as a V Zone ore shoot, extending from approximately 350 metres to more than 700 metres depth.  The V Zone ore shoot follows the south limb of a fold in the contact between volcanic and sedimentary rock units, which is a

 

50


 

favourable location for mineralization; within this main shoot, mineralization is hosted in both rock units.  The definition of this zone in 2018 by additional drilling and partial reinterpretation led to a large addition of mineral resources at the V Zone Deep: the most significant increase in inferred mineral resources on the Amaruq project during the year.

 

In the fourth quarter of 2018, deep exploration drilling continued to return positive results, particularly along the interpreted V Zone ore shoot.  Hole AMQ18-1899 intersected three intervals, the deepest one being 9.8 g/t gold over 7.5 metres at 582 metres depth, including 15.3 g/t gold over 2.8 metres.  This intercept is located 30 metres north of the volcanic-sediment contact, extending the inferred mineral resources outline from an isolated area approximately 50 metres west of this hole.  Approximately 110 metres to the northeast and below, hole AMQ18-1902 first intersected the zone in volcanic rocks, grading 27.4 g/t gold over 6.4 metres at 613 metres below surface, extending the inferred mineral resources slightly at depth while confirming the locally very high grades of the mineralization hosted by the volcanic rocks.  Farther down the same hole was an interval grading 4.6 g/t gold over 7.2 metres at 635 metres depth, directly north of the sediment contact.  Together with holes AMQ18-1739B and AMQ18-1697C (previously reported in the Company’s news release dated July 16, 2018), these intercepts extend the inferred mineral resources by 170 metres to the northeast.

 

Hole AMQ18-1886B intersected 7.4 g/t gold over 3.8 metres at 534 metres depth, as well as 24.3 g/t gold over 3.1 metres at 545 metres depth.  Both intersections were in volcanic rock, approximatively 80 metres south of the contact with sedimentary rocks.  Both intercepts are located just below the current V Zone ore shoot mineral resource outline and demonstrate the local stacking of narrow high-grade zones hosted in the volcanics.

 

Hole AMQ18-1564C intersected 11.8 g/t gold over 3.6 metres at 455 metres depth, in the volcanic rocks directly south of the contact with sedimentary rocks.  This intercept is 100 metres north of Whale Tail, in the same horizon as Whale Tail North.  Drilling in 2019 will aim to close this gap and improve the understanding of the transition between the Whale Tail North and V Zone systems.

 

One of the deepest intercepts to date is hole AMQ18-1895A that intersected 21.8 g/t gold over 3.0 metres at 707 metres depth.  This represents the easternmost significant intercept of the V Zone at depth within the ore shoot, approximatively 180 metres northeast of any other intercepts and of the mineral resource outline at this depth.

 

The V Zone ore shoot remains open at depth and laterally down-plunge to the east along the favourable folded contact between volcanic and sedimentary rocks.  Additional drilling is expected to extend the high-grade ore shoot to the east and west, as well as better define the geometry of these structures.

 

Most of the results presented in this news release (including holes AMQ18-1886B, 1895A, 1899, 1902, 1903, 1904, 1909A, 1914, 1915 and 1919) were received after the closure of the Amaruq database that was used for the December 31, 2018 mineral resource estimate;

 

51


 

these results and the outcome of ongoing drilling are expected to have a positive impact on the next estimate a year from now.

 

The 2019 exploration program is budgeted for 32,800 metres of drilling at an estimated cost of $8.1 million, focused on Whale Tail deep extensions toward the west and the east, V Zone deep extensions and also extending the known mineral resources of the Whale Tail North structure toward the east to fill in the gap with the V Zone and at depth.  New concepts will also be tested regionally to search for new shallow mineralization, focusing on areas close to the current infrastructure.  As well, 20,300 metres of conversion drilling is budgeted at $4.4 million.

 

Meliadine Project - Mill Commissioning Underway; Commercial Production Expected Early in the Second Quarter of 2019; Drilling continues to Extend Mineralization

 

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010, and is Agnico Eagle’s largest gold deposit in terms of mineral resources.  The Company owns 100% of the 111,358-hectare property.  In February 2017, the Company’s Board of Directors approved the construction of the Meliadine project.

 

The forecast parameters surrounding the Company’s proposed Meliadine operations were based, in part, on the results of preliminary economic assessments.  These preliminary economic assessments include inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the forecast production amounts set out in this news release will be realized.  For further information on the basis for the preliminary economic assessments and the qualifications and assumptions made in connection with the preparation of the assessments, please see the Company’s press release dated February 14, 2018 and the Company’s Annual Information Form for the year ended December 31, 2017, as well as the Company’s other filings with the Canadian securities regulators and the SEC.  The results of the preliminary economic assessment had no impact on the results of any pre-feasibility or feasibility study in respect of Meliadine.

 

Underground development and surface construction at Meliadine continued through the fourth quarter of 2018.  Commissioning of the mill is now underway, with commercial production expected to occur early in the second quarter of 2019.

 

Recent Development/Construction Highlights include:

 

·                  At the end of the fourth quarter of 2018, construction was 97% complete

 

·                  The power plant was commissioned in October, and is now providing electrical power to the entire site

 

·                  Construction work at the crusher and paste plants continued to progress during the fourth quarter of 2018.  The crusher will be completed in mid-February and the paste plant is expected to be in full operation beginning in March 2019

 

52


 

·                  In December 2018, the process plant began processing waste rock, which resulted in successful commissioning of the grinding and filtration circuits

 

·                  In early February 2019, the process plant began running low-grade ore in order to begin commissioning of the CIL circuit.  Commissioning of the carbon stripping, gravity circuits and oxygen plant are expected to be carried out in mid-February, coinciding with the processing of higher grade ore feed

 

·                  Three underground stopes have been blasted and mucked out.  Additional higher grade stopes will be developed and mined in the second quarter of 2019.  At present, there are approximately 180,000 tonnes of stockpiled ore grading 6.0 g/t gold

 

·                  In the fourth quarter of 2018, approximately 2,535 metres of underground development was completed (8,655 metres completed for the full year 2018).  The main development focus was on the lower levels and Ramp 3

 

·                  In the fourth quarter of 2018, approximately 4,325 metres of underground delineation drilling was completed (19,915 metres completed for the full year 2018), which is in line with budget.  Stope delineation for 2019 is progressing as expected

 

·                  Results from the delineation drilling have generally been in line with the block model

 

·                  The salt water treatment plant is now in operation and performing according to plan.  The Company has also received the necessary Ministerial approval to discharge saline water to the ocean commencing in the third quarter of 2019

 

Drilling Continues to Extend Mineralization at Tiriganiaq and Shows Potential to Increase Mineral Resources

 

The Meliadine project includes seven gold deposits, six of which are part of the current mine plan.  Tiriganiaq is the largest of the deposits with the bulk of the mineral reserves; it has a strike length of approximately 3.0 kilometres at surface and a known depth of 750 metres.

 

Exploration resumed at the Tiriganiaq deposit in January 2018 after a three-year hiatus while the Company evaluated the project and initial development work began.  In 2018, exploration drilling consisted of 29 holes (12,022 metres) and conversion drilling consisted of 34 holes (18,716 metres) at the Meliadine project.  Results from the exploration program at Meliadine were last reported in the Company’s news release dated July 25, 2018.

 

Selected recent intercepts from the Meliadine project are set out in the table below.  The drill hole collar coordinates are set out in a table in the Appendix to this news release.  The pierce points are shown on the Meliadine project composite longitudinal section.  All intercepts reported for the Meliadine 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.

 

53


 

Recent exploration drill results from the Tiriganiaq and Wesmeg deposits at the Meliadine project

 

Drill hole

 

Deposit

 

Lode

 

From
 (metres)

 

To (metres)

 

Depth of
 mid-point
 below
 surface
 (metres)

 

Estimated
 true width
 (metres)

 

Gold grade
 (g/t)
 (uncapped)

 

Gold grade
 (g/t)
 (capped)*

 

M18-2471-W2A

 

Tiriganiaq

 

1000

 

734.0

 

737.0

 

642

 

2.8

 

24.2

 

24.2

 

M18-2471-W3B

 

Tiriganiaq

 

1000

 

732.1

 

736.2

 

626

 

3.8

 

29.1

 

29.1

 

M18-2477-W3A

 

Tiriganiaq

 

1251

 

602.9

 

605.9

 

532

 

2.8

 

6.1

 

6.1

 

M18-2485C-W1

 

Tiriganiaq

 

1000

 

648.5

 

652.9

 

591

 

3.7

 

5.5

 

5.5

 

M18-2486

 

Tiriganiaq

 

1025

 

805.5

 

809.0

 

726

 

3.4

 

4.4

 

4.4

 

and

 

Tiriganiaq

 

1000

 

811.0

 

813.9

 

730

 

2.8

 

9.0

 

9.0

 

M18-2486-W1

 

Tiriganiaq

 

1025

 

803.0

 

806.0

 

734

 

2.8

 

8.0

 

8.0

 

M18-2486-W2

 

Tiriganiaq

 

1025

 

822.3

 

825.3

 

748

 

2.8

 

47.0

 

40.0

 

M18-2501A-W1A

 

Tiriganiaq

 

1251

 

542.3

 

549.3

 

489

 

6.8

 

11.8

 

11.8

 

M18-2505-W2

 

Tiriganiaq

 

1025

 

632.4

 

639.4

 

600

 

6.6

 

9.8

 

9.8

 

ML400-9164-F1

 

Wesmeg

 

650

 

164.0

 

174.3

 

391

 

10.0

 

11.6

 

11.6

 

ML400-9164-F2

 

Wesmeg

 

650

 

143.7

 

147.8

 

391

 

3.6

 

17.3

 

17.3

 

ML400-9164-U1

 

Wesmeg

 

650

 

171.9

 

177.8

 

360

 

4.2

 

15.4

 

15.4

 

 


*Holes at the Tiriganiaq deposit use a capping factor between 100 and 400 g/t gold, based on lithologies.

 

[Meliadine Project Composite Longitudinal Section]

 

 

The conversion drill program resulted in an increase of both the indicated mineral resources and the probable mineral reserves of the Tiriganiaq deposit.  Drilling has confirmed the continuity of the mineralization in the deeper portions of the deposit.  Hole M18-2501A-W1A intersected 11.8 g/t gold over 6.8 metres at 489 metres depth (lode 1251) and hole M18-2477-W3A intersected 6.1 g/t gold over 2.8 metres at 532 metres depth (lode 1251).  These two holes were drilled close to hole M18-2438 that intersected 27.3 g/t gold over 12.8 metres

 

54


 

at 483 metres depth (now interpreted as lode 1251, previously reported in the Company’s news release dated July 25, 2018).  Approximately 400 metres to the west, in the deeper west portion of the current mineral resources, hole M18-2505-W2 intersected 9.8 g/t gold over 6.6 metres at 600 metres depth (lode 1025).

 

The Wesmeg portion of the conversion program resulted in an increase of probable mineral reserves of the Wesmeg deposit.  Hole ML400-9164-F1 intersected 11.6 g/t gold over 10.0 metres at 391 metres depth (lode 650).  Hole ML400-9164-F2 intersected 17.3 g/t gold over 3.6 metres at 391 metres depth and hole ML400-9164-U1 intersected 15.4 g/t gold over 4.2 metres at 360 metres depth; these two holes are expected to positively affect the next estimate of the lode 650 of the Wesmeg deposit.

 

Recent results from the exploration program at Tiriganiaq are located around hole M18-2441-W1 (previously reported in the Company’s news release dated July 25, 2018) that intersected 7.9 g/t gold over 3.0 metres at 711 metres depth (lode 1000), opening up a new area for exploration.  New hole M18-2471-W2A intersected 24.2 g/t gold over 2.8 metres at 642 metres depth (lode 1000), while hole M18-2471-W3B intersected 29.1 g/t gold over 3.8 metres at 626 metres depth (lode 1000).  As a result, there is a new area of inferred mineral resources in this location.

 

Another new area was discovered by exploring 300 to 500 metres west of hole M18-2471-W2A.  These intercepts (along with hole M18-2441-W1) are among the deepest reported to date at the Meliadine project, 150 to 200 metres beneath the current mineral resource envelope, in lodes 1000 and 1025.  Hole M18-2486 intersected 4.4 g/t gold over 3.4 metres at 726 metres depth (lode 1025) and 9.0 g/t gold over 2.8 metres at 730 metres depth (lode 1000).  Hole M18-2486-W1 intersected 8.0 g/t gold over 2.8 metres at 734 metres depth (lode 1025).  Hole M18-2486-W2 intersected 40.0 g/t gold over 2.8 metres at 748 metres depth (lode 1025).  This new area is expected to increase inferred mineral resources in 2019 pending additional diamond drilling.

 

In 2019 the Company plans to continue the conversion program, with 7,500 metres of drilling in the inferred mineral resources located below the mineral reserve envelope at Tiriganiaq and 5,000 metres of drilling at Wesmeg.  The 2019 exploration program has a budget of 10,000 metres of drilling to continue investigating the Tiriganiaq deposit near holes M18-2486 and M18-2471, and to test the mineralization extending at depth to the west of the deposit.

 

Some of the results presented in this news release (including holes M18-2477-W3A, M18-2486-W1 and W2, M18-2501A-W1A, M18-2505-W2, and ML400-9164-F2 and U1) were received after the closure of the Meliadine database that was used for the December 31, 2018 mineral reserve and mineral resource estimate; these results and the outcome of ongoing drilling are expected to have a positive impact on the next estimate a year from now.

 

55


 

 

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 reserves and mineral resources and the Company has approved an expansion to add an underground shaft and increase expected mill throughput by 25 percent to 2.0 mtpa.  In Sweden, the Company has a 55 percent interest in the Barsele exploration project.

 

Kittila - Record Annual Mill Throughput; Shaft Expansion Project Advancing and Drilling Continues to Expand Mineral Resources

 

The 100% owned Kittila mine in northern Finland achieved commercial production in 2009.

 

Kittila Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

462

 

394

 

Tonnes of ore milled per day

 

5,022

 

4,280

 

Gold grade (g/t)

 

3.93

 

4.32

 

Gold production (ounces)

 

49,353

 

47,746

 

Production costs per tonne (EUR)

 

70

 

83

 

Minesite costs per tonne (EUR)

 

73

 

82

 

Production costs per ounce of gold produced ($ per ounce):

 

$

738

 

$

799

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

787

 

$

796

 

 

Production costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period primarily due to higher throughput levels.  Production costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to higher gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reason described above.  Total cash costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reason described above.

 

In October 2018, a mill shutdown was performed at Kittila and was completed within 6.5 days, shorter than the scheduled period of 10 days.  Despite the scheduled shutdown, gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to strong quarterly mill throughput, partially offset by lower grades and recoveries.  The lower grade was primarily due to the mining sequence.

 

56


 

Kittila Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

1,827

 

1,685

 

Tonnes of ore milled per day

 

5,005

 

4,615

 

Gold grade (g/t)

 

3.80

 

4.15

 

Gold production (ounces)

 

188,979

 

196,938

 

Production costs per tonne (EUR)

 

73

 

78

 

Minesite costs per tonne (EUR)

 

75

 

78

 

Production costs per ounce of gold produced ($ per ounce):

 

$

831

 

$

753

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

853

 

$

753

 

 

Production costs per tonne for the full year 2018 decreased when compared to the prior-year period due to higher throughput levels.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to higher underground development costs, higher milling and re-handling costs and lower gold production, partially offset by the timing of inventory.

 

Minesite costs per tonne for the full year 2018 decreased when compared to the prior-year period due to higher throughput levels.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to higher underground development costs, higher milling and re-handling costs and lower gold production.

 

Gold production for the full year 2018 decreased when compared to the prior-year period due to lower grades and recoveries.

 

In February 2018, the Company’s Board of Directors approved an expansion to increase throughput rates at Kittila to 2.0 mtpa from the current rate of 1.6 mtpa.  This expansion includes the construction of a 1,044-metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades over a period from 2018 to 2021.

 

The expansion project is expected to increase the efficiency of the mine and decrease or maintain current operating costs while providing access to the deeper mining horizons.  In addition, the shaft is expected to provide access to the mineral resources located below 1,150 metres depth, where recent exploration programs have shown promising results.

 

The mill expansion is advancing as planned.  Phase 1 construction work was completed in the fourth quarter of 2018.  The shaft project continues to progress with detailed engineering started.  Shaft slashing was delayed during the fourth quarter of 2018 as result of contractor availability and late regulatory approval.  Shaft slashing began in January 2019 and construction of the head frame is expected to begin in the third quarter of 2019.

 

A mill shutdown is currently scheduled to take place in the second quarter of 2019 for a 60-day period to allow for autoclave relining.

 

57


 

Drilling Continues to Infill and Expand the Roura Main Zone and Sisar Top and Central Areas

 

As a result of a pre-feasibility study completed in 2018, the mineral reserves estimate for Kittila as of December 31, 2018 increased to 4.4 million ounces of gold (30.5 million tonnes grading 4.50 g/t gold), while the measured and indicated mineral resources estimate has decreased to 1.6 million ounces of gold (18.8 million tonnes grading 2.64 g/t gold) and the inferred mineral resources estimate has decreased to 1.0 million ounces of gold (8.3 million tonnes grading 3.84 g/t gold).  For more details, see the description of the Company’s new mineral resources estimate earlier in this news release.

 

In the fourth quarter of 2018, exploration drilling at the Kittila mine continued with 21 holes (8,089 metres) drilled in the Roura area.  Drilling targeted the Main Zone and the Sisar lens.  Sisar is subparallel to and slightly east of the main Kittila mineralization.

 

Selected recent drill results from the Kittila mine are set out in the table below.  The drill-hole collar coordinates are set out in a table in the Appendix to this news release.  The pierce points are shown on the Kittila Composite Longitudinal Section.  All intercepts reported for the Kittila mine show uncapped gold 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 and Roura zones at the Kittila mine

 

Drill hole

 

Zone

 

From
(metres)

 

To (metres)

 

Depth of mid-
point below
surface
(metres)

 

Estimated
true width
(metres)

 

Gold grade (g/t)
(uncapped)*

 

ROD18-700F

 

Main - Roura

 

668.0

 

687.0

 

1,328

 

3.4

 

10.3

 

ROD18-701

 

Main - Roura

 

341.0

 

359.0

 

961

 

6.8

 

5.7

 

and

 

Main - Roura

 

367.9

 

376.2

 

978

 

3.3

 

6.5

 

ROD18-701B

 

Main - Roura

 

349.0

 

366.0

 

969

 

6.2

 

6.1

 

and

 

Main - Roura

 

371.0

 

402.0

 

991

 

11.2

 

8.4

 

ROD18-701C

 

Main - Roura

 

362.0

 

378.0

 

981

 

5.7

 

6.3

 

and

 

Sisar Central

 

615.0

 

627.3

 

1,176

 

4.2

 

10.4

 

ROU18-623

 

Main - Roura

 

208.0

 

224.0

 

1,104

 

9.7

 

5.2

 

and

 

Main - Roura

 

230.0

 

239.0

 

1,114

 

5.5

 

4.4

 

ROU18-625

 

Main - Roura

 

128.0

 

135.0

 

987

 

6.1

 

4.4

 

ROU18-632

 

Sisar Top

 

158.5

 

165.5

 

957

 

6.9

 

3.5

 

and

 

Sisar Top

 

182.0

 

189.2

 

955

 

7.0

 

5.1

 

and

 

Sisar Top

 

195.0

 

202.0

 

954

 

6.8

 

3.8

 

 


*Holes at Kittila have uncapped gold grades

 

58


 

[Kittla Composite Longitudinal Section]

 

 

Recent intercepts have confirmed the Main Zone and the Sisar Top Zone mineral reserves and mineral resources in the northern part of the Roura area, between approximately 950 and 1,120 metres depth.  Drilling targeted the Roura-Rimpi gap area in the Main Zone and Sisar lens.

 

In the Main Zone, exploration hole ROU18-623 had two intercepts close to each other, 5.2 g/t gold over 9.7 metres at 1,104 metres depth and 4.4 g/t gold over 5.5 metres at 1,114 metres depth.  In the same area, exploration hole ROU18-625 intersected 4.4 g/t gold over 6.1 metres at 987 metres depth.  These intercepts confirm the Main Zone in the Roura-Rimpi gap area.

 

Approximately 90 metres to the north of the drill holes described above, an almost horizontal drill hole (hole ROU18-632) had three intercepts in the Sisar Top Zone, including 5.1 g/t gold over 7.0 metres at 955 metres depth.

 

Deep drilling of the Roura area continues from the exploration ramp with two high-capacity drill rigs, approximately 500 to 700 metres to the south of the drill holes described above.  Recent intercepts from Roura have confirmed both the Main Zone and the Sisar Zone mineral reserves and mineral resources in the area between 900 and 1,400 metres depths.  Most of the recent mineral reserve increase has come in the Roura Deep area between 1,100 and 1,400 metres depth.  Hole ROD18-701B cut the Main Zone in two closely-spaced intercepts: 6.1 g/t gold over 6.2 metres at 969 metres depth and 8.4 g/t gold over 11.2 metres at 991 metres depth.  In the same area, the Main Zone was intersected by hole ROD18-701C yielding 6.3 g/t gold over 5.7 metres at 981 metres depth; the same hole intersected the Sisar Central Zone at greater depth yielding 10.4 g/t gold over 4.2 metres at 1,176 metres depth.  Approximately 100 metres to the north of and well below these intercepts, hole ROD18-700F intersected the Main Zone yielding 10.3 g/t gold over 3.4 metres at 1,328 metres depth.

 

59


 

The assay results of hole ROD18-700F were received after the closure of the Kittila database that was used for the December 31, 2018 mineral reserve and mineral resource estimate; this intercept and the outcome of ongoing drilling are expected to have a positive impact on the next estimate a year from now.

 

The 2019 exploration program is budgeted at $9.0 million including 34,000 metres of drilling, focused on the Roura and Rimpi Main Zones and the Sisar Zone.

 

SOUTHERN BUSINESS REVIEW

 

Agnico Eagle’s Southern Business operations are focused in Mexico.  These operations have been a solid source of precious metals production (gold and silver) with stable operating costs and strong free cash flow since 2009.

 

Pinos Altos - Underground Development Continues at the Sinter and Cubiro Satellite Deposits; Commissioning of the Ore Sorting Pilot Plant Now Underway

 

The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.

 

Pinos Altos Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore processed (thousands of tonnes)

 

588

 

548

 

Tonnes of ore processed per day

 

6,391

 

5,957

 

Gold grade (g/t)

 

2.77

 

2.45

 

Gold production (ounces)

 

49,170

 

40,406

 

Production costs per tonne

 

$

60

 

$

56

 

Minesite costs per tonne

 

$

59

 

$

54

 

Production costs per ounce of gold produced ($ per ounce):

 

$

716

 

$

761

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

518

 

$

485

 

 

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period primarily due to higher costs associated with underground mining, partially offset by higher throughput and the timing of inventory.  Production costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher costs associated with underground mining.

 

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above and lower by-product revenues.

 

60


 

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher grades and higher throughput.

 

Pinos Altos Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore processed (thousands of tonnes)

 

2,218

 

2,308

 

Tonnes of ore processed per day

 

6,077

 

6,323

 

Gold grade (g/t)

 

2.69

 

2.62

 

Gold production (ounces)

 

181,057

 

180,859

 

Production costs per tonne

 

$

62

 

$

47

 

Minesite costs per tonne

 

$

61

 

$

50

 

Production costs per ounce of gold produced ($ per ounce):

 

$

764

 

$

601

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

548

 

$

395

 

 

Production costs per tonne for the full year 2018 increased when compared to the prior-year period due to lower throughput levels, higher costs associated with underground mining and the timing of unsold inventory.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

 

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above and lower by-product revenue.

 

Gold production for the full year 2018 increased when compared to the prior-year period due to higher grades, partially offset by lower throughput.

 

In 2018, Pinos Altos transitioned into a predominantly underground mining operation, with higher associated costs.  The development of satellite deposits provides an opportunity to lower unit costs by filling available capacity at the processing and heap leaching facility.  Optimization opportunities are also being studied to reduce unit costs.

 

Development projects at the Sinter and Cubiro satellite deposits at Pinos Altos continued to advance in the fourth quarter of 2018.  The Sinter deposit, located approximately 2.0 kilometres northwest of the Pinos Altos mine, will be mined from underground and a small open pit.  At Sinter, 757 metres of underground development had been completed by year-end 2018, and mineral resource conversion and expansion drilling is expected to begin in the first quarter of 2019.

 

At the Cubiro deposit, located approximately 9.2 kilometres northwest of the Pinos Altos mine, which could potentially supply high-grade ore to the Pinos Altos processing facilities, 300 metres of underground ramp development had been completed at the end of the fourth quarter of 2018.  Underground exploration and mineral resource conversion drilling are expected to commence later in 2019.

 

61


 

In the fourth quarter of 2018, the Company completed the installation of an ore sorting pilot plant at Pinos Altos.  The goal of this plant is to improve feed grades to the processing facilities.  Commissioning activities commenced in January 2019 and testing is expected to continue for approximately six months.  Over this period, samples will be processed from all of the ore bodies at Pinos Altos and La India to determine the merits of implementing the technology at the Company’s Mexican operations.  Similar ore sorting pilot testing is being considered at the Company’s other operating regions.

 

Creston Mascota - Mining Activities Expected to be Completed at the Bravo Deposit in the Fourth Quarter of 2019; Leaching to Continue into 2020

 

The Creston Mascota heap leach open pit mine has been operating as a satellite operation to the Pinos Altos mine since late 2010.  During 2018, the mine has been preparing to transition operations to the new Bravo pit and expanding the existing heap leach pad facility.  Open pit reserves are expected to be depleted in the fourth quarter of 2019 while gold leaching is expected to continue through 2020.

 

Creston Mascota Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore processed (thousands of tonnes)

 

383

 

558

 

Tonnes of ore processed per day

 

4,163

 

6,065

 

Gold grade (g/t)

 

1.97

 

1.08

 

Gold production (ounces)

 

11,452

 

14,012

 

Production costs per tonne

 

$

24

 

$

17

 

Minesite costs per tonne

 

$

25

 

$

17

 

Production costs per ounce of gold produced ($ per ounce):

 

$

792

 

$

665

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

736

 

$

591

 

 

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to lower tonnes processed and have also been affected by longer hauling distances.  Production costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above and lower gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to lower by-product revenue and the reasons described above.

 

Gold production in the fourth quarter of 2018 decreased when compared to the prior-year period due to lower tonnes processed, partially offset by higher grades.

 

62


 

Creston Mascota Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore processed (thousands of tonnes)

 

1,422

 

2,196

 

Tonnes of ore processed per day

 

3,896

 

6,016

 

Gold grade (g/t)

 

1.03

 

1.23

 

Gold production (ounces)

 

40,180

 

48,384

 

Production costs per tonne

 

$

26

 

$

14

 

Minesite costs per tonne

 

$

27

 

$

15

 

Production costs per ounce of gold produced ($ per ounce):

 

$

928

 

$

651

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

841

 

$

575

 

 

Production costs per tonne for the full year 2018 increased when compared to the prior-year period due to lower tonnes processed and the timing of unsold inventory, and have also been affected by longer hauling distances.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to lower gold production and the reasons described above.

 

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to reasons described above.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

 

Gold production for the full year 2018 decreased when compared to the prior-year period due to lower tonnes processed at lower grades which was as a result of delays in accessing the main Bravo pit during the year.

 

In the fourth quarter of 2018, the Phase V heap leach pad expansion was completed, and the Calera waste rock dump was developed close to the Bravo pit to reduce waste haulage costs.  The Company is evaluating the viability of processing higher grade ore from the Bravo deposit at the Pinos Altos mill to improve recoveries and generate additional cash flow.

 

La India - Initial Mineral Reserves Declared at El Realito, and Drilling Continues to Expand the Chipriona Deposit

 

The La India mine in Sonora, Mexico, located approximately 70 kilometres northwest of the Company’s Pinos Altos mine, achieved commercial production in February 2014.

 

63


 

La India Mine - Operating Statistics

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore processed (thousands of tonnes)

 

1,451

 

1,692

 

Tonnes of ore processed per day

 

15,772

 

18,391

 

Gold grade (g/t)

 

0.73

 

0.70

 

Gold production (ounces)

 

26,308

 

25,500

 

Production costs per tonne

 

$

12

 

$

10

 

Minesite costs per tonne

 

$

13

 

$

11

 

Production costs per ounce of gold produced ($ per ounce):

 

$

677

 

$

669

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

694

 

$

678

 

 

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to lower tonnes processed and the timing of unsold inventory.  Production costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the timing of unsold inventory, partially offset by higher gold production.

 

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due the reasons described above and to lower by-product revenue.

 

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher grades and plant optimizations.

 

La India Mine - Operating Statistics

 

 

 

Year Ended

 

Year Ended

 

 

 

December 31, 2018

 

December 31, 2017

 

Tonnes of ore milled (thousands of tonnes)

 

6,128

 

5,965

 

Tonnes of ore milled per day

 

16,789

 

16,342

 

Gold grade (g/t)

 

0.72

 

0.69

 

Gold production (ounces)

 

101,357

 

101,150

 

Production costs per tonne

 

$

11

 

$

10

 

Minesite costs per tonne

 

$

12

 

$

11

 

Production costs per ounce of gold produced ($ per ounce):

 

$

682

 

$

604

 

Total cash costs per ounce of gold produced ($ per ounce):

 

$

685

 

$

580

 

 

Production costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period primarily due to increased heap leach costs resulting from a higher consumption of reagents and general materials.

 

Minesite costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2018 increased when

 

64


 

compared to the prior-year period primarily due to increased heap leach costs resulting from a higher consumption of reagents and general materials and lower by-product revenues.

 

Gold production for the full year 2018 increased when compared to the prior-year period primarily due to higher tonnes processed and higher grades.

 

An initial mineral reserve of 84,000 ounces of gold and 418,000 ounces of silver (3.3 million tonnes grading 0.80 g/t gold and 3.96 g/t silver) was declared at the El Realito deposit.

 

Detailed engineering regarding the heap leach expansion was completed in November, and earthworks were started in December.  Liner installation is currently underway with completion expected in April 2019.

 

Studies are underway to optimize the crushing circuit with a goal of potentially increasing capacity from 16,000 to 17,000 tonnes-per-day.

 

La India Regional Exploration Focused on Chipriona Zone

 

Regional exploration at the La India property in the fourth quarter of 2018 included drilling at the Chipriona regional target as well as in other areas such as the Tarachi corridor in the north of the property, the Los Andes prospect adjacent to the El Realito deposit, and the Los Pinos Zone to the west of the mine.  In the fourth quarter of 2018, Chipriona drilling totalled six holes (1,878 metres).  For the full-year 2018, Chipriona drilling totalled 34 holes (10,528 metres) with the aim of better understanding the geometry of the mineralized veins along the Chipriona corridor.

 

The 2018 drill program concluded in October, and the results were used to estimate an initial mineral resource for the deposit.  As of December 31, 2018, the Chipriona deposit has inferred mineral resources of 160,000 ounces of gold, 18.3 million ounces of silver, 11,800 tonnes of copper and 50,400 tonnes of zinc (6.4 million tonnes grading 0.78 g/t gold, 89.6 g/t silver, 0.20% copper and 0.79% zinc).  Drill results for the Chipriona target were last reported in the Company’s news release dated October 24, 2018.

 

Selected recent intercepts from the La India property are set out in the table below.  The drill-hole collar coordinates are set out in a table in the Appendix of this news release.  The collars are located on the La India Mine Local Geology Map.  All intercepts reported for the La India property show uncapped and capped gold and silver grades over estimated true widths, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling.  The gold and silver grades reported at the Chipriona target are uncapped and capped.

 

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Recent exploration drill results from the Chipriona target at the La India property

 

Drill Hole

 

Vein

 

From
(metres)

 

To
(metres)

 

Depth of
mid-
point
below
surface
(metres)

 

Estimated
true width
(metres)

 

Gold grade
(g/t)
(uncapped)

 

Gold grade
(g/t)
(capped)*

 

Silver
grade (g/t)
(uncapped)

 

Silver
grade (g/t)
(capped)*

 

CHP18-063

 

Jessica

 

89.0

 

121.0

 

52

 

29.0

 

0.7

 

0.7

 

16

 

16

 

including

 

 

 

105.0

 

111.0

 

52

 

5.0

 

2.1

 

2.1

 

41

 

41

 

CHP18-067

 

Jessica

 

147.0

 

231.0

 

87

 

76.0

 

1.2

 

1.2

 

102

 

94

 

including

 

 

 

169.0

 

199.0

 

84

 

21.0

 

2.8

 

2.8

 

225

 

205

 

CHP18-068

 

Chipriona

 

63.2

 

71.2

 

68

 

7.0

 

0.5

 

0.5

 

97

 

97

 

including

 

 

 

66.2

 

71.2

 

67

 

4.0

 

0.8

 

0.8

 

149

 

149

 

CHP18-069

 

HQV

 

295.0

 

315.0

 

247

 

19.0

 

0.5

 

0.5

 

13

 

13

 

CHP18-071

 

ST BX VN / Jessica

 

10.0

 

97.0

 

40

 

82.0

 

1.0

 

0.9

 

41

 

40

 

including

 

ST BX

 

10.0

 

34.0

 

24

 

23.0

 

1.6

 

1.2

 

86

 

84

 

and including

 

Jessica

 

44.0

 

70.0

 

41

 

24.0

 

1.4

 

1.4

 

38

 

38

 

 


*Holes at Chipriona use a capping factor of 10 g/t gold and 700 g/t silver.

 

[La India Local Geology Map]

 

 

The Chipriona satellite target is located approximately one kilometre north of the North Zone at the La India mine.  Agnico Eagle acquired its 100% interest in the Chipriona property in December 2016.  Mineralization at Chipriona consists of what appears to be structurally controlled gold- and silver-rich veins, stringers and breccias with significant zinc, lead and copper content in sulphides.  Preliminary metallurgical testing is being conducted to determine the potential processing and cut-off grades for this type of mineralization.

 

Surface mapping and sampling have traced stacked structures within the Chipriona mineralized corridor, which has a width ranging from tens of metres to a few hundred metres over a northwest strike length of at least 2,000 metres; 1,800 metres of this length has been

 

66


 

confirmed through drill-testing.  Mineralization has been intersected from surface to a depth of approximately 270 metres.  The project hosts a swarm of parallel and subparallel structural pathways that are favourable hosts for sulphide-based gold-silver mineralization with base metal credits.  Significant mineralization has been intersected near surface over substantial widths; this suggests the potential for bulk mining lower-grade mineralization in stockwork zones that surround high-grade feeder zones.

 

Results from the latest drilling program have demonstrated the continuity of mineralization in the main veins identified in 2017, as well as the consistency in thickness of the individual veins in the corridor.  Veins seem to coalesce towards the southeast and depth.  Currently, the mineralization is open towards the southeast and down dip.  All of the results presented in this news release are part of the database that was used for the December 31, 2018 mineral resource estimate.  The gold and silver grades reported at Chipriona are uncapped and capped over estimated true widths.

 

In the eastern portion of the Chipriona target, drill hole CHP18-067 intersected the Jessica vein, yielding 1.2 g/t gold and 94 g/t silver over 76.0 metres at a depth of 87 metres, including 2.8 g/t gold and 205 g/t silver over 21.0 metres.  Almost 400 metres to the northwest, drill hole CHP18-071 intersected the Jessica and ST BX veins, yielding 0.9 g/t gold and 40 g/t silver over 82 metres at a depth of 40 metres including 1.2 g/t gold and 84 g/t silver over 23 metres and 1.4 g/t gold and 38 g/t silver over 24.0 metres at a depth of 41 metres.  Between these two drill holes, hole CHP18-063 intersected the Jessica vein, yielding 2.1 g/t gold and 41 g/t silver over 5.0 metres at 52 metres depth.  These intersections open the potential for additional mineralization to the southeast at greater depths, as the mineralization seems to plunge in this direction.

 

A 2019 drill program (5,000 metres) is already underway at the Chipriona deposit.  The first phase of drilling, which started in early January, consists of step-out drill holes aimed at extending the mineralization towards the southeast and down dip.

 

Santa Gertrudis - Initial Mineral Resource Estimate, Exploration Reveals High-Grade Mineralization and Potential for Growth

 

Agnico Eagle acquired its 100% interest in the Santa Gertrudis gold property in November 2017.  The 44,145-hectare property is located approximately 180 kilometres north of Hermosillo in Sonora, Mexico.

 

The property was the site of historic heap-leach operations that produced approximately 565,000 ounces of gold at a grade of 2.1 g/t gold between 1991 and 2000.  The project also has a substantial surface infrastructure already in place including pre-stripped pits, haul roads, water sources and buildings.

 

Three corridors with favourable geological formations with a potential strike length of 18 kilometres have been identified on the property.  Within the corridors there are nine mineralized zones with multiple deposits; limited drilling has been done between the

 

67


 

deposits.  In addition, the Company’s prospecting identified high-grade mineralization along northeast-trending structures.

 

Drill results for the Santa Gertrudis project were last reported in the Company’s news release dated October 24, 2018.  This news release presents the drill results from the fourth quarter of 2018 using portable and skid-mounted drill rigs, with the purpose of expanding the deposits and exploring new concepts.

 

In the fourth quarter of 2018, there were 54 holes (9,520 metres) mainly in the Cristina, Toro, Trinidad, Viviana, Greta and Corral zones.  This drilling focused on exploration for new mineral resources.  The full-year 2018 exploration program totalled 193 holes (31,127 metres).

 

The 2018 confirmation and exploration drill program as well as studies have led to the Company’s initial mineral resource estimate for the Santa Gertrudis project of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold) in inferred mineral resources as of December 31, 2018.

 

Selected recent intercepts from the Santa Gertrudis project are set out in the table below.  The drill hole coordinates are set out in a table in the Appendix of this news release.  The drill hole collars are also shown on the Santa Gertrudis Project Local Geology Map.  All intercepts reported for the Santa Gertrudis project show uncapped and capped gold grades over an estimated true width, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling.

 

Selected recent exploration drill results from the Santa Gertrudis project

 

Drill Hole

 

Zone

 

From
(metres)

 

To (metres)

 

Depth of
mid-point
below
surface
(metres)

 

Estimated true
width (metres)

 

Gold grade
(g/t)
(uncapped)

 

Gold grade
(g/t)
capped)*

 

SGE18-132

 

Greta

 

99.0

 

104.4

 

99

 

5.1

 

30.2

 

12.1

 

SGE18-143

 

Greta

 

45.9

 

55.0

 

26

 

8.9

 

5.1

 

5.1

 

SGE18-146

 

Viviana

 

77.0

 

92.0

 

45

 

14.9

 

3.2

 

3.2

 

SGE18-150

 

Viviana

 

60.0

 

75.0

 

33

 

15.0

 

11.8

 

9.7

 

SGE18-161

 

Cristina

 

77.0

 

105.0

 

89

 

26.0

 

0.4

 

0.4

 

SGE18-167

 

Corral

 

130.0

 

137.3

 

129

 

6.6

 

2.4

 

2.4

 

SGE18-169

 

Corral

 

94.7

 

110.0

 

88

 

14.8

 

0.5

 

0.5

 

SGE18-172

 

Trinidad

 

158.0

 

168.0

 

123

 

9.2

 

2.3

 

2.3

 

SGE18-177

 

Trinidad

 

58.0

 

66.0

 

64

 

6.7

 

1.3

 

1.3

 

SGE18-183

 

Toro

 

204.0

 

208.0

 

175

 

3.6

 

3.3

 

3.3

 

SGE18-185

 

Toro

 

171.0

 

180.0

 

89

 

8.6

 

0.9

 

0.9

 

 


*Holes at Santa Gertrudis use a capping factor of 5 g/t gold at the Cristina Zone and 25 g/t gold at all other zones.  The cut-off grade for these intervals is 0.3 g/t gold.

 

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[Santa Gertrudis Project Local Geology Map]

 

 

Recent assay results from the Greta and Viviana zones have confirmed that high-grade mineralization can be extended along structurally-controlled feeders.  Drilling also discovered a gold zone 300 metres north of the Cristina deposit along the same zone, illustrating that individual zones are continuing to grow.

 

Recent exploration drilling has discovered additional high-grade mineralization in the Greta Zone.  Drilling in 2018 extended the historical deposit, expanding 40 metres deeper and 150 metres to the southwest, where hole SGE18-132 intersected 12.1 g/t gold over 5.1 metres at 99 metres depth.  Approximately 145 metres to the northeast, hole SGE18-143 intersected 5.1 g/t gold over 8.9 metres at 26 metres depth.

 

In the Viviana Zone, approximately 11 kilometres northwest of the Greta Zone, hole SGE18-150 intersected 9.7 g/t gold over 15.0 metres at 33 metres depth; approximately 40 metres to the northwest, hole SGE18-146 intersected 3.2 g/t gold over 14.9 metres at 45 metres depth.  The two intercepts are below an historic small pit.  Historic holes and the Company’s 2018 drilling provided sufficient information to estimate a new inferred mineral resource of 34,500 ounces of gold (652,000 tonnes grading 1.65 g/t gold) at Viviana.

 

Along the Cristina Zone, approximately seven kilometres west of the Greta Zone, exploration drilling has discovered a new zone located 300 metres northwest of the Cristina deposit with similar characteristics.  Recent results include hole SGE18-161 that intersected 0.4 g/t gold over 26.0 metres at 89 metres depth.  This discovery may significantly increase the mineralized volume in the Cristina Zone.

 

Midway between the Viviana Zone and the Greta Zone, drilling in the Corral Zone has extended mineralization outside the current mineral resource outline.  Recent results include hole SGE18-167 that intersected 2.4 g/t gold over 6.6 metres at 129 metres depth, or 80 metres below the current mineral resource.

 

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Approximately two kilometres north-northeast of Viviana, exploration has successfully tested two northeast extensions of the Trinidad Zone including hole SGE18-172 that intersected 2.3 g/t gold over 9.2 metres at 123 metres depth.

 

The Toro Zone, 1.7 kilometres southeast of Viviana, is estimated to contain 126,500 ounces of gold (3.5 million tonnes grading 1.14 g/t gold) in inferred mineral resources, with the potential for this amount to increase.  Hole SGE18-183 intersected 3.3 g/t gold over 3.6 metres at 175 metres depth, 80 metres beneath the current mineral resources cone.

 

Some of the results presented in this news release (including holes SGE18-172, SGE18-177, SGE18-183 and SGE18-185) were received after the closure of the Santa Gertrudis database that was used for the December 31, 2018 mineral resource estimate; these results and the outcome of ongoing drilling are expected to have a positive impact on the next estimate a year from now.

 

The 2019 exploration program at Santa Gertrudis is budgeted at $8.2 million, including 29,000 metres of drilling focused on expanding the mineral resource and exploring new targets to be outlined by a target-generation initiative.

 

The Company is currently evaluating a potential production scenario at Santa Gertrudis that utilizes a heap leach for lower grade mineralization and a small mill facility to process higher-grade ore.  The Company believes that the Santa Gertrudis project has the potential to be a similar size operation to La India.

 

El Barqueno - Carrying Value of the Property Reduced, Minimal Exploration Planned in 2019

 

Agnico Eagle acquired its 100% interest in the El Barqueno project in November 2014.  The 79,746-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.

 

El Barqueno is estimated to contain 318,000 ounces of gold and 1.2 million ounces of silver in indicated mineral resources (8.1 million tonnes grading 1.22 g/t gold and 4.63 g/t silver) and 322,000 ounces of gold and 4.6 million ounces of silver in inferred mineral resources (8.2 million tonnes grading 1.22 g/t gold and 17.45 g/t silver).

 

In 2018, 28,000 metres of drilling was completed at the El Barqueno project, with a principal focus on testing new target areas.  Although the El Barqueno project continues to have geological potential, current development studies indicate that the project does not meet the Company’s investment criteria.  As a result, the carrying value of the property has been reduced while exploration activity continues in 2019.

 

70


 

About Agnico Eagle

 

Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957.  Its operating 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 (before 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 this measure 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.

 

All-in sustaining costs per ounce of gold produced on a by-product basis are calculated as the aggregate of total cash costs on a by-product basis, sustaining capital expenditures

 

71


 

(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 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 net income 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

 

72


 

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 February 14, 2019.  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, recovery rates, 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, cash flows and free cash flow; the estimated timing and conclusions of technical studies and evaluations; the methods by which ore will be extracted or processed; statements concerning the Company’s plans to build operations at Meliadine, Amaruq and Akasaba West and the Company’s expansion plans at Kittila, including the timing, funding, completion and commissioning thereof; statements concerning other expansion projects, recovery rates, mill throughput, optimization and projected exploration , including costs and other estimates upon which such projections are based; statements regarding timing and amounts of capital expenditures and other expenditures; estimates of future mineral reserves, mineral resources, mineral production, optimization efforts and sales; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; future dividend amounts and payment dates; 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 and the effect of drill results on future mineral reserves and mineral resources; statements regarding the Company’s ability to obtain the necessary permits and authorizations in connection with its proposed or current 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; 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; and statements regarding the outcome of discussions with First Nations groups.  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

 

73


 

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, 2017 filed with Canadian securities regulators and that are included in its Annual Report on Form 40-F for the year ended December 31, 2017 (“Form 40-F”) filed with 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; seismic activity at the Company’s operations at LaRonde, which reach more than three kilometres below the surface where there are few resources available to model the geomechanical conditions, is as expected by the Company; 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; seismic activity at the Company’s operations, including the LaRonde mine; mining risks; community protests, including by First Nations groups; 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.

 

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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 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 Marc Legault, Eng., Senior Vice President, Operations - U.S.A. & Latin America; 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 whom is a “Qualified Person” for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”).

 

The scientific and technical information relating to Agnico Eagle’s mineral reserves and mineral resources contained herein (other than the Canadian Malartic mine) has been approved by Daniel Doucet, Eng., Senior Corporate Director, Reserve Development; relating to mineral reserves at the Canadian Malartic mine, has been approved by Sylvie Lampron, Eng., Senior Project Mine Engineer at Canadian Malartic Corporation; and relating to mineral resources at the Canadian Malartic mine and the Odyssey and East Malartic projects, has been approved by Pascal Lehouiller, P. Geo., Senior Resource Geologist at Canadian Malartic Corporation, each of whom is a “Qualified Person” for the purposes of NI 43-101.

 

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Detailed Mineral Reserves and Mineral Resources Data

 

 

 

 

 

MINERAL RESERVES

 

 

 

 

 

As of December 31, 2018

 

OPERATION

 

 

 

 

 

PROVEN

 

PROBABLE

 

PROVEN & PROBABLE

 

GOLD

 

Mining Method

 

Ownership

 

000 Tonnes

 

g/t

 

000 Oz Au

 

000 Tonnes

 

g/t

 

000 Oz Au

 

000 Tonnes

 

g/t

 

000 Oz Au

 

LaRonde

 

Underground

 

100

%

4,817

 

4.87

 

754

 

11,561

 

6.26

 

2,327

 

16,378

 

5.85

 

3,081

 

LaRonde Zone 5

 

Underground

 

100

%

4,053

 

2.03

 

264

 

5,377

 

2.41

 

417

 

9,430

 

2.25

 

681

 

Canadian Malartic

 

Open Pit

 

50

%

23,029

 

0.89

 

658

 

55,799

 

1.18

 

2,122

 

78,828

 

1.10

 

2,780

 

Goldex

 

Underground

 

100

%

207

 

2.06

 

14

 

18,717

 

1.58

 

949

 

18,925

 

1.58

 

962

 

Akasaba West

 

Open Pit

 

100

%

 

 

 

 

5,432

 

0.84

 

147

 

5,432

 

0.84

 

147

 

Lapa

 

Underground

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Meadowbank

 

Open Pit

 

100

%

1,141

 

1.57

 

58

 

464

 

2.68

 

40

 

1,605

 

1.89

 

98

 

Amaruq

 

Open Pit

 

100

%

89

 

3.15

 

9

 

24,852

 

3.60

 

2,873

 

24,941

 

3.59

 

2,882

 

Meadowbank Complex Total

 

 

 

 

 

1,230

 

1.68

 

67

 

25,315

 

3.58

 

2,913

 

26,546

 

3.49

 

2,979

 

Meliadine

 

Open Pit

 

100

%

150

 

5.67

 

27

 

3,552

 

5.52

 

630

 

3,702

 

5.52

 

657

 

Meliadine

 

Underground

 

100

%

 

 

 

 

13,033

 

7.39

 

3,095

 

13,033

 

7.39

 

3,095

 

Meliadine Total

 

 

 

 

 

150

 

5.67

 

27

 

16,585

 

6.99

 

3,725

 

16,736

 

6.97

 

3,753

 

Upper Beaver

 

Underground

 

100

%

 

 

 

 

7,992

 

5.43

 

1,395

 

7,992

 

5.43

 

1,395

 

Kittila

 

Underground

 

100

%

491

 

4.12

 

65

 

30,040

 

4.50

 

4,349

 

30,531

 

4.50

 

4,414

 

Pinos Altos

 

Open Pit

 

100

%

9

 

0.39

 

0

 

4,056

 

0.95

 

123

 

4,066

 

0.94

 

123

 

Pinos Altos

 

Underground

 

100

%

4,772

 

2.71

 

416

 

8,266

 

2.43

 

645

 

13,039

 

2.53

 

1,061

 

Pinos Altos Total

 

 

 

 

 

4,782

 

2.70

 

416

 

12,323

 

1.94

 

769

 

17,104

 

2.15

 

1,184

 

Creston Mascota

 

Open Pit

 

100

%

 

 

 

 

1,434

 

1.77

 

82

 

1,434

 

1.77

 

82

 

La India

 

Open Pit

 

100

%

228

 

0.49

 

4

 

24,256

 

0.74

 

577

 

24,484

 

0.74

 

581

 

Totals

 

Totals

 

 

 

38,987

 

1.81

 

2,268

 

214,833

 

2.86

 

19,771

 

253,820

 

2.70

 

22,039

 

 

SILVER

 

Mining Method

 

Ownership

 

000 Tonnes

 

g/t

 

000 Oz Ag

 

000 Tonnes

 

g/t

 

000 Oz Ag

 

000 Tonnes

 

g/t

 

000 Oz Ag

 

LaRonde

 

Underground

 

100

%

4,817

 

14.63

 

2,265

 

11,561

 

19.72

 

7,331

 

16,378

 

18.22

 

9,597

 

Pinos Altos

 

Open Pit

 

100

%

9

 

138.55

 

42

 

4,056

 

25.01

 

3,262

 

4,066

 

25.28

 

3,304

 

Pinos Altos

 

Underground

 

100

%

4,772

 

63.21

 

9,698

 

8,266

 

65.91

 

17,517

 

13,039

 

64.92

 

27,215

 

Pinos Altos Total

 

subtotal

 

 

 

4,782

 

63.36

 

9,740

 

12,323

 

52.45

 

20,779

 

17,104

 

55.50

 

30,519

 

Creston Mascota

 

Open Pit

 

100

%

 

 

 

 

1,434

 

40.89

 

1,886

 

1,434

 

40.89

 

1,886

 

La India

 

Open Pit

 

100

%

228

 

3.73

 

27

 

24,256

 

2.54

 

1,981

 

24,484

 

2.55

 

2,008

 

Totals

 

Totals

 

 

 

9,826

 

38.09

 

12,032

 

49,575

 

20.06

 

31,977

 

59,401

 

23.04

 

44,010

 

 

COPPER

 

Mining Method

 

Ownership

 

000 Tonnes

 

%

 

tonnes Cu

 

000 Tonnes

 

%

 

tonnes Cu

 

000 Tonnes

 

%

 

tonnes Cu

 

LaRonde

 

Underground

 

100

%

4,817

 

0.20

 

9,874

 

11,561

 

0.28

 

32,877

 

16,378

 

0.26

 

42,751

 

Akasaba West

 

Open Pit

 

100

%

 

 

 

 

5,432

 

0.48

 

25,832

 

5,432

 

0.48

 

25,832

 

Upper Beaver

 

Underground

 

100

%

 

 

 

 

7,992

 

0.25

 

19,980

 

7,992

 

0.25

 

19,980

 

Totals

 

Totals

 

 

 

4,817

 

0.20

 

9,874

 

24,985

 

0.31

 

78,689

 

29,802

 

0.30

 

88,563

 

 

ZINC

 

Mining Method

 

Ownership

 

000 Tonnes

 

%

 

tonnes Zn

 

000 Tonnes

 

%

 

tonnes Zn

 

000 Tonnes

 

%

 

tonnes Zn

 

LaRonde

 

Underground

 

100

%

4,817

 

0.54

 

25,797

 

11,561

 

0.99

 

114,430

 

16,378

 

0.86

 

140,226

 

Totals

 

Totals

 

 

 

4,817

 

0.54

 

25,797

 

11,561

 

0.99

 

114,430

 

16,378

 

0.86

 

140,226

 

 

76


 

 

 

 

 

 

 

MINERAL RESOURCES

 

 

 

 

 

 

 

As of December 31, 2018

 

OPERATION

 

 

 

 

 

MEASURED

 

INDICATED

 

MEASURED & INDICATED

 

INFERRED

 

GOLD

 

Mining Method

  

Ownership

  

000 Tonnes

  

g/t

  

000 Oz Au

  

000 Tonnes

  

g/t

  

000 Oz Au

  

000 Tonnes

  

g/t

  

000 Oz Au

  

000 Tonnes

  

g/t

  

000 Oz Au

 

LaRonde

 

Underground

 

100

%

 

 

 

 

4,872

 

3.25

 

509

 

4,872

 

3.25

 

509

 

5,494

  

4.95

 

874

 

LaRonde Zone 5

 

Underground

 

100

%

 

 

 

 

6,796

 

2.34

 

510

 

6,796

 

2.34

 

510

 

2,985

  

5.19

 

498

 

Ellison

 

Underground

 

100

%

 

 

 

 

665

 

3.19

 

68

 

665

 

3.19

 

68

 

2,343

  

3.38

 

254

 

Canadian Malartic

 

Open Pit

 

50

%

238

 

0.48

 

4

 

915

 

0.48

 

14

 

1,153

 

0.48

 

18

 

998

  

0.98

 

32

 

Canadian Malartic

 

Underground

 

50

%

1,647

 

1.49

 

79

 

6,426

 

1.66

 

342

 

8,073

 

1.62

 

421

 

1,694

  

1.38

 

75

 

Canadian Malartic Total

 

 

 

 

 

1,885

 

1.36

 

83

 

7,341

 

1.51

 

356

 

9,226

 

1.48

 

439

 

2,692

  

1.23

 

107

 

Odyssey

 

Underground

 

50

%

 

 

 

 

1,009

 

2.11

 

68

 

1,009

 

2.11

 

68

 

11,498

  

2.19

 

809

 

East Malartic

 

Underground

 

50

%

 

 

 

 

5,265

 

2.13

 

361

 

5,265

 

2.13

 

361

 

22,021

  

1.98

 

1,403

 

Goldex

 

Underground

 

100

%

12,360

 

1.86

 

739

 

15,413

 

1.90

 

944

 

27,773

 

1.88

 

1,683

 

27,791

  

1.50

 

1,338

 

Akasaba West

 

Open Pit

 

100

%

 

 

 

 

2,141

 

0.67

 

46

 

2,141

 

0.67

 

46

 

  

 

 

 

Lapa

 

Underground

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Zulapa

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

391

  

3.14

 

39

 

Meadowbank

 

Open Pit

 

100

%

25

 

0.96

 

1

 

1,728

 

2.35

 

130

 

1,752

 

2.33

 

131

 

63

  

2.05

 

4

 

Amaruq

 

Open Pit

 

100

%

 

 

 

 

4,247

 

3.34

 

455

 

4,247

 

3.34

 

455

 

899

  

4.20

 

121

 

Amaruq

 

Underground

 

100

%

 

 

 

 

4,618

 

4.56

 

676

 

4,618

 

4.56

 

676

 

11,675

  

5.19

 

1,948

 

Amaruq Total

 

 

 

 

 

 

 

 

 

8,865

 

3.97

 

1,132

 

8,865

 

3.97

 

1,132

 

12,573

  

5.12

 

2,069

 

Meadowbank Complex Total

 

 

 

 

 

25

 

0.96

 

1

 

10,593

 

3.71

 

1,262

 

10,618

 

3.70

 

1,263

 

12,637

  

5.10

 

2,073

 

Meliadine

 

Open Pit

 

100

%

 

 

 

 

10,643

 

3.51

 

1,200

 

10,643

 

3.51

 

1,200

 

997

  

4.60

 

148

 

Meliadine

 

Underground

 

100

%

 

 

 

 

15,319

 

4.02

 

1,979

 

15,319

 

4.02

 

1,979

 

12,482

  

6.11

 

2,450

 

Meliadine Total

 

 

 

 

 

 

 

 

 

25,962

 

3.81

 

3,179

 

25,962

 

3.81

 

3,179

 

13,479

  

6.00

 

2,598

 

Hammond Reef

 

Open Pit

 

100

%

165,662

 

0.70

 

3,724

 

42,754

 

0.57

 

777

 

208,416

 

0.67

 

4,501

 

501

  

0.74

 

12

 

Upper Beaver

 

Underground

 

100

%

 

 

 

 

3,636

 

3.45

 

403

 

3,636

 

3.45

 

403

 

8,688

  

5.07

 

1,416

 

AK Project

 

Underground

 

100

%

 

 

 

 

1,268

 

6.51

 

265

 

1,268

 

6.51

 

265

 

2,373

  

5.32

 

406

 

Anoki-McBean

 

Underground

 

100

%

 

 

 

 

1,868

 

5.33

 

320

 

1,868

 

5.33

 

320

 

2,526

  

4.70

 

382

 

Upper Canada

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

4,886

  

1.97

 

309

 

Upper Canada

 

Underground

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

7,212

  

6.22

 

1,442

 

Upper Canada Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,098

  

4.50

 

1,752

 

Kittila

 

Open Pit

 

100

%

 

 

 

 

229

 

3.41

 

25

 

229

 

3.41

 

25

 

373

  

3.89

 

47

 

Kittila

 

Underground

 

100

%

1,776

 

2.62

 

150

 

16,802

 

2.64

 

1,424

 

18,578

 

2.63

 

1,574

 

7,879

  

3.84

 

972

 

Kittila Total

 

 

 

 

 

1,776

 

2.62

 

150

 

17,030

 

2.65

 

1,449

 

18,807

 

2.64

 

1,599

 

8,252

  

3.84

 

1,019

 

Kuotko

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

284

  

3.18

 

29

 

Kylmäkangas

 

Underground

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

1,896

  

4.11

 

250

 

Barsele

 

Open Pit

 

55

%

 

 

 

 

3,178

 

1.08

 

111

 

3,178

 

1.08

 

111

 

2,260

  

1.25

 

91

 

Barsele

 

Underground

 

55

%

 

 

 

 

1,158

 

1.77

 

66

 

1,158

 

1.77

 

66

 

13,552

  

2.10

 

914

 

Barsele Total

 

 

 

 

 

 

 

 

 

4,335

 

1.27

 

176

 

4,335

 

1.27

 

176

 

15,811

  

1.98

 

1,005

 

Pinos Altos

 

Open Pit

 

100

%

 

 

 

 

934

 

0.61

 

18

 

934

 

0.61

 

18

 

758

  

0.84

 

20

 

Pinos Altos

 

Underground

 

100

%

 

 

 

 

18,165

 

1.84

 

1,073

 

18,165

 

1.84

 

1,073

 

4,041

  

2.17

 

282

 

Pinos Altos Total

 

 

 

 

 

 

 

 

 

19,098

 

1.78

 

1,091

 

19,098

 

1.78

 

1,091

 

4,799

  

1.96

 

302

 

Creston Mascota

 

Open Pit

 

100

%

 

 

 

 

1,345

 

0.65

 

28

 

1,345

 

0.65

 

28

 

386

  

1.02

 

13

 

La India

 

Open Pit

 

100

%

11,908

 

0.57

 

219

 

2,774

 

0.53

 

47

 

14,682

 

0.57

 

267

 

1,761

  

0.53

 

30

 

Tarachi

 

Open Pit

 

100

%

 

 

 

 

22,665

 

0.40

 

294

 

22,665

 

0.40

 

294

 

6,476

  

0.33

 

68

 

Chipriona

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

6,355

  

0.78

 

160

 

El Barqueño Gold

 

Open Pit

 

100

%

 

 

 

 

8,115

 

1.22

 

318

 

8,115

 

1.22

 

318

 

8,200

  

1.22

 

322

 

Santa Gertrudis

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

27,498

  

1.09

 

962

 

Totals

 

Totals

 

 

 

193,615

 

0.79

 

4,916

 

204,946

 

1.89

 

12,475

 

398,562

 

1.36

 

17,390

 

209,232

  

2.69

 

18,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SILVER

 

Mining Method

  

Ownership

  

000 Tonnes

  

g/t

  

000 Oz Ag

  

000 Tonnes

  

g/t

  

000 Oz Ag

  

000 Tonnes

  

g/t

  

000 Oz Ag

  

000 Tonnes

  

g/t

  

000 Oz Ag

 

LaRonde

 

Underground

  

100

%

  

 

  

  

4,872

  

25.34

  

3,969

  

4,872

  

25.34

  

3,969

  

5,494

  

14.31

  

2,528

 

Kylmäkangas

 

Underground

  

100

%

  

 

  

  

  

 

  

  

  

 

  

  

1,896

  

31.11

  

1,896

 

Pinos Altos

 

Open Pit

  

100

%

  

 

  

  

934

  

13.05

  

392

  

934

  

13.05

  

392

  

758

  

17.41

  

424

 

Pinos Altos

 

Underground

  

100

%

  

 

  

  

18,165

  

42.42

  

24,771

  

18,165

  

42.42

  

24,771

  

4,041

  

49.16

  

6,387

 

Pinos Altos Total

 

 

  

 

 

  

 

  

  

19,098

  

40.98

  

25,163

  

19,098

  

40.98

  

25,163

  

4,799

  

44.15

  

6,811

 

Creston Mascota

 

Open Pit

  

100

%

  

 

  

  

1,345

  

8.78

  

380

  

1,345

  

8.78

  

380

  

386

  

9.91

  

123

 

La India

 

Open Pit

  

100

%

11,908

  

3.20

  

1,227

  

2,774

  

4.44

  

396

  

14,682

  

3.44

  

1,623

  

1,761

  

3.37

  

191

 

Chipriona

 

Open Pit

  

100

%

  

 

  

  

  

 

  

  

  

 

  

  

6,355

  

89.63

  

18,312

 

El Barqueño Silver

 

Open Pit

  

100

%

  

 

  

  

  

 

  

  

  

 

  

  

4,108

  

127.97

  

16,901

 

El Barqueño Gold

 

Open Pit

  

100

%

  

 

  

  

8,115

  

4.63

  

1,208

  

8,115

  

4.63

  

1,208

  

8,200

  

17.45

  

4,600

 

Totals

 

Totals

  

 

 

11,908

  

3.20

  

1,227

  

36,205

  

26.73

  

31,116

  

48,112

  

20.91

  

32,343

  

32,998

  

48.41

  

51,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COPPER

  

Mining Method

  

Ownership

  

000 Tonnes

  

%

  

Tonnes Cu

  

000 Tonnes

  

%

  

Tonnes Cu

  

000 Tonnes

  

%

  

Tonnes Cu

  

000 Tonnes

  

%

  

Tonnes Cu

 

LaRonde

 

Underground

 

100

%

 

 

 

 

4,872

 

0.16

 

7,582

 

4,872

 

0.16

 

7,582

 

5,494

 

0.24

 

13,248

 

Akasaba West

 

Open Pit

 

100

%

 

 

 

 

2,141

 

0.40

 

8,511

 

2,141

 

0.40

 

8,511

 

 

 

 

 

Upper Beaver

 

Underground

 

100

%

 

 

 

 

3,636

 

0.14

 

5,135

 

3,636

 

0.14

 

5,135

 

8,688

 

0.20

 

17,284

 

Chipriona

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

6,355

 

0.19

 

11,787

 

El Barqueño Gold

 

Open Pit

 

100

%

 

 

 

 

8,115

 

0.18

 

14,949

 

8,115

 

0.18

 

14,949

 

8,200

 

0.22

 

18,069

 

Totals

 

Totals

 

 

 

 

 

 

 

18,764

 

0.19

 

36,177

 

18,764

 

0.19

 

36,177

 

28,736

 

0.21

 

60,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ZINC

  

Mining Method

  

Ownership

  

000 Tonnes

  

%

  

Tonnes Zn

  

000 Tonnes

  

%

  

Tonnes Zn

  

000 Tonnes

  

%

  

Tonnes Zn

  

000 Tonnes

  

%

  

Tonnes Zn

 

LaRonde

 

Underground

 

100

%

 

 

 

 

4,872

 

0.97

 

47,051

 

4,872

 

0.97

 

47,051

 

5,494

 

0.63

 

34,523

 

Chipriona

 

Open Pit

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

6,355

 

0.79

 

50,400

 

Totals

 

Totals

 

 

 

 

 

 

 

4,872

 

0.97

 

47,051

 

4,872

 

0.97

 

47,051

 

11,849

 

0.72

 

84,923

 

 

Mineral reserves are not a subset of mineral resources. Tonnage amounts and contained metal amounts set out in this table have been rounded to the nearest thousand, so aggregate amounts may differ from column totals.Mineral reserves are in-situ, taking into account all mining recoveries, before mill or heap leach recoveries.

 

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

 

77


 

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 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 uses price assumptions that are below the three-year averages.

 

Assumptions used for the December 31, 2018 mineral reserves estimate at all mines and advanced projects reported by the Company

 

 

 

 

Metal prices

 

Exchange rates

 

 

 

Gold
(US$/oz)

 

Silver
(US$/oz)

 

Copper
(US$/lb)

 

Zinc
(US$/lb)

 

C$per
US$1.00

 

Mexican
peso per
US$1.00

 

US$per
€1.00

 

Long-life operations and projects

 

 

 

 

 

 

 

 

 

$

 1.20

 

MXP

16.00

 

$

 1.15

 

Short-life operations -Meadowbank mine, Sinter and Creston Mascota (Bravo) satellite operation at Pinos Altos

 

$

 1,150

 

$

 16.00

 

$

 2.50

 

$

 1.00

 

$

 1.25

 

MXP

17.00

 

Not
applicable

 

Upper Canada, Upper Beaver*, Canadian Malartic mine**

 

$

 1,200

 

Not
applicable

 

2.75

 

Not
applicable

 

$

 1.25

 

Not
applicable

 

Not
applicable

 

 


*The Upper Beaver project has a net smelter return (NSR) cut-off value of C$125/tonne

**The Canadian Malartic mine uses a cut-off grade between 0.37 g/t and 0.38 g/t gold (depending on the deposit)

 

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.

 

78


 

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

 

79


 

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 and location

 

Date of most recent Technical Report
(NI 43-101) filed on SEDAR

LaRonde, LaRonde Zone 5 & Ellison, Quebec, Canada

 

March 23, 2005

Canadian Malartic, Quebec, Canada

 

June 16, 2014

Kittila, Kuotko and Kylmakangas, Finland

 

March 4, 2010

Meadowbank Gold Complex including the Amaruq Satellite Mine Development, Nunavut, Canada

 

February 14, 2018

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

 

80


 

Appendix

 

Kirkland Lake project exploration drill hole collar coordinates of selected holes

 

 

 

Drill Hole Collar Coordinates*

 

Drill Hole ID

 

UTM North

 

UTM East

 

Elevation
(metres above
sea level)

 

Azimuth
(degrees)

 

Dip (degrees)

 

Length
(metres)

 

KLUC18-506

 

5332900

 

586079

 

353

 

165

 

-45

 

261

 

KLUC18-510

 

5332732

 

585759

 

351

 

345

 

-46

 

282

 

KLUC18-512

 

5332401

 

585001

 

348

 

155

 

-45

 

366

 

KLUC18-517

 

5332429

 

587831

 

335

 

342

 

-54

 

678

 

KLUC18-518

 

5332699

 

585850

 

353

 

345

 

-46

 

273

 

KLUC18-519

 

5332755

 

585806

 

352

 

342

 

-50

 

249

 

KLUB18-327W4

 

5337177

 

591910

 

319

 

127

 

-72

 

2,034

 

KLUB18-327W5

 

5337177

 

591910

 

319

 

127

 

-72

 

2,076

 

KLUB18-328W4

 

5337074

 

591948

 

320

 

131

 

-71

 

1,896

 

KLUB18-328W5

 

5337074

 

591948

 

320

 

131

 

-71

 

1,968

 

 


*Coordinate System NAD 1983 UTM Zone 17N

 

Meliadine project exploration drill collar coordinates of selected holes

 

 

 

Drill collar coordinates*

 

Drill hole ID

 

UTM North

 

UTM East

 

Elevation
(metres above
sea level)

 

Azimuth
(degrees)

 

Dip
(degrees)

 

Final Length
(metres)

 

M18-2471-W2A

 

6988842

 

539674

 

-276

 

180

 

-62

 

759

 

M18-2471-W3B

 

6988788

 

539673

 

-368

 

180

 

-58

 

756

 

M18-2477-W3A

 

6988806

 

539100

 

-340

 

201

 

-58

 

699

 

M18-2485C-W1

 

6988788

 

539499

 

-265

 

172

 

-63

 

662

 

M18-2486

 

6989057

 

539299

 

74

 

186

 

-80

 

842

 

M18-2486-W1

 

6988966

 

539316

 

-288

 

166

 

-71

 

861

 

M18-2486-W2

 

6988960

 

539318

 

-307

 

169

 

-71

 

876

 

M18-2501A-W1A

 

6988834

 

539090

 

-155

 

195

 

-73

 

677

 

M18-2505-W2

 

6988805

 

538581

 

-187

 

187

 

-72

 

674

 

ML400-9164-F1

 

6988437

 

539166

 

-318

 

154

 

3

 

306

 

ML400-9164-F2

 

6988437

 

539165

 

-318

 

164

 

3

 

170

 

ML400-9164-U1

 

6988437

 

539165

 

-318

 

158

 

14

 

201

 

 


* Coordinate System UTM NAD83 Z15

 

81


 

Kittila mine exploration drill collar coordinates of selected holes

 

 

 

Drill collar coordinates*

 

Drill hole ID

 

UTM North

 

UTM East

 

Elevation
(metres above
sea level)

 

Azimuth
(degrees)

 

Dip
(degrees)

 

Length
(metres)

 

ROD18-700F

 

7537998

 

2558629

 

-485

 

089

 

-58

 

771

 

ROD18-701

 

7537849

 

2558624

 

-464

 

088

 

-58

 

726

 

ROD18-701B

 

7537849

 

2558624

 

-464

 

088

 

-58

 

750

 

ROD18-701C

 

7537849

 

2558624

 

-464

 

088

 

-58

 

776

 

ROU18-623

 

7538402

 

2558690

 

-745

 

073

 

-40

 

288

 

ROU18-625

 

7538399

 

2558691

 

-744

 

105

 

-10

 

207

 

ROU18-632

 

7538510

 

2558707

 

-758

 

082

 

10

 

306

 

 


* Finnish Coordinate System KKJ Zone 2

 

Santa Gertrudis project exploration drill hole collar coordinates of selected holes

 

 

 

Drill Hole Collar Coordinates*

 

Drill Hole ID

 

UTM North

 

UTM East

 

Elevation
(metres
above sea
level)

 

Azimuth
(degrees)

 

Dip
(degrees)

 

Length
(metres)

 

SGE18-132

 

3384349

 

551759

 

1,700

 

117

 

-70

 

171

 

SGE18-143

 

3384460

 

551856

 

1,699

 

045

 

-55

 

113

 

SGE18-146

 

3390285

 

541987

 

1,314

 

220

 

-65

 

135

 

SGE18-150

 

3390256

 

542015

 

1,307

 

243

 

-46

 

80

 

SGE18-161

 

3385225

 

543906

 

1,278

 

090

 

-60

 

120

 

SGE18-167

 

3387458

 

545989

 

1,453

 

055

 

-75

 

156

 

SGE18-169

 

3388103

 

545577

 

1,452

 

050

 

-55

 

111

 

SGE18-172

 

3392429

 

542589

 

1,308

 

180

 

-65

 

210

 

SGE18-177

 

3392245

 

542990

 

1,266

 

180

 

-60

 

150

 

SGE18-183

 

3389135

 

543189

 

1,400

 

150

 

-65

 

250

 

SGE18-185

 

3389131

 

542854

 

1,349

 

145

 

-70

 

250

 

 


*Coordinate System UTM WGS84 12N Zone

 

La India property exploration drill hole collar coordinates of selected holes

 

 

 

Drill Hole Collar Coordinates*

 

Drill Hole ID

 

UTM North

 

UTM East

 

Elevation
(metres above
 sea level)

 

Azimuth
(degrees)

 

Dip
(degrees)

 

Length
(metres)

 

CHP-18-063

 

3180382

 

707158

 

1,568

 

220

 

-45

 

231

 

CHP-18-067

 

3180213

 

707348

 

1,570

 

225

 

-50

 

351

 

CHP-18-068

 

3181020

 

706398

 

1,575

 

223

 

-50

 

243

 

CHP-18-069

 

3180721

 

706856

 

1,540

 

225

 

-48

 

384

 

CHP-18-071

 

3180464

 

707041

 

1,524

 

226

 

-45

 

252

 

 


*Coordinates are in UTM NAD27 12N

 

82


 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2018

 

2017(i)

 

2018

 

2017(i)

 

Operating margin(ii) by mine:

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

$

58,697

 

$

73,686

 

$

288,379

 

$

299,000

 

LaRonde Zone 5 mine

 

5,600

 

 

8,336

 

 

Lapa mine

 

3,868

 

1,567

 

11,927

 

25,786

 

Goldex mine

 

19,318

 

13,532

 

73,893

 

68,650

 

Meadowbank mine

 

27,985

 

49,196

 

111,995

 

224,661

 

Canadian Malartic mine(iii)

 

60,346

 

56,348

 

248,765

 

215,873

 

Kittila mine

 

22,516

 

23,245

 

80,252

 

100,489

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

36,582

 

36,563

 

132,493

 

149,179

 

Creston Mascota mine

 

4,794

 

9,144

 

17,403

 

32,308

 

La India mine

 

13,643

 

14,284

 

57,423

 

68,816

 

Total operating margin(ii)

 

253,349

 

277,565

 

1,030,866

 

1,184,762

 

Impairment loss

 

389,693

 

 

389,693

 

 

Amortization of property, plant and mine development

 

137,235

 

129,478

 

553,933

 

508,739

 

Exploration, corporate and other

 

113,694

 

81,872

 

346,292

 

336,734

 

Income (loss) before income and mining taxes

 

(387,273

)

66,215

 

(259,052

)

339,289

 

Income and mining taxes

 

6,383

 

28,715

 

67,649

 

98,494

 

Net income (loss) for the period

 

$

(393,656

)

$

37,500

 

$

(326,701

)

$

240,795

 

Net income (loss) per share — basic (US$)

 

$

(1.68

)

$

0.16

 

$

(1.40

)

$

1.05

 

Net income (loss) per share — diluted (US$)

 

$

(1.67

)

$

0.16

 

$

(1.40

)

$

1.04

 

 

 

 

 

 

 

 

 

 

 

Cash flows:

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

140,284

 

$

166,930

 

$

605,650

 

$

767,557

 

Cash used in investing activities

 

$

(336,376

)

$

(377,304

)

$

(1,204,368

)

$

(1,000,052

)

Cash (used in) provided by financing activities

 

$

(18,099

)

$

(10,101

)

$

274,099

 

$

329,167

 

 

 

 

 

 

 

 

 

 

 

Realized prices (US$):

 

 

 

 

 

 

 

 

 

Gold (per ounce)

 

$

1,235

 

$

1,279

 

$

1,266

 

$

1,261

 

Silver (per ounce)

 

$

14.53

 

$

16.72

 

$

15.51

 

$

17.07

 

Zinc (per tonne)

 

$

2,568

 

$

3,215

 

$

3,034

 

$

2,829

 

Copper (per tonne)

 

$

6,126

 

$

6,806

 

$

6,543

 

$

6,345

 

 

83


 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

Payable production(iv):

 

 

 

 

 

 

 

 

 

Gold (ounces):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

81,022

 

92,523

 

343,686

 

348,870

 

LaRonde Zone 5 mine

 

10,196

 

 

18,620

 

515

 

Lapa mine

 

7,307

 

203

 

34,026

 

48,613

 

Goldex mine

 

31,508

 

27,033

 

121,167

 

118,947

 

Meadowbank mine

 

59,664

 

85,046

 

248,997

 

352,526

 

Canadian Malartic mine(iii)

 

84,732

 

80,743

 

348,600

 

316,731

 

Kittila mine

 

49,353

 

47,746

 

188,979

 

196,938

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

49,170

 

40,406

 

181,057

 

180,859

 

Creston Mascota mine

 

11,452

 

14,012

 

40,180

 

48,384

 

La India mine

 

26,308

 

25,500

 

101,357

 

101,150

 

Total gold (ounces)

 

410,712

 

413,212

 

1,626,669

 

1,713,533

 

 

 

 

 

 

 

 

 

 

 

Silver (thousands of ounces):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

205

 

360

 

1,040

 

1,254

 

LaRonde Zone 5 mine

 

1

 

 

2

 

 

Lapa mine

 

1

 

 

2

 

3

 

Goldex mine

 

 

 

1

 

1

 

Meadowbank mine

 

28

 

67

 

171

 

275

 

Canadian Malartic mine(iii)

 

104

 

88

 

437

 

341

 

Kittila mine

 

4

 

3

 

13

 

13

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

631

 

612

 

2,368

 

2,535

 

Creston Mascota mine

 

83

 

84

 

310

 

281

 

La India mine

 

54

 

51

 

180

 

313

 

Total silver (thousands of ounces)

 

1,111

 

1,265

 

4,524

 

5,016

 

 

 

 

 

 

 

 

 

 

 

Zinc (tonnes)

 

3,168

 

2,010

 

7,864

 

6,510

 

Copper (tonnes)

 

914

 

1,266

 

4,193

 

4,501

 

 

84


 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Payable metal sold:

 

 

 

 

 

 

 

 

 

Gold (ounces):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

81,831

 

91,795

 

364,816

 

353,440

 

LaRonde Zone 5 mine

 

9,631

 

 

17,469

 

 

Lapa mine

 

11,640

 

2,808

 

31,874

 

50,928

 

Goldex mine

 

31,748

 

27,797

 

120,621

 

119,200

 

Meadowbank mine

 

58,610

 

80,990

 

253,014

 

353,506

 

Canadian Malartic mine(iii)(v)

 

84,352

 

83,750

 

330,620

 

299,030

 

Kittila mine

 

47,993

 

48,079

 

187,871

 

197,702

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

50,717

 

44,350

 

185,444

 

173,026

 

Creston Mascota mine

 

10,409

 

13,448

 

39,592

 

47,251

 

La India mine

 

25,067

 

23,979

 

98,464

 

99,691

 

Total gold (ounces)

 

411,998

 

416,996

 

1,629,785

 

1,693,774

 

 

 

 

 

 

 

 

 

 

 

Silver (thousands of ounces):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

207

 

348

 

1,043

 

1,251

 

LaRonde Zone 5 mine

 

 

 

1

 

 

Lapa mine

 

1

 

1

 

2

 

7

 

Goldex mine

 

1

 

 

2

 

1

 

Meadowbank mine

 

26

 

85

 

170

 

275

 

Canadian Malartic mine(iii)(v)

 

90

 

90

 

394

 

329

 

Kittila mine

 

4

 

2

 

13

 

11

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

644

 

655

 

2,442

 

2,397

 

Creston Mascota mine

 

75

 

82

 

301

 

265

 

La India mine

 

51

 

50

 

176

 

316

 

Total silver (thousands of ounces):

 

1,099

 

1,313

 

4,544

 

4,852

 

 

 

 

 

 

 

 

 

 

 

Zinc (tonnes)

 

1,896

 

1,221

 

8,523

 

6,316

 

Copper (tonnes)

 

926

 

1,328

 

4,195

 

4,599

 

 

85


 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Total cash costs per ounce of gold produced — co-product basis (US$)(vi):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

$

649

 

$

615

 

$

634

 

$

607

 

LaRonde Zone 5 mine(vii)

 

642

 

 

733

 

 

Lapa mine(viii)

 

715

 

 

873

 

757

 

Goldex mine(ix)

 

624

 

719

 

646

 

611

 

Meadowbank mine

 

740

 

670

 

825

 

628

 

Canadian Malartic mine(iii)

 

581

 

648

 

579

 

594

 

Kittila mine

 

788

 

797

 

854

 

754

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

707

 

730

 

749

 

634

 

Creston Mascota mine

 

844

 

689

 

961

 

669

 

La India mine

 

724

 

711

 

712

 

634

 

Weighted average total cash costs per ounce of gold produced

 

$

681

 

$

680

 

$

710

 

$

637

 

 

 

 

 

 

 

 

 

 

 

Total cash costs per ounce of gold produced — by-product basis (US$)(vi):

 

 

 

 

 

 

 

 

 

Northern Business

 

 

 

 

 

 

 

 

 

LaRonde mine

 

$

441

 

$

386

 

$

445

 

$

406

 

LaRonde Zone 5 mine (vii)

 

641

 

 

732

 

 

Lapa mine (viii)

 

713

 

 

872

 

755

 

Goldex mine (ix)

 

624

 

719

 

646

 

610

 

Meadowbank mine

 

734

 

653

 

814

 

614

 

Canadian Malartic mine (iii)

 

562

 

628

 

559

 

576

 

Kittila mine

 

787

 

796

 

853

 

753

 

Southern Business

 

 

 

 

 

 

 

 

 

Pinos Altos mine

 

518

 

485

 

548

 

395

 

Creston Mascota mine

 

736

 

591

 

841

 

575

 

La India mine

 

694

 

678

 

685

 

580

 

Weighted average total cash costs per ounce of gold produced

 

$

608

 

$

592

 

$

637

 

$

558

 

 

86


 


Notes:

 

(i) In accordance with the adoption of IFRS 9 on January 1, 2018, the Company has restated comparative information where required.

 

(ii) Operating margin is calculated as revenues from mining operations less production costs.

 

(iii) The information set out in this table reflects the Company’s 50% interest in the Canadian Malartic mine.

 

(iv) 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.

 

(v) The Canadian Malartic mine’s payable metal sold excludes the 5.0% net smelter royalty in favour of Osisko Gold Royalties Ltd.

 

(vi) 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 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 consolidated statements of income  for by-product metal revenues, inventory production costs, smelting, refining and marketing charges, 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 and other adjustments 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 analysis in order to quantify the effects of fluctuating metal prices and exchange rates.

 

(vii) The LaRonde Zone 5 mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 515 ounces of payable gold production and the associated costs which were produced prior to the achievement of commercial production on June 1, 2018.

 

(viii) The Lapa mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 203 ounces of payable gold production as a result of the Lapa mill being placed on temporary maintenance.

 

(ix) The Goldex mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 8,041 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.

 

87


 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars, except share amounts, IFRS basis)

(Unaudited)

 

 

 

As at

 

As at

 

 

 

December 31,

 

December 31,

 

 

 

2018

 

2017(i)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

301,826

 

$

632,978

 

Short-term investments

 

6,080

 

10,919

 

Trade receivables

 

10,055

 

12,000

 

Inventories

 

494,150

 

500,976

 

Income taxes recoverable

 

17,805

 

13,598

 

Equity securities

 

76,532

 

122,775

 

Fair value of derivative financial instruments

 

180

 

17,240

 

Other current assets

 

165,824

 

151,048

 

Total current assets

 

1,072,452

 

1,461,534

 

Non-current assets:

 

 

 

 

 

Goodwill

 

407,792

 

696,809

 

Property, plant and mine development

 

6,234,302

 

5,626,552

 

Other assets

 

138,297

 

80,706

 

Total assets

 

$

7,852,843

 

$

7,865,601

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

310,597

 

$

290,722

 

Reclamation provision

 

5,411

 

10,038

 

Interest payable

 

16,531

 

12,894

 

Income taxes payable

 

18,671

 

16,755

 

Finance lease obligations

 

1,914

 

3,412

 

Fair value of derivative financial instruments

 

8,325

 

 

Total current liabilities

 

361,449

 

333,821

 

Non-current liabilities:

 

 

 

 

 

Long-term debt

 

1,721,308

 

1,371,851

 

Reclamation provision

 

380,747

 

345,268

 

Deferred income and mining tax liabilities

 

796,708

 

827,341

 

Other liabilities

 

42,619

 

40,329

 

Total liabilities

 

3,302,831

 

2,918,610

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Common shares:

 

 

 

 

 

Outstanding — 235,025,507 common shares issued, less 566,910 shares held in trust

 

5,362,169

 

5,288,432

 

Stock options

 

197,597

 

186,754

 

Contributed surplus

 

37,254

 

37,254

 

Deficit

 

(988,913

)

(598,889

)

Other reserves

 

(58,095

)

33,440

 

Total equity

 

4,550,012

 

4,946,991

 

Total liabilities and equity

 

$

7,852,843

 

$

7,865,601

 

 


Note:

(i)In accordance with the adoption of IFRS 9 on January 1, 2018, the Company has restated comparative information where required.

 

88


 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(thousands of United States dollars, except per share amounts, IFRS basis)

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

 

 

2018

 

2017(i)

 

2018

 

2017(i)

 

REVENUES

 

 

 

 

 

 

 

 

 

Revenues from mining operations

 

$

537,821

 

$

565,254

 

$

2,191,221

 

$

2,242,604

 

 

 

 

 

 

 

 

 

 

 

COSTS, EXPENSES AND OTHER INCOME

 

 

 

 

 

 

 

 

 

Production(ii)

 

284,472

 

287,689

 

1,160,355

 

1,057,842

 

Exploration and corporate development

 

27,572

 

31,708

 

137,670

 

141,450

 

Amortization of property, plant and mine development

 

137,235

 

129,478

 

553,933

 

508,739

 

General and administrative

 

31,361

 

28,570

 

124,873

 

115,064

 

Impairment loss on equity securities

 

 

1,286

 

 

8,532

 

Finance costs

 

25,544

 

21,092

 

96,567

 

78,931

 

Loss (gain) on derivative financial instruments

 

11,074

 

(2,691

)

6,065

 

(17,898

)

Environmental remediation

 

14,167

 

893

 

14,420

 

1,219

 

Impairment loss

 

389,693

 

 

389,693

 

 

Foreign currency translation loss

 

2,657

 

5,492

 

1,991

 

13,313

 

Other expenses (income)

 

1,319

 

(4,478

)

(35,294

)

(3,877

)

Income (loss) before income and mining taxes

 

(387,273

)

66,215

 

(259,052

)

339,289

 

Income and mining taxes expense

 

6,383

 

28,715

 

67,649

 

98,494

 

Net income (loss) for the period

 

$

(393,656

)

$

37,500

 

$

(326,701

)

$

240,795

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$

(1.68

)

$

0.16

 

$

(1.40

)

$

1.05

 

Net income (loss) per share - diluted

 

$

(1.68

)

$

0.16

 

$

(1.40

)

$

1.04

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

234,096

 

231,916

 

233,251

 

230,252

 

Diluted

 

234,096

 

234,065

 

233,251

 

232,461

 

 

 

 

 

 

 

 

 

 

 

 


Notes:

(i)In accordance with the adoption of IFRS 9 on January 1, 2018, the Company has restated comparative information where required.

(ii)Exclusive of amortization, which is shown separately.

 

89


 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars, IFRS basis)

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

 

 

2018

 

2017(i)

 

2018

 

2017(i)

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net income (loss) for the period

 

$

(393,656

)

$

37,500

 

$

(326,701

)

$

240,795

 

Add (deduct) items not affecting cash:

 

 

 

 

 

 

 

 

 

Amortization of property, plant and mine development

 

137,235

 

129,478

 

553,933

 

508,739

 

Deferred income and mining taxes

 

(22,089

)

16,589

 

(30,961

)

10,855

 

Stock-based compensation

 

11,870

 

9,417

 

50,658

 

43,674

 

Impairment loss on equity securities

 

 

1,286

 

 

8,532

 

Impairment loss

 

389,693

 

 

389,693

 

 

Foreign currency translation loss

 

2,657

 

5,492

 

1,991

 

13,313

 

Other

 

26,903

 

11,828

 

11,610

 

18,286

 

Adjustment for settlement of reclamation provision

 

(2,170

)

(2,085

)

(4,685

)

(4,824

)

Changes in non-cash working capital balances:

 

 

 

 

 

 

 

 

 

Trade receivables

 

(1,429

)

(4,256

)

1,945

 

(3,815

)

Income taxes

 

25,359

 

(16,901

)

(2,291

)

(31,913

)

Inventories

 

(13,418

)

7,750

 

(52,316

)

(64,889

)

Other current assets

 

38,994

 

26,163

 

(18,326

)

(13,722

)

Accounts payable and accrued liabilities

 

(44,218

)

(44,033

)

29,034

 

44,694

 

Interest payable

 

(15,447

)

(11,298

)

2,066

 

(2,168

)

Cash provided by operating activities

 

140,284

 

166,930

 

605,650

 

767,557

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Additions to property, plant and mine development

 

(342,183

)

(296,277

)

(1,089,100

)

(874,153

)

Acquisition

 

 

(71,989

)

(162,479

)

(71,989

)

Net proceeds from sale of property, plant and mine development

 

163

 

 

35,246

 

 

Net sales (purchases) of short-term investments

 

7,103

 

(737

)

4,839

 

(2,495

)

Net proceeds from sale of equity securities

 

1,073

 

 

17,499

 

333

 

Purchases of equity securities

 

(2,510

)

(8,299

)

(11,163

)

(51,724

)

(Increase) decrease in restricted cash

 

(22

)

(2

)

790

 

(24

)

Cash used in investing activities

 

(336,376

)

(377,304

)

(1,204,368

)

(1,000,052

)

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Dividends paid

 

(20,821

)

(20,285

)

(83,961

)

(76,075

)

Repayment of finance lease obligations

 

(820

)

(914

)

(3,382

)

(5,252

)

Proceeds from long-term debt

 

50,000

 

 

300,000

 

280,000

 

Repayment of long-term debt

 

(50,000

)

 

(300,000

)

(410,412

)

Notes issuance

 

 

 

350,000

 

300,000

 

Long-term debt financing

 

(930

)

(1,220

)

(3,215

)

(3,505

)

Repurchase of common shares for stock-based compensation plans

 

(3,559

)

(25

)

(30,062

)

(24,684

)

Proceeds on exercise of stock options

 

4,748

 

9,452

 

30,962

 

44,199

 

Common shares issued

 

3,283

 

2,891

 

13,757

 

224,896

 

Cash (used in) provided by financing activities

 

(18,099

)

(10,101

)

274,099

 

329,167

 

Effect of exchange rate changes on cash and cash equivalents

 

(4,238

)

(2,013

)

(6,533

)

(3,668

)

Net (decrease) increase in cash and cash equivalents during the period

 

(218,429

)

(222,488

)

(331,152

)

93,004

 

Cash and cash equivalents, beginning of period

 

520,255

 

855,466

 

632,978

 

539,974

 

Cash and cash equivalents, end of period

 

$

301,826

 

$

632,978

 

$

301,826

 

$

632,978

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

Interest paid

 

$

42,743

 

$

33,814

 

$

91,079

 

$

78,885

 

Income and mining taxes paid

 

$

9,615

 

$

31,322

 

$

106,568

 

$

127,915

 

 


Note:

(i)In accordance with the adoption of IFRS 9 on January 1, 2018, the Company has restated comparative information where required.

 

90


 

AGNICO EAGLE MINES LIMITED

RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES

(thousands of United States dollars, except where noted)

(Unaudited)

 

 

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Total Production Costs by Mine

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

(thousands of United States dollars)

 

 

 

 

 

 

 

 

 

LaRonde mine

 

$

53,931

 

$

54,756

 

$

228,294

 

$

185,488

 

LaRonde Zone 5 mine

 

6,326

 

 

12,991

 

 

Lapa mine

 

10,541

 

2,073

 

27,870

 

38,786

 

Goldex mine

 

19,707

 

21,785

 

78,533

 

71,015

 

Meadowbank mine

 

44,330

 

55,505

 

211,147

 

224,364

 

Canadian Malartic mine(i)

 

51,148

 

58,295

 

199,761

 

188,568

 

Kittila mine

 

36,415

 

38,146

 

157,032

 

148,272

 

Pinos Altos mine

 

35,206

 

30,752

 

138,362

 

108,726

 

Creston Mascota mine

 

9,066

 

9,315

 

37,270

 

31,490

 

La India mine

 

17,802

 

17,062

 

69,095

 

61,133

 

Production costs per the consolidated statement of income

 

$

284,472

 

$

287,689

 

$

1,160,355

 

$

1,057,842

 

 

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

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

81,022

 

 

 

92,523

 

 

 

343,686

 

 

 

348,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

53,931

 

$

666

 

$

54,756

 

$

592

 

$

228,294

 

$

664

 

$

185,488

 

$

532

 

Inventory and other adjustments(iv)

 

(1,332

)

(17

)

2,105

 

23

 

(10,475

)

(30

)

26,246

 

75

 

Cash operating costs (co-product basis)

 

$

52,599

 

$

649

 

$

56,861

 

$

615

 

$

217,819

 

$

634

 

$

211,734

 

$

607

 

By-product metal revenues

 

(16,890

)

(208

)

(21,106

)

(229

)

(64,973

)

(189

)

(70,054

)

(201

)

Cash operating costs (by-product basis)

 

$

35,709

 

$

441

 

$

35,755

 

$

386

 

$

152,846

 

$

445

 

$

141,680

 

$

406

 

 

LaRonde Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne)

 

(thousands)

 

($ per tonne)

 

(thousands)

 

($ per tonne)

 

(thousands)

 

($ per tonne)

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

515

 

 

 

585

 

 

 

2,108

 

 

 

2,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

53,931

 

$

105

 

$

54,756

 

$

94

 

$

228,294

 

$

108

 

$

185,488

 

$

83

 

Production costs (C$)

 

C$

70,291

 

C$

136

 

C$

68,535

 

C$

117

 

C$

293,094

 

C$

139

 

C$

243,638

 

C$

108

 

Inventory and other adjustments (C$)(v)

 

(10,206

)

(19

)

(3,953

)

(7

)

(41,568

)

(20

)

(1,107

)

 

Minesite operating costs (C$)

 

C$

60,085

 

C$

117

 

C$

64,582

 

C$

110

 

C$

251,526

 

C$

119

 

C$

242,531

 

C$

108

 

 

91


 

LaRonde Zone 5 Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii) (vi)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

10,196

 

 

 

 

 

 

18,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

6,326

 

$

620

 

$

 

$

 

$

12,991

 

$

698

 

$

 

$

 

Inventory and other adjustments(iv)

 

224

 

22

 

 

 

656

 

35

 

 

 

Cash operating costs (co-product basis)

 

$

6,550

 

$

642

 

$

 

$

 

$

13,647

 

$

733

 

$

 

$

 

By-product metal revenues

 

(14

)

(1

)

 

 

(21

)

(1

)

 

 

Cash operating costs (by-product basis)

 

$

6,536

 

$

641

 

$

 

$

 

$

13,626

 

$

732

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LaRonde Zone 5 Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii) (vii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

115

 

 

 

 

 

 

225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

6,326

 

$

55

 

$

 

$

 

$

12,991

 

$

58

 

$

 

$

 

Production costs (C$)

 

C$

8,346

 

C$

73

 

C$

 

C$

 

C$

17,028

 

C$

76

 

C$

 

C$

 

Inventory and other adjustments (C$)(v)

 

270

 

2

 

 

 

945

 

4

 

 

 

Minesite operating costs (C$)

 

C$

8,616

 

C$

75

 

C$

 

C$

 

C$

17,973

 

C$

80

 

C$

 

C$

 

 

Lapa Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)(viii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

7,307

 

 

 

 

 

 

34,026

 

 

 

48,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

10,541

 

$

1,443

 

$

2,073

 

$

 

$

27,870

 

$

819

 

$

38,786

 

$

801

 

Inventory and other adjustments(iv)

 

(5,317

)

(728

)

(2,060

)

 

1,843

 

54

 

(2,143

)

(44

)

Cash operating costs (co-product basis)

 

$

5,224

 

$

715

 

$

13

 

$

 

$

29,713

 

$

873

 

$

36,643

 

$

757

 

By-product metal revenues

 

(13

)

(2

)

(13

)

 

(26

)

(1

)

(112

)

(2

)

Cash operating costs (by-product basis)

 

$

5,211

 

$

713

 

$

 

$

 

$

29,687

 

$

872

 

$

36,531

 

$

755

 

 

Lapa Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

69

 

 

 

 

 

 

311

 

 

 

398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

10,541

 

$

153

 

$

2,073

 

$

 

$

27,870

 

$

90

 

$

38,786

 

$

97

 

Production costs (C$)

 

C$

13,688

 

C$

198

 

C$

2,639

 

C$

 

C$

35,854

 

C$

115

 

C$

50,976

 

C$

128

 

Inventory and other adjustments (C$)(v)

 

(6,827

)

(99

)

(2,639

)

 

2,369

 

8

 

(3,166

)

(8

)

Minesite operating costs (C$)

 

C$

6,861

 

C$

99

 

C$

 

C$

 

C$

38,223

 

C$

123

 

C$

47,810

 

C$

120

 

 

92


 

Goldex Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)(ix)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

31,508

 

 

 

27,033

 

 

 

121,167

 

 

 

110,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

19,707

 

$

625

 

$

21,785

 

$

806

 

$

78,533

 

$

648

 

$

71,015

 

$

640

 

Inventory and other adjustments(iv)

 

(56

)

(1

)

(2,349

)

(87

)

(219

)

(2

)

(3,289

)

(29

)

Cash operating costs (co-product basis)

 

$

19,651

 

$

624

 

$

19,436

 

$

719

 

$

78,314

 

$

646

 

$

67,726

 

$

611

 

By-product metal revenues

 

(6

)

 

(3

)

 

(25

)

 

(24

)

(1

)

Cash operating costs (by-product basis)

 

$

19,645

 

$

624

 

$

19,433

 

$

719

 

$

78,289

 

$

646

 

$

67,702

 

$

610

 

 

Goldex Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)(x)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

711

 

 

 

593

 

 

 

2,625

 

 

 

2,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

19,707

 

$

28

 

$

21,785

 

$

37

 

$

78,533

 

$

30

 

$

71,015

 

$

30

 

Production costs (C$)

 

C$

26,075

 

C$

37

 

C$

27,642

 

C$

47

 

C$

101,787

 

C$

39

 

C$

91,998

 

C$

38

 

Inventory and other adjustments (C$)(v)

 

(181

)

(1

)

(2,147

)

(4

)

44

 

 

(2,404

)

(1

)

Minesite operating costs (C$)

 

C$

25,894

 

C$

36

 

C$

25,495

 

C$

43

 

C$

101,831

 

C$

39

 

C$

89,594

 

C$

37

 

 

Meadowbank Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

59,664

 

 

 

85,046

 

 

 

248,997

 

 

 

352,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

44,330

 

$

743

 

$

55,505

 

$

653

 

$

211,147

 

$

848

 

$

224,364

 

$

636

 

Inventory and other adjustments(iv)

 

(177

)

(3

)

1,495

 

17

 

(5,769

)

(23

)

(3,127

)

(8

)

Cash operating costs (co-product basis)

 

$

44,153

 

$

740

 

$

57,000

 

$

670

 

$

205,378

 

$

825

 

$

221,237

 

$

628

 

By-product metal revenues

 

(371

)

(6

)

(1,430

)

(17

)

(2,685

)

(11

)

(4,714

)

(14

)

Cash operating costs (by-product basis)

 

$

43,782

 

$

734

 

$

55,570

 

$

653

 

$

202,693

 

$

814

 

$

216,523

 

$

614

 

 

Meadowbank Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

700

 

 

 

992

 

 

 

3,262

 

 

 

3,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

44,330

 

$

63

 

$

55,505

 

$

56

 

$

211,147

 

$

65

 

$

224,364

 

$

58

 

Production costs (C$)

 

C$

57,511

 

C$

82

 

C$

71,048

 

C$

72

 

C$

272,140

 

C$

83

 

C$

292,216

 

C$

76

 

Inventory and other adjustments (C$)(v)

 

676

 

1

 

4,397

 

4

 

(4,477

)

(1

)

1,512

 

 

Minesite operating costs (C$)

 

C$

58,187

 

C$

83

 

C$

75,445

 

C$

76

 

C$

267,663

 

C$

82

 

C$

293,728

 

C$

76

 

 

93


 

Canadian Malartic Mine(i)

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

84,732

 

 

 

80,743

 

 

 

348,600

 

 

 

316,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

51,148

 

$

604

 

$

58,296

 

$

722

 

$

199,761

 

$

573

 

$

188,568

 

$

595

 

Inventory and other adjustments(iv)

 

(1,899

)

(23

)

(6,010

)

(74

)

1,947

 

6

 

(497

)

(1

)

Cash operating costs (co-product basis)

 

$

49,249

 

$

581

 

$

52,286

 

$

648

 

$

201,708

 

$

579

 

$

188,071

 

$

594

 

By-product metal revenues

 

(1,608

)

(19

)

(1,593

)

(20

)

(6,806

)

(20

)

(5,759

)

(18

)

Cash operating costs (by-product basis)

 

$

47,641

 

$

562

 

$

50,693

 

$

628

 

$

194,902

 

$

559

 

$

182,312

 

$

576

 

 

Canadian Malartic Mine(i)

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

2,542

 

 

 

2,615

 

 

 

10,242

 

 

 

10,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

51,148

 

$

20

 

$

58,296

 

$

22

 

$

199,761

 

$

20

 

$

188,568

 

$

19

 

Production costs (C$)

 

C$

67,097

 

C$

26

 

C$

73,736

 

C$

28

 

C$

258,291

 

C$

25

 

C$

243,903

 

C$

24

 

Inventory and other adjustments (C$)(v)

 

(2,240

)

(1

)

(9,225

)

(3

)

2,972

 

 

(3,567

)

 

Minesite operating costs (C$)

 

C$

64,857

 

C$

25

 

C$

64,511

 

C$

25

 

C$

261,263

 

C$

25

 

C$

240,336

 

C$

24

 

 

Kittila Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

49,353

 

 

 

47,746

 

 

 

188,979

 

 

 

196,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

36,415

 

$

738

 

$

38,146

 

$

799

 

$

157,032

 

$

831

 

$

148,272

 

$

753

 

Inventory and other adjustments(iv)

 

2,464

 

50

 

(109

)

(2

)

4,374

 

23

 

213

 

1

 

Cash operating costs (co-product basis)

 

$

38,879

 

$

788

 

$

38,037

 

$

797

 

$

161,406

 

$

854

 

$

148,485

 

$

754

 

By-product metal revenues

 

(32

)

(1

)

(39

)

(1

)

(186

)

(1

)

(192

)

(1

)

Cash operating costs (by-product basis)

 

$

38,847

 

$

787

 

$

37,998

 

$

796

 

$

161,220

 

$

853

 

$

148,293

 

$

753

 

 

Kittila Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore milled (thousands of tonnes)

 

 

 

462

 

 

 

394

 

 

 

1,827

 

 

 

1,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

36,415

 

$

79

 

$

38,146

 

$

97

 

$

157,032

 

$

86

 

$

148,272

 

$

88

 

Production costs (€)

 

32,337

 

70

 

32,525

 

83

 

133,817

 

73

 

131,111

 

78

 

Inventory and other adjustments (€)(v)

 

1,590

 

3

 

(144

)

(1

)

2,545

 

2

 

(79

)

 

Minesite operating costs (€)

 

33,927

 

73

 

32,381

 

82

 

136,362

 

75

 

131,032

 

78

 

 

94


 

Pinos Altos Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

49,170

 

 

 

40,406

 

 

 

181,057

 

 

 

180,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

35,206

 

$

716

 

$

30,752

 

$

761

 

$

138,362

 

$

764

 

$

108,726

 

$

601

 

Inventory and other adjustments(iv)

 

(432

)

(9

)

(1,263

)

(31

)

(2,767

)

(15

)

5,926

 

33

 

Cash operating costs (co-product basis)

 

$

34,774

 

$

707

 

$

29,489

 

$

730

 

$

135,595

 

$

749

 

$

114,652

 

$

634

 

By-product metal revenues

 

(9,282

)

(189

)

(9,874

)

(245

)

(36,301

)

(201

)

(43,169

)

(239

)

Cash operating costs (by-product basis)

 

$

25,492

 

$

518

 

$

19,615

 

$

485

 

$

99,294

 

$

548

 

$

71,483

 

$

395

 

 

Pinos Altos Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore processed (thousands of tonnes)

 

 

 

588

 

 

 

548

 

 

 

2,218

 

 

 

2,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

35,206

 

$

60

 

$

30,752

 

$

56

 

$

138,362

 

$

62

 

$

108,726

 

$

47

 

Inventory and other adjustments(v)

 

(486

)

(1

)

(991

)

(2

)

(3,061

)

(1

)

6,065

 

3

 

Minesite operating costs

 

$

34,720

 

$

59

 

$

29,761

 

$

54

 

$

135,301

 

$

61

 

$

114,791

 

$

50

 

 

Creston Mascota Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

11,452

 

 

 

14,012

 

 

 

40,180

 

 

 

48,384

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

9,066

 

$

792

 

$

9,315

 

$

665

 

$

37,270

 

$

928

 

$

31,490

 

$

651

 

Inventory and other adjustments(iv)

 

596

 

52

 

339

 

24

 

1,326

 

33

 

862

 

18

 

Cash operating costs (co-product basis)

 

$

9,662

 

$

844

 

$

9,654

 

$

689

 

$

38,596

 

$

961

 

$

32,352

 

$

669

 

By-product metal revenues

 

(1,237

)

(108

)

(1,368

)

(98

)

(4,818

)

(120

)

(4,535

)

(94

)

Cash operating costs (by-product basis)

 

$

8,425

 

$

736

 

$

8,286

 

$

591

 

$

33,778

 

$

841

 

$

27,817

 

$

575

 

 

Creston Mascota Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore processed (thousands of tonnes)

 

 

 

383

 

 

 

558

 

 

 

1,422

 

 

 

2,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

9,066

 

$

24

 

$

9,315

 

$

17

 

$

37,270

 

$

26

 

$

31,490

 

$

14

 

Inventory and other adjustments(v)

 

481

 

1

 

254

 

 

853

 

1

 

559

 

1

 

Minesite operating costs

 

$

9,547

 

$

25

 

$

9,569

 

$

17

 

$

38,123

 

$

27

 

$

32,049

 

$

15

 

 

95


 

La India Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Ounce of Gold Produced(ii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

(thousands)

 

($ per ounce )

 

Gold production (ounces)

 

 

 

26,308

 

 

 

25,500

 

 

 

101,357

 

 

 

101,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

17,802

 

$

677

 

$

17,062

 

$

669

 

$

69,095

 

$

682

 

$

61,133

 

$

604

 

Inventory and other adjustments(iv)

 

1,242

 

47

 

1,057

 

42

 

3,084

 

30

 

2,958

 

30

 

Cash operating costs (co-product basis)

 

$

19,044

 

$

724

 

$

18,119

 

$

711

 

$

72,179

 

$

712

 

$

64,091

 

$

634

 

By-product metal revenues

 

(795

)

(30

)

(823

)

(33

)

(2,777

)

(27

)

(5,392

)

(54

)

Cash operating costs (by-product basis)

 

$

18,249

 

$

694

 

$

17,296

 

$

678

 

$

69,402

 

$

685

 

$

58,699

 

$

580

 

 

La India Mine

 

Three Months Ended

 

Three Months Ended

 

Year Ended

 

Year Ended

 

Per Tonne(iii)

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

(thousands)

 

($ per tonne )

 

Tonnes of ore processed (thousands of tonnes)

 

 

 

1,451

 

 

 

1,692

 

 

 

6,128

 

 

 

5,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

$

17,802

 

$

12

 

$

17,062

 

$

10

 

$

69,095

 

$

11

 

$

61,133

 

$

10

 

Inventory and other adjustments(v)

 

980

 

1

 

766

 

1

 

2,109

 

1

 

1,545

 

1

 

Minesite operating costs

 

$

18,782

 

$

13

 

$

17,828

 

$

11

 

$

71,204

 

$

12

 

$

62,678

 

$

11

 

 


Notes:

 

(i) The information set out in this table reflects the Company’s 50% interest in the Canadian Malartic mine.

 

(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 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 consolidated statements of income for by-product metal revenues, inventory production costs, smelting, refining and marketing charges, 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 and other adjustments 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 analysis 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 consolidated statements of income for inventory production costs and other adjustments, 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 from contracts with customers is recognized upon the transfer of control over metals sold to the customer. 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 and smelting, refining and marketing charges associated with production.

 

(vi) The LaRonde Zone 5 mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 515 ounces of payable gold production and the associated costs which were produced prior to the achievement of commercial production on June 1, 2018.

 

(vii) The LaRonde Zone 5 mine’s per tonne calculations for the year ended December 31, 2017 exclude 7,709 tonnes and the associated costs which were processed prior to the achievement of commercial production on June 1, 2018.

 

(viii) The Lapa mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 203 ounces of payable gold production as a result of the Lapa mill being placed on temporary maintenance.

 

(ix) The Goldex mine’s per ounce of gold production calculations for the year ended December 31, 2017 exclude 8,041 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.

 

(x) The Goldex mine’s per tonne calculations for the year ended December 31, 2017 exclude 175,514 tonnes processed and the associated costs related to the Deep 1 Zone which were processed prior to the achievement of commercial production.

 

96


 

Reconciliation of Production Costs to All-in Sustaining Costs per Ounce of Gold Produced

 

(United States dollars per ounce of gold produced, except where noted)

 

Three Months Ended
December 31, 2018

 

Three Months Ended
December 31, 2017

 

Year Ended
December 31, 2018

 

Year Ended
December 31, 2017

 

Production costs per the consolidated statements of income and comprehensive income (thousands of United States dollars)

 

$

284,472

 

$

287,689

 

$

1,160,355

 

$

1,057,842

 

Adjusted gold production (ounces)(i) (ii)

 

410,712

 

413,009

 

1,626,669

 

1,704,774

 

Production costs per ounce of adjusted gold production(i) (ii)

 

$

693

 

$

697

 

$

713

 

$

621

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory and other adjustments(iii)

 

(12

)

(17

)

(3

)

16

 

Total cash costs per ounce of gold produced (co-product basis)(iv)

 

$

681

 

$

680

 

$

710

 

$

637

 

By-product metal revenues

 

(73

)

(88

)

(73

)

(79

)

Total cash costs per ounce of gold produced (by-product basis)(iv)

 

$

608

 

$

592

 

$

637

 

$

558

 

Adjustments:

 

 

 

 

 

 

 

 

 

Sustaining capital expenditures (including capitalized exploration)

 

164

 

241

 

159

 

176

 

General and administrative expenses (including stock options)

 

76

 

69

 

77

 

67

 

Non-cash reclamation provision and other

 

4

 

3

 

4

 

3

 

All-in sustaining costs per ounce of gold produced (by-product basis)

 

$

852

 

$

905

 

$

877

 

$

804

 

By-product metal revenues

 

73

 

88

 

73

 

79

 

All-in sustaining costs per ounce of gold produced (co-product basis)

 

$

925

 

$

993

 

$

950

 

$

883

 

 


Notes:

 

(i) Adjusted gold production for the year ended December 31, 2017 excludes 8,041 ounces of payable gold production at the Goldex mine’s Deep 1 Zone which were produced prior to the achievement of commercial production.

 

(ii) Adjusted gold production for the year ended December 31, 2017 excludes 203 ounces of payable gold production at the Lapa mine as a result of the mill being placed on temporary maintenance.

 

(iii) Adjusted gold production for the year ended December 31, 2017 excludes 515 ounces of payable gold production  at the LaRonde Zone 5 mine which were produced prior to the achievement of commercial production on June 1, 2018.

 

(iv) Under the Company’s revenue recognition policy, revenue from contracts with customers is recognized upon transfer of control over metals sold to the customer. 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) 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 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 consolidated statements of income for by-product metal revenues, inventory production costs or 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 and other adjustments 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 analysis in order to quantify the effects of fluctuating metal prices and exchange rates.

 

97