NYSE: AEM 46.27
+0.60 +1.31%
Volume: 263,215
August 16, 2017
TSX: AEM 58.77
+0.53 +0.91%
Volume: 157,685
August 16, 2017
Gold: 1,273.99
+1.11 +0.09%
Volume:
August 16, 2017

Agnico Eagle Reports Second Quarter 2017 Results; Strong Operational Performance Continues; Full Year Production Guidance Increased; Nunavut Projects Advancing on Schedule and Budget; Positive Exploration Results at Multiple Projects

July 26, 2017

Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)

TORONTO, July 26, 2017 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $61.9 million, or $0.27 per share, for the second quarter of 2017.  This result includes non-cash foreign currency translation gains on deferred tax liabilities of $12.1 million ($0.05 per share), various mark-to-market and other adjustment losses of $10.3 million ($0.04 per share), unrealized gains on financial instruments of $7.9 million ($0.03 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 $54.9 million or $0.24 per share for the second quarter of 2017.  In the second quarter of 2016, the Company reported net income of $19.0 million or $0.09 per share.

Not included in the second quarter of 2017 adjusted net income above is non-cash stock option expense of $3.8 million ($0.02 per share).

For the first six months of 2017, the Company reported net income of $137.8 million, or $0.60 per share.  This compares with the first six months of 2016 when net income was $46.8 million, or $0.21 per share.  Financial results in the 2017 period were positively affected by higher gold sales volumes and realized prices (approximately 6% and 1% higher, respectively) and lower depreciation expense.

In the second quarter of 2017, cash provided by operating activities decreased to $184.0 million ($197.2 million before changes in non-cash components of working capital) compared with cash provided by operating activities of $229.5 million in the second quarter of 2016 ($192.7 million before changes in non-cash components of working capital).  The cash provided by operating activities before changes in working capital during the current period were essentially the same.

________________________

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 first six months of 2017, cash provided by operating activities was $406.6 million ($421.2 million before changes in non-cash components of working capital), as compared with the first six months of 2016 when cash provided by operating activities was $375.2 million ($360.2 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in working capital during the first six months of 2017 was mainly due to a combination of higher gold and by-product metals production and higher realized gold prices.

"As a result of continued strong production and cost performance at all of our mines, we have increased our gold production guidance to 1.62 million ounces from 1.57 million ounces and reduced our total cash cost guidance from $610 per ounce to $595 per ounce", said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "In addition to strong operating and financial results, we continue to make very good progress on the exploration and development front.  Our Nunavut projects are advancing on schedule and budget, and we are also generating positive exploration results at many of our minesites, which should support future growth initiatives", added Mr. Boyd.

Second Quarter 2017 highlights include:

  • Operations continue to deliver strong performance – Payable gold production2 in the second quarter of 2017 was 427,743 ounces of gold at production costs per ounce of $634, total cash costs3 per ounce of $556 and all-in sustaining costs per ounce4 ("AISC") of $785

  • Full year production guidance increased and unit cost forecasts reduced – Given the strong first half operational performance, 2017 production is now expected to be 1.62 million ounces compared to previous guidance of 1.57 million ounces.  Total cash costs per ounce are now expected to be $580 to $610 (previously $595 to $625) and AISC are expected to be $830 to $880 per ounce (previously $850 to $900)

  • Meliadine project continues to progress on schedule and budget – Underground development is ahead of plan and engineering was 80% complete at the end of June 2017.  Construction activities are progressing well with cranes and structural steel for the erection of surface buildings being moved to site from the Rankin Inlet laydown facility.  The first delivery of the shipping season arrived in Rankin Inlet on June 30, 2017.  Since then, three deliveries of construction materials have been received at Rankin Inlet.  Four additional deliveries of construction materials are expected over the next two months

  • Amaruq exploration program continues to yield positive results – At Amaruq, infill drilling has been completed on the Whale Tail and V Zone deposits, and other target areas are now being explored.  Significant results include: 6.9 grams per tonne ("g/t") over 6 metres on the western extension of the planned Whale Tail pit and 20.4 g/t gold over 10.4 metres at the V Zone at 225 metres depth, beneath the planned pit outline

  • Infill and exploration drilling expected to result in mineral resource additions and conversions at multiple properties – Significant results include: 7.1 g/t gold over 33.5 metres at the Rimpi deposit at Kittila, 23.7 g/t gold over 10.9 metres at LaRonde 3 and 1.6 g/t gold over 18.2 metres near surface at the Bravo deposit at Creston Mascota

  • A quarterly dividend of $0.10 per share was declared

 

___________________
2 Payable production of a mineral means the quantity of mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance" below.
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" below.

 

Second Quarter Financial and Production Highlights – Higher Gold Production, Lower Production Costs – 2017 Cost Forecasts Decrease

In the second quarter of 2017, strong operational performance continued at the Company's mines.  Payable gold production was 427,743 ounces, compared to 408,932 ounces in the second quarter of 2016.  The higher level of production in the 2017 period was primarily due to higher grades mined at Meadowbank and Canadian Malartic.  A detailed description of the production of each of the Company's mines is set out below.

In the first six months of 2017, payable gold production was 845,959 ounces, compared to 820,268 ounces in the 2016 period.  The higher level of production in the 2017 period was primarily due to higher grades mined at Meadowbank.  

Production costs per ounce for the second quarter of 2017 were $634, which was essentially the same as the $625 in the 2016 period.  Total cash costs per ounce for the second quarter of 2017 were $556 which was 6% lower compared to $592 per ounce for the second quarter 2016.  Total cash costs per ounce in the second quarter of 2017 were positively affected by higher production of gold at Meadowbank and Canadian Malartic.  A detailed description of the cost performance of each of the Company's mines is set out below.

Production costs per ounce for the first six months of 2017 were $606, which was slightly lower than the $609 in the 2016 period.  Production costs per ounce were positively affected by higher grades mined at Meadowbank and Canadian Malartic.  Total cash costs per ounce for the first six months of 2017 were $548 compared with $582 in the prior-year period.  Total cash costs per ounce in the first six months of 2017 were positively affected by higher production of gold at Meadowbank and Canadian Malartic.  The Company now forecasts a decrease in total cash costs per ounce for 2017 to $580 to $610 per ounce, which is down from previous guidance of $595 to $625 per ounce.

AISC for the second quarter of 2017 were 7% lower at $785 per ounce compared to $848 in the second quarter of 2016.  The lower AISC is primarily due to lower total cash costs per ounce and lower sustaining capital expenditures compared to the second quarter of 2016.  AISC in 2017 are now forecast to be $830 to $880 per ounce, lower than previous guidance of $850 to $900 per ounce.

AISC for the first six months of 2017 was $764 per ounce compared to $822 in the prior-year period.  The lower AISC is primarily due to lower total cash costs per ounce and lower sustaining capital expenditures compared to the prior-year period.

Cash Position Remains Strong

Cash and cash equivalents and short term investments increased to $952.4 million at June 30 2017, from the March 31, 2017 balance of $804.3 million.

On April 7, 2017, the Company repaid the first series of maturing guaranteed senior unsecured notes totalling $115 million.  On June 29, 2017, the Company issued, on a private placement basis, an aggregate of $300 million of guaranteed senior unsecured notes due 2025, 2027, 2029 and 2032 (the "Notes") with a weighted average maturity of 10.9 years and weighted average coupon of 4.67%.  Net proceeds from the sale of the Notes were used for general corporate purposes.  During the quarter, the Company's investment grade credit rating was re-confirmed by DBRS with a stable trend.

The outstanding balance on the Company's credit facility remained nil at June 30, 2017.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

Approximately 35% of the Company's remaining 2017 Canadian dollar exposure is hedged at a floor price of 1.30 US$/C$.  For remaining 2017 Euro exposure, approximately 11% is hedged at a floor price of 1.10 EURO$/US$ and for remaining 2017 Mexican Peso exposure, approximately 34% is hedged at 18.60 US$/MXP.

Capital Expenditures

Additional expenditures in 2017 for preliminary work on the road deviation at the Canadian Malartic extension project are expected to be between $16 to $22 million, reflecting the Company's 50% interest. These additional expenditures are expected to be offset by reduced capital expenditures at other projects such as Goldex and LaRonde Zone 5.  The forecast for 2017 capital expenditures remains unchanged at $859 million.  The following table sets out capital expenditures (including sustaining capital) in the second quarter and first six months of 2017.

Capital Expenditures




(In thousands of US dollars)






Three Months Ended

Six Months Ended



June 30, 2017

June 30, 2017

Sustaining Capital




LaRonde mine


$

22,532

$

36,337

Canadian Malartic mine


12,628

25,070

Meadowbank mine


3,322

5,753

Kittila mine


12,254

21,935

Goldex mine


5,031

8,210

Pinos Altos mine


8,143

16,382

Creston Mascota deposit Pinos Altos


1,382

1,964

La India mine


2,265

3,899





Development Capital




LaRonde Zone 5


$

4,448

$

6,871

Canadian Malartic mine


723

1,441

Amaruq satellite deposit


38,541

50,861

Kittila mine


6,155

12,635

Goldex mine


7,086

19,641

Pinos Altos mine


6,048

6,937

La India mine


2,483

2,483

Meliadine project


93,125

141,690

Other


159

886





Total Capital Expenditures


$

226,325

$

362,995

 

Revised 2017 Guidance – Production Increased, Costs Lowered, Depreciation Decreased

Production for 2017 is now forecast to be 1.62 million ounces of gold (previously 1.57 million ounces) with total cash costs per ounce expected to be $580 to $610 (previously $595 to $625) and AISC expected to be approximately $830 to $880 per ounce (previously $850 to $900).

The Company expects depreciation and amortization expense to be approximately $550 million.  Previous guidance was $580 to $610 million.

Dividend Record and Payment Dates for the Third Quarter of 2017

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per common share, payable on September 15, 2017, to shareholders of record as of September 1, 2017.  Agnico Eagle has declared a cash dividend every year since 1983.

Other Expected Dividend and Record Dates for 2017

Record Date

Payment Date

December 1

December 15

 

Dividend Reinvestment Plan

Please follow the link below for information on the Company's dividend reinvestment plan.  Dividend Reinvestment Plan

Second Quarter 2017 Results Conference Call and Webcast Tomorrow

The Company's senior management will host a conference call on Thursday, July 27, 2017 at 10:00 AM (E.D.T.) to discuss financial results and provide an update of the Company's operating activities.

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 ten 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 50955626. The conference call replay will expire on August 27, 2017.

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

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

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

LaRonde Mine – Infill Drilling Expected to Upgrade Mineral Resources with Potential for Higher Gold Grades in Western Portion of LaRonde 3 Project

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

LaRonde Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


520


569

Tonnes of ore milled per day


5,708


6,253

Gold grade (g/t)


4.51


4.31

Gold production (ounces) 


72,090


75,159

Production costs per tonne (C$)


$

118


$

100

Minesite costs per tonne (C$)


$

113


$

106

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


$

647


$

539

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


$

482


$

543

 

Production costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to lower tonnage as a result of a planned shutdown to perform maintenance on the ventilation system and the timing of unsold concentrate inventory.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower production and the reasons described above.

Minesite costs per tonne5 in the second quarter of 2017 increased when compared to the prior-year period due to lower tonnage as a result of a planned shutdown to perform maintenance on the ventilation system.  Total cash costs per ounce in the second quarter of 2017 decreased when compared to the prior-year period due to higher by-product metal revenues.

___________________
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.


LaRonde Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,079


1,147

Tonnes of ore milled per day


5,960


6,302

Gold grade (g/t)


4.56


4.27

Gold production (ounces) 


151,002


150,496

Production costs per tonne (C$)


$

112


$

102

Minesite costs per tonne (C$)


$

111


$

104

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


$

603


$

574

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


$

473


$

536

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower tonnage as a result of a planned shutdown to perform maintenance on the ventilation system and the timing of unsold concentrate inventory.  Production costs per ounce for the first six months of 2017 increased due to the reasons described above.

Minesite costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower tonnage as a result of a planned shutdown to perform maintenance on the ventilation system.  Total cash costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to higher gold production from higher gold grades and higher by-product metal revenues.

At the LaRonde 3 project, studies are ongoing to evaluate the potential to mine below the currently planned 311 level (a depth of 3.1 kilometres).  The current mineral resources in the western portion of the deposit are all in the inferred mineral resource category, extending to the 371 level.

Selected recent drill results are set out in the table below; drill hole collar coordinates are set out in a table in the Appendix of this news release.  Pierce points for all of these holes are shown on the LaRonde Composite Longitudinal Section.  All intercepts reported for the LaRonde mine show capped gold grades over estimated true widths.

Recent exploration and infill drill results from LaRonde 3 (below Level 311)

Drill hole

From
(metres)

To
(metres)

Depth of
midpoint
below
surface
(metres)

Estimated
true width
(metres)

Gold grade
(g/t)
(uncapped)

Gold
grade
(g/t)
(capped)

Silver
grade (g/t)
(uncapped)

Copper
grade
(%)

Zinc
grade
(%)

LR-290-075A

482.1

497.5

3,240

10.9

28.8

22.1

33.6

0.35

0.10

LR-290-076

415.7

423.0

3,137

4.3

15.1

13.0

83.7

0.56

10.07

LR-290-077A

548.7

555.1

3,292

3.5

5.9

5.9

15.7

0.12

0.71

LR-293-021A

345.0

361.5

3,123

11.9

12.6

12.6

16.0

0.25

0.03

LR-293-022

378.6

396.6

3,163

10.9

25.6

23.7

15.6

0.30

0.02

* Holes at LaRonde 3 use a capping factor of 80 g/t gold and 1,000 g/t silver.  None of the silver values in this table were capped.

 

An infill drill program is continuing from the 311 to the 371 levels, with a focus on the western portion of the deposit where recent drilling has continued to encounter higher-grade mineralization between the 311 and 340 levels. Drilling highlights from the first half of 2017 include: 23.7 g/t gold over 10.9 metres at 3,163 metres depth in hole LR-293-022 and 22.1 g/t gold over 10.9 metres at 3,240 metres depth in hole LR-290-075A.

These new high-grade intersections support the geological model and are expected to result in conversion of inferred mineral resources to indicated mineral resources in the western portion of the LaRonde 3 project, in the year-end 2017 update.

[Laronde Mine Composite Longitudinal Section]

LaRonde Zone 5 – Permitting and Development Activities Remain on Schedule

In 2003, the Company acquired the LaRonde Zone 5 project.  The project lies adjacent to and west of the LaRonde mining complex and previous operators mined the deposit by open pit.  In February 2017, the Company approved LaRonde Zone 5 for development (subject to permitting approval).  Permits are expected to be received by mid-2018 with underground mining expected to commence shortly thereafter.

In the first quarter of 2017, the certificate of authorization for surface construction was received.  Construction of the paste plant is underway with completion expected in the second quarter of 2018.  A new underground ramp is being driven with lateral underground development underway on three levels in preparation for mining activities.  For additional details on the project see the Company's news release dated February 15, 2017.

Canadian Malartic Mine – Record Quarterly Production and Mill Throughput

In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired all of the issued and outstanding common shares of Osisko Mining Corporation and created the Canadian Malartic General Partnership (the "Partnership").  The Partnership owns the Canadian Malartic mine in northwestern Quebec and operates it through a joint management committee.  Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership.  All volume measures in this section reflect the Company's 50% interest in the Canadian Malartic mine except as noted.

Canadian Malartic Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


2,603


2,524

Tonnes of ore milled per day


28,612


27,736

Gold grade (g/t)


1.11


1.00

Gold production (ounces) 


82,509


72,502

Production costs per tonne (C$)


$

27


$

21

Minesite costs per tonne (C$)


$

24


$

24

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


$

639


$

662

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


$

540


$

621

 

Production costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to timing of unsold inventory.  Production costs per ounce in the second quarter of 2017 decreased when compared to the prior-year period due to higher production from higher gold grades.  The mill had record throughput levels during the quarter largely due to increased volumes of softer ore being processed. 

Minesite costs per tonne in the second quarter of 2017 were the same when compared to the prior-year period.  Total cash costs per ounce in the second quarter of 2017 decreased when compared to the prior-year period due to higher production from higher gold grades.

Canadian Malartic Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


5,036


4,905

Tonnes of ore milled per day


27,825


26,951

Gold grade (g/t)


1.07


1.04

Gold production (ounces) 


153,891


146,115

Production costs per tonne (C$)


$

23


$

21

Minesite costs per tonne (C$)


$

23


$

24

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


$

554


$

608

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


$

548


$

589

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to timing of unsold inventory.  Production costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to higher production from higher gold grades.

Minesite costs per tonne for the first six months of 2017 decreased when compared to the prior-year period due to higher throughput levels during the period.  Total cash costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to the reasons described above.

On April 19, 2017, the Government of Quebec announced the issuance of two decrees authorizing the Partnership to carry out the proposed expansion of the Canadian Malartic mine and the deviation of Highway 117 in Malartic (collectively, the "Project"), which will allow the Partnership to access the Barnat deposit.  The preparatory work for the Project will begin after obtaining the certificates of authorization from the Quebec Ministry of Sustainable Development, Environment and Climate Change.

Deviation plans include a temporary bridge over Highway 117 to minimize the impact of the construction work on local traffic.  Tree clearing activities have started for the road deviation.  The final certificate of authorization for the bridge construction is expected from the Quebec Ministry of Transport in the third quarter of 2017.  Road construction is expected to take two years.

Additional expenditures in 2017 for preliminary work on the road deviation at the Canadian Malartic extension Project are expected to be between $16 to $22 million, (reflecting the Company's 50% interest in the Canadian Malartic mine).  The Company's production guidance (see news release dated February 15, 2017) assumes a modest contribution from Barnat in late 2019.

Drilling at Odyssey Focused on Internal Zones and Infilling the South Zone

At the Canadian Malartic mine, exploration programs are ongoing to evaluate a number of near-pit/underground targets and the potential to mine portions of the East Malartic deposit, which is located adjacent to the Canadian Malartic mine.  In addition, the Partnership continues to explore the Odyssey project, which is located approximately 1.5 kilometres east of the current limit of the Canadian Malartic open pit.  These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill, and studies are underway to further evaluate these prospects.

During the second quarter of 2017, 35 holes (totaling 25,759 metres) were drilled at Odyssey with a primary focus on further defining the internal mineralized zones between the Odyssey North and South Zones and expanding the mineral resources in Odyssey South.  Drilling carried out to date suggests that these internal zones could increase the mineral resources and enhance the economics of the project by adding higher grade mineral resources that would require minimal additional infrastructure to access.

Canadian Malartic Corporation

In addition to the Partnership, each of Agnico Eagle and Yamana has an indirect 50% interest in Canadian Malartic Corporation ("CMC") which holds a portfolio of exploration properties that includes properties in the Kirkland Lake area of Ontario and the Pandora property in the Abitibi region of Quebec.

At the Pandora property (adjacent to the Lapa mine), seven diamond drill holes (3,244 metres) have been completed in 2017, with a focus on the western portion of the property.  Given that these holes have yielded low gold values, and the Lapa operations are winding down, the decision has been made to cease exploration activities from underground at Pandora.

In addition, CMC has retained financial advisors to evaluate strategic alternatives with respect to the Kirkland Lake property portfolio.

Lapa – Production now Expected to Extend to the end of the Third Quarter of 2017

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

Lapa Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


134


161

Tonnes of ore milled per day


1,474


1,769

Gold grade (g/t)


4.05


5.20

Gold production (ounces) 


15,881


21,914

Production costs per tonne (C$)


$

118


$

119

Minesite costs per tonne (C$)


$

114


$

116

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


$

741


$

675

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


$

712


$

658

 

Production costs per tonne in the second quarter of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower production from lower grades.

Minesite costs per tonne in the second quarter of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to the reasons described above.

Lapa Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


264


322

Tonnes of ore milled per day


1,456


1,769

Gold grade (g/t)


4.15


5.10

Gold production (ounces) 


31,241


43,623

Production costs per tonne (C$)


$

125


$

114

Minesite costs per tonne (C$)


$

124


$

118

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


$

789


$

632

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


$

781


$

663

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower throughput levels as the mine reaches the end of the mine life and higher costs associated with development work in the new zones that had been previously excluded from the mine plan.  Production costs per ounce for the first six months of 2017 increased due to lower production from lower grades and the reasons described above.

Minesite costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to reasons described above.  Total cash costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to the reasons described above.

During the second quarter of 2017, further development was undertaken to allow for additional mining in the Contact Zone, Zone 7 at depth and Zone 4.  Under the current mine plan, Lapa is expected to operate until the end of the third quarter of 2017.  Total gold production for 2017 is now expected to be approximately 40,000 ounces, an increase from the previous forecast of 30,000 ounces.

Goldex – Deep 1 Project Achieves Commercial Production

The 100% owned Goldex mine in northwestern Quebec began operation from the M and E satellite zones in September 2013.  During the second quarter of 2017, approximately 118,000 tonnes of development ore from the Deep 1 project was milled and yielded 5,646 ounces of pre-commercial gold production.  The revenue from the pre-commercial gold production was deducted from the capital expenditures of the project.  As of July 1, 2017, the Deep 1 project was declared to be in commercial production.

Goldex Mine - Operating Statistics





All metrics exclude pre-production tonnes and ounces


Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


562


658

Tonnes of ore milled per day


6,173


7,231

Gold grade (g/t)


1.48


1.63

Gold production (ounces) 


24,691


31,452

Production costs per tonne (C$)


$

35


$

32

Minesite costs per tonne (C$)


$

36


$

32

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


$

596


$

507

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


$

603


$

513

 

Production costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting development ore tonnage).  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower production from lower grades (after deducting development ore ounces).

Minesite costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to the reasons described above.

Goldex Mine - Operating Statistics





All metrics exclude pre-production tonnes and ounces


Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,146


1,294

Tonnes of ore milled per day


6,332


7,110

Gold grade (g/t)


1.58


1.67

Gold production (ounces) 


54,967


63,792

Production costs per tonne (C$)


$

37


$

33

Minesite costs per tonne (C$)


$

36


$

33

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


$

574


$

496

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


$

564


$

509

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting development ore tonnage) and timing of unsold inventory.  Production costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to lower production from lower grades (after deducting development ore ounces).

Minesite costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting development ore tonnage).  Total cash costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to the reasons described above.

All excavations for the Deep 1 Project have now been completed, the first stope has been mined out and backfilled and three additional stopes are under development.  The Rail-Veyor has been commissioned and all six trains are expected to be operational in the third quarter of 2017.  Mining activities in the Deep 1 area are expected to continue to ramp up through 2018.

The Company is evaluating the potential to mine a portion of the Deep 2 Zone, which starts below the Deep 1 Zone at 1,200 metres below surface.

Drilling and development is ongoing on the South Zone, which is accessible from the Deep 1 Zone infrastructure.  The South Zone consists of quartz veins that have higher grades than those in the primary mineralized zones at Goldex.  The Company is evaluating the potential for the South Zone to provide incremental ore feed to the Goldex mill.

At the adjoining Joubi property, exploration activities by previous operators focused on the evaluation of quartz vein mineralization within a quartz diorite body. A six-hole drill program is underway to evaluate the potential for bulk mining within the Joubi intrusive body.

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 Quebec Bureau des Audiences Publiques sur l'Environnement report on the Akasaba project was made public on June 2, 2017.  The report deemed the Akasaba West project acceptable under certain conditions.  Final approval by the Quebec Government is under review.  At the federal level, discussions are ongoing on the wildlife habitat compensation plan submitted for the Akasaba West project.  Mining activities are expected to begin on the project in 2019.

NUNAVUT REGION

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential.  With the Company's largest producing mine (Meadowbank) and two significant development assets (Meliadine and the Amaruq satellite deposit at Meadowbank) and other exploration projects, the Company believes Nunavut has the potential to be a strategic operating platform with the ability to generate strong production and cash flows over several decades.

Meadowbank – Strong Production Driven by Higher Grades and Mining Sequence

The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010.

Meadowbank Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


996


994

Tonnes of ore milled per day


10,948


10,923

Gold grade (g/t)


3.26


2.48

Gold production (ounces) 


95,289


72,402

Production costs per tonne (C$)


$

73


$

71

Minesite costs per tonne (C$)


$

73


$

73

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


$

571


$

756

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


$

559


$

789

 

Production costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to a lower amount of stripping costs being capitalized and timing of unsold inventory.  Production costs per ounce in the second quarter of 2017 decreased when compared to the prior-year period due to higher production resulting from higher grades processed and mining sequence.

Minesite costs per tonne in the second quarter of 2017 were the same when compared to the prior-year period.  Total cash costs per ounce in the second quarter of 2017 decreased when compared to the prior-year period due to the reasons described above.

Meadowbank Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,922


1,939

Tonnes of ore milled per day


10,620


10,654

Gold grade (g/t)


3.19


2.53

Gold production (ounces) 


180,659


144,713

Production costs per tonne (C$)


$

75


$

72

Minesite costs per tonne (C$)


$

73


$

75

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


$

600


$

739

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


$

573


$

789

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower throughput, a lower amount of stripping costs being capitalized and timing of unsold inventory.  Production costs per ounce for the first six months of 2017 decreased due to higher production resulting from higher grades processed and mining sequence.

Minesite costs per tonne for the first six months of 2017 decreased when compared to the prior-year period due to lower direct production expenses.  Total cash costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to the reasons described above.

Given the positive tonnage and grade reconciliation with the Vault deposit block model, the Company now expects to extend production activities at Meadowbank through year-end 2018.  Additional opportunities are being evaluated in order to further extend production into 2019 and bridge any gap between cessation of mining operations at Meadowbank and commencement of production at Amaruq.  Further information will be provided with the production guidance in February 2018.

Amaruq Satellite Deposit – Drilling Infills Whale Tail and V Zone and Suggests Potential Extensions of the V Zone to the West and at Depth to the Southeast

Agnico Eagle has a 100% interest in the Amaruq satellite deposit, approximately 50 kilometres northwest of the Meadowbank mine.  Amaruq is situated on a 116,717-hectare property near the 77,411-hectare Meadowbank property.  A significant gold discovery was made on the Amaruq property in 2013, and activities since that time have focused on the development of satellite mineralization to feed the existing 11,000 tonne per day capacity Meadowbank mill in the future.

At December 31, 2016, the Amaruq deposit contained an open pit indicated mineral resource of 2.1 million ounces of gold (16.9 million tonnes grading 3.88 g/t gold); an open pit inferred mineral resource of 763,000 ounces gold (4.9 million tonnes grading 4.81 g/t gold); and an underground inferred mineral resource of 1.4 million ounces gold (6.8 million tonnes grading 6.22 g/t gold).

In February 2017, the Company's Board of Directors approved the project for development pending the receipt of the required permits.

Agnico Eagle is working closely with the Nunavut Impact Review Board ("NIRB") and the Nunavut Water Board ("NWB") on the Amaruq Phase I (Whale Tail pit) joint permitting process.  NIRB/NWB has coordinated the technical review of Amaruq Phase I, which is underway; technical meetings and a prehearing conference were held in Baker Lake, from April 27 to May 2.  All questions and concerns from those meetings have been answered, and the final public hearing is scheduled to take place in September 2017.  The Whale Tail pit permitting is on schedule and permits are expected by the third quarter of 2018.

The Company expects a conventional open pit mining operation to begin on the Whale Tail satellite deposit (Phase I) in the third quarter of 2019 followed by the V Zone pit (Phase II) in 2020.  The Whale Tail and V Zone planned pits extend to depths of approximately 250 metres and 150 metres, respectively, and both pits are open for expansion.

The Company's plan calls for the production of approximately 2.0 million ounces of gold between 2019 and 2024, with pre-mining activities starting in 2018 at the Whale Tail deposit.  This represents less than 50 percent of the currently known mineral resource base.  Initial capital costs are estimated to be approximately $330 million.  For additional details on the project see the Company's news release dated February 15, 2017.

Approximately $78 million will be spent on capital costs at Amaruq in 2017, primarily on completion of the all-weather exploration road, additional technical studies and the procurement of materials and equipment for the 2018 construction season.

By the end of the second quarter of 2017, 52 kilometres of the exploration road from Meadowbank to Amaruq had been completed; the 64-kilometre exploration road is expected to be completed on budget and on schedule in September 2017.  Development of the Amaruq exploration ramp has been permitted and planning is underway; construction of the ramp will begin when the road is completed and the necessary underground mining equipment can be brought to site.

On June 15, 2017, the Company and the Kivalliq Inuit Association signed an Inuit Impact and Benefit Agreement ("IIBA") for the Whale Tail Project.  The Whale Tail IIBA addresses protection of Inuit values, culture and language and provides for enhanced access by Inuit to employment, training and business opportunities.  The IIBA contains implementation and monitoring measures that will ensure these goals are achieved.

Second Quarter 2017 Amaruq Work Program – Primary Focus on Infill and Expansion of V Zone and Whale Tail Deposit

The first phase of a planned $22 million, 75,000-metre drill program commenced in early February 2017.  In the second quarter of 2017, 191 holes (36,000 metres) were drilled.  The second quarter 2017 drill program was focused primarily on infilling the Whale Tail pit and V Zone pit mineral resources, which was completed near the end of May.  Drilling since the end of May has focused on exploration to extend the Whale Tail deposit at depth, particularly on the western side (near Mammoth Lake).  Results from both the V Zone and Whale Tail exploration programs are set out below.  A table of results from infill drilling at Whale Tail and V Zone can be found in the Appendix of this news release.

Recent intercepts from the project are set out in the table below and the drill hole collars are located on the Amaruq project local geology map.  The pierce points are shown on the Amaruq project composite longitudinal section.  All intercepts reported for the Amaruq project show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

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

Drill hole

Location

From
(metres)

To
(metres)

Depth of
midpoint
below
surface
(metres)

Estimated
true width
(metres)

Gold grade
(g/t)
(uncapped)

Gold
grade (g/t)
(capped)*

AMQ17-1142

WT

21.8

27.9

18

5.9

4.5

4.5

AMQ17-1199

IVR

260.0

272.0

225

10.4

29.8

20.4

  Including


260.0

264.5

222

3.4

59.0

38.3

  Including


268.8

272.0

229

3.0

28.8

22.4

AMQ17-1216

IVR

218.7

222.5

193

3.1

21.1

20.6

AMQ17-1266

IVR

122.0

125.4

90

2.8

15.8

15.8

AMQ17-1281

IVR

40.0

44.0

34

2.8

259.5

15.8

AMQ17-1303

WT

15.7

24.5

15

4.4

8.6

8.6

  And

WT

39.7

52.3

33

6.3

6.9

6.9

  And

WT
Extension

146.9

153.2

107

5.5

5.8

5.8

AMQ17-1308

WT

65.7

70.5

50

4.1

4.7

4.7

AMQ17-1368

IVR

178.9

181.9

138

3.0

483.6

30.1

AMQ17-1370

IVR

220.6

226.6

205

5.9

6.1

6.1

AMQ17-1387

IVR

12.4

21.5

12

9.0

4.3

4.3

AMQ17-1394

IVR

80.7

84.3

58

3.1

21.5

8.6

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

**Result from hole AMQ17-1143 was previously reported in the April 27, 2017 news release.

 

[Amaruq Project Local Geology Map]

[Amaruq Project Composite Longitudinal Section]

V Zone

The V Zone consists of a series of parallel stacked quartz vein structures striking northeast and dipping shallowly to the southeast from near surface to locally as deep as 542 metres. The V Zone remains open at depth.

Several recent drill holes intersected the uppermost V Zone structure such as hole AMQ17-1281 which intersected a shallow mineralized zone, returning 15.8 g/t gold over 2.8 metres at 34 metres depth, just below the planned pit's northern margin in an area outside the current V Zone mineral resources.

Just below the proposed V Zone pit outline there were high-grade gold intercepts at greater depths.  Hole AMQ17-1199 returned 20.4 g/t gold over 10.4 metres at 225 metres depth, representing the down-dip extension of the same mineralized structure found near surface approximately 350 metres to the west.  Another 100 metres to the northeast, hole AMQ17-1216 returned 20.6 g/t gold over 3.1 metres at 193 metres depth.

Two holes with significant grades have identified a new area south of the V Zone pit outline, showing the potential to extend the V Zone to the southeast at depth.  AMQ17-1368 intersected 30.1 g/t gold over 3.0 metres at 138 metres depth in the upper structure 80 metres northeast of the Whale Tail pit limit, while AMQ17-1370 intersected the same structure approximatively 175 metres farther east, returning 6.1 g/t gold over 5.9 metres at 205 metres depth. 

Approximately 200 metres west of the proposed V Zone pit outline, exploration has outlined a new mineralized area.  Hole AMQ17-1266 returned 15.8 g/t gold over 2.8 metres at 90 metres depth.  Nearby, hole AMQ17-1387 intersected near-surface mineralization, returning 4.3 g/t gold over 9.0 metres at 12 metres depth, as did hole AMQ17-1394, with an intersection of 8.6 g/t gold over 3.1 metres at 58 metres depth.  This area requires further investigation.

Whale Tail

Drilling in the western end of the planned Whale Tail pit has confirmed mineral resources and extended the deposit.  Hole AMQ17-1303 had three intercepts: 8.6 g/t gold over 4.4 metres at 15 metres depth, 6.9 g/t gold over 6.3 metres at 33 metres depth and 5.8 g/t gold over 5.5 metres at 107 metres depth (beneath the planned pit).  Nearby, hole AMQ17-1142 intersected 4.5 g/t gold over 5.9 metres at 18 metres depth, while hole AMQ17-1308 reported 4.7 g/t gold over 4.2 metres at 50 metres depth.

To date, the Whale Tail deposit has been defined over at least 2.3 kilometres of strike length and extends from surface to 732 metres depth; it remains open at depth and along strike.

Conversion Drilling

The conversion drilling campaign at Amaruq continues to demonstrate very good continuity of gold mineralization within the V Zone, affirming high-grade gold values at open-pit depths, increasing confidence in the current geological model.  Infill drilling also demonstrates good continuity in the Whale Tail deposit.  The results of selected infill drill holes from both deposits can be found in a table in the Appendix of this news release.

Future Drilling Activities

Drilling to test regional exploration targets began in June, including a deep extension of Whale Tail and V Zones, as well as an eastward extension of the V Zone toward the Buffalo prospect.  This drilling will continue, with results expected later this year.

Meliadine Project – Boat Sealift Underway, Construction Activities are on Schedule and on Budget

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010 and is one of Agnico Eagle's largest gold projects in terms of mineral resources.  The Company owns 100% of the 111,757 hectare property.

In February 2017, the Company's Board of Directors approved the construction of the Meliadine project.  The mine is expected to begin operations in the third quarter of 2019, and the current mine plan will be focused on the Tiriganiaq and nearby Wesmeg-Normeg mineralized zones that will be accessed from the Tiriganiaq underground infrastructure.

Over an estimated 14 year mine life, approximately 5.3 million ounces of gold are expected to be produced at Meliadine.  This represents approximately half of the currently known mineral reserve and mineral resource base.

At December 31, 2016, the Meliadine property was estimated to hold proven and probable mineral reserves of 3.4 million ounces (14.5 million tonnes grading 7.32 g/t gold), indicated mineral resources of 3.3 million ounces (20.8 million tonnes grading 4.95 g/t gold) and inferred mineral resources of 3.6 million ounces (14.7 million tonnes grading 7.51 g/t gold).  In addition, there are numerous other known gold occurrences along the 80-kilometre-long greenstone belt that require further evaluation.

For additional details on the project see the Company's news release dated February 15, 2017.

Update on Meliadine Development Activities

On June 30, 2017 the first delivery of the shipping season arrived in Rankin Inlet.  Since that time, three other deliveries of construction materials have been received at Rankin Inlet.  An additional four deliveries of construction materials are expected over the next two months.  Material from the boats has been off loaded at the Company's Rankin Inlet laydown area, prior to being transported by road to the project site.  Adjacent to the laydown site, construction is underway on a fuel storage area.  The first 30 million litre fuel tank is expected to be installed and filled by the end of the 2017 shipping season..

Construction and development activities at the Meliadine project remain on schedule and on budget.  The estimated capital budget for 2017 is unchanged at $360 million.  Project activities during the second quarter included:

  • Key permits and production lease received
  • Mine development is 3% ahead of plan.  During the second quarter, approximately 1,308 metres of underground development were completed.  In the first half of 2017, approximately 2,524 metres of development have been completed (a total of approximately 5,600 metres of development are planned for 2017)
  • Excavation of the second underground portal is underway, and the ramp to this portal is being driven from underground
  • Installation of underground ventilation and heating continues and is expected to be completed by the first quarter of 2018
  • Approximately 12,500 metres of conversion drilling and 14,000 metres of scheduled underground delineation drilling is underway
  • Detailed engineering is ahead of plan with 80% completed as compared to a target of 75%
  • Procurement and logistical activity is on target, 70% of global project packages have been awarded
  • New camp facilities (seven wings + kitchen) completed
  • Site occupancy ramping up (380 people were at site at the end of June) with good safety performance
  • Water containment dykes (DCP-1 and DCP-5) completed
  • Sewage treatment plant and water treatment plant completed and now in operation
  • Concrete batch plant production capacity achieved
  • Process plant pilings completed and concrete work in progress
  • Multi-service building ahead of schedule with 48% of the concrete works completed
  • Cranes and structural steel for the erection of the surface buildings are being moved to the site from the Rankin inlet laydown facility
  • Closing in of the process plant, power plant, and multi-service buildings continued and is expected to be completed by the end of 2017

 

The Company believes that there are numerous opportunities to create additional value both at the mine and on the large land package at Meliadine.  Opportunities currently being reviewed include:

  • Optimization of the current mine plan (advance Phase 2 pit development)
  • Minesite exploration upside through mineral resource conversion and expansion of known ore zones
  • Budgets have been approved to test potential extensions of the mineralization at depth outside the mineral resource model (most mineralized zones are open below a vertical depth of 450 metres)
  • Potential for the discovery of new deposits along the 80 kilometre-long greenstone belt.  One drill is currently testing a number of regional targets on the property.  Approximately 5,000 metres of reconnaissance drilling is planned for 2017, and regional exploration programs are expected to ramp up once the mine starts production in 2019

 

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 studies are underway to evaluate the potential to cost-effectively increase the production rate.

Kittila – Conversion of Main Zone in Rimpi Deep area, Expansion of Sisar Top and Central Zones

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

Kittila Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


439


389

Tonnes of ore milled per day


4,829


4,275

Gold grade (g/t)


3.84


4.29

Gold production (ounces) 


47,156


46,209

Production costs per tonne (EUR)


75


79

Minesite costs per tonne (EUR)


77


81

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


$

772


$

737

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


$

802


$

756

 

Production costs per tonne in the second quarter of 2017 decreased when compared to the prior-year period due to higher throughput levels and timing of unsold inventory.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to higher re-handling costs.

Minesite costs per tonne in the second quarter of 2017 decreased when compared to the prior-year period due to higher throughput levels.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to the reasons described above.

Kittila Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore milled (thousands of tonnes)


862


821

Tonnes of ore milled per day


4,764


4,511

Gold grade (g/t)


4.06


4.20

Gold production (ounces) 


98,777


94,336

Production costs per tonne (EUR)


76


77

Minesite costs per tonne (EUR)


76


76

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


$

732


$

743

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


$

732


$

741

 

Production costs per tonne for the first six months of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to higher production and timing of unsold inventory.

Minesite costs per tonne for the first six months of 2017 were the same when compared to the prior-year period.  Total cash costs per ounce for the first six months of 2017 decreased when compared to the prior-year period due to higher production.

The main target of exploration at Kittila continues to be the Sisar Zone, which is subparallel to and slightly east of the main Kittila mineralization.  Sisar has been located between approximately 775 metres and 1,910 metres below surface, forming a roughly triangular shape that remains open at depth and along strike to the north and south.  The initial mineral reserves in the Sisar Zone was estimated as of December 31, 2016 as part of the total Kittla mineral reserves estimate.  Exploration results for Kittila were last reported in the Company's news release dated April 27, 2017.

The main exploration ramp to the North is now completed and is being used for testing the deep extensions of the Roura and Rimpi Zones.  Two internal ramps are being driven southward off the main exploration ramp for converting Sisar Zone and Rimpi deep mineral resources.  Initial results for conversion drilling from the ramp into the Rimpi Deep area are set out below.

In the first half of 2017, 28 holes (10,847 metres) were drilled in the Sisar Top and Central Zones; assays are pending for many of the holes.

Selected recent drill results are set out in the table below; drill hole collar coordinates are set out in a table in the Appendix of this news release.  Pierce points for all these holes are shown on the Kittila Composite Longitudinal Section.  All intercepts reported for the Kittila mine show uncapped grades over estimated true widths, based on a current geological interpretation that is being updated as new information becomes available with further drilling.

Recent exploration drill results from the Sisar Zone (Roura) and Main Zone and conversion drill results from the Rimpi Deep area at the Kittila mine

Drill hole

Zone

From
(metres)

To
(metres)

Depth of
midpoint
below
surface
(metres)

Estimated
true width
(metres)

Gold grade
(g/t)
(uncapped)

RIE17-601

Sisar Top

248.4

258.0

1,027

6.4

5.0

ROD14-003B

Sisar Central

638.0

664.0

1,274

11.2

4.4

ROD14-003D

Sisar Central

490.6

503.0

1,109

8.0

5.7

ROD17-700

Main - Roura

528.0

540.4

1,235

5.2

6.5

ROD17-700B

Sisar Central

692.3

695.5

1,329

2.0

2.5

VUG17-505

Main - Rimpi

78.0

87.0

880

8.3

5.2

  And

Main - Rimpi

100.0

109.0

881

8.3

6.8

  And

Main - Rimpi

117.0

123.0

881

5.6

5.9

VUG17-506

Main - Rimpi

66.0

75.0

864

9.0

5.0

  And

Main - Rimpi

92.0

96.0

860

4.0

5.3

VUG17-508

Main - Rimpi

72.0

106.0

904

33.5

7.1

VUG17-509

Main - Rimpi

75.0

116.0

911

35.4

4.9

VUG17-511

Main - Rimpi

52.0

57.0

873

4.7

6.8

  And

Main - Rimpi

77.0

83.0

869

5.6

7.3

 

[Kittila - Composite Longitudinal Section]

For the purposes of description, the Sisar Zone has been divided into two depths, referred to as "Sisar Top" (approximately 775 to 1,100 metres below surface) and "Sisar Central" (approximately 1,100 to 1,400 metres below surface).  Some of the Sisar mineralized lenses extend between the Sisar Top and Sisar Central Zones.

Recent intercepts at approximately 1,000 metres below surface have confirmed and extended the mineral reserves and mineral resources in the Sisar Top Zone.  The best recent intercepts in this area were in the area of hole RIE17-601 that intersected 5.0 g/t gold over 6.4 metres at 1,027 metres depth.

The results of the deep exploration drilling campaign intersected the Sisar Central Zone from 1,000 to 1,350 metres depth with encouraging results.  Three holes extended the Central Zone mineralizaton to the north by as much as 300 metres.  Hole ROD14-003D intersected 5.7 g/t gold over 8.0 metres at 1,109 metres depth, while hole ROD14-003B intersected 4.4 g/t gold over 11.2 metres at 1,274 metres depth.  Approximately 280 metres farther north, hole ROD17-700B intersected 2.5 g/t gold over 2.0 metres at 1,329 metres depth.  Assays are pending for several other holes in this vicinity.

Deep exploration has confirmed and extended the mineral reserves and mineral resources at the Main Zone in the Roura area between 1,000 and 1,250 metres depth with several high grade intercepts, and has extended the Main Zone into an area 230 metres to the north of, and 70 metres above, the current mineral resources envelope.  Hole ROD17-700 intersected 6.5 g/t gold over 5.2 metres at 1,235 metres depth.

The first conversion drilling campaign of the Main Zone in the Rimpi Deep area using low-angle (almost horizontal) drilling from the exploration ramp intersected significant grades and thicknesses between 850 and 910 metres depth, confirming Rimpi mineral reserves and mineral resources.  In the central part of Rimpi are two very thick intercepts: hole VUG17-509 reported 4.9 g/t gold over 35.4 metres at 911 metres depth, while 50 metres to the north, hole VUG17-508 intersected 7.1 g/t gold over 33.5 metres at 904 metres depth.  On the flanks of the zone, the mineralization appears to divide into multiple horizons.  Approximately 25 metres south of hole VUG17-509, hole VUG17-505 intersected 5.2 g/t gold over 8.3 metres, 6.8 g/t gold over 8.3 metres and 5.9 g/t gold over 5.6 metres, all at approximately 880 metres depth; the last intercept is approximately 37 metres to the east of the first intercept.  Another 50 metres south of hole VUG17-505, hole VUG17-506 intersected 5.0 g/t gold over 9.0 metres at 864 metres depth and 5.3 g/t gold over 4.0 metres at 860 metres depth.  Approximately 50 metres north of hole VUG17-508, hole VUG17-511 intersected 6.8 g/t gold over 4.7 metres at 873 metres depth and 7.3 g/t gold over 5.6 metres at 869 metres depth.

In 2017, approximately $7.9 million will be spent on deep drilling at Kittila (which includes the Sisar Zone).  The goal of this program is to expand the mineral resources to the north of the current mine plan and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.

Studies are ongoing to evaluate the economics of increasing throughput rates at Kittila to 2.0 million tonnes per annum.  The Company expects that this increased mining rate scenario could be supported by the development of the Rimpi and Sisar Zones.

Barsele Project – Exploration Ongoing to Extend Known Mineralized Zones

On June 11, 2015, Agnico Eagle acquired a 55% interest in the Barsele project in Sweden.  The Company can earn an additional 15% interest in the project through the completion of a pre-feasibility study.  The Barsele property is known to contain intrusive-hosted gold mineralization (the Central, Avan and Skiråsen zones), which appears to be similar to the Goldex deposit.  The property also hosts gold-rich polymetallic volcanogenic massive sulphide (VMS) mineralization (the Norra Zone). 

In 2016, Agnico Eagle completed an initial mineral resource estimate for the Barsele project that outlined total inferred mineral resources (on a 100% basis) of 1.2 million ounces (21.7 million tonnes grading 1.72 g/t gold).

In 2017, the $8.8 million exploration drill program is focused on expanding the mineral resources along strike and at depth, and testing the gap between the Central and Avan zones.  Drilling at Barsele during the first half of 2017 totaled 24,777 metres (46 holes). 

SOUTHERN BUSINESS REVIEW

Agnico Eagle's Southern Business operations are focused in Northern Mexico, with two operations (Pinos Altos and Creston Mascota) in Chihuahua State and the La India mine in Sonora State.  These operations have been the source of growing precious metals production (gold and silver), stable operating costs and strong free cash flow since 2009.

Pinos Altos – New Silver Flotation Circuit Commissioned

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



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


620


605

Tonnes of ore processed per day


6,811


6,648

Gold grade (g/t)


2.65


2.71

Gold production (ounces) 


48,196


49,458

Production costs per tonne 


$

46


$

48

Minesite costs per tonne 


$

46


$

47

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


$

595


$

582

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


$

373


$

348

 

Production costs per tonne in the second quarter of 2017 decreased when compared to the prior-year period due to higher tonnes processed, variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore, routine fluctuations in the waste to ore stripping ratio in the open pit mines and timing of unsold inventory.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to more tonnes being mined but lower gold production following a planned mill shutdown.

Minesite costs per tonne in the second quarter of 2017 decreased when compared to the prior-year period due to higher tonnes processed, variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore and routine fluctuations in the waste to ore stripping ratio in the open pit mines.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower gold production and lower by-product revenues.

Pinos Altos Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,173


1,107

Tonnes of ore processed per day


6,482


6,082

Gold grade (g/t)


2.67


2.87

Gold production (ounces) 


93,556


97,575

Production costs per tonne 


$

45


$

48

Minesite costs per tonne 


$

47


$

48

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


$

560


$

540

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


$

366


$

346

 

Production costs per tonne for the first six months of 2017 decreased when compared to the prior-year period due to higher tonnes processed, variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore, routine fluctuations in the waste to ore stripping ratio in the open pit mines and timing of unsold inventory.  Production costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to higher costs from underground mining and maintenance and lower gold production.

Minesite costs per tonne for the first six months of 2017 decreased when compared to the prior-year period due to higher tonnes processed, variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore and routine fluctuations in the waste to ore stripping ratio in the open pit mines.  Total cash costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to lower production.

In late June, a new silver flotation circuit was commissioned at the Pinos Altos mill complex.  The new circuit is expected to result in approximately a 10-12% increase in overall silver recovery.

Work on the Phase III heap leach pad was completed in the second quarter of 2017 and Cell 2 was put into operation in April.  The pad was divided into two individual cells to facilitate faster stacking.

In 2017, a 2,500 metre drill program has been planned for the Cerro Colorado Zone.  Previous drilling outlined a series of veins that are sub-parallel to the main Cerro Colorado Structure.  This year's program is planned to confirm the continuity of the upper level and northwestern extension of Cerro Colorado Zone.

Creston Mascota – Drilling Continues to Extend High Grade Zone at Bravo and Madrono

The Creston Mascota heap leach has been operating as a satellite operation to the Pinos Altos mine since late 2010.

Creston Mascota deposit at Pinos Altos - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


596


573

Tonnes of ore processed per day


6,554


6,297

Gold grade (g/t)


1.17


0.95

Gold production (ounces) 


12,074


12,398

Production costs per tonne 


$

12


$

12

Minesite costs per tonne 


$

13


$

12

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


$

610


$

534

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


$

550


$

469

 

Production costs per tonne in the second quarter of 2017 were the same when compared to the prior-year period.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to higher ore and waste haulage costs as a result of longer trucking distances and lower gold production.

Minesite costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to higher ore and waste haulage costs as a result of longer trucking distances and a lower amount of stripping costs being capitalized.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to slightly lower gold production and the reasons described above.

Creston Mascota deposit at Pinos Altos - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,120


1,089

Tonnes of ore processed per day


6,188


5,984

Gold grade (g/t)


1.16


1.06

Gold production (ounces) 


23,318


23,949

Production costs per tonne 


$

13


$

11

Minesite costs per tonne 


$

13


$

12

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


$

615


$

518

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


$

538


$

465

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to higher ore and waste haulage costs as a result of longer trucking distances and a lower amount of stripping costs being capitalized.  Production costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to slightly lower gold production and the reasons described above.

Minesite costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to reasons described above.  Total cash costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.

During the quarter, waste dumping started at the south end of the open pit, which reduced haulage distances.  The Company expects the reduced haulage distances to control or improve haulage costs at Creston Mascota.

Exploration drilling in the second quarter of 2017 focused on the Bravo and Madrono Zones, immediately adjacent to the Creston Mascota pit, including 11,024 metres of conversion, step-out and exploration drilling in 72 holes.  Bravo is a shallowly northwest dipping zone of quartz breccia, vein and stockwork with significant gold and silver grades, while the quartz vein systems at Madrono appear to be more vertical.  Drilling results for Bravo were last reported in the Company's news release dated April 27, 2017, and Madrono results were last reported in the Company's news release dated February 15, 2017.

Selected recent drill results from the Bravo and Madrono Zones 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 and the collars are located on the Creston Mascota Area Local Geology Map.  All intercepts reported for the Bravo and Madrono Zones 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.

Recent exploration drill results from the Bravo and Madrono Zones at the Creston Mascota mine

Drill Hole

Zone

From
(metres)

To
(metres)

Depth of
midpoint
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)

BRV17-156

Bravo

13.4

16.4

16

3.0

1.0

1.0

10

10

  And

Bravo

20.1

38.3

30

18.2

1.6

1.6

29

29

BRV17-168

Bravo

0.0

5.4

5

5.4

10.9

10.0

12

12

BRV17-180

Bravo

45.4

57.9

52

12.3

1.7

1.7

13

13

BRV17-187

Bravo

20.2

32.2

26

12.0

0.4

0.4

3

3

  And

Bravo

39.0

46.2

40

7.2

1.0

1.0

22

22

BRV17-196

Bravo

0.0

10.1

6

10.0

1.4

1.4

15

15

MAD17-050

Madrono

117.9

123.1

99

4.6

1.1

1.1

28

28

  And

Madrono

145.0

160.7

124

13.6

1.4

1.4

20

20

  And

Madrono

222.0

237.7

202

13.6

1.9

1.9

5

5

  And

Madrono

251.4

255.4

213

3.5

4.2

4.2

4

4

MAD17-061

Madrono

160.0

169.5

188

8.2

2.5

2.5

53

53

MAD17-068

Madrono

163.0

177.0

170

7.0

2.4

2.4

59

59

MAD17-070

Madrono

112.3

118.5

124

5.4

3.3

3.3

69

69

MAD17-083

Madrono

129.6

148.5

142

17.8

3.5

3.5

69

69

  Including


131.9

135.2

136

3.1

5.4

5.4

100

100

  Including


141.9

146.7

146

4.5

8.1

8.1

103

103

  And

Madrono

153.4

168.3

163

14.0

1.8

1.8

24

24

Cut-off value 0.30 g/t gold, maximum 3.0-metres internal dilution

Holes at the Bravo and Madrono Zones use a capping factor of 10 g/t gold and 250 g/t silver.

 

[Creston Mascota Area Local Geology Map]

Results from 41 drill holes in the Bravo Zone this year have confirmed down-dip mineralization as well as favourable gold and silver grades and widths.  Examples include hole BRV17-168, which had a high-grade intercept of 10.0 g/t gold and 12 g/t silver over 5.4 metres at surface.  Approximately 230 metres south of this, hole BRV17-196 averaged 1.4 g/t gold and 15 g/t silver over 10.0 metres at surface.  About 185 metres farther southwest, hole BRV17-187 reported two intercepts: 0.4 g/t gold and 3 g/t silver over 12.0 metres at 26 metres depth and 1.0 g/t gold and 22 g/t silver over 7.2 metres at 40 metres depth.

Recent drilling in the central western portion of the Bravo Zone has opened up new potential growth areas such as Calera.  Drilling in this area included a tight cluster of holes 180 metres west of the current Bravo mineral resources.  The best results from this location were in hole BRV17-156 which yielded two intercepts: 1.0 g/t gold and 10 g/t silver over 3.0 metres at 16 metres depth and 1.6 g/t gold and 29 g/t silver over 18.2 metres at 30 metres depth.  Also in this location, hole BRV17-180 intersected 1.7 g/t gold and 13 g/t silver over 12.3 metres at 52 metres depth.

There have been recent results from two structures in the Madrono Zone: the Madrono and Santa Martha veins.  In the Madrono Vein, hole MAD17-050 had four intercepts between 99 and 213 metres depth, including 1.9 g/t gold and 5 g/t silver over 13.6 metres at 202 metres depth.  Approximately 160 metres to the southeast, hole MAD17-061 reported 2.5 g/t gold and 53 g/t silver over 8.2 metres at 188 metres depth.

In the Santa Martha Vein, hole MAD17-083 had two intercepts: 3.5 g/t gold and 69 g/t silver over 17.8 metres at 142 metres depth and 1.8 g/t gold and 24 g/t silver over 14.0 metres at 163 metres depth.  Approximately 150 metres to the southeast, hole MAD17-070 intersected 3.3 g/t gold and 69 g/t silver over 5.4 metres at 124 metres depth.  Nearby, hole MAD17-068 was drilled vertically and intersected 2.4 g/t gold and 59 g/t silver over 7.0 metres at 170 metres depth.

The recent Madrono results show considerable thickness of mineralization and down-dip continuity of the vein system to the south; the zone continues to be open at depth.

The results of the current drill program have the potential to increase the gold and silver grade of the Bravo and Madrono Zones and consequently improve the mineral resources at Creston Mascota.  Construction of an access road to the Bravo Zone is underway.  This road could ultimately be used for pre-stripping activities on the zone.

La India – Exploration focused on Extending Near-Pit Mineralization and Other Near Mine Targets

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

La India Mine - Operating Statistics







Three Months Ended


Three Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,329


1,535

Tonnes of ore processed per day


14,605


16,868

Gold grade (g/t)


0.65


0.76

Gold production (ounces) 


24,211


27,438

Production costs per tonne 


$

11


$

8

Minesite costs per tonne 


$

11


$

8

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


$

617


$

437

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


$

552


$

381

 

Production costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to lower tonnes processed, higher contractor costs to accelerate open pit mine development, higher maintenance costs, higher ore and waste haulage costs as a result of longer trucking distances from the Main Zone pit and timing of unsold inventory.  Production costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.

Minesite costs per tonne in the second quarter of 2017 increased when compared to the prior-year period due to reasons described above.  Total cash costs per ounce in the second quarter of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.

La India Mine - Operating Statistics







Six Months Ended


Six Months Ended



June 30, 2017


June 30, 2016

Tonnes of ore processed (thousands of tonnes)


2,731


2,931

Tonnes of ore processed per day


15,087


16,104

Gold grade (g/t)


0.69


0.80

Gold production (ounces) 


50,507


55,669

Production costs per tonne 


$

10


$

8

Minesite costs per tonne 


$

10


$

8

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


$

555


$

412

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


$

493


$

371

 

Production costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to lower tonnes processed, higher contractor costs to accelerate open pit mine development, higher maintenance costs, higher ore and waste haulage costs as a result of longer trucking distances from the Main Zone pit and timing of unsold inventory.  Production costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.

Minesite costs per tonne for the first six months of 2017 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce for the first six months of 2017 increased when compared to the prior-year period due to lower gold production and the reasons described above.

Relocation of the overland conveyor and liner installation for an additional heap leach area is approximately 78% complete.  The project is expected to be completed in August 2017 and improve processing efficiency.  In addition, installation of a mobile crusher is underway.  This crusher has a capacity of up to 3,000 tonnes per day, and is expected to be operational shortly and will provide an opportunity to treat incremental ore that is currently being stockpiled.

During the quarter, infill drilling was carried out on the Main Zone to evaluate the potential to extend mineral reserves and mineral resources below the current pit design.  Additional drilling is planned in the second half of 2017.

Drilling was also carried out at the nearby El Realito, Chipriona, Cerro de Oro and El Cochi zones during the second quarter, with encouraging results.  These areas are being drilled to evaluate the potential to increase mineral reserves and mineral resources in close proximity to the current mining areas.  Additional exploration work is planned in these areas in the second half of 2017.

Given the increases in mineral reserves and mineral resources in 2016 and ongoing exploration that appears to indicate the potential for further increases, the Company is evaluating location options to construct additional pad capacity.

El Barqueno – Exploration focus is on Extending the Azteca-Zapoteca Zones and Testing Other Target Areas

Agnico Eagle acquired its 100% interest in the El Barqueno project in November 2014.  The 63,997-hectare property is in the Guachinango gold-silver mining district of Jalisco State in west-central Mexico, approximately 150 kilometres west of the state capital of Guadalajara.  Drilling results for El Barqueno were last reported in the Company's news release dated February 15, 2017.

The El Barqueno project contains a number of known mineralized zones and several prospects.  The project contains 301,100 ounces of gold in indicated mineral resources (8.4 million tonnes grading 1.11 g/t gold) and 362,000 ounces of gold in inferred mineral resources (7.2 million tonnes grading 1.56 g/t gold) as of December 31, 2016.  The indicated mineral resources are in the Azteca-Zapoteca and Pena de Oro zones, while the inferred mineral resources are in these two zones as well as the Angostura Zone, the Olmeca area (Socorro vein) and the El Rayo prospect.

In the second quarter of 2017, approximately 18,200 metres of drilling (55 holes) was completed with a focus on the extension of the Azteca-Zapoteca Zone, as well as at the Tecolote and San Diego prospects and the Mortero vein in the Olmeca prospect.

About Agnico Eagle

Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957.  Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States and Sweden.  The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales.  Agnico Eagle has declared a cash dividend every year since 1983.

Further Information

For further information regarding Agnico Eagle, contact Investor Relations at info@agnicoeagle.com or call (416) 947-1212.

Note Regarding Certain Measures of Performance

This news release discloses certain measures, including "total cash costs per ounce", "all-in sustaining costs per ounce", "minesite costs per tonne" and "adjusted net income" that are not standardized measures under IFRS.  These data may not be comparable to data reported by other issuers.  For a reconciliation of these measures to the most directly comparable financial information reported in the consolidated financial statements prepared in accordance with IFRS, other than adjusted net income, see "Reconciliation of Non-GAAP Financial Performance Measures" below.

The total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues).  The total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced.  The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis except that no adjustment is made for by-product metal revenues.  Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals.  The total cash costs per ounce of gold produced is intended to provide information about the cash-generating capabilities of the Company's mining operations.  Management also uses these measures to monitor the performance of the Company's mining operations.  As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash-generating capabilities at various gold prices.

The Company calculates all-in sustaining costs per ounce of gold produced on a by-product basis as the aggregate of total cash costs per ounce on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock options) and non-cash reclamation provision expense per ounce of gold produced.  All-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as all-in sustaining costs per ounce of gold produced on a by-product basis, except that the total cash costs per ounce on a co-product basis are used, meaning no adjustment is made for by-product metal revenues.  All-in sustaining costs per ounce is used to show the full cost of gold production from current operations.  Management is aware that these per ounce measures of performance can be affected by fluctuations in foreign exchange rates and, in the case of total cash costs per ounce of gold produced on a by-product basis and all-in sustaining costs per ounce of gold produced on a by-product, 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 affected by fluctuations in processing levels and compensates for this inherent limitation by using this measure in conjunction with production costs prepared in accordance with IFRS.

Adjusted net income is calculated by adjusting the basic net income per share as recorded in the consolidated statements of income for foreign currency translation gains and losses, mark-to-market adjustments, non-recurring gains and losses and unrealized gains and losses on financial instruments.  Management uses adjusted net income to evaluate the underlying operating performance of the Company and to assist with the planning and forecasting of future operating results.  Management believes that adjusted net income is a useful measure of performance because foreign currency translation gains and losses, mark-to-market adjustments, non-recurring gains and losses and unrealized gains and losses on financial instruments do not reflect the underlying operating performance of the Company and may not be indicative of future operating results.

Management also performs sensitivity analyses in order to quantify the effects of fluctuating foreign exchange rates and metal prices.  This news release also contains information as to estimated future total cash costs per ounce and all-in sustaining costs per ounce.  The estimates are based upon the total cash costs per ounce and all-in sustaining costs per ounce that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined.  It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable IFRS measure.

Forward-Looking Statements

The information in this news release has been prepared as at July 26, 2017.  Certain statements contained in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" under the provisions of Canadian provincial securities laws and are referred to herein as "forward-looking statements".  When used in this news release, the words "anticipate", "could", "estimate", "expect", "forecast", "future", "indicate", "plan", "possible", "potential", "will" and similar expressions are intended to identify forward-looking statements.  Such statements include, without limitation: the Company's forward-looking production guidance, including estimated ore grades, project timelines, drilling results, metal production, life of mine estimates, total cash costs per ounce, all-in sustaining costs per ounce, other expenses and cash flows; the estimated timing and conclusions of technical reports and other studies; the methods by which ore will be extracted or processed; statements concerning the Company's plans to build operations at Meliadine, Amaruq and LaRonde Zone 5, including the timing and funding thereof; statements concerning other expansion projects, recovery rates, mill throughput, optimization and projected exploration expenditures, including costs and other estimates upon which such projections are based; statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future mineral reserves, mineral resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of mineral reserves and mineral resources; statements regarding the Company's ability to obtain the necessary permits and authorizations in connection with its exploration, development and mining operations and the anticipated timing thereof; statements regarding anticipated future exploration; the anticipated timing of events with respect to the Company's mine sites and statements regarding the sufficiency of the Company's cash resources and other statements regarding anticipated trends with respect to the Company's operations, exploration and the funding thereof.  Such statements reflect the Company's views as at the date of this news release and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements.  Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies.  The material factors and assumptions used in the preparation of the forward looking statements contained herein, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in management's discussion and analysis ("MD&A") and the Company's Annual Information Form ("AIF") for the year ended December 31, 2016 filed with Canadian securities regulators and that are included in its Annual Report on Form 40-F for the year ended December 31, 2016 ("Form 40-F") filed with the U.S. Securities and Exchange Commission (the "SEC") as well as: that there are no significant disruptions affecting operations; that production, permitting, development and expansion at each of Agnico Eagle's properties proceeds on a basis consistent with current expectations and plans; that the relevant metal prices, foreign exchange rates and prices for key mining and construction supplies will be consistent with Agnico Eagle's expectations; that Agnico Eagle's current estimates of mineral reserves, mineral resources, mineral grades and metal recovery are accurate; that there are no material delays in the timing for completion of ongoing growth projects; that the Company's current plans to optimize production are successful; and that there are no material variations in the current tax and regulatory environment.  Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward looking statements.  Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, project development, capital expenditures and other costs; foreign exchange rate fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; the unfavorable outcome of litigation involving the Partnership; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's currency, fuel and by-product metal derivative strategies.  For a more detailed discussion of such risks and other factors that may affect the Company's ability to achieve the expectations set forth in the forward-looking statements contained in this news release, see the AIF and MD&A filed on SEDAR at www.sedar.com and included in the Form 40-F filed on EDGAR at www.sec.gov, as well as the Company's other filings with the Canadian securities regulators and the SEC.  Other than as required by law, the Company does not intend, and does not assume any obligation, to update these forward-looking statements.

Notes to Investors Regarding the Use of Mineral Resources

Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources

This news release uses the terms "measured mineral resources" and "indicated mineral resources".  Investors are advised that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into mineral reserves.

Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources

This news release also uses the term "inferred mineral resources".  Investors are advised that while this term is recognized and required by Canadian regulations, the SEC does not recognize it.  "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.  Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legally mineable.

Scientific and Technical Data

The scientific and technical information contained in this news release relating to Quebec operations has been approved by Christian Provencher, Eng., Vice-President, Canada; relating to Nunavut operations has been approved by Dominique Girard, Eng., Vice-President, Nunavut Operations; relating to the Finland operations has been approved by Francis Brunet, Eng., Corporate Director Mining; relating to Southern Business operations has been approved by Carol Plummer, Eng., Vice-President, Project Development, Southern Business; and relating to exploration has been approved by Alain Blackburn, Eng., Senior Vice-President, Exploration and Guy Gosselin, Eng. and P.Geo., Vice-President, Exploration.  Each of them is a "Qualified Person" for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101").

Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce.  Agnico Eagle reports mineral reserve and mineral resource estimates in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Best Practice Guidelines for Exploration and Best Practice Guidelines for Estimation of Mineral Resources and Mineral Reserves, in accordance with NI 43-101.  These standards are similar to those used by the SEC's Industry Guide No. 7, as interpreted by Staff at the SEC ("Guide 7").  However, the definitions in NI 43-101 differ in certain respects from those under Guide 7.  Accordingly, mineral reserve information contained herein may not be comparable to similar information disclosed by U.S. companies.  Under the requirements of the SEC, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  A "final" or "bankable" feasibility study is required to meet the requirements to designate mineral reserves under Industry Guide 7.  Agnico Eagle uses certain terms in this news release, such as "measured", "indicated", "inferred" and "resources" that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC.

SEC guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices.  Given the current commodity price environment, Agnico Eagle has decided to use price assumptions that are below the three-year averages for its estimates of mineral reserves and mineral resources.

The assumptions used for the December 2016 mineral reserves estimate at all longer life mines and advanced projects reported by the Company (other than the Meliadine project, the Canadian Malartic mine and the Upper Beaver project) were $1,150 per ounce gold, $16.50 per ounce silver, $0.95 per pound zinc, $2.15 per pound copper and foreign exchange rates of C$1.20 per $1.00, 16.00 Mexican pesos per $1.00 and $1.15 per €1.00 for all mines and projects other than the Lapa and Meadowbank mines in Canada, and the Creston Mascota mine and Santo Niño pit at the Pinos Altos mine in Mexico.  Due to the shorter remaining mine life for the Lapa and Meadowbank mines, and the Creston Mascota mine and Santo Niño pit at the Pinos Altos mine, the foreign exchange rates used were C$1.30 per $1.00 and 16.00 Mexican pesos per $1.00 (other assumptions unchanged).  At the Meliadine project, the same assumptions at December 2015 were used to estimate the December 2016 mineral reserves, which were $1,100 per ounce gold and a foreign exchange rate of C$1.16 per $1.00.

The Partnership, owned by Agnico Eagle (50%) and Yamana (50%), which owns and operates the Canadian Malartic mine, and CMC, owned by Agnico Eagle (50%) and Yamana (50%), which owns and manages the Upper Beaver project in Kirkland Lake, have estimated the December 2016 mineral reserves of the Canadian Malartic mine and the Upper Beaver project using the following assumptions: $1,200 per ounce gold; a cut-off grade at the Canadian Malartic mine between 0.33 g/t and 0.37 g/t gold (depending on the deposit); a C$125/tonne net smelter return for the Upper Beaver project; and a foreign exchange rate of C$1.25 per $1.00.

NI 43-101 requires mining companies to disclose mineral reserves and mineral resources using the subcategories of "proven mineral reserves", "probable mineral reserves", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources".  Mineral resources that are not mineral reserves do not have demonstrated economic viability.

A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource.  It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of modifying factors.  Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.  The mineral reserves presented in this news release are separate from and not a portion of the mineral resources.

Modifying factors are considerations used to convert mineral resources to mineral reserves.  These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

A proven mineral reserve is the economically mineable part of a measured mineral resource.  A proven mineral reserve implies a high degree of confidence in the modifying factors.  A probable mineral reserve is the economically mineable part of an indicated and, in some circumstances, a measured mineral resource.  The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.

A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.  The location, quantity, grade or quality, continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit.  Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.  An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.  Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.  An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.  Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.

Investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.

A feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors, together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable).  The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project.  The confidence level of the study will be higher than that of a pre-feasibility study.

Additional Information

Additional information about each of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4(a), (c) and (d) can be found in Technical Reports, which may be found at www.sedar.com.  Other important operating information can be found in the Company's AIF, MD&A and Form 40-F.


Property/Project name
and location

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

LaRonde, LaRonde 5 &
Ellison, Quebec, Canada

March 23, 2005

Canadian Malartic, Quebec, Canada

June 16, 2014

Kittila, Kuotko and
Kylmakangas, Finland

March 4, 2010

Meadowbank, Nunavut,
Canada

February 15, 2012

Goldex, Quebec, Canada

October 14, 2012

Lapa, Quebec, Canada

June 8, 2006

Meliadine, Nunavut,
Canada

February 11, 2015

Hammond Reef, Ontario, Canada

July 2, 2013

Upper Beaver (Kirkland Lake property), Ontario, Canada

November 5, 2012

Pinos Altos and Creston Mascota, Mexico

March 25, 2009

La India, Mexico

August 31, 2012

 

Appendix: Infill drill intercepts from the Amaruq project

Recent infill drilling intercepts from the Amaruq project are set out in the table below and the drill hole collars are located on the Amaruq project local geology map.  The pierce points are shown on the Amaruq project composite longitudinal section.  All intercepts reported for the Amaruq project show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

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

 

Drill hole

Location

From (metres)

To (metres)

Depth of midpoint below surface (metres)

Estimated true width (metres)

Gold grade (g/t) (uncapped)

Gold grade (g/t) (capped)*

AMQ17-1172

WT

166.5

172.0

125

4.5

5.4

5.4

AMQ17-1187

WT

246.4

266.0

184

17.0

4.1

4.1

AMQ17-1191

IVR

91.0

96.9

77

5.8

6.7

6.7

AMQ17-1193

IVR

93.0

96.0

78

2.9

7.1

7.1

  And

IVR

101.3

105.0

85

3.6

4.1

4.1

AMQ17-1198

IVR

88.0

94.0

75

5.8

4.2

4.2

  And

IVR

109.5

114.8

92

5.1

4.3

4.3

AMQ17-1199

IVR

102.7

108.0

88

5.1

4.1

4.1

AMQ17-1208

WT

185.7

196.3

142

8.1

5.1

5.1

AMQ17-1243

WT

11.3

22.7

12

10.3

4.3

4.3

AMQ17-1278

IVR

29.4

42.5

28

11.3

3.2

3.2

 

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

 

Appendix: Selected drill collar coordinates

LaRonde 3 exploration drill collar coordinates


Drill collar coordinates*

Drill hole ID

UTM
North

UTM
East

Elevation
(metres
above sea
level)

Azimuth
(degrees)

Dip
(degrees)

Length
(metres)

LR-290-075A

5346891

689508

2,536

198

-56

530

LR-290-076

5346892

689508

2,536

209

-48

470

LR-290-077A

5346909

689414

2,532

194

-60

638

LR-293-021A

5346881

689576

2,556

184

-55

395

LR-293-022

5346881

689576

2,556

182

-54

431

* Coordinate System UTM Nad 83 Zone 17

 

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)

RIE17-601

7538805

2558701

-655

079

-41

360

ROD14-003B

7538199

2558630

-515

091

-58

799

ROD14-003D

7538199

2558630

-515

091

-58

616

ROD17-700

7538498

2558632

-557

090

-70

879

ROD17-700B

7538498

2558632

-557

090

-70

885

VUG17-505

7539202

2558636

-656

067

-3

209

VUG17-506

7539200

2558637

-656

090

10

162

VUG17-508

7539301

2558641

-671

075

-9

171

VUG17-509

7539298

2558641

-670

108

-13

191

VUG17-511

7539403

2558657

-663

110

10

170

* Finnish Coordinate System KKJ Zone 2

 

Bravo and Madrono zones at Creston Mascota mine exploration drill collar coordinates


Drill collar coordinates*

Drill Hole ID

UTM
North

UTM
East

Elevation
(metres
above sea
level)

Azimuth
(degrees)

Dip
(degrees)

Length
(metres)

BRV17-156

3135599

760014

1,609

090

-60

141

BRV17-168

3135672

760454

1,831

090

-45

99

BRV17-180

3135628

759974

1,616

090

-60

135

BRV17-187

3135304

760316

1,723

090

-45

93

BRV17-196

3135455

760410

1,776

090

-45

60

MAD17-050

3134915

761541

2,079

000

-45

333

MAD17-061

3134823

761659

2,079

050

-45

180

MAD17-068

3134580

761907

2,126

000

-90

201

MAD17-070

3134620

761856

2,114

050

-45

156

MAD17-083

3134725

761742

2,115

050

-45

240

*Coordinate System UTM Nad 27 Zone

 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)


















Three Months Ended
June 30,


Six Months Ended
June 30,


2017


2016


2017


2016









Operating margin(i)by mine:








Northern Business









LaRonde mine

$

54,062


$

54,985


$

124,764


$

103,039


Lapa mine

8,189


14,437


14,394


25,243


Goldex mine

15,990


22,896


36,844


45,080


Meadowbank mine

62,668


34,733


120,141


68,062


Canadian Malartic mine(ii)

51,237


50,133


102,823


91,874


Kittila mine

21,741


22,079


51,582


46,165

Southern Business









Pinos Altos mine

41,138


48,392


83,171


84,212


Creston Mascota deposit at Pinos Altos

8,114


9,719


16,171


18,708


La India mine

19,103


24,818


39,472


46,367

Total operating margin(i)

282,242


282,192


589,362


528,750

Amortization of property, plant and mine








development

128,440


154,658


260,949


300,289

Exploration, corporate and other

82,044


89,624


154,008


163,354

Income before income and mining taxes

71,758


37,910


174,405


65,107

Income and mining taxes expense

9,874


18,920


36,571


18,329

Net income for the period

$

61,884


$

18,990


$

137,834


$

46,778

Net income per share — basic (US$)

$

0.27


$

0.09


$

0.60


$

0.21

Net income per share — diluted (US$)

$

0.26


$

0.08


$

0.60


$

0.21









Cash flows:








Cash provided by operating activities

$

183,950


$

229,456


$

406,561


$

375,160

Cash used in investing activities

$

(203,444)


$

(122,651)


$

(357,131)


$

(230,246)

Cash provided by financing activities

$

169,836


$

199,494


$

351,407


$

197,906









Realized prices (US$):








Gold (per ounce)

$

1,260


$

1,268


$

1,241


$

1,230

Silver (per ounce)

$

17.03


$

17.21


$

17.33


$

16.25

Zinc (per tonne)

$

2,642


$

1,852


$

2,721


$

1,704

Copper (per tonne)

$

5,660


$

4,714


$

6,018


$

4,506









Payable production(iii):








Gold (ounces):









Northern Business










LaRonde mine

72,090


75,159


151,002


150,496



Lapa mine

15,881


21,914


31,241


43,623



Goldex mine

30,337


31,452


63,008


63,792



Meadowbank mine

95,289


72,402


180,659


144,713



Canadian Malartic mine(ii)

82,509


72,502


153,891


146,115



Kittila mine

47,156


46,209


98,777


94,336


Southern Business










Pinos Altos mine

48,196


49,458


93,556


97,575



Creston Mascota deposit at Pinos Altos

12,074


12,398


23,318


23,949



La India mine

24,211


27,438


50,507


55,669

Total gold (ounces)

427,743


408,932


845,959


820,268









Silver (thousands of ounces):









Northern Business










LaRonde mine

337


266


609


512



Lapa mine

1


1


2


4



Goldex mine

1


1


1


1



Meadowbank mine

65


66


136


109



Canadian Malartic mine(ii)

89


86


173


164



Kittila mine

3


2


6


5


Southern Business










Pinos Altos mine

645


633


1,228


1,220



Creston Mascota deposit at Pinos Altos

70


50


126


98



La India mine

74


105


202


222

Total silver (thousands of ounces)

1,285


1,210


2,483


2,335









Zinc (tonnes)

1,724


1,318


2,729


1,932

Copper (tonnes)

907


1,141


2,179


2,295









Payable metal sold:








Gold (ounces):









Northern Business










LaRonde mine

72,706


72,005


158,162


147,262



Lapa mine

15,870


22,911


31,277


42,747



Goldex mine

30,165


30,605


63,377


62,560



Meadowbank mine

92,038


70,021


182,593


141,610



Canadian Malartic mine(ii)(iv)

77,380


72,259


141,240


137,344



Kittila mine

46,210


44,580


100,110


95,305


Southern Business










Pinos Altos mine

47,839


52,287


92,972


95,511



Creston Mascota deposit at Pinos Altos

11,414


12,117


23,040


23,962



La India mine

26,251


27,748


51,931


53,913

Total gold (ounces)

419,873


404,533


844,702


800,214









Silver (thousands of ounces):









Northern Business










LaRonde mine

319


267


607


499



Lapa mine

6



6


1



Goldex mine

1


1


1


1



Meadowbank mine

73


66


136


109



Canadian Malartic mine(ii)(iv)

75


76


154


149



Kittila mine

3


2


5


5


Southern Business










Pinos Altos mine

586


647


1,192


1,177



Creston Mascota deposit at Pinos Altos

70


49


120


96



La India mine

86


123


215


210

Total silver (thousands of ounces):

1,219


1,231


2,436


2,247









Zinc (tonnes)

1,645


673


3,781


1,278

Copper (tonnes)

885


1,164


2,114


2,320









Total cash costs per ounce of gold produced








— co-product basis (US$)(v):








Northern Business









LaRonde mine

$

686


$

707


$

673


$

689


Lapa mine

717


658


785


663


Goldex mine(vi)

603


513


564


510


Meadowbank mine

572


804


586


801


Canadian Malartic mine(ii)

558


641


566


606


Kittila mine

803


757


733


742

Southern Business









Pinos Altos mine

594


583


594


557


Creston Mascota deposit at Pinos Altos

648


542


634


535


La India mine

604


451


563


437

Weighted average total cash costs per ounce








of gold produced

$

628


$

663


$

622


$

647









Total cash costs per ounce of gold produced








— by-product basis (US$)(v):








Northern Business









LaRonde mine

$

482


$

543


$

473


$

536


Lapa mine

712


658


781


663


Goldex mine(vi)

603


513


564


509


Meadowbank mine

559


789


573


789


Canadian Malartic mine(ii)

540


621


548


589


Kittila mine

802


756


732


741

Southern Business









Pinos Altos mine

373


348


366


346


Creston Mascota deposit at Pinos Altos

550


469


538


465


La India mine

552


381


493


371

Weighted average total cash costs per ounce








of gold produced

$

556


$

592


$

548


$

582

 

Notes:

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

(ii) On June 16, 2014, Agnico Eagle and Yamana jointly acquired 100% of Osisko by way of the Osisko Arrangement.  As a result of the Osisko Arrangement, Agnico Eagle and Yamana each indirectly own 50% of Osisko (now Canadian Malartic Corporation) and Canadian Malartic GP, which now holds the Canadian Malartic mine.  The information set out in this table reflects the Company's 50% interest in the Canadian Malartic mine since the date of acquisition.

(iii) Payable production (a non-GAAP non-financial performance measure) is the quantity of mineral produced during a period contained in products that have been or will be sold by the Company, whether such products are sold during the period or held as inventories at the end of the period.

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

(v) Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data reported by other gold producers. Total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statement of income for by-product metal revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The Company believes that these generally accepted industry measures provide a realistic indication of operating performance and provide useful comparison points between periods. Total cash costs per ounce of gold produced is intended to provide information about the cash generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash generating capabilities at various gold prices. Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

(vi) The Goldex mine's per ounce of gold produced calculations exclude 5,646 and 8,041 ounces for the three and six months ended June 30, 2017 of payable gold production and the associated costs related to the Deep 1 Zone which were produced prior to the achievement of commercial production.

 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

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

(Unaudited)








As at June 30,
2017


As at December 31,
2016

ASSETS





Current assets:






Cash and cash equivalents


$

943,936


$

539,974


Short-term investments


8,419


8,424


Restricted cash


395


398


Trade receivables


8,395


8,185


Inventories


432,090


443,714


Income taxes recoverable


433



Available-for-sale securities


128,100


92,310


Fair value of derivative financial instruments


15,219


364


Other current assets


149,762


136,810

Total current assets


1,686,749


1,230,179

Non-current assets:






Restricted cash


790


764


Goodwill


696,809


696,809


Property, plant and mine development


5,224,272


5,106,036


Other assets


86,422


74,163

Total assets


$

7,695,042


$

7,107,951

LIABILITIES AND EQUITY





Current liabilities:






Accounts payable and accrued liabilities


$

304,892


$

228,566


Reclamation provision


7,895


9,193


Interest payable


12,491


14,242


Income taxes payable


16,893


35,070


Finance lease obligations


4,856


5,535


Current portion of long-term debt



129,896


Fair value of derivative financial instruments


679


1,120

Total current liabilities


347,706


423,622

Non-current liabilities:






Long-term debt


1,371,948


1,072,790


Reclamation provision


282,663


265,308


Deferred income and mining tax liabilities


810,429


819,562


Other liabilities


31,870


34,195

Total liabilities


2,844,616


2,615,477

EQUITY





Common shares:






Outstanding — 231,980,778 common shares issued,






less 755,094 shares held in trust


5,244,150


4,987,694


Stock options


182,419


179,852


Contributed surplus


37,254


37,254


Deficit


(652,094)


(744,453)


Accumulated other comprehensive income


38,697


32,127

Total equity


4,850,426


4,492,474

Total liabilities and equity


$

7,695,042


$

7,107,951

 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)










Three Months Ended


Six Months Ended


June 30,


June 30,


2017


2016


2017


2016

















REVENUES








Revenues from mining operations

$

549,883


$

537,628


$

1,097,342


$

1,028,159









COSTS, EXPENSES AND OTHER INCOME








Production(i)

267,641


255,436


507,980


499,409

Exploration and corporate development

34,323


38,100


59,636


66,485

Amortization of property, plant and mine development

128,440


154,658


260,949


300,289

General and administrative

27,754


24,337


58,508


49,160

Impairment loss on available-for-sale securities

5,814



5,814


Finance costs

17,835


17,391


37,541


35,192

Gain on derivative financial instruments

(10,655)


(670)


(14,455)


(10,291)

Gain on sale of available-for-sale securities

(3)


(1,799)


(79)


(1,918)

Environmental remediation

(190)


840


138


5,933

Foreign currency translation loss

2,647


5,517


3,499


12,287

Other expenses

4,519


5,908


3,406


6,506

Income before income and mining taxes

71,758


37,910


174,405


65,107

Income and mining taxes expense

9,874


18,920


36,571


18,329

Net income for the period

$

61,884


$

18,990


$

137,834


$

46,778









Net income per share - basic

$

0.27


$

0.09


$

0.60


$

0.21

Net income per share - diluted

$

0.26


$

0.08


$

0.60


$

0.21









Weighted average number of common shares








outstanding (in thousands):








Basic

230,798


222,165


228,842


220,925

Diluted

233,531


225,169


231,234


223,568

 

Note:

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

 

AGNICO EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars, IFRS basis)

(Unaudited)










Three Months Ended


Six Months Ended


June 30,


June 30,


2017


2016


2017


2016









OPERATING ACTIVITIES








Net income for the period

$

61,884


$

18,990


$

137,834


$

46,778

Add (deduct) items not affecting cash:









Amortization of property, plant and mine development

128,440


154,658


260,949


300,289


Deferred income and mining taxes

(8,671)


3,665


(8,140)


(13,321)


Gain on sale of available-for-sale securities

(3)


(1,799)


(79)


(1,918)


Stock-based compensation

9,530


7,860


24,920


17,646


Impairment loss on available-for-sale securities

5,814



5,814



Foreign currency translation loss

2,647


5,517


3,499


12,287


Other

(414)


4,227


(525)


68

Adjustment for settlement of reclamation provision

(1,989)


(402)


(2,295)


(1,634)

Changes in non-cash working capital balances:









Trade receivables

1,218


198


(210)


2,271


Income taxes

(14,807)


3,915


(18,610)


(9,809)


Inventories

(16,725)


6,894


(8,789)


31,505


Other current assets

(20,676)


6,124


(15,457)


10,144


Accounts payable and accrued liabilities

52,533


28,539


31,374


(17,797)


Interest payable

(14,831)


(8,930)


(3,724)


(1,349)

Cash provided by operating activities

183,950


229,456


406,561


375,160









INVESTING ACTIVITIES








Additions to property, plant and mine development

(192,272)


(123,263)


(320,911)


(223,957)

Acquisitions, net of cash and cash equivalents acquired


(5,499)



(5,499)

Net sales (purchases) of short-term investments

2,726


(540)


5


1,695

Net proceeds from sale of available-for-sale securities








and other investments

6


6,979


197


7,278

Purchases of available-for-sale securities and other








investments

(13,888)


(327)


(36,425)


(9,772)

(Increase) decrease in restricted cash

(16)


(1)


3


9

Cash used in investing activities

(203,444)


(122,651)


(357,131)


(230,246)









FINANCING ACTIVITIES








Dividends paid

(18,769)


(15,352)


(38,227)


(30,198)

Repayment of finance lease obligations

(1,466)


(2,570)


(3,148)


(5,084)

Proceeds from long-term debt

280,000


50,000


280,000


125,000

Repayment of long-term debt

(410,412)


(275,374)


(410,412)


(405,374)

Notes issuance

300,000


350,000


300,000


350,000

Long-term debt financing

(2,129)


(2,169)


(2,129)


(2,169)

Repurchase of common shares for stock-based








compensation plans

(302)


(632)


(24,540)


(15,527)

Proceeds on exercise of stock options

19,969


93,003


30,882


157,427

Common shares issued

2,945


2,588


218,981


23,831

Cash provided by financing activities

169,836


199,494


351,407


197,906

Effect of exchange rate changes on cash and








cash equivalents

407


(1,143)


3,125


932

Net increase in cash and cash equivalents








during the period

150,749


305,156


403,962


343,752

Cash and cash equivalents, beginning of period

793,187


162,746


539,974


124,150

Cash and cash equivalents, end of period

$

943,936


$

467,902


$

943,936


$

467,902









SUPPLEMENTAL CASH FLOW INFORMATION








Interest paid

$

31,433


$

24,540


$

38,300


$

33,420

Income and mining taxes paid

$

38,792


$

13,448


$

69,155


$

66,765

 

AGNICO EAGLE MINES LIMITED

RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES

(thousands of United States dollars, except where noted)

(Unaudited)












Total Production Costs by Mine


Three Months Ended
June 30, 2017


Three Months Ended
June 30, 2016


Six Months Ended
June 30, 2017


Six Months Ended
June 30, 2016

(thousands of United States dollars)













LaRonde mine


$

46,641


$

40,500


$

91,006


$

86,354

Lapa mine


11,762


14,791


24,649


27,575

Goldex mine


14,706


15,937


31,571


31,669

Meadowbank mine


54,397


54,761


108,375


106,971

Canadian Malartic mine(i)


52,752


47,974


85,253


88,788

Kittila mine


36,420


34,055


72,339


70,082

Pinos Altos mine


28,660


28,794


52,392


52,650

Creston Mascota deposit at Pinos Altos


7,361


6,623


14,339


12,404

La India mine


14,942


12,001


28,056


22,916

Production costs per the condensed interim consolidated statement of income


$

267,641


$

255,436


$

507,980


$

499,409


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

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




72,090




75,159




151,002




150,496


















Production costs


$

46,641


$

647


$

40,500


$

539


$

91,006


$

603


$

86,354


$

574


Inventory and other adjustments(iv)


2,839


39


12,658


168


10,679


70


17,277


115

Cash operating costs (co-product basis)


$

49,480


$

686


$

53,158


$

707


$

101,685


$

673


$

103,631


$

689


By-product metal revenues


(14,727)


(204)


(12,369)


(164)


(30,312)


(200)


(23,015)


(153)

Cash operating costs (by-product basis)


$

34,753


$

482


$

40,789


$

543


$

71,373


$

473


$

80,616


$

536










LaRonde Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




520




569




1,079




1,147


















Production costs


$

46,641


$

90


$

40,500


$

71


$

91,006


$

84


$

86,354


$

75

Production costs (C$)


 C$

61,574


 C$

118


 C$

56,723


 C$

100


 C$

120,798


 C$

112


 C$

117,455


 C$

102

Inventory and other adjustments (C$)(v)


(3,055)


(5)


3,565


6


(1,559)


(1)


2,061


2

Minesite operating costs (C$)


 C$

58,519


 C$ 

113


 C$

60,288


 C$

106


 C$

119,239


 C$

111


 C$

119,516


 C$

104










Lapa Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




15,881




21,914




31,241




43,623


















Production costs


$

11,762


$

741


$

14,791


$

675


$

24,649


$

789


$

27,575


$

632


Inventory and other adjustments(iv)


(382)


(24)


(375)


(17)


(140)


(4)


1,352


31

Cash operating costs (co-product basis)


$

11,380


$

717


$

14,416


$

658


$

24,509


$

785


$

28,927


$

663


By-product metal revenues


(80)


(5)


(4)



(94)


(4)


(17)


Cash operating costs (by-product basis)


$

11,300


$

712


$

14,412


$

658


$

24,415


$

781


$

28,910


$

663










Lapa Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




134




161




264




322


















Production costs


$

11,762


$

88


$

14,791


$

92


$

24,649


$

93


$

27,575


$

86

Production costs (C$)


 C$

15,790


 C$

118


 C$

19,206


 C$

119


 C$

33,049


 C$

125


 C$

36,722


 C$

114

Inventory and other adjustments (C$)(v)


(537)


(4)


(579)


(3)


(476)


(1)


1,386


4

Minesite operating costs (C$)


 C$

15,253


 C$

114


 C$

18,627


 C$

116


 C$

32,573


 C$

124


 C$

38,108


 C$

118










Goldex Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)(vi)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




24,691




31,452




54,967




63,792


















Production costs


$

14,706


$

596


$

15,937


$

507


$

31,571


$

574


$

31,669


$

496


Inventory and other adjustments(iv)


193


7


211


6


(559)


(10)


835


14

Cash operating costs (co-product basis)


$

14,899


$

603


$

16,148


$

513


$

31,012


$

564


$

32,504


$

510


By-product metal revenues


(7)



(2)



(15)



(8)


(1)

Cash operating costs (by-product basis)


$

14,892


$

603


$

16,146


$

513


$

30,997


$

564


$

32,496


$

509










Goldex Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)(vii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




562




658




1,146




1,294


















Production costs


$

14,706


$

26


$

15,937


$

24


$

31,571


$

28


$

31,669


$

24

Production costs (C$)


 C$

19,822


 C$

35


 C$

20,782


 C$

32


 C$

42,125


 C$

37


 C$

42,081


 C$

33

Inventory and other adjustments (C$)(v)


289


1


326



(684)


(1)


733


Minesite operating costs (C$)


 C$

20,111


 C$

36


 C$

21,108


 C$

32


 C$

41,441


 C$

36


 C$

42,814


 C$

33










Meadowbank Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




95,289




72,402




180,659




144,713


















Production costs


$

54,397


$

571


$

54,761


$

756


$

108,375


$

600


$

106,971


$

739


Inventory and other adjustments(iv)


92


1


3,474


48


(2,423)


(14)


8,920


62

Cash operating costs (co-product basis)


$

54,489


$

572


$

58,235


$

804


$

105,952


$

586


$

115,891


$

801


By-product metal revenues


(1,258)


(13)


(1,115)


(15)


(2,365)


(13)


(1,774)


(12)

Cash operating costs (by-product basis)


$

53,231


$

559


$

57,120


$

789


$

103,587


$

573


$

114,117


$

789










Meadowbank Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




996




994




1,922




1,939


















Production costs


$

54,397


$

55


$

54,761


$

55


$

108,375


$

56


$

106,971


$

55

Production costs (C$)


 C$ 

72,521


 C$

73


 C$

70,547


 C$

71


 C$

143,935


 C$

75


 C$

139,667


 C$

72

Inventory and other adjustments (C$)(v)


247



1,907


2


(2,894)


(2)


5,845


3

Minesite operating costs (C$)


 C$

72,768


 C$

73


 C$

72,454


 C$

73


 C$

141,041


 C$

73


 C$

145,512


 C$

75










Canadian Malartic Mine(i)


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




82,509




72,502




153,891




146,115


















Production costs


$

52,752


$

639


$

47,974


$

662


$

85,253


$

554


$

88,788


$

608


Inventory and other adjustments(iv)


(6,674)


(81)


(1,502)


(21)


1,889


12


(193)


(2)

Cash operating costs (co-product basis)


$

46,078


$

558


$

46,472


$

641


$

87,142


$

566


$

88,595


$

606


By-product metal revenues


(1,513)


(18)


(1,442)


(20)


(2,866)


(18)


(2,537)


(17)

Cash operating costs (by-product basis)


$

44,565


$

540


$

45,030


$

621


$

84,276


$

548


$

86,058


$

589










Canadian Malartic Mine(i)


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




2,603




2,524




5,036




4,905


















Production costs


$

52,752


$

20


$

47,974


$

19


$

85,253


$

17


$

88,788


$

18

Production costs (C$)


 C$

70,868


 C$

27


 C$

51,749


 C$

21


 C$

113,864


 C$

23


 C$

102,343


 C$

21

Inventory and other adjustments (C$)(v)


(9,261)


(3)


7,792


3


1,871



14,743


3

Minesite operating costs (C$)


 C$

61,607


 C$

24


 C$

59,541


 C$

24


 C$

115,735


 C$

23


 C$

117,086


 C$

24










Kittila Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




47,156




46,209




98,777




94,336


















Production costs


$

36,420


$

772


$

34,055


$

737


$

72,339


$

732


$

70,082


$

743


Inventory and other adjustments(iv)


1,450


31


922


20


58


1


(102)


(1)

Cash operating costs (co-product basis)


$

37,870


$

803


$

34,977


$

757


$

72,397


$

733


$

69,980


$

742


By-product metal revenues


(40)


(1)


(32)


(1)


(84)


(1)


(79)


(1)

Cash operating costs (by-product basis)


$

37,830


$

802


$

34,945


$

756


$

72,313


$

732


$

69,901


$

741










Kittila Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




439




389




862




821


















Production costs


$

36,420


$

83


$

34,055


$

88


$

72,339


$

84


$

70,082


$

85

Production costs (€)


32,748


75


30,761


79


65,852


76


62,964


77

Inventory and other adjustments (€)(v)


1,118


2


620


2


(222)



(474)


(1)

Minesite operating costs (€)


33,866


77


31,381


81


65,630


76


62,490


76










Pinos Altos Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




48,196




49,458




93,556




97,575


















Production costs


$

28,660


$

595


$

28,794


$

582


$

52,392


$

560


$

52,650


$

540


Inventory and other adjustments(iv)


(8)


(1)


16


1


3,203


34


1,651


17

Cash operating costs (co-product basis)


$

28,652


$

594


$

28,810


$

583


$

55,595


$

594


$

54,301


$

557


By-product metal revenues


(10,663)


(221)


(11,577)


(235)


(21,358)


(228)


(20,549)


(211)

Cash operating costs (by-product basis)


$

17,989


$

373


$

17,233


$

348


$

34,237


$

366


$

33,752


$

346










Pinos Altos Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




620




605




1,173




1,107


















Production costs


$

28,660


$

46


$

28,794


$

48


$

52,392


$

45


$

52,650


$

48

Inventory and other adjustments(v)


(70)



(416)


(1)


2,771


2


880


Minesite operating costs


$

28,590


$

46


$

28,378


$

47


$

55,163


$

47


$

53,530


$

48










Creston Mascota deposit at Pinos Altos


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




12,074




12,398




23,318




23,949


















Production costs


$

7,361


$

610


$

6,623


$

534


$

14,339


$

615


$

12,404


$

518


Inventory and other adjustments(iv)


466


38


92


8


435


19


402


17

Cash operating costs (co-product basis)


$

7,827


$

648


$

6,715


$

542


$

14,774


$

634


$

12,806


$

535


By-product metal revenues


(1,186)


(98)


(898)


(73)


(2,230)


(96)


(1,680)


(70)

Cash operating costs (by-product basis)


$

6,641


$

550


$

5,817


$

469


$

12,544


$

538


$

11,126


$

465










Creston Mascota deposit at Pinos Altos


Three Months Ended


Three Months Ended


Six Months Ended


Six Months Ended

Per Tonne(iii)


June 30, 2017


June 30, 2016


June 30, 2017


June 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




596




573




1,120




1,089


















Production costs


$

7,361


$

12


$

6,623


$

12


$

14,339


$

13


$

12,404


$

11

Inventory and other adjustments(v)


378


1


31



283



226


1

Minesite operating costs


$

7,739


$

13


$

6,654


$

12


$

14,622


$

13


$

12,630


$

12










La India Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Ounce of Gold Produced(ii)







(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




24,211




27,438




50,507




55,669


















Production costs


$

14,942


$

617


$

12,001


$

437


$

28,056


$

555


$

22,916


$

412


Inventory and other adjustments(iv)


(313)


(13)


361


14


373


8


1,415


25

Cash operating costs (co-product basis)


$

14,629


$

604


$

12,362


$

451


$

28,429


$

563


$

24,331


$

437


By-product metal revenues


(1,268)


(52)


(1,907)


(70)


(3,547)


(70)


(3,703)


(66)

Cash operating costs (by-product basis)


$

13,361


$

552


$

10,455


$

381


$

24,882


$

493


$

20,628


$

371










La India Mine


Three Months Ended

June 30, 2017


Three Months Ended

June 30, 2016


Six Months Ended

June 30, 2017


Six Months Ended

June 30, 2016

Per Tonne(iii)







(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




1,329




1,535




2,731




2,931


















Production costs


$

14,942


$

11


$

12,001


$

8


$

28,056


$

10


$

22,916


$

8

Inventory and other adjustments(v)


(687)



(1)



(318)



818


Minesite operating costs


$

14,255


$

11


$

12,000


$

8


$

27,738


$

10


$

23,734


$

8

 

Notes:

(i) On June 16, 2014, Agnico Eagle and Yamana jointly acquired 100% of Osisko by way of the Osisko Arrangement.  As a result of the Osisko Arrangement, Agnico Eagle and Yamana each indirectly own 50% of Osisko (now Canadian Malartic Corporation) and Canadian Malartic GP, which now holds the Canadian Malartic mine.  The information set out in this table reflects the Company's 50% interest in the Canadian Malartic mine since the date of acquisition.

(ii) Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data reported by other gold producers. Total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statement of income for by-product metal revenues, inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The Company believes that these generally accepted industry measures provide a realistic indication of operating performance and provide useful comparison points between periods. Total cash costs per ounce of gold produced is intended to provide information about the cash generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash generating capabilities at various gold prices. Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

(iii) Minesite costs per tonne is not a recognized measure under IFRS and this data may not be comparable to data reported by other gold producers. This measure is calculated by adjusting production costs as shown in the condensed interim consolidated statement of income for inventory production costs, and then dividing by tonnes of ore milled. As the total cash costs per ounce of gold produced measure can be affected by fluctuations in by-product metal prices and exchange rates, management believes that the minesite costs per tonne measure provides additional information regarding the performance of mining operations, eliminating the impact of varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure of performance can be impacted by fluctuations in processing levels and compensates for this inherent limitation by using this measure in conjunction with production costs prepared in accordance with IFRS.

(iv) Under the Company's revenue recognition policy, revenue is recognized when legal title and risk is transferred. As total cash costs per ounce of gold produced are calculated on a production basis, an inventory adjustment is made to reflect the portion of production not yet recognized as revenue. Other adjustments include the addition of smelting, refining and marketing charges to production costs.

(v) This inventory and other adjustment reflects production costs associated with the portion of production still in inventory.

(vi) The Goldex mine's per ounce of gold produced calculations exclude 5,646 and 8,041 ounces for the three and six months ended June 30, 2017 of payable gold production and the associated costs related to the Deep 1 Zone which were produced prior to the achievement of commercial production.

(vii) The Goldex mine's per tonne calculations exclude 117,784 and 175,514 tonnes for the three and six months ended June 30, 2017 and the associated costs related to the Deep 1 Zone which were processed prior to the achievement of commercial production.

 

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


















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


Three Months Ended
June 30, 2017


Three Months Ended
June 30, 2016


Six Months Ended
June 30, 2017


Six Months Ended
June 30, 2016

Production costs per the condensed interim














consolidated statement of income
(thousands of United States dollars)


$

267,641


$

255,436


$

507,980


$

499,409

Adjusted gold production (ounces)(i)


422,097


408,932


837,918


820,268

Production costs per ounce of adjusted gold production(i)


$

634


$

625


$

606


$

609

Adjustments:


















Inventory and other adjustments(ii)


(6)


(38)


16


38

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


$

628


$

663


$

622


$

647

By-product metal revenues


(72)


(71)


(74)


(65)

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


$

556


$

592


$

548


$

582

Adjustments:

















Sustaining capital expenditures (including capitalized exploration)


160


193


143


177

General and administrative expenses (including stock options)


66


60


70


60

Non-cash reclamation provision and other


3


3


3


3

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


$

785


$

848


$

764


$

822

By-product metal revenues


72


71


74


65

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


$

857


$

919


$

838


$

887

 

Notes:

















(i) The Goldex mine's per ounce of gold produced calculations exclude 5,646 and 8,041 ounces for the three and six months ended June 30, 2017 of payable gold production and the associated costs related to the Deep 1 Zone which were produced prior to the achievement of commercial production.

(ii) Under the Company's revenue recognition policy, revenue is recognized when legal title and risk is transferred. As total cash costs per ounce of gold produced are calculated on a production basis, this inventory adjustment reflects the sales margin on the portion of production not yet recognized as revenue.

(iii) Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statement of income for by-product metal revenues, inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The Company believes that these generally accepted industry measures provide a realistic indication of operating performance and provide useful comparison points between periods. Total cash costs per ounce of gold produced is intended to provide information about the cash generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash generating capabilities at various gold prices. Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

 

SOURCE Agnico Eagle Mines Limited

Investor Relations, (416) 947-1212