NYSE: AEM 44.92
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Volume: 771,898
November 22, 2017
TSX: AEM 57.26
+0.17 +0.3%
Volume: 47,220
November 23, 2017
Gold: 1,292.33
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Volume:
November 23, 2017

Agnico Eagle Reports Third Quarter 2017 Results Including Record Quarterly Gold Production; Improved 2017 Production and Cost Guidance; Nunavut Projects Remain on Schedule and on Budget; Dividend Increased by 10%

October 25, 2017

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

TORONTO, Oct. 25, 2017 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $71.0 million, or $0.31 per share, for the third quarter of 2017.  This result includes non-cash foreign currency translation gains on deferred tax liabilities of $5.7 million ($0.03 per share), unrealized gains on financial instruments (net of tax) of $5.3 million ($0.02 per share), non-cash foreign currency translation losses of $4.3 million ($0.02 per share) and various mark-to-market and other adjustment losses (net of tax) of $2.2 million ($0.01 per share).  Excluding these items would result in adjusted net income1 of $66.5 million or $0.29 per share for the third quarter of 2017.  In the third quarter of 2016, the Company reported net income of $49.4 million or $0.22 per share.

Not included in the third quarter of 2017 adjusted net income is non-cash stock option expense of $3.7 million ($0.02 per share).

For the first nine months of 2017, the Company reported net income of $208.8 million, or $0.91 per share.  This compares with the first nine months of 2016 when net income was $96.2 million, or $0.43 per share.  Financial results in the 2017 period were positively affected by higher gold sales volumes (approximately 3%) and lower depreciation expense partly offset by lower realized gold prices.

In the third quarter of 2017, cash provided by operating activities decreased to $194.1 million ($207.9 million before changes in non-cash components of working capital) compared with cash provided by operating activities of $282.9 million in the third quarter of 2016 ($233.7 million before changes in non-cash components of working capital).  The decrease in cash provided by operating activities before changes in non-cash components of working capital during the current period was largely due to lower realized gold prices.

________________________

1Adjusted net income is a non-GAAP measure. For a discussion regarding the Company's use of non-GAAP measures, see "Note Regarding Certain Measures of Performance".

 

For the first nine months of 2017, cash provided by operating activities was $600.6 million ($629.9 million before changes in non-cash components of working capital), as compared with the first nine months of 2016 when cash provided by operating activities was $658.0 million ($593.9 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 nine months of 2017 was mainly due to a combination of higher gold and by-product metals sales volumes partly offset by lower realized gold prices.

"We continued to see strong operating performance in the third quarter, culminating in record gold production and strong cash flow generation.  Given these strong results, we have increased our 2017 production guidance and have increased our dividend by 10%", said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "Our major projects in Nunavut continue to advance on time and on budget and we are excited by the significant growth in gold production and the related cash flows that these projects are forecast to provide", added Mr. Boyd.

Third quarter 2017 highlights include:

  • Continued strong operating performance yields record quarterly gold production – Payable gold production2 in the third quarter of 2017 was 454,362 ounces at production costs per ounce of $578, total cash costs3 per ounce of $546 and all-in sustaining costs per ounce 4 ("AISC") of $789

  • Higher than expected grades and tonnage drive record quarterly gold production at the LaRonde mine – Payable gold production in the third quarter of 2017 was 105,345 ounces at production costs per ounce of $377 and total cash costs per ounce of $328

  • Full year production guidance increased and unit cost forecasts reduced – Given the strong nine month operational performance, 2017 production is now expected to exceed 1.68 million ounces of gold compared to previous guidance of 1.62 million ounces of gold. Total cash costs per ounce are now expected to be $570 to $600 (previously $580 to $610) and AISC are expected to be $820 to $870 per ounce (previously $830 to $880)

  • Meliadine project continues to advance on schedule and on budget – Surface construction activities are progressing well, with outside cladding and roofing expected to be completed on the mill facility, multi-service building and powerhouse in November 2017. Underground development is on plan and critical mining equipment, which was received during the 2017 summer sealift, is currently being commissioned

  • Drilling at Amaruq extends Whale Tail mineralization at depth, and demonstrates continuity and improving grades in the eastern part of V Zone – Significant results include: 7.3 grams per tonne ("g/t") over 16.1 metres at a depth of 627 metres at Whale Tail and 20.6 g/t gold over 6.2 metres at the V Zone at 452 metres depth, beneath the current planned pit outline

  • Quarterly dividend increased by 10% – Company has declared an $0.11 quarterly dividend. The previous quarterly dividend was $0.10

 

________________________

2Payable 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.

3Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported in this news release 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.

4All-in sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported in this news release 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.

 

Third Quarter Financial and Production Highlights – Record Gold Production, Lower Production Costs – 2017 Cost Forecasts Decrease

In the third quarter of 2017, strong operational performance continued at the Company's mines.  Payable gold production was 454,362 ounces, compared to 416,187 ounces in the prior-year period.  The higher level of production in the 2017 period was primarily due to higher grades mined at LaRonde, Meadowbank and Canadian Malartic.  A detailed description of the production of each of the Company's mines is set out below.

In the first nine months of 2017, payable gold production was 1,300,321 ounces, compared to 1,236,455 ounces in the prior-year period.  The higher level of production in the 2017 period was primarily due to higher grades mined at LaRonde, Meadowbank and Canadian Malartic.

Production costs per ounce for the third quarter of 2017 were $578, which was 13% lower, compared to $666 in the prior-year period.  Total cash costs per ounce for the third quarter of 2017 were $546, which was 5% lower compared to $575 per ounce in the prior-year period.  Production costs per ounce and total cash costs per ounce in the third quarter of 2017 were positively affected by record quarterly production.  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 nine months of 2017 were $596, which was 5% lower, compared to $628 in the prior-year period.  Total cash costs per ounce for the first nine months of 2017 were $547, compared with $580 in the prior-year period.  Production costs per ounce and total cash costs per ounce in the first nine months of 2017 were positively affected by higher production of gold at LaRonde, Meadowbank, and Canadian Malartic.  The Company now forecasts a decrease in total cash costs per ounce for 2017 to $570 to $600 per ounce, which is down from previous guidance of $580 to $610 per ounce.

AISC for the third quarter of 2017 were $789, which was 4% lower, compared to $821 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.

AISC for the first nine months of 2017 was $772, compared to $821 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.  The Company now forecasts a decrease in AISC for 2017 to $820 to $870 per ounce, which is down from previous guidance of $830 to $880 per ounce.

Cash Position Remains Strong

Cash and cash equivalents and short term investments decreased to $865.6 million at September 30, 2017, from the June 30, 2017 balance of $952.4 million due to the ongoing investment in the Company's growth projects.

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

On October 25, 2017, the Company amended its $1.2 billion credit facility to extend the maturity date from June 22, 2021 to June 22, 2022.

The Company's $500 million short form base shelf prospectus expired on October 4, 2017.  The Company intends to file a new base shelf prospectus, on substantially the same terms, qualifying up to $500 million of debt securities, common shares and warrants.  The Company has no present intention to offer securities pursuant to the new base shelf prospectus.  It has been the Company's practice to maintain a $500 million base shelf prospectus since 2002.  The notice set out in this paragraph does not constitute an offer of any securities for sale or an offer to sell or the solicitation of an offer to buy any securities.

Approximately 35% of the Company's remaining 2017 Canadian dollar exposure is hedged at a floor price of 1.30 US$/C$.  Approximately 11% of the Company's remaining 2017 Euro exposure is hedged at a floor price of 1.10 EUR$/US$.  Approximately 31% of the Company's remaining 2017 Mexican Peso exposure is hedged at a floor price of 18.60 US$/MXP.

Capital Expenditures

The total estimated initial capital costs at both the Meliadine and Amaruq projects in Nunavut remain unchanged at $900 million and $330 million, respectively.  The forecast for the Company's total 2017 capital expenditures is now approximately $895 million, which is an increase of approximately $36 million over the previous forecast.  The increase is largely due to an acceleration of capital spending at the Meliadine and Amaruq projects due to good progress made in 2017 on development and construction activities at both projects.  The following table sets out capital expenditures (including sustaining capital expenditures) in the third quarter and first nine months of 2017.

Capital Expenditures





(In thousands of US dollars)







Three Months Ended


Nine Months Ended



September 30, 2017


September 30, 2017

Sustaining Capital





LaRonde mine


$

13,908


$

50,245

Canadian Malartic mine


15,527


40,597

Meadowbank mine


10,959


16,712

Kittila mine


14,465


36,400

Goldex mine


10,140


18,352

Pinos Altos


11,103


27,485

Creston Mascota deposit at Pinos Altos


2,343


4,307

La India mine


2,510


6,409






Development Capital





LaRonde Zone 5


$

5,447


$

12,319

Canadian Malartic mine


6,516


7,957

Amaruq satellite deposit


25,762


76,623

Kittila mine


6,979


19,614

Goldex mine


4,290


23,929

Pinos Altos


1,563


8,500

Creston Mascota deposit at Pinos Altos


446


446

La India mine


112


2,595

Meliadine project


144,714


286,404

Other


-


885






Total Capital Expenditures


$

276,784


$

639,779

 

Revised 2017 Guidance – Production Increased and Costs Lowered for the Sixth Year in a Row

Production for 2017 is now forecasted to exceed 1.68 million ounces of gold (previously 1.62 million ounces) with total cash costs per ounce expected to be $570 to $600 (previously $580 to $610) and AISC expected to be $820 to $870 per ounce (previously $830 to $880).

Dividend Record and Payment Dates for the Fourth Quarter of 2017

Agnico Eagle's Board of Directors has increased the dividend by 10% and has declared a quarterly cash dividend of $0.11 per common share, payable on December 15, 2017, to shareholders of record as of December 1, 2017.  The previous quarterly dividend was $0.10 per common share.  Agnico Eagle has declared a cash dividend every year since 1983.

Dividend Reinvestment Plan

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

Third Quarter 2017 Results Conference Call and Webcast Tomorrow

The Company's senior management will host a conference call on Thursday, October 26, 2017 at 11:00 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 50998337.  The conference call replay will expire on November 26, 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 – Higher than Expected Grades and Tonnage Drive Record Quarterly Gold Production

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

LaRonde Mine - Operating Statistics





All results exclude pre-commercial production tonnes and ounces
from LaRonde Zone 5


Three Months Ended


Three Months Ended


September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


582


522

Tonnes of ore milled per day


6,326


5,677

Gold grade (g/t)


5.87


4.47

Gold production (ounces)


105,345


71,784

Production costs per tonne (C$)


$

93


$

121

Minesite costs per tonne (C$)


$

101


$

115

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


$

377


$

684

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


$

328


$

541

 

Production costs per tonne in the third quarter of 2017 decreased when compared to the prior-year period due to higher tonnage and the timing of unsold concentrate inventory.  Production costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to higher gold production and the reasons described above.

Minesite costs per tonne5 in the third quarter of 2017 decreased when compared to the prior-year period due to higher tonnage of ore milled.  Total cash costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to higher production and higher by-product metal revenues.

 _________________________

5Minesite 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





All results exclude pre-commercial production tonnes and ounces
from LaRonde Zone 5


Nine Months Ended


Nine Months Ended


September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,661


1,668

Tonnes of ore milled per day


6,084


6,087

Gold grade (g/t)


5.02


4.33

Gold production (ounces)


256,347


222,280

Production costs per tonne (C$)


$

105


$

108

Minesite costs per tonne (C$)


$

107


$

108

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


$

510


$

609

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


$

413


$

537

 

Production costs per tonne for the first nine months of 2017 decreased when compared to the prior-year period due to the timing of unsold concentrate inventory.  Production costs per ounce for the first nine months of 2017 decreased when compared to the prior-year period due to higher production and the reason described above.

Minesite costs per tonne for the first nine months of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the first nine months of 2017 decreased when compared to the prior-year period due to higher gold production and higher by-product metal revenues.

The record gold production in the third quarter of 2017 was largely a result of higher tonnage and grades being sequenced from the 293 pyramids during the quarter.  This was particularly evident in September, when production totaled 46,100 ounces of gold at a grade of 6.88 g/t gold.  Gold grades for the remainder of the year are expected to return to the previously forecasted 2017 level of approximately 4.77 g/t.

At the LaRonde 3 project, the Company is evaluating 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.

An infill drill program is continuing from the 311 to the 340 levels, with a focus on the western portion of the deposit where recent drilling has continued to encounter higher-grade mineralization (for additional details on this drilling see the Company's news release dated July 26, 2017).  These new high-grade intercepts 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 mineral resource update.

LaRonde Zone 5 – Initial Production Permit Received; Start-up on Schedule for Early Third Quarter 2018

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).  The permit to operate at an initial mining rate of 1,900 tonnes-per-day has now been received.

To date, 4.1 kilometres of underground development have been completed and the ramp has reached level 18, which is the first production level.  Work is progressing on the main ventilation network, and underground installation of the paste fill system is expected to begin shortly.

During the quarter, a 7,700 tonne bulk sample of development ore was processed at the Lapa gold circuit (part of the LaRonde mining complex) yielding 515 ounces of gold.  The material was processed to test paste fill blends and ore grinding characteristics.  The revenue from the pre-commercial production was deducted from the capital expenditures of the project.  Commercial production remains on track for early in the third quarter of 2018.  For additional technical details on the project see the Company's news release dated February 15, 2017.

Canadian Malartic Mine – Higher Grades and Mill Throughput Drive Increased Production

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



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


2,528


2,483

Tonnes of ore milled per day


27,476


26,995

Gold grade (g/t)


1.14


1.07

Gold production (ounces)


82,097


76,428

Production costs per tonne (C$)


$

22


$

22

Minesite costs per tonne (C$)


$

24


$

25

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


$

548


$

627

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


$

577


$

613

 

Production costs per tonne in the third quarter of 2017 were the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to higher production.

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

Canadian Malartic Mine - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


7,564


7,388

Tonnes of ore milled per day


27,707


26,964

Gold grade (g/t)


1.09


1.06

Gold production (ounces)


235,988


222,543

Production costs per tonne (C$)


$

22


$

21

Minesite costs per tonne (C$)


$

23


$

24

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


$

552


$

614

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


$

558


$

597

 

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

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

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, which will allow the Partnership to access the Barnat deposit.  Deviation plans include a temporary bridge over Highway 117 to minimize the impact of the construction work on local traffic.

During the third quarter of 2017, construction commenced on the temporary bridge, approximately 75-80% of the vegetation has been cleared (mainly over the tailings and waste storage areas) and overburden stripping is underway in two areas.

Road construction is expected to take two years.  The Company's production guidance (see news release dated February 15, 2017) assumes a modest contribution from Barnat in late 2019.

Odyssey and East Malartic Properties – Exploration Programs Ongoing to Increase Mineral Resources and Evaluate Underground Mining Potential

At the Canadian Malartic mine, exploration programs are ongoing to evaluate several near-pit/underground targets and the potential to mine portions of the East Malartic deposit, which is located adjacent to, and east of, 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.

During the third quarter of 2017, 37 holes (totalling 20,704 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 and upgrading the mineral resources in Odyssey South.  Drilling carried out to date suggests that these internal zones could increase the mineral resource base and enhance the economics of the project by adding higher grade mineral resources that would require minimal additional infrastructure to access.

An updated mineral resource estimate is expected to be completed by the end of 2017, and the Partnership is evaluating potential underground mining scenarios at both Odyssey and East Malartic.  Permitting activities will start in the fourth quarter of 2017 for potential underground mining scenarios.

Canadian Malartic Corporation

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.

During the third quarter of 2017, CMC completed a review of strategic alternatives for the Kirkland Lake assets.  At this time, the assets remain part of CMC's longer-term development pipeline and additional work will be carried out to further evaluate the potential of these assets.

In the third quarter of 2017, 30 holes (totaling 7,512 metres) were drilled at Kirkland Lake with a primary focus on testing targets on the Upper Beaver and Amalgamated Kirkland properties.  It is expected that an updated mineral resource estimate will be completed on the Upper Canada property at year-end 2017.

Lapa – Mining Expected to Continue Through Year-End 2017 at a Reduced Rate; Mill Processing Expected to Resume in 2018

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

Lapa Mine - Operating Statistics







Three Months Ended


Three Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


134


141

Tonnes of ore milled per day


1,457


1,536

Gold grade (g/t)


4.41


4.26

Gold production (ounces)


17,169


16,242

Production costs per tonne (C$)


$

113


$

113

Minesite costs per tonne (C$)


$

113


$

113

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


$

703


$

749

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


$

706


$

743

 

Production costs per tonne in the third quarter of 2017 were the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to higher production.

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

Lapa Mine - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


398


463

Tonnes of ore milled per day


1,458


1,689

Gold grade (g/t)


4.24


4.84

Gold production (ounces)


48,410


59,865

Production costs per tonne (C$)


$

121


$

114

Minesite costs per tonne (C$)


$

120


$

117

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


$

758


$

664

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


$

755


$

684

 

Production costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to lower throughput levels as the mine approaches the end of its mine life.  Production costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to lower production.

Minesite costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to lower throughput levels as the mine nears the end of its mine life.  Total cash costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to lower production.

Mining operations at Lapa are expected to continue through year-end 2017 at a reduced rate.  The ore mined will be stockpiled in the fourth quarter of 2017 and is expected to be processed during the first half of 2018.  Gold production from Lapa for 2018 (not previously included in the Company's production guidance) is now expected to be approximately 5,000 ounces.

Goldex – Deep 2 and South Zones Show Potential to Extend Current Mine Life

The 100% owned Goldex mine in northwestern Quebec began operation from the M and E satellite zones in September 2013.  The Deep 1 Zone entered commercial production in July 2017.  Production from Deep 1 is expected to extend the Goldex mine life through 2025.

Goldex Mine - Operating Statistics





All metrics exclude pre-production tonnes and ounces


Three Months Ended


Three Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


657


671

Tonnes of ore milled per day


7,141


7,292

Gold grade (g/t)


1.47


1.63

Gold production (ounces)


28,906


32,742

Production costs per tonne (C$)


$

34


$

32

Minesite costs per tonne (C$)


$

34


$

31

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


$

611


$

500

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


$

598


$

483

 

Production costs per tonne in the third quarter of 2017 increased when compared to the prior-year period due to lower throughput levels.  Production costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to lower production.

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

Goldex Mine - Operating Statistics





All results exclude pre-commercial production tonnes and ounces


Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,803


1,965

Tonnes of ore milled per day


6,604


7,173

Gold grade (g/t)


1.54


1.66

Gold production (ounces)


83,873


96,534

Production costs per tonne (C$)


$

36


$

32

Minesite costs per tonne (C$)


$

36


$

32

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


$

587


$

498

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


$

576


$

501

 

Production costs per tonne for the first nine months of 2017 increased when compared to the prior-year period primarily due to lower throughput levels (after deducting pre-commercial production tonnage).  Production costs per ounce for the first nine months of 2017 increased when compared to the prior-year period primarily due to lower production (after deducting pre-commercial production ounces).

Minesite costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to lower throughput levels (after deducting pre-commercial production tonnage).  Total cash costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to lower production (after deducting pre-commercial production ounces).

Commercial production was declared for the Deep 1 Zone effective July 1, 2017.  To date, two stopes have been mined with positive reconciliation to the block model.  Mining activities in the Deep 1 area are expected to continue to ramp up through 2018.  Given the successful start-up of Deep 1 and encouraging exploration results, 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 also 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.

Additional development of drifts will be carried out in the South Zone in the fourth quarter of 2017 along with the collection of a bulk sample.  The first test stopes are expected to be developed in the first half of 2018.

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 the 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.  Provincial Ministry recommendations are expected in December 2017, and delivery of the decree is expected in January 2018.  Federal Ministry recommendations are expected in February 2018, and delivery of a Federal decree is expected in April 2018.  Given the updated permitting timeline, the Company now expects start-up of the project in 2020, not late 2019 as was previously expected.

NUNAVUT REGION

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with strong 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 – Higher Grades Continue to Drive Strong Quarterly Production

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



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


939


961

Tonnes of ore milled per day


10,207


10,450

Gold grade (g/t)


3.16


2.57

Gold production (ounces)


86,821


72,731

Production costs per tonne (C$)


$

82


$

81

Minesite costs per tonne (C$)


$

82


$

75

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


$

697


$

821

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


$

661


$

746

 

Production costs per tonne in the third quarter of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to higher production.

Minesite costs per tonne in the third quarter of 2017 increased when compared to the prior-year period due to lower tonnage.  Total cash costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to the reason described above.

Meadowbank Mine - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


2,861


2,900

Tonnes of ore milled per day


10,480


10,585

Gold grade (g/t)


3.18


2.54

Gold production (ounces)


267,480


217,444

Production costs per tonne (C$)


$

77


$

75

Minesite costs per tonne (C$)


$

76


$

75

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


$

631


$

767

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


$

602


$

774

 

Production costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to slightly lower throughput and less stripping cost being capitalized.  Production costs per ounce for the first nine months of 2017 decreased when compared to the prior-year period due to due to higher production.

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

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.  Further information will be provided with the production guidance in February 2018.

Amaruq Satellite Deposit – Drilling Extends Whale Tail Deposit at Depth and Demonstrates Continuity and Improving Grades in the Eastern V Zone

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, almost adjacent to the 77,411-hectare Meadowbank property.

At December 31, 2016, the Amaruq property 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 of gold (4.9 million tonnes grading 4.81 g/t gold); and an underground inferred mineral resource of 1.4 million ounces of gold (6.8 million tonnes grading 6.22 g/t gold).

Development of the Amaruq property has been approved by the Company's Board of Directors as a satellite deposit to supply ore to the existing Meadowbank mill, 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 Whale Tail joint permitting process.  The final public hearing with NIRB was conducted from September 19 to 22, and the final NWB hearing was conducted from September 26 to 27.  The NIRB final recommendation to the Indigenous and Northern Affairs Canada Minister is expected by November 6, 2017.  The Whale Tail pit permitting remains 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 deposit in the third quarter of 2019.  Other satellite deposits, such as the V Zone, are being evaluated and considered for future development and will require additional permitting.  The planned Whale Tail pit currently extends to a depth of approximately 250 metres and is open for expansion.

For additional technical details on the project see the Company's news releases dated February 15, 2017 and July 26, 2017.

The second phase of the 2017 Amaruq drill program commenced in July and initial results from the program were reported in the Company's news release dated September 5, 2017.  Drilling is targeting extensions of the Whale Tail deposit and V Zone, testing the continuity of the new Tugak structure and determining the source of the gold-bearing boulders discovered in 2014 north of Mammoth Lake.  In the third quarter of 2017, the Company drilled an additional 35,321 metres in 143 drill holes at the Amaruq project.  The total drilling from the start of the year to the end of September is 89,217 metres (453 holes).

Selected recent intercepts from the project are set out in the table below.  The drill hole collars are located on the Amaruq project local geology map; the pierce points are shown on the Amaruq project composite longitudinal section and the drill hole collar coordinates are set out in a table below.  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, the V Zone and regional targets, Amaruq project

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)*

AMQ17-1433E

WT

694.0

756.3

627

16.1

7.3

7.3

  including


726.4

750.0

637

8.0

10.6

10.6

AMQ17-1436B

WT

1,051.5

1,067.0

915

5.3

5.0

5.0

AMQ17-1448

V Zone

493.5

499.0

447

4.8

5.5

5.5

  And

V Zone

543.5

550.4

492

6.5

5.5

5.5

AMQ17-1450

I/V east

182.4

185.4

161

2.8

34.4

31.1

AMQ17-1460

I/V east

192.1

195.4

161

2.9

247.3

10.1

AMQ17-1475**

V Zone

647.2

657.5

610

9.0

8.5

8.5

AMQ17-1484

Tugak

193.0

196.5

141

1.2

107.9

13.6

AMQ17-1504

V Zone

336.9

341.3

313

4.0

5.3

5.3

  and

V Zone

418.5

425.5

389

6.1

5.6

5.6

AMQ17-1510

V Zone

448.9

453.4

402

4.2

12.1

12.1

  and

V Zone

566.6

572.5

508

5.3

6.4

6.4

AMQ17-1517

V Zone

480.3

487.9

452

6.2

49.8

20.6

AMQ17-1527

V Zone

370.0

376.5

346

5.9

22.1

18.1

AMQ17-1532

Mammoth region

191.0

195.0

145

3.5

15.4

7.7

AMQ17-1537

V Zone

506.5

513.5

471

6.3

8.8

8.8

*          

Holes at the Whale Tail deposit use a capping factor of 80 g/t gold.  Holes at the IVR deposit (including the I and V Zones), Tugak, Buffalo and Mammoth 3 use a capping factor of 60 g/t gold.

**         

Hole AMQ17-1475 was previously reported in the Company's news release dated September 5, 2017.

 

Amaruq project exploration drill collar coordinates of selected holes


Drill collar coordinates*

Drill hole ID

UTM
North

UTM
East

Elevation (metres above
sea level)

Azimuth

Dip
(degrees)

Length
(metres)

AMQ17-1433E

7255052

606661

161

322

-64

846

AMQ17-1436B

7255139

606898

153

322

-63

1,142

AMQ17-1448

7256150

607582

162

331

-67

577

AMQ17-1450

7257014

607439

158

324

-61

245

AMQ17-1460

7257012

607389

157

324

-53

209

AMQ17-1475

7256136

607650

162

327

-74

688

AMQ17-1484

7254230

601215

166

324

-47

201

AMQ17-1504

7256122

607445

161

324

-70

492

AMQ17-1510

7256022

607574

164

324

-65

606

AMQ17-1517

7256124

607505

161

315

-69

523

AMQ17-1527

7256126

607371

160

325

-70

447

AMQ17-1532

7253867

604593

156

317

-50

225

AMQ17-1537

7255992

607419

160

323

-68

672

*  

Coordinate System UTM83 Z14                                                                                                                                

 

[Amaruq Project Local Geology Map]

[Amaruq Project Composite Longitudinal Section]

[Amaruq Project V Zone Cross Section]

V Zone

The V Zone consists of a series of parallel stacked quartz vein structures striking northeast and dipping to the southeast from near surface to as deep as 610 metres below surface locally.  New intercepts demonstrate that the dip of the V Zone structures steepen with depth, ranging from 30 degrees near surface to 60 degrees at depth as shown by the Amaruq Project V Zone cross section; the steeper orientation of the deep structures would allow for an improved underground mine design.  The V Zone remains open along strike and at depth.

Many of the intercepts reported recently are beneath and southeast of the current V Zone mineral resources.  Infill drilling in this area has demonstrated very good continuity of mineralization and improving grades.  Several recent holes encountered high-grade gold intervals between 300 and 500 metres depth, in the area between the current mineral resources outline and hole AMQ17-1475 (previously reported in the Company's news release dated July 26, 2017) with an intercept at 610 metres depth.  For example, hole AMQ17-1527 returned 18.1 g/t gold over 5.9 metres at 346 metres depth, while hole AMQ17-1517 returned 20.6 g/t gold over 6.2 metres at 452 metres depth and hole AMQ17-1537 returned 8.8 g/t gold over 6.3 metres at 471 metres depth.

Hole AMQ17-1504 encountered two distinct mineralized structures in this area consisting of 5.3 g/t gold over 4.0 metres at 313 metres depth and 5.6 g/t gold over 6.1 metres at 389 metres depth.  Two other nearby holes intersected what appears to be the same two distinct mineralized layers at greater depths: hole AMQ17-1448 (collared 140 metres east of hole -1504) intersected 5.5 g/t gold over 4.8 metres at 447 metres depth and 5.5 g/t gold over 6.5 metres at 492 metres depth, while hole AMQ17-1510 (collared 160 metres southeast of hole -1504) intersected 12.1 g/t gold over 4.2 metres at 402 metres depth and 6.4 g/t gold over 5.3 metres at 508 metres depth.

The current results from the deep area east of V Zone are expected to have a positive effect on the year-end 2017 underground mineral resource estimate for Amaruq.  Follow-up drilling continues in this area, and more results are expected before the end of the year.

Recent drilling appears to show that the I Zone is parallel to, and part of, the lowermost V Zone structures, as shown by intersections at less than 100 metres depth.  The I Zone was discovered in 2013, and outcrops approximately 200 metres northwest of the planned V Zone pit.  Since late 2015, the V Zone has been shown to consist of an increasing number of northeast-striking mineralized structures, and the I Zone is now considered to be another of these structures.

Approximately 500 metres northeast of the planned V Zone pit are two recent intercepts, which may also be related to the I and V Zones.  Hole AMQ17-1450 intersected 31.1 g/t gold over 2.8 metres at 161 metres depth, and nearby hole AMQ17-1460 intersected 10.1 g/t gold over 2.9 metres at 161 metres depth.

Whale Tail

The directional drilling program continues at depth below the proposed Whale Tail pit.  Hole AMQ17-1433E has been drilled to approximately 730 metres depth; this hole identified significant deep mineralization, returning 7.3 g/t gold over 16.1 metres at 627 metres depth, including a high grade zone of 10.6 g/t gold over 8.0 metres.  These intercepts extend the mineralization by approximately 50 metres to the west at this depth.

Almost 300 metres below this long intercept, hole AMQ17-1436B intersected 5.0 g/t gold over 5.3 metres at 915 metres depth; this represents the deepest drill intercept within Whale Tail to date, extending the depth of the deposit by approximately 185 metres (approximately 25%).  To date, the Whale Tail deposit has been defined over at least 2.3 kilometres of strike length and extends from surface to 915 metres depth; it remains open at depth and along strike.

Regional Targets

The Tugak showing, west of Mammoth Lake and approximately 4.5 kilometres west of the planned Whale Tail pit, was discovered in summer 2017 and first reported in the Company's news release dated September 5, 2017.  Drilling on Tugak to date has included 28 holes (5,200 metres).  Recent results include hole AMQ17-1484 that intersected 13.6 g/t gold over 1.2 metres at 141 metres depth.  A follow-up drill program will be carried out on the showing in 2018.

Close to the southern shore of Mammoth Lake is a new showing that may represent the source of the quartz vein, gold- and sulphide-bearing glacial boulders discovered in 2014 on the north side of the lake.  A recent hole drilled in this area, AMQ17-1532, intersected 7.7 g/t gold over 3.5 metres at 145 metres depth.

This showing is located approximately 1.4 kilometres southwest of the planned Whale Tail pit.  The mineralized boulders were found in three boulder trains stretching from 900 to at least 2,800 metres to the northwest, north and northeast of the Mammoth 3 showing.  The significance of this showing will be investigated with further drilling in 2018.

Future Activities

The second phase of 2017 drilling at Amaruq began in July, with a supplemental budget of $4.6 million (18,500 metres) to continue the drilling campaign well into the fourth quarter of this year.  This is the first time drilling is possible year-round at Amaruq due to the completion in August of the 64-kilometre all-weather exploration road.

Drilling will continue until mid-December.  The V Zone is being explored at depth by one drill rig.  Two more rigs are continuing the deep drilling program at Whale Tail in order to confirm and extend the mineralization along strike and at depth, and further demonstrate the potential for underground resources at Amaruq.  Three rigs have begun delineation drilling near surface in the western part of the Whale Tail deposit.

The total initial capital cost of the Amaruq project remains unchanged at $330 million.  Capital spending for 2017 has been accelerated by approximately $24 million (total capital in 2017 at Amaruq is now estimated at approximately $100 million).  The accelerated expenditure will be used to fund the relocation and installation of existing Vault infrastructure from Meadowbank, technical studies and the procurement of additional materials and equipment.  The Amaruq exploration ramp has been permitted and construction of the ramp is expected to begin before year-end 2017.

Two long-haul trucks and trailers to be used for ore transport from Amaruq to the Meadowbank mill have arrived at the Meadowbank site.  These units (from different manufacturers) will undergo immediate testing so that a procurement decision for the rest of the haulage fleet can be made in early 2018.

Amaruq site infrastructure engineering is 40% complete, while mill modification engineering is 36% complete and earthwork engineering is 25% complete.

Meliadine Project – Construction Activities Remain on Schedule and on Budget; Enclosure of Key Buildings Expected in November 2017

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.

At December 31, 2016, the Meliadine property was estimated to hold proven and probable mineral reserves of 3.4 million ounces of gold (14.5 million tonnes grading 7.32 g/t gold), indicated mineral resources of 3.3 million ounces of gold (20.8 million tonnes grading 4.95 g/t gold) and inferred mineral resources of 3.6 million ounces of gold (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 technical details on the project see the Company's news release dated February 15, 2017.

Update on Meliadine Development Activities in the Third Quarter of 2017

Construction and development activities at the Meliadine project remain on schedule and on budget.  The construction management team is now fully staffed, and at the end of the third quarter of 2017, engineering was approximately 89% complete.

Surface construction activities are progressing well with outside cladding and roofing expected to be completed on the mill facility, multi-service building and powerhouse in November 2017.

Underground development for 2017 is on plan, and critical mining equipment, which was received during the 2017 summer sealift, is currently being commissioned.  During the third quarter, approximately 1,265 metres of underground development was completed.  In the first nine months of 2017, approximately 3,789 metres of development has been completed (a total of approximately 5,600 metres of development is planned for 2017).

The second underground portal is expected to be completed by mid-November 2017, and the ramp to this portal is progressing from underground.  Installation of underground ventilation and heating continues and is expected to be completed by the first quarter of 2018.

At the laydown area in Rankin Inlet, installation of the 13.5 million litre fuel tank is complete and the first delivery of fuel occurred in mid-October 2017.  Construction of a second larger fuel tank is well advanced with completion expected in 2018.  The Rankin Inlet bypass road is expected to be completed before the 2018 barge season.

The total initial capital cost of the Meliadine project remains unchanged at $900 million.  Given the construction progress achieved to date, capital spending for 2017 has been accelerated by approximately $12 million.  The total capital budget for 2017 is now approximately $372 million.

The Company believes that there is good potential to create additional value both at the mine and on the large regional land package at Meliadine.  Opportunities currently being evaluated include:

  • Optimization of the current mine plan (both the underground plan and advancement of phase 2 pit development)

  • Minesite exploration upside through mineral resource conversion and expansion of known mineralized zones (conversion drill programs are underway on the Wesmeg, Normeg and Tiriganiaq deposits)

  • Testing potential extensions of the mineralization at depth outside the mineral resource model (most mineralized zones are open below a depth of 450 metres)

  • Potential for the discovery of new deposits along the 80-kilometre-long greenstone belt. Regional exploration programs are expected to 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 the Company is evaluating the potential to cost-effectively increase the production rate.  In Sweden, the Company has a 55% interest in the Barsele exploration project.

Kittila – Drilling confirms Mineral Reserves in Sisar Top and Rimpi Deep areas, Expansion of Sisar Central and Roura Zones

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

Kittila Mine - Operating Statistics







Three Months Ended


Three Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


429


445

Tonnes of ore milled per day


4,659


4,837

Gold grade (g/t)


4.15


4.39

Gold production (ounces)


50,415


54,835

Production costs per tonne (EUR)


$

76


$

75

Minesite costs per tonne (EUR)


$

77


$

73

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


$

750


$

683

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


$

753


$

663

 

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

Minesite costs per tonne in the third quarter of 2017 increased when compared to the prior-year period due to lower throughput levels.  Total cash costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to the reason described above.

Kittila Mine - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore milled (thousands of tonnes)


1,291


1,266

Tonnes of ore milled per day


4,728


4,621

Gold grade (g/t)


4.09


4.27

Gold production (ounces)


149,192


149,171

Production costs per tonne (EUR)


$

76


$

76

Minesite costs per tonne (EUR)


$

76


$

75

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


$

738


$

721

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


$

739


$

712

 

Production costs per tonne for the first nine months of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to the timing of inventory.

Minesite costs per tonne for the first nine months of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to the reason described above.

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 were estimated as of December 31, 2016 as part of the total Kittila mineral reserves estimate.  Exploration results for Kittila were last reported in the Company's news release dated July 26, 2017.

The main exploration ramp to the north is now completed and is being used for testing the 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 between 800 and 1,000 metres below surface.

In the third quarter of 2017, 17 holes (5,900 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 followed by a table showing the drill hole collar coordinates.  Pierce points for 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)

RIE17-611B

Sisar Top

172.2

187.0

1,012

12.3

3.7

RIE17-612

Sisar Top

177.0

199.0

1,023

11.7

4.2

ROD15-705E

Sisar Central

731.5

735.0

1,390

1.7

4.0

ROD17-700D

Main - Roura

537.8

548.6

1,246

4.2

9.2

  and

Sisar Central

728.4

732.4

1,377

1.8

7.2

ROD17-700E

Main - Roura

523.0

532.2

1,226

4.7

4.7

ROD17-700F

Main - Roura

520.0

526.9

1,220

4.4

3.5

VUG17-513

Main - Rimpi

102.0

111.0

953

6.4

7.0

  and

Main - Rimpi

119.0

149.0

963

21.7

5.7

VUG17-514

Main - Rimpi

81.0

89.0

917

7.2

3.7

  and

Main - Rimpi

93.0

107.0

918

12.6

7.9

 

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)

RIE17-611B

7538569

2558761

-689

088

-35

270

RIE17-612

7538568

2558761

-689

105

-38

300

ROD15-705E

7538599

2558634

-573

087

-64

860

ROD17-700D

7538498

2558632

-557

089

-70

896

ROD17-700E

7538498

2558632

-557

089

-70

840

ROD17-700F

7538498

2558632

-557

089

-70

795

VUG17-513

7539229

2558643

-690

061

-26

260

VUG17-514

7539226

2558643

-689

105

-5

213

Finnish Coordinate System KKJ Zone 2                                                                                                       

 

[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 the mineral reserves and mineral resources in the Sisar Top Zone.  Hole RIE17-612, which intersected 4.2 g/t gold over 11.7 metres at 1,023 metres depth, shows the potential of the as-yet undrilled gap between Roura and Rimpi.

The results of the deep exploration drilling campaign intersected the Sisar Central Zone at close to 1,400 metres depth with encouraging grades over narrow widths.  Hole ROD17-700D intersected 7.2 g/t gold over 1.8 metres at 1,377 metres depth and hole ROD15-705E intersected 4.0 g/t gold over 1.7 metres at 1,390 metres depth.

Deep exploration continues to extend the Roura Main Zone mineralization northward at approximately 1,250 metres depth with several high grade intercepts 10 to 20 metres apart, such as hole ROD17-700D that intersected 9.2 g/t gold over 4.2 metres at 1,246 metres depth.

The underground conversion drilling campaign continues in the Rimpi Deep area, drilling from the exploration ramp.  Two recent holes intersected significant grades and thicknesses between 915 and 970 metres depth, confirming that the Rimpi mineralization has a very thick core and narrower edges.  Hole VUG17-513 intersected 7.0 g/t gold over 6.4 metres at 953 metres depth and 5.7 g/t gold over 21.7 metres at 963 metres depth, while 80 metres to the north, hole VUG17-514 intersected 3.7 g/t gold over 7.2 metres at 917 metres depth and 7.9 g/t gold over 12.6 metres at 918 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.

The Company is evaluating increasing throughput rates at Kittila to 2.0 million tonnes per annum (an increase of approximately 25%).  The Company expects that this increased mining rate scenario could be supported by the development of the Rimpi and Sisar Zones.  The Company expects to provide an update on its progress with its 2017 year-end results.

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 increasing precious metals production (gold and silver), stable operating costs and strong free cash flow since Pinos Altos opened in 2009.

Pinos Altos – New Silver Flotation Circuit Nearing Steady State

The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009. Pinos Altos is an open pit and underground mine that produces gold and silver dore from conventional milling and also a heap leach process.

Pinos Altos Mine - Operating Statistics







Three Months Ended


Three Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


587


597

Tonnes of ore processed per day


6,380


6,489

Gold grade (g/t)


2.65


2.68

Gold production (ounces)


46,897


48,512

Production costs per tonne


$

44


$

59

Minesite costs per tonne


$

51


$

49

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


$

545


$

731

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


$

376


$

343

 

Production costs per tonne in the third quarter of 2017 decreased when compared to the prior-year period due to the timing of inventory.  Production costs per ounce in the third quarter of 2017 decreased when compared to the prior-year period due to the reason described above.

Minesite costs per tonne in the third quarter of 2017 increased when compared to the prior-year period due to lower tonnage processed.  Total cash costs per ounce in the third 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







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,760


1,704

Tonnes of ore processed per day


6,447


6,219

Gold grade (g/t)


2.67


2.80

Gold production (ounces)


140,453


146,087

Production costs per tonne


$

44


$

52

Minesite costs per tonne


$

48


$

49

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


$

555


$

603

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


$

369


$

345

 

Production costs per tonne for the first nine months of 2017 decreased when compared to the prior-year period primarily due to higher tonnes processed and timing of inventory.  Production costs per ounce for the first nine months of 2017 decreased when compared to the prior-year period due to the reasons described above.

Minesite costs per tonne for the first nine months of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the first nine 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 nearing steady state production and is expected to result in approximately a 10-12% increase in overall silver recovery.

Work is underway to expand the underground paste fill plant with commissioning expected by year-end 2017.  Detailed engineering is also underway for an expansion of the heap leach facility.

At the Sinter deposit, final permitting activities are underway, and a potential production decision could be announced with the 2017 year-end results.  Elsewhere, additional drilling is planned to further evaluate the underground potential at Cubiro, and surface potential at Reyna de Plata.

Creston Mascota – Drilling Continues to Extend Mineralization at Madrono

The Creston Mascota, open-pit, heap leach mine, 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



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


518


506

Tonnes of ore processed per day


5,630


5,500

Gold grade (g/t)


1.54


1.17

Gold production (ounces)


11,054


12,134

Production costs per tonne


$

15


$

14

Minesite costs per tonne


$

15


$

14

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


$

709


$

578

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


$

632


$

493

 

Production costs per tonne in the third quarter of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to lower gold production resulting from lower recoveries and higher contractor costs.

Minesite costs per tonne in the third quarter of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to lower gold production resulting from lower recoveries and higher contractor costs.

Creston Mascota deposit at Pinos Altos - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,638


1,595

Tonnes of ore processed per day


6,000


5,821

Gold grade (g/t)


1.28


1.10

Gold production (ounces)


34,372


36,083

Production costs per tonne


$

14


$

12

Minesite costs per tonne


$

14


$

12

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


$

645


$

538

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


$

568


$

474

 

Production costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to higher contractor costs.  Production costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to lower gold production resulting from lower recoveries and the reason described above.

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

Exploration drilling in the third quarter of 2017 focused on the Madrono Zone, immediately southeast of the Creston Mascota pit, including 10,240 metres of conversion, step-out and exploration drilling in 65 holes.  Drilling results for Madrono were last reported in the Company's news release dated July 26, 2017.

Selected recent drill results from the Madrono Zone and drill hole collar coordinates are set out in the tables below.  The collars are also located on the Creston Mascota Area Local Geology Map.  All intercepts reported for the Madrono Zone 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 Madrono Zone at the Creston Mascota mine 

Drill Hole

Vein

From
(metres)

To
(metres)

Depth of
midpoint
below
surface
(metres)

Estimated
true width
(m)

Gold grade
(g/t)
(uncapped)

Gold
grade
(g/t)
(capped)

Silver
grade (g/t)
(uncapped)

Silver
grade
(g/t)
(capped)

MAD17-091

Madrono

161.2

178.6

185

15.8

4.3

3.3

23

23

  including


164.0

167.7

181

3.4

5.1

5.1

24

24

  and
including


174.0

178.6

192

4.2

10.6

6.8

55

55

  and

Madrono

241.5

248.9

245

6.7

1.0

1.0

11

11

MAD17-094

Santa
Martha /
Madrono

153.0

166.0

176

11.3

1.7

1.4

11

11

  and

Santa
Martha /
Madrono

170.7

182.0

199

9.8

1.0

1.0

14

14

  and

Santa
Martha /
Madrono

187.5

200.1

217

10.9

0.9

0.9

12

12

MAD17-096

Madrono

246.3

252.0

224

5.8

3.0

2.4

4

4

MAD17-098

Santa
Martha

116.1

133.6

133

16.5

5.8

4.1

68

68

  and


137.6

159.5

159

22.0

1.3

1.3

24

24

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

Holes at the Madrono Zone use a capping factor of 10 g/t gold and 200 g/t silver.

 

Madrono Zone 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)

MAD17-091

3134857

761600

2,079

000

-45

303

MAD17-094

3134857

761602

2,079

045

-45

246

MAD17-096

3134873

761547

2,061

005

-45

303

MAD17-098

3134743

761729

2,102

050

-45

204

*  

Coordinate System UTM Nad 27 Zone                                                                                                             

 

[Creston Mascota Area Local Geology Map]

The quartz vein systems at Madrono are nearly vertical.  While the dominant strike of the veins is to the northwest, there is also a set of steep veins that strike almost east-west.  Where these two vein sets intersect, the quartz vein material thickens into steeply plunging shoots including gold and silver.  In addition, the north-west-striking veins host shallowly plunging horizontal shoots of gold-bearing quartz, which are possibly flexures caused by fault movement along uneven vein surfaces.

Current drilling in the Madrono Zone is testing the underground potential of the shallowly plunging shoots.  Recent results are reported from the Madrono and Santa Martha veins.

Testing the east-west Madrono Vein, hole MAD17-091 (drilling to the north) intercepted two mineralized structures between 185 and 245 metres depth; the upper intercept was 3.3 g/t gold and 23 g/t silver over 15.8 metres at 185 metres depth, including 6.8 g/t gold and 55 g/t silver over 4.2 metres.  Approximately 60 metres to the northwest, hole MAD17-096 intersected 2.4 g/t gold and 4.0 g/t silver over 5.8 metres at 224 metres depth.  These two holes lie between intercepts reported in the Company's news release dated July 26, 2017, showing continuity of the Madrono Vein structure at depths between 70 and 245 metres below surface over a strike length of 480 metres.

In the northwest-striking Santa Martha Vein, hole MAD17-098 intersected 4.1 g/t gold and 68 g/t silver over 16.5 metres at 133 metres depth and 1.3 g/t gold and 24 g/t silver over 22.0 metres at 159 metres depth.  Approximately 170 metres to the northwest, hole MAD17-094 (with the same collar position as hole MAD17-091 but drilling to the northeast) had three wide intercepts in the Santa Martha Vein between 176 and 217 metres depth, almost in its junction with the Madrono Vein, including 1.4 g/t gold and 11 g/t silver over 11.3 metres at 176 metres depth.  These intercepts confirm the thicknesses and locally high gold and silver grades in the Santa Martha Vein over a strike length of 800 metres between 100 and 200 metres depth.

The recent Madrono results lie in a former gap between the Madrono and Santa Martha veins, and show the location where the two vein systems intersect; the Madrono Zone continues to be open at depth.

The results of the current drill program have the potential to increase the gold and silver grades of the Madrono Zone and consequently increase the mineral resources at Creston Mascota.

Drilling is also continuing on the Bravo Zone with the goal of increasing and upgrading the mineral resource.  In addition a new access road at Bravo is approximately 75% completed.  This road could ultimately be used for pre-stripping activities on the zone.

La India – Exploration Remains Focused on Expanding Mineral Reserves and Mineral Resources Close to Current Mining Areas

The La India, open-pit, heap leach 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



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


1,542


1,366

Tonnes of ore processed per day


16,761


14,848

Gold grade (g/t)


0.69


0.78

Gold production (ounces)


25,143


30,779

Production costs per tonne


$

10


$

9

Minesite costs per tonne


$

11


$

11

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


$

637


$

396

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


$

657


$

400

 

Production costs per tonne in the third quarter of 2017 were essentially the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to lower gold production, higher contractor costs and the timing of inventory.

Minesite costs per tonne in the third quarter of 2017 were the same when compared to the prior-year period.  Total cash costs per ounce in the third quarter of 2017 increased when compared to the prior-year period due to lower gold production from lower grades, lower by-product revenues and higher contractor costs.

La India Mine - Operating Statistics







Nine Months Ended


Nine Months Ended



September 30, 2017


September 30, 2016

Tonnes of ore processed (thousands of tonnes)


4,273


4,297

Tonnes of ore processed per day


15,652


15,682

Gold grade (g/t)


0.69


0.79

Gold production (ounces)


75,650


86,448

Production costs per tonne


$

10


$

8

Minesite costs per tonne


$

10


$

9

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


$

583


$

406

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


$

547


$

381

 

Production costs per tonne for the first nine months of 2017 increased when compared to the prior-year period due to 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 inventory.  Production costs per ounce for the first nine 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 nine months of 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the first nine months of 2017 increased when compared to the prior-year period due to lower gold production and by-product revenues.

During the third quarter of 2017, relocation of the overland conveyor and liner installation for an additional heap leach area was completed.  These activities are expected to improve processing efficiency.  In addition, a 3,000-tonne-per-day mobile crusher was installed which will provide an opportunity to treat incremental ore that was previously being stockpiled.

A powerline has been approved for the La India mine, which will also extend power to neighboring communities.  Land negotiation and permitting are in progress with the powerline expected to be in service in 2019.

A second phase of drilling has commenced under the Main Zone to further evaluate the potential to extend mineral reserves and mineral resources below the current pit design.  Drilling is also ongoing at the nearby El Realito, Chipriona, Cerro de Oro and El Cochi zones to evaluate the potential to increase mineral reserves and mineral resources in close proximity to the current mining areas.

Given the increases in mineral reserves and mineral resources in 2016 and promising results from ongoing exploration, the Company continues to evaluate location options to construct additional pad capacity.

El Barqueno – Exploration Focus Remains on Testing Satellite Targets and Extending Known Deposits

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 September 5, 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 third quarter of 2017, approximately 16,800 metres of drilling (55 holes) was completed with a focus on extending known deposits such as Cuauhtemoc and testing other potential satellites such as Tecolote, El Rayo and Camino.  Drilling at Cuauhtemoc has now extended the mineral resources over one kilometre to the west of the Azteca-Zapoteca Zone.

Currently, six rigs are operating on the property, two at El Rayo, one at Cuauhtemoc, one at Pilarica, one at Azteca-Zapoteca and one at Socorro.  In addition, negotiations are continuing to finalize short- and long-term surface rights agreements for key areas for future exploration around the project.

Agnico Eagle believes that El Barqueno ultimately has the potential to be developed into a series of open pits utilizing heap leach and/or mill processing, similar to the Pinos Altos mine.  The Company is evaluating conceptual mine design scenarios and additional metallurgical testing is continuing at El Barqueno.

About Agnico Eagle

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

Further Information

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

Note Regarding Certain Measures of Performance

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

The total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues).  The total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced.  The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis except that no adjustment is made for by-product metal revenues.  Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals.  The Company believes these generally accepted industry measures provide a realistic indication of operating performance and provide useful comparison points between periods.  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 October 25, 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 mineral 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 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 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 and the 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 which owns and operates the Canadian Malartic mine, and CMC, which owns and manages the Upper Beaver project in Kirkland Lake, (each of which are owned by Agnico Eagle (50%) and Yamana (50%)), 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

 

AGNICO EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted)

(Unaudited)










Three Months Ended
September 30,


Nine Months Ended
September 30,


2017


2016


2017


2016









Operating margin(i)by mine:








Northern Business









LaRonde mine

$

100,550


$

61,587


$

225,314


$

164,626


Lapa mine

9,825


10,181


24,219


35,424


Goldex mine

18,274


27,834


55,118


72,914


Meadowbank mine

55,324


46,190


175,465


114,253


Canadian Malartic mine(ii)     

56,702


55,981


159,525


147,855


Kittila mine

25,662


36,714


77,244


82,879

Southern Business









Pinos Altos mine

29,445


60,699


112,616


144,911


Creston Mascota deposit at Pinos Altos

6,993


10,448


23,164


29,156


La India mine

15,060


23,858


54,532


70,224

Total operating margin(i)

317,835


333,492


907,197


862,242

Amortization of property, plant and mine development

118,312


161,472


379,261


461,761

Exploration, corporate and other

94,521


84,079


248,529


247,433

Income before income and mining taxes

105,002


87,941


279,407


153,048

Income and mining taxes expense

34,047


38,549


70,618


56,878

Net income for the period

$

70,955


$

49,392


$

208,789


$

96,170

Net income per share — basic (US$)

$

0.31


$

0.22


$

0.91


$

0.43

Net income per share — diluted (US$)

$

0.30


$

0.22


$

0.90


$

0.43









Cash flows:








Cash provided by operating activities

$

194,066


$

282,856


$

600,627


$

658,016

Cash used in investing activities

$

(265,617)


$

(142,701)


$

(622,748)


$

(372,947)

Cash (used in) provided by financing activities

$

(12,139)


$

11,840


$

339,268


$

209,746









Realized prices (US$):








Gold (per ounce)

$

1,282


$

1,332


$

1,255


$

1,266

Silver (per ounce)

$

16.92


$

19.52


$

17.20


$

17.45

Zinc (per tonne)

$

2,780


$

2,170


$

2,736


$

1,945

Copper (per tonne)

$

6,412


$

4,819


$

6,158


$

4,613









Payable production(iii):








Gold (ounces):









Northern Business










LaRonde mine

105,860


71,784


256,862


222,280



Lapa mine

17,169


16,242


48,410


59,865



Goldex mine

28,906


32,742


91,914


96,534



Meadowbank mine

86,821


72,731


267,480


217,444



Canadian Malartic mine(ii)

82,097


76,428


235,988


222,543



Kittila mine

50,415


54,835


149,192


149,171


Southern Business










Pinos Altos mine

46,897


48,512


140,453


146,087



Creston Mascota deposit at Pinos Altos

11,054


12,134


34,372


36,083



La India mine

25,143


30,779


75,650


86,448

Total gold (ounces)

454,362


416,187


1,300,321


1,236,455









Silver (thousands of ounces):









Northern Business










LaRonde mine

285


203


894


716



Lapa mine

1


1


3


5



Goldex mine



1


1



Meadowbank mine

72


59


208


168



Canadian Malartic mine(ii)

80


96


253


260



Kittila mine

4


3


10


8


Southern Business










Pinos Altos mine

695


644


1,923


1,863



Creston Mascota deposit at Pinos Altos

71


55


197


153



La India mine

60


126


262


348

Total silver (thousands of ounces)

1,268


1,187


3,751


3,522









Zinc (tonnes)

1,771


1,010


4,500


2,942

Copper (tonnes)

1,056


1,177


3,235


3,472









Payable metal sold:








Gold (ounces):









Northern Business










LaRonde mine

103,483


78,096


261,645


225,358



Lapa mine

16,843


16,851


48,120


59,598



Goldex mine

28,026


33,275


91,403


95,835



Meadowbank mine

89,923


78,710


272,516


220,320



Canadian Malartic mine(ii)(iv)

74,040


72,950


215,280


210,294



Kittila mine

49,513


55,710


149,623


151,015


Southern Business










Pinos Altos mine

35,704


60,541


128,676


156,052



Creston Mascota deposit at Pinos Altos

10,763


12,655


33,803


36,617



La India mine

23,781


26,050


75,712


79,963

Total gold (ounces)

432,076


434,838


1,276,778


1,235,052









Silver (thousands of ounces):









Northern Business









LaRonde mine

296


225


903


724


Lapa mine



6


1


Goldex mine


1


1


1


Meadowbank mine

54


53


190


162


Canadian Malartic mine(ii)(iv)

85


87


239


236


Kittila mine

4


3


9


8


Southern Business









Pinos Altos mine

550


812


1,742


1,989


Creston Mascota deposit at Pinos Altos

63


38


183


134


La India mine

51


91


266


301

Total silver (thousands of ounces):

1,103


1,310


3,539


3,556









Zinc (tonnes)

1,314


1,374


5,095


2,652

Copper (tonnes)

1,157


1,201


3,271


3,521









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








Northern Business









LaRonde mine(vi)

$

505


$

718


$

604


$

698


Lapa mine

706


743


757


685


Goldex mine(vii)

598


484


576


501


Meadowbank mine

671


761


614


787


Canadian Malartic mine(ii)

592


637


575


617


Kittila mine

755


664


740


713

Southern Business









Pinos Altos mine

630


612


606


575


Creston Mascota deposit at Pinos Altos

717


583


660


551


La India mine

698


482


608


453

Weighted average total cash costs per ounce of gold produced

$

623


$

652


$

622


$

649









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








Northern Business









LaRonde mine(vi)

$

328


$

541


$

413


$

537


Lapa mine

706


743


755


684


Goldex mine(vii)

598


483


576


501


Meadowbank mine

661


746


602


774


Canadian Malartic mine(ii)

577


613


558


597


Kittila mine

753


663


739


712

Southern Business









Pinos Altos mine

376


343


369


345


Creston Mascota deposit at Pinos Altos

632


493


568


474


La India mine

657


400


547


381

Weighted average total cash costs per ounce of gold produced

$

546


$

575


$

547


$

580

 

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 statements of income and comprehensive 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 LaRonde mine's per ounce of gold produced calculations exclude 515 ounces for the three and nine months ended September 30, 2017 of payable gold production and the associated costs related to LaRonde Zone 5 which were produced prior to the achievement of commercial production.

(vii) The Goldex mine's per ounce of gold produced calculations exclude 8,041 ounces for the nine months ended September 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 September 30,
2017


As at December 31,
2016

ASSETS





Current assets:






Cash and cash equivalents


$                    855,466


$                    539,974


Short-term investments


10,182


8,424


Restricted cash


420


398


Trade receivables


7,744


8,185


Inventories


511,327


443,714


Available-for-sale securities


123,181


92,310


Fair value of derivative financial instruments


24,733


364


Other current assets


174,968


136,810

Total current assets


1,708,021


1,230,179

Non-current assets:






Restricted cash


806


764


Goodwill


696,809


696,809


Property, plant and mine development


5,389,334


5,106,036


Other assets


80,230


74,163

Total  assets


$                 7,875,200


$                 7,107,951

LIABILITIES AND EQUITY





Current liabilities:






Accounts payable and accrued liabilities


$                    383,061


$                    228,566


Reclamation provision


10,160


9,193


Interest payable


26,373


14,242


Income taxes payable


20,058


35,070


Finance lease obligations


3,483


5,535


Current portion of long-term debt



129,896


Fair value of derivative financial instruments



1,120

Total current liabilities


443,135


423,622

Non-current liabilities:






Long-term debt


1,372,409


1,072,790


Reclamation provision


296,591


265,308


Deferred income and mining tax liabilities


813,448


819,562


Other liabilities


30,066


34,195

Total liabilities


2,955,649


2,615,477

EQUITY





Common shares:






Outstanding — 232,312,281 common shares issued,
less 639,127 shares held in trust


5,262,855


4,987,694


Stock options


185,189


179,852


Contributed surplus


37,254


37,254


Deficit


(604,288)


(744,453)


Accumulated other comprehensive income


38,541


32,127

Total equity


4,919,551


4,492,474

Total liabilities and equity


$                 7,875,200


$                 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


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016

















REVENUES








Revenues from mining operations

$       580,008


$       610,863


$    1,677,350


$    1,639,022









COSTS, EXPENSES AND OTHER INCOME








Production(i)

262,173


277,371


770,153


776,780

Exploration and corporate development

50,106


44,647


109,742


111,132

Amortization of property, plant and mine development

118,312


161,472


379,261


461,761

General and administrative

27,986


21,474


86,494


70,634

Impairment loss on available-for-sale securities

1,432



7,246


Finance costs

20,298


19,654


57,839


54,846

(Gain) loss on derivative financial instruments

(7,085)


832


(21,540)


(9,459)

Gain on sale of available-for-sale securities

(89)


(1,582)


(168)


(3,500)

Environmental remediation

188


(278)


326


5,655

Foreign currency translation loss

4,322


2,531


7,821


14,818

Other (income) expenses

(2,637)


(3,199)


769


3,307

Income before income and mining taxes

105,002


87,941


279,407


153,048

Income and mining taxes expense

34,047


38,549


70,618


56,878

Net income for the period

$         70,955


$         49,392


$       208,789


$         96,170









Net income per share - basic

$             0.31


$             0.22


$             0.91


$             0.43

Net income per share - diluted

$             0.30


$             0.22


$             0.90


$             0.43









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








Basic

231,404


224,306


229,696


222,053

Diluted

233,792


227,654


232,016


225,073









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


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016









OPERATING ACTIVITIES








Net income for the period

$          70,955


$          49,392


$        208,789


$          96,170

Add (deduct) items not affecting cash:









Amortization of property, plant and mine development

118,312


161,472


379,261


461,761


Deferred income and mining taxes

3,245


11,252


(4,895)


(2,069)


Gain on sale of available-for-sale securities

(89)


(1,582)


(168)


(3,500)


Stock-based compensation

9,337


7,427


34,257


25,073


Impairment loss on available-for-sale securities

1,432



7,246



Foreign currency translation loss

4,322


2,531


7,821


14,818


Other

818


3,531


293


3,599

Adjustment for settlement of reclamation provision

(444)


(297)


(2,739)


(1,931)

Changes in non-cash working capital balances:









Trade receivables

651


(2,456)


441


(185)


Income taxes

3,598


11,458


(15,012)


1,649


Inventories

(63,850)


(11,138)


(72,639)


20,367


Other current assets

(24,428)


10,282


(39,885)


20,426


Accounts payable and accrued liabilities

57,353


29,339


88,727


11,542


Interest payable

12,854


11,645


9,130


10,296

Cash provided by operating activities

194,066


282,856


600,627


658,016









INVESTING ACTIVITIES








Additions to property, plant and mine development

(256,965)


(125,526)


(577,876)


(349,483)

Acquisitions, net of cash and cash equivalents acquired


(6,935)



(12,434)

Net purchases of short-term investments

(1,763)


(3,053)


(1,758)


(1,358)

Net proceeds from sale of available-for-sale securities and other investments

136


2,183


333


9,461

Purchases of available-for-sale securities and other investments

(7,000)


(9,594)


(43,425)


(19,366)

(Increase) decrease in restricted cash

(25)


224


(22)


233

Cash used in investing activities

(265,617)


(142,701)


(622,748)


(372,947)









FINANCING ACTIVITIES








Dividends paid

(17,563)


(20,896)


(55,790)


(51,094)

Repayment of finance lease obligations

(1,190)


(2,545)


(4,338)


(7,629)

Proceeds from long-term debt



280,000


125,000

Repayment of long-term debt



(410,412)


(405,374)

Notes issuance



300,000


350,000

Long-term debt financing

(156)


(326)


(2,285)


(2,495)

Repurchase of common shares for stock-based compensation plans

(119)


(15)


(24,659)


(15,542)

Proceeds on exercise of stock options

3,865


33,124


34,747


190,551

Common shares issued

3,024


2,498


222,005


26,329

Cash (used in) provided by financing activities

(12,139)


11,840


339,268


209,746

Effect of exchange rate changes on cash and cash equivalents

(4,780)


(1,336)


(1,655)


(404)

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

(88,470)


150,659


315,492


494,411

Cash and cash equivalents, beginning of period

943,936


467,902


539,974


124,150

Cash and cash equivalents, end of period

$        855,466


$        618,561


$        855,466


$        618,561









SUPPLEMENTAL CASH FLOW INFORMATION








Interest paid

$            6,771


$            6,628


$          45,071


$          40,048

Income and mining taxes paid

$          27,438


$          17,738


$          96,593


$          84,503

 


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
September 30, 2017


Three Months Ended
September 30, 2016


Nine Months Ended
September 30, 2017


Nine Months Ended
September 30, 2016

(thousands of United States dollars)

















LaRonde mine


$


39,726


$


49,086


$


130,732


$


135,440

Lapa mine




12,064


12,166


36,713


39,741

Goldex mine




17,659


16,357


49,230


48,026

Meadowbank mine




60,484


59,746


168,859


166,717

Canadian Malartic mine(i)




45,020


47,917


130,273


136,705

Kittila mine




37,787


37,437


110,126


107,519

Pinos Altos mine




25,582


35,457


77,974


88,107

Creston Mascota deposit at Pinos Altos




7,836


7,014


22,175


19,418

La India mine




16,015


12,191


44,071


35,107

Production costs per the condensed interim consolidated statement of income


$


262,173


$


277,371


$


770,153


$


776,780


















Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced (ii)by Mine and Reconciliation of Production Costs to Minesite Costs per Tonne(iii)  by Mine 














(thousands of United States dollars, except as noted)






























LaRonde Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)(vi)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




105,345




71,784




256,347




222,280


















Production costs


$

39,726


$

377


$

49,086


$

684


$

130,732


$

510


$

135,440


$

609


Inventory and other adjustments(iv)


13,462


128


2,466


34


24,141


94


19,743


89

Cash operating costs (co-product basis)


$

53,188


$

505


$

51,552


$

718


$

154,873


$

604


$

155,183


$

698


By-product metal revenues


(18,636)


(177)



(12,718)


(177)


(48,948)


(191)


(35,733)


(161)

Cash operating costs (by-product basis)


$

34,552


$

328


$

38,834


$

541


$

105,925


$

413


$

119,450


$

537


















LaRonde Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)(vii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




582




522




1,661




1,668


















Production costs


$

39,726


$

68


$

49,086


$

94


$

130,732


$

79


$

135,440


$

81

Production costs (C$)


 C$ 

54,305


 C$  

93


 C$ 

63,178


 C$

121


 C$ 

175,103


 C$ 

105


 C$ 

180,633


 C$

108

Inventory and other adjustments (C$)(v)


4,405


8


(2,992)


(6)


2,846


2


(931)


Minesite operating costs (C$)


 C$ 

58,710


 C$  

101


 C$  

60,186


 C$    

115


 C$ 

177,949


 C$ 

107


 C$ 

179,702


 C$ 

108


















Lapa Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




17,169




16,242




48,410




59,865


















Production costs


$

12,064


$

703


$

12,166


$

749


$

36,713


$

758


$

39,741


$

664


Inventory and other adjustments(iv)


57


3


(97)


(6)


(83)


(1)


1,255


21

Cash operating costs (co-product basis)


$

12,121


$

706


$

12,069


$

743


$

36,630


$

757


$

40,996


$

685


By-product metal revenues


(5)



(5)



(99)


(2)


(22)


(1)

Cash operating costs (by-product basis)


$

12,116


$

706


$

12,064


$

743


$

36,531


$

755


$

40,974


$

684


















Lapa Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




134




141




398




463


















Production costs


$

12,064


$

90


$

12,166


$

86


$

36,713


$

92


$

39,741


$

86

Production costs (C$)


 C$   

15,288


 C$  

113


 C$

15,884


 C$

113


 C$   

48,337


 C$     

121


 C$  

52,606


 C$  

114

Inventory and other adjustments (C$)(v)


(51)



(4)



(527)


(1)


1,382


3

Minesite operating costs (C$)


 C$   

15,237


 C$    

113


 C$  

15,880


 C$     

113


 C$

47,810


 C$   

120


 C$   

53,988


 C$        

117


















Goldex Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)(viii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




28,906




32,742




83,873




96,534


















Production costs


$

17,659


$

611


$

16,357


$

500


$

49,230


$

587


$

48,026


$

498


Inventory and other adjustments(iv)


(381)


(13)


(521)


(16)


(940)


(11)


314


3

Cash operating costs (co-product basis)


$

17,278


$

598


$

15,836


$

484


$

48,290


$

576


$

48,340


$

501


By-product metal revenues


(6)



(13)


(1)


(21)



(21)


Cash operating costs (by-product basis)


$

17,272


$

598


$

15,823


$

483


$

48,269


$

576


$

48,319


$

501


















Goldex Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)(ix)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




657




671




1,803




1,965


















Production costs


$

17,659


$

27


$

16,357


$

24


$

49,230


$

27


$

48,026


$

24

Production costs (C$)


 C$   

22,231


 C$  

34


 C$ 

21,375


 C$ 

32


 C$   

64,356


 C$  

36


 C$

63,456


 C$ 

32

Inventory and other adjustments (C$)(v)


427



(398)


(1)


(257)



335


Minesite operating costs (C$)


 C$  

22,658


 C$  

34


 C$   

20,977


 C$  

31


 C$ 

64,099


 C$  

36


 C$

63,791


 C$ 

32


















Meadowbank Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




86,821




72,731




267,480




217,444


















Production costs


$

60,484


$

697


$

59,746


$

821


$

168,859


$

631


$

166,717


$

767


Inventory and other adjustments(iv)


(2,199)


(26)


(4,423)


(60)


(4,622)


(17)


4,497


20

Cash operating costs (co-product basis)


$

58,285


$

671


$

55,323


$

761


$

164,237


$

614


$

171,214


$

787


By-product metal revenues


(919)


(10)


(1,042)


(15)


(3,284)


(12)


(2,816)


(13)

Cash operating costs (by-product basis)


$

57,366


$

661


$

54,281


$

746


$

160,953


$

602


$

168,398


$

774


















Meadowbank Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




939




961




2,861




2,900


















Production costs


$

60,484


$

64


$

59,746


$

62


$

168,859


$

59


$

166,717


$

57

Production costs (C$)


 C$ 

77,233


 C$  

82


 C$  

77,771


 C$ 

81


 C$ 

221,168


 C$    

77


 C$  

217,438


 C$   

75

Inventory and other adjustments (C$)(v)


9



(5,534)


(6)


(2,885)


(1)


311


Minesite operating costs (C$)


 C$   

77,242


 C$ 

82


 C$   

72,237


 C$       

75


 C$ 

218,283


 C$       

76


 C$ 

217,749


 C$        

75


















Canadian Malartic Mine(i)


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




82,097




76,428




235,988




222,543


















Production costs


$

45,020


$

548


$

47,917


$

627


$

130,273


$

552


$

136,705


$

614


Inventory and other adjustments(iv)


3,624


44


756


10


5,513


23


563


3

Cash operating costs (co-product basis)


$

48,644


$

592


$

48,673


$

637


$

135,786


$

575


$

137,268


$

617


By-product metal revenues


(1,300)


(16)


(1,816)


(24)


(4,166)


(17)


(4,353)


(20)

Cash operating costs (by-product basis)


$

47,344


$

577


$

46,857


$

613


$

131,620


$

558


$

132,915


$

597


















Canadian Malartic Mine(i)


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




2,528




2,483




7,564




7,388


















Production costs


$

45,020


$

18


$

47,917


$

19


$

130,273


$

17


$

136,705


$

19

Production costs (C$)


 C$   

56,303


 C$     

22


 C$   

54,737


 C$      

22


 C$ 

170,167


 C$    

22


 C$  

157,080


 C$       

21

Inventory and other adjustments (C$)(v)


3,787


2


8,463


3


5,658


1


23,206


3

Minesite operating costs (C$)


 C$   

60,090


 C$      

24


 C$   

63,200


 C$     

25


 C$ 

175,825


 C$  

23


 C$

180,286


 C$ 

24


















Kittila Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




50,415




54,835




149,192




149,171


















Production costs


$

37,787


$

750


$

37,437


$

683


$

110,126


$

738


$

107,519


$

721


Inventory and other adjustments(iv)


264


5


(1,025)


(19)


322


2


(1,127)


(8)

Cash operating costs (co-product basis)


$

38,051


$

755


$

36,412


$

664


$

110,448


$

740


$

106,392


$

713


By-product metal revenues


(69)


(2)


(62)


(1)


(153)


(1)


(141)


(1)

Cash operating costs (by-product basis)


$

37,982


$

753


$

36,350


$

663


$

110,295


$

739


$

106,251


$

712


















Kittila Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore milled (thousands of tonnes)




429




445




1,291




1,266


















Production costs


$

37,787


$

88


$

37,437


$

84


$

110,126


$

85


$

107,519


$

85

Production costs (€)


32,734


76


33,414


75


98,586


76


96,378


76

Inventory and other adjustments (€)(v)


287


1


(1,042)


(2)


65



(1,516)


(1)

Minesite operating costs (€)


33,021


77


32,372


73


98,651


76


94,862


75


















Pinos Altos Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




46,897




48,512




140,453




146,087


















Production costs


$

25,582


$

545


$

35,457


$

731


$

77,974


$

555


$

88,107


$

603


Inventory and other adjustments(iv)


3,986


85


(5,776)


(119)


7,189


51


(4,125)


(28)

Cash operating costs (co-product basis)


$

29,568


$

630


$

29,681


$

612


$

85,163


$

606


$

83,982


$

575


By-product metal revenues


(11,937)


(254)


(13,037)


(269)


(33,295)


(237)


(33,586)


(230)

Cash operating costs (by-product basis)


$

17,631


$

376


$

16,644


$

343


$

51,868


$

369


$

50,396


$

345


















Pinos Altos Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




587




597




1,760




1,704


















Production costs


$

25,582


$

44


$

35,457


$

59


$

77,974


$

44


$

88,107


$

52

Inventory and other adjustments(v)


4,285


7


(6,306)


(10)


7,056


4


(5,426)


(3)

Minesite operating costs


$

29,867


$

51


$

29,151


$

49


$

85,030


$

48


$

82,681


$

49


















Creston Mascota deposit at Pinos Altos


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




11,054




12,134




34,372




36,083


















Production costs


$

7,836


$

709


$

7,014


$

578


$

22,175


$

645


$

19,418


$

538


Inventory and other adjustments(iv)


88


8


55


5


523


15


457


13

Cash operating costs (co-product basis)


$

7,924


$

717


$

7,069


$

583


$

22,698


$

660


$

19,875


$

551


By-product metal revenues


(937)


(85)


(1,089)


(90)


(3,167)


(92)


(2,769)


(77)

Cash operating costs (by-product basis)


$

6,987


$

632


$

5,980


$

493


$

19,531


$

568


$

17,106


$

474


















Creston Mascota deposit at Pinos Altos


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




518




506




1,638




1,595


















Production costs


$

7,836


$

15


$

7,014


$

14


$

22,175


$

14


$

19,418


$

12

Inventory and other adjustments(v)


22



(112)



305



114


Minesite operating costs


$

7,858


$

15


$

6,902


$

14


$

22,480


$

14


$

19,532


$

12


















La India Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Ounce of Gold Produced(ii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )


(thousands)


($ per ounce )

Gold production (ounces)




25,143




30,779




75,650




86,448


















Production costs


$

16,015


$

637


$

12,191


$

396


$

44,071


$

583


$

35,107


$

406


Inventory and other adjustments(iv)


1,528


61


2,632


86


1,901


25


4,047


47

Cash operating costs (co-product basis)


$

17,543


$

698


$

14,823


$

482


$

45,972


$

608


$

39,154


$

453


By-product metal revenues


(1,022)


(41)


(2,526)


(82)


(4,569)


(61)


(6,229)


(72)

Cash operating costs (by-product basis)


$

16,521


$

657


$

12,297


$

400


$

41,403


$

547


$

32,925


$

381


















La India Mine


Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended

Per Tonne(iii)


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )


(thousands)


($ per tonne )

Tonnes of ore processed (thousands of tonnes)




1,542




1,366




4,273




4,297


















Production costs


$

16,015


$

10


$

12,191


$

9


$

44,071


$

10


$

35,107


$

8

Inventory and other adjustments(v)


1,097


1


2,322


2


779



3,140


1

Minesite operating costs


$

17,112


$

11


$

14,513


$

11


$

44,850


$

10


$

38,247


$

9

 

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 statements of income and comprehensive income for by-product metal revenues, inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The Company believes that these generally accepted industry measures provide a realistic indication of operating performance and provide useful comparison points between periods. Total cash costs per ounce of gold produced is intended to provide information about the cash generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash generating capabilities at various gold prices. Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

(iii) Minesite costs per tonne is not a recognized measure under IFRS and this data may not be comparable to data reported by other gold producers. This measure is calculated by adjusting production costs as shown in the condensed interim consolidated statements of income and comprehensive 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 LaRonde mine's per ounce of gold produced calculations exclude 515 ounces for the three and nine months ended September 30, 2017 of payable gold production and the associated costs related to LaRonde Zone 5 which were produced prior to the achievement of commercial production.

(vii) The LaRonde mine's per tonne calculations exclude 7,709 tonnes and the associated costs related to LaRonde Zone 5 which were processed prior to the achievement of commercial production.

(viii) The Goldex mine's per ounce of gold produced calculations exclude 8,041 ounces for the nine months ended September 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.

(ix) The Goldex mine's per tonne calculations exclude 175,514 tonnes for the nine months ended September 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 September 30, 2017


Three Months Ended September 30, 2016


Nine Months Ended
September 30, 2017


Nine Months Ended
September 30, 2016

Production costs per the condensed interim consolidated statement of income (thousands of United States dollars)


$                                262,173


$                                277,371


$                                770,153


$                                776,780

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


453,847


416,187


1,291,765


1,236,455

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


$                                       578


$                                       666


$                                       596


$                                       628

Adjustments:


















Inventory and other adjustments(iii)


45


(14)


26


21

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


$                                       623


$                                       652


$                                       622


$                                       649

By-product metal revenues


(77)


(77)


(75)


(69)

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


$                                       546


$                                       575


$                                       547


$                                       580

Adjustments:

















Sustaining capital expenditures (including capitalized exploration)


178


192


155


182

General and administrative expenses (including stock options)


62


52


67


57

Non-cash reclamation provision and other


3


2


3


2

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


$                                       789


$                                       821


$                                       772


$                                       821

By-product metal revenues


77


77


75


69

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


$                                       866


$                                       898


$                                       847


$                                       890

 

Notes:

















(i) The LaRonde mine's per ounce of gold produced calculations exclude 515 ounces for the three and nine months ended September 30, 2017 of payable gold production and the associated costs related to LaRonde Zone 5 which were produced prior to the achievement of commercial production.

(ii) The Goldex mine's per ounce of gold produced calculations exclude 8,041 ounces for the nine months ended September 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.

(iii) 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.

(iv) Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statements of income and comprehensive 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