Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, Oct. 28, 2015 /CNW/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $1.3 million, or net income of $0.01 per share for the third quarter
of 2015. This result includes losses on financial instruments of $16.6
million ($0.08 per share), a non-cash foreign currency translation loss
on deferred tax liabilities of $8.1 million ($0.04 per share), various
mark-to-market and other adjustment losses of $9.5 million ($0.04 per
share), non-cash stock option expense of $4.1 million ($0.02 per
share), non-cash foreign currency translation losses of $0.9 million
(nil per share), and non-recurring gains of $1.3 million ($0.01 per
share). Excluding these items would result in adjusted net income of
$39.2 million or adjusted net income of $0.18 per share for the third
quarter of 2015. In the third quarter of 2014, the Company reported a
net loss of $15.1 million or a net loss of $0.07 per share.
Based on the exploration success in the first half of the year at
several of the Company's projects, it was previously announced that
exploration expense would increase in the second half of the year.
Total exploration expense for the third quarter was $37.1 million.
As a result of this increased exploration expense the Amaruq project in
Nunavut yielded a significant increase in inferred resources (see
August 19, 2015 news release) and an initial resource is expected to be
reported by mid-February 2016 at the El Barqueno project in Mexico.
For the first nine months of 2015, the Company reported net income of
$40.1 million, or $0.19 per share. This compares with the first nine
months of 2014 when net income was $104.3 million, or $0.55 per share.
Financial results in the 2015 period were negatively impacted by much
higher investment in exploration (approximately 102% higher); lower
gold prices (approximately 9% lower) and lower by-product metals
revenues.
Third quarter 2015 cash provided by operating activities was $143.7
million ($217.8 million before changes in non-cash components of
working capital). This compares to cash provided by operating activities of $71.2 million in the third quarter
of 2014 ($129.2 million before changes in non-cash components of
working capital). The increase in cash provided by operating
activities before changes in working capital during the current period
was mainly due to an increase of 26% in gold production.
For the first nine months of 2015, cash provided by operating activities
was $475.5 million ($547.4 million before changes in non-cash
components of working capital), as compared with the first nine months
of 2014 when cash provided by operating activities was $504.4 million
($472.8 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 period was mainly due to a 20%
increase in gold production.
“In the third quarter of 2015, we set a new record for quarterly gold
production and lowered unit costs which resulted in strong operating
cash flow. This has allowed us to continue to invest in our
exploration and development pipeline, which represents the long-term
future of our business,” said Sean Boyd, Agnico Eagle's Chief Executive
Officer. “Our increased level of exploration activity continues to pay
dividends as witnessed by the new discoveries at Kittila, Amaruq and El
Barqueno. These projects are expected to be significant contributors
to our production profile in the coming years,” added Mr. Boyd.
Third Quarter 2015 Highlights Include:
-
Strong performance of Abitibi operations drives record quarterly gold
production and low costs – Payable gold production1 in the third quarter of 2015 was 441,124 ounces of gold at total cash
costs2 per ounce on a by-product basis of $536 and all-in sustaining costs3 on a by-product basis (“AISC”) of $759 per ounce -
Two new production records set at Canadian Malartic – New quarterly records were set for average tonnes processed per
calendar day (53,703 tonnes on a 100% basis), and ounces of gold
produced in a quarter (153,206 ounces on a 100% basis) -
2015 production guidance increased and cost forecasts reduced – Expected gold production for 2015 is now forecast to be approximately
1.65 million ounces (previously 1.6 million ounces) with total cash
costs on a by-product basis of approximately $590 to $610 per ounce
(previously $600 to $620) and AISC of approximately $840 to $860 per
ounce (previously $870 to $890) expected -
Amaruq drilling expands scope of known mineralization – Drilling indicates that the Whale Tail and Mammoth zones form a single
mineralized system at least 2.3 kilometres long. In addition, the V
zone (part of the IVR area) has been identified as a substantial
mineralized structure, locally with abundant visible gold -
Drilling extends new parallel zone at Kittila – Two recent drill holes have confirmed continuity within the new
parallel lens (now called the “Sisar lens”). Highlights include: 8.1
grams per tonne (“g/t”) gold (uncapped) over 8.0 metres at 1,235 metres
depth; and 5.5 g/t gold (uncapped) over 3.3 metres at 950 metres depth
and 560 metres farther north along strike -
Improved financial flexibility – In the third quarter, the Company's credit facility was amended and
$25 million was repaid. In addition, a 10-year, $50-million term note
was issued to Ressources Québec, a subsidiary of Investissement
Québec. Capital expenditures in 2015 are also forecast to be
approximately $50 million lower than previously reported due to
positive foreign currency adjustments and deferrals into future periods - A quarterly dividend of $0.08 per share was declared
________________________________ |
1 Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company, whether such products are shipped during the period or held as inventory at the end of the period |
2 Total cash costs per ounce is a non-GAAP measure. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures” below. Total cash costs per ounce of gold produced is calculated on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) 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. 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. See “Note Regarding Certain Measures of Performance”. For information about the Company's total cash costs per ounce on a co-product basis please see “Reconciliation of Non-GAAP Financial Performance Measures”. |
3All-in sustaining costs is a non-GAAP measure and is used to show the full cost of gold production from current operations. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures – Reconciliation of Production Costs to All-In Sustaining Costs Per Ounce of Gold Produced” below. The Company calculates all-in sustaining costs per ounce of gold produced on a by-product basis as the aggregate of total cash costs on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock option expense) and reclamation expenses divided by the amount 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 per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. The Company's methodology for calculating all-in sustaining costs differ from the methodology used by other producers that disclose all-in sustaining costs. See “Note Regarding Certain Measures of Performance”. The Company may change the methodology it uses to calculate all-in sustaining costs in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council. |
Third Quarter Financial and Production Highlights
In the third quarter of 2015, strong operational performance continued
at the Company's mines.
Payable gold production in the third quarter of 2015 was a record
441,124 ounces compared to 349,273 ounces in the third quarter of
2014. The higher level of production in the 2015 period was primarily
due to increased throughput levels at LaRonde, Goldex and Canadian
Malartic, increased mill capacity at Kittila and higher grades at
LaRonde, Meadowbank, Goldex, Kittila, Pinos Altos and La India. A
detailed description of the production and cost performance at each
mine is set out below.
Total cash costs per ounce on a by-product basis for the third quarter
of 2015 were lower at $536 compared to $716 per ounce for the third
quarter of 2014. The reduction in total cash costs per ounce on a
by-product basis in the third quarter of 2015 was a result of higher
silver production, higher gold production at the majority of the
Company's mines and weaker local currencies compared to the third
quarter of 2014.
In the third quarter of 2015 the average value of the Canadian dollar,
Euro and Mexican Peso were 8%, 4%, and 23% lower, respectively than the
Company's 2015 currency price assumptions (see February 11, 2015 news
release).
Payable gold production for the first nine months of 2015 was 1,249,012
ounces, compared to payable gold production of 1,041,753 ounces in the
comparable 2014 period (which only included 76,639 ounces from Canadian
Malartic for production from June 16 to September 30, 2014).
For the first nine months of 2015, total cash costs on a by-product
basis were $574 per ounce. This compares with $627 per ounce on a
by-product basis in the first nine months of 2014. The lower costs in
the 2015 period are due to the higher levels of production and
favourable currency movements compared to the 2014 period.
AISC for the third quarter of 2015 was lower at $759 versus $1,059 per
ounce for the third quarter of 2014. The lower AISC is primarily due
to higher production, lower total cash costs per ounce on a by-product
basis, lower general and administrative expenditures and lower capital
expenditures.
For the first nine months of 2015, AISC was $808 versus $947 per ounce
for the 2014 period. The lower AISC in the 2015 period is due to the
same reasons set out above.
Cash Position Remains Strong; Continued focus on Debt Reduction; Credit
lines extended for an additional year through 2020
Cash and cash equivalents and short term investments increased to $208.1
million at September 30, 2015, from the June 30, 2015 balance of $164.0
million.
The outstanding balance on the Company's $1.2 billion credit facility
was reduced from $375 million at June 30, 2015 to $350 million at
September 30, 2015. This results in available credit lines of
approximately $850 million, not including the $300 million accordion
facility.
On September 30, 2015, the Company amended its $1.2 billion Credit
Facility to extend the maturity date from June 22, 2019 to June 22,
2020 and improve the pricing terms.
On September 30 2015, a private placement of a $50 million, 10-year
senior unsecured note (the “Note”) with a maturity of September 30,
2025 was completed with Ressources Québec, a subsidiary of
Investissement Québec. The Company has agreed to use the net proceeds
from the issuance of the Note at its mining projects in the Province of
Québec.
Total capital expenditures made by the Company in the third quarter of
2015 were $122.4 million, including $24.8 million at Meliadine, $19.7
million at Meadowbank, $15.1 million at LaRonde, $14.1 million at
Kittila, $13.3 million at Goldex, $12.5 million at Pinos Altos, $9.3
million at Canadian Malartic (50% basis), $7.0 million at La India,
$1.2 million at Creston Mascota and $1.1 million at Lapa.
Total capital expenditures for the first nine months of 2015 were $316.8
million including $50.6 million at LaRonde, $47.4 million at
Meadowbank, $44.6 million at Meliadine, $41.8 million at Pinos Altos,
$38.4 million at Kittila, $35.3 million at Goldex, $29.8 million at
Canadian Malartic (50% basis), $15.5 million at La India, $5.5 million
at Lapa and $1.6 million at Creston Mascota.
Total sustaining capital expenditures made by the Company in the third
quarter were $72.0 million, including $19.5 million at Meadowbank,
$15.1 million at LaRonde, $10.6 million at Kittila, $8.2 million at
Canadian Malartic (50% basis), $7.0 million at La India, $6.7 million
at Pinos Altos, $2.6 million at Goldex, $1.2 million at Creston Mascota
and $1.1 million at Lapa.
Total sustaining capital expenditures for the first nine months of 2015
were $214.7 million including $50.6 million at LaRonde, $47.2 million
at Meadowbank, $30.7 million at Kittila, $28.0 million at Canadian
Malartic (50% basis), $24.0 million at Pinos Altos, $15.5 million at La
India, $11.6 million at Goldex, $5.5 million at Lapa, and $1.6 million
at Creston Mascota.
For 2015, capital expenditures are expected to total approximately
$489.0 million, representing approximately a $50 million decrease from
the previously announced figure. The decrease is primarily due to
favourable currency movements and capital expenditure deferrals into
future periods.
The Company recorded an income and mining taxes recovery of $15.3
million on the consolidated statements of income for the third quarter
of 2015. This was primarily a result of applying effective tax rates
on a regional tax basis which were well in excess of the statutory tax
rate based on IFRS tax calculation methodology. The Company continues
to guide an effective tax rate range between 40% and 45% for 2015.
Revised 2015 Guidance – Production Increased and Costs Lowered
As a result of strong operational performance in the third quarter of
2015, production guidance for 2015 has been increased to approximately
1.65 million ounces of gold (previously 1.6 million ounces) with total
cash costs on a by-product basis of approximately $590 to $610 per
ounce (previously $600 to $620) and AISC of approximately $840 to $860
per ounce (previously $870 to $890).
Third Quarter 2015 Results Conference Call and Webcast Tomorrow
The Company's senior management will host a conference call on Thursday, October 29, 2015 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 meeting will be available on the Company's
website www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 1-416-260-0113
or toll-free 1-800-524-8950. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 1-647-436-0148 or toll-free 1-888-203-1112, access code
3791390. The conference call replay will expire on November 29, 2015.
The webcast, along with presentation slides, will be archived for 180
days on www.agnicoeagle.com.
NORTHERN BUSINESS OPERATING REVIEW
ABITIBI REGION, QUEBEC
Agnico Eagle is currently Quebec's largest gold producer with a 100%
interest in three mines (LaRonde, Goldex and Lapa) and a 50% interest
in the Canadian Malartic mine. These mines are located within 50
kilometres of each other, which provides operating synergies and allows
for the sharing of technical expertise.
LaRonde Mine – Increased Production Driven by Higher Grades in Lower
Mining Area, Phase 1 Commissioning of Coarse Ore Conveyor Underway
The 100% owned LaRonde mine in northwestern Quebec achieved commercial
production in 1988.
The LaRonde mill processed an average of 5,992 tonnes per day (“tpd”) in
the third quarter of 2015, compared with an average of 4,634 tpd in the
corresponding period of 2014. Throughput in the 2014 period was lower
due to an approximate four week shutdown related to the upgrade and
commissioning of the production and service hoist drives at the Penna
shaft.
Minesite costs per tonne4 were approximately C$101 in the third quarter of 2015, lower than the
C$111 per tonne experienced in the third quarter of 2014. The higher
costs in the 2014 period were primarily due to the scheduled shutdown
noted above.
For the first nine months of 2015, the LaRonde mill processed an average
of 6,145 tpd, compared to 5,668 tpd in the first nine months of 2014.
Minesite costs per tonne were approximately C$101, compared to C$100
per tonne in the first nine months of 2014.
LaRonde's total cash costs per ounce on a by-product basis were $558 in
the third quarter of 2015 on payable production of 71,860 ounces of
gold. This compares with the third quarter of 2014 when total cash
costs per ounce on a by-product basis were $861 on production of 37,490
ounces of gold. Production in the 2015 period increased as a result of
higher throughput and higher gold grades (primarily from the 293 mining
pyramid) compared to the 2014 period. Costs in the 2015 period were
lower due to higher gold production (partially offset by lower
by-product revenues) and favourable foreign exchange rates.
In the first nine months of 2015, LaRonde produced 194,760 ounces of
gold at total cash costs per ounce of $620 on a by-product basis. This
is in contrast with the first nine months of 2014 when the mine
produced 145,336 ounces of gold at total cash costs per ounce of $701
on a by-product basis. Production in the 2015 period was higher and
costs were lower due to the factors mentioned above.
During the quarter, work was completed on the installation of the coarse
ore conveyor system that extends from the 293 level to the crusher on
the 280 level. The first phase of commissioning involving the
discharge point and rock breaker is underway. The ore pass feeding the
rock breaker is expected to be commissioned in the first quarter of
2016. The new conveyor should help to improve mining flexibility and
reduce congestion in the deeper portions of the mine.
Studies are continuing to assess the potential to extend the mineral
reserves and carry out mining activities between the 311 and 371 levels
at LaRonde. At present, the mineral reserves extend to the 311 level,
which is 3.1 kilometres below the surface. Drilling is ongoing to
further expand the known mineral resource between the 311 and 341
levels. Additional holes are also being drilled to evaluate the extent
of the mineralization down to the 371 level (a depth of 3.7 kilometres
below the surface).
The exploration is currently focused on Zone 20, which is the active
mining horizon. Additional drilling is also planned for Zone 6, which
is located in the footwall to Zone 20.
___________________________________ |
4 Minesite costs per tonne is a non-GAAP measure. For a reconciliation of this measure to production costs as reported in the financial statements, see “Reconciliation of Non-GAAP Financial Performance Measures” below. See also “Note Regarding Certain Measures of Performance”. |
Canadian Malartic Mine – New Quarterly Production Records Established
In June 2014, Agnico Eagle and Yamana Gold Inc. (“Yamana”) acquired all
of the issued and outstanding common shares of Osisko Mining
Corporation (“Osisko”) and created the Canadian Malartic General
Partnership (the “Partnership”). The partnership owns and operates the
Canadian Malartic mine in northwestern Quebec through a joint
management committee. Each of Agnico Eagle and Yamana has an indirect
50% ownership interest in the Partnership.
Canadian Malartic had very strong operational performance in the third
quarter of 2015. New records were set for quarterly tonnes milled (4.94
million tonnes), tonnes processed per day (53,703 tonnes), and ounces
produced (153,206 ounces on a 100% basis). On September 22, 2015, the
mine poured its two millionth ounce of gold.
During the third quarter of 2015, the Canadian Malartic mill processed
an average of 53,703 tpd (on a 100% basis) compared with an average of
52,539 tpd in the corresponding period of 2014. Minesite costs per
tonne were approximately C$22 (C$19.32 excluding royalties) compared to
the C$22 (C$19.60 excluding royalties) per tonne experienced in the
third quarter of 2014. The costs in the 2015 period were in line with
the costs in the 2014 period. Throughput was higher in the 2015 period
due to improved crusher operating time. The average stripping ratio in
the third quarter of 2015 was 2.04 to 1.0.
For the first nine months of 2015, the Canadian Malartic mill processed
an average of 52,139 tpd compared with an average of 50,580 tpd in the
corresponding period of 2014 (on a 100% basis). Minesite costs per
tonne were approximately C$23 (C$19.72 excluding royalties) compared to
the C$22 (C$19.42 excluding royalties) per tonne experienced in the
corresponding period of 2014. The 2014 tonnage and costs are not
considered to be representative as they only reflect the period of June
16 through September 30.
For the third quarter of 2015, Agnico Eagle's share of production at the
Canadian Malartic mine was 76,603 ounces of gold at total cash costs
per ounce of $544 on a by-product basis. This compares with the third
quarter of 2014 when total cash costs per ounce on a by-product basis
were $735 on production of 64,761 ounces of gold. Production was higher
in the 2015 period due to increased mill throughput and higher grades.
Costs in the 2015 period were lower due to increased production and
favourable foreign exchange rates.
In the first nine months of 2015, Agnico Eagle's share of production at
the Canadian Malartic mine was 212,937 ounces of gold at total cash
costs per ounce of $593 on a by-product basis. This is in contrast
with production from June 16 to September 30, 2014 which only included
76,639 ounces of gold at total cash costs per ounce of $717 on a
by-product basis from Canadian Malartic.
The Partnership continues to work on initiatives to optimize the
operations. Current opportunities include:
-
Improving SAG mill and crusher liners to attempt to reduce the number of
planned shutdowns to three per year (currently four per year). New
liners were installed in Q3 2015 -
Improving gyratory crusher availability by redirecting ore containing
scrap steel to a separate crusher -
Maintaining mining throughput levels at two million tonnes per month in
the North zone (which contains higher grades) - Acquiring an additional remote excavator for use in the North zone
-
Adding two larger production drills which is expected reduce drilling
costs -
Increasing rate of waste rock backfilling of the Gouldie pit which
reduces haulage distances and noise
Permitting activities for the Barnat Extension and deviation of Highway
117 are continuing. An Environmental Impact Assessment (“EIA”) for
this project was submitted in February 2015. An initial series of
questions were received by the Partnership, and final responses were
submitted in September 2015. A second round of questions from the
government is expected to be received later in the fourth quarter of
2015. Public hearings are then expected to be held in the spring of
2016, with receipt of the necessary permits potentially by year-end
2016. In parallel, the Partnership is currently working on the
permitting for improving the efficiency and environmental performance
of the existing mobile crusher. At this point, milling levels are
expected to be approximately 53,000 tpd through year-end 2016.
In March 2015, the Partnership increased its interest in the Malartic
CHL property to 100% by acquiring the remaining 30% interest from
Abitibi Royalties Inc. The Malartic CHL property adjoins the Canadian
Malartic mine to the east and hosts part of the Odyssey North
discovery. At the end of the third quarter of 2015, 28 holes (24,537
metres) of drilling had been completed on the Odyssey zones. Drilling
and data compilation will continue in the fourth quarter.
Update on Pandora and Kirkland Lake Projects
Canadian Malartic Corporation, a company in which each of Agnico Eagle
and Yamana has an indirect 50% interest, is exploring a portfolio of
properties in the Kirkland Lake area of Ontario and the Pandora
property in the Abitibi region of Quebec.
In the Kirkland Lake area, an internal technical study on the Upper
Beaver property is being reviewed. Elsewhere in the region, compilation
work is ongoing and a select number of targets are being drilled.
At Pandora, underground development on the 101-W exploration drift from
the adjacent Lapa mine commenced in February 2015 and approximately 691
metres of development was completed by the end of the third quarter of
2015. For the full year, approximately 940 metres of development is
planned.
In mid-June 2015, underground drilling resumed from the 101-W
exploration drift and approximately half of the proposed 2015 program
(approximately 7,000 metres) was completed by the end of the third
quarter. The focus of the current exploration program is to test for
extensions to the Branch zone and C zone on the Pandora property.
Lapa – Zulapa Z7 Zone Continues to Deliver Higher Grades and Recoveries
The 100% owned Lapa mine in northwestern Quebec achieved commercial
production in May 2009.
The Lapa circuit, located at the LaRonde mill, processed an average of
1,583 tpd in the third quarter of 2015. This compares with an average
of 1,703 tpd in the third quarter of 2014. Throughput in the 2015
period was lower because of downtime related to repairs carried out on
the Lapa ball mill. Repairs were completed in August 2015. During the
repair time, excess ore was stockpiled and there is sufficient mill
capacity that should allow the Company to meet its annual throughput
rate (tonnes and ounces) over the balance of 2015.
Minesite costs per tonne were C$114 in the third quarter of 2015,
compared to the C$104 in the third quarter of 2014. Costs in the 2015
period were higher due to mining at deeper depths and lower throughput
compared to the same period in 2014.
For the first nine months of 2015, the Lapa mill processed an average of
1,553 tpd, compared to 1,747 tpd in the first nine months of 2014.
Minesite costs per tonne were approximately C$119, above the C$106 per
tonne in the first nine months of 2014 due to the reasons explained
above.
Payable production in the third quarter of 2015 was 25,668 ounces of
gold at total cash costs per ounce on a by-product basis of $522. This
compares with the third quarter of 2014, when production was 24,781
ounces of gold at total cash costs per ounce on a by-product basis of
$606. In the 2015 period, production was higher primarily due to
better recoveries (up 8.7%) related to a higher component of free gold
in the Zulapa Z7 ore zone. Costs were lower primarily due to increased
production and favourable foreign exchange rates.
In the first nine months of 2015, Lapa produced 71,038 ounces of gold at
total cash costs per ounce of $581 on a by-product basis. This
compares to the first nine months of 2014 when the mine produced 67,011
ounces of gold at total cash costs per ounce of $689 on a by-product
basis. The higher production and lower costs in the 2015 period are
due to the reasons outlined above.
At Lapa, 2015 is the last full year of production based on the current
life of mine plan. Commercial production is forecast to end at the
mine in the third quarter of 2016, but exploration activities
(primarily on the Pandora property) are expected to continue. The
permanent employees are expected to be relocated to the Company's other
operations where they will replace contract positions.
Studies are underway to evaluate other internal opportunities to utilize
the Lapa mill, which is located at the LaRonde Metallurgical complex.
Goldex – Development Rates Expected to Double by Year End; M Zone Yields
Better Than Expected Grades
The 100% owned Goldex mine in northwestern Quebec began operation in
2008 but mining operations in the original orebody, the Goldex
Extension Zone (“GEZ”), were suspended in October 2011. In July 2012,
the M and E satellite zones were approved for development. Mining
operations resumed on the M and E satellite zones in September 2013.
Mining operations at GEZ remain suspended.
The Goldex mill processed an average of 6,199 tpd in the third quarter
of 2015. This compares with an average of 5,851 tpd in the third
quarter of 2014. The higher throughput in the 2015 period was due to
more mature mining fronts and productivity improvements compared to the
2014 period.
Minesite costs per tonne were approximately C$34 in the third quarter of
2015, which was slightly higher than the C$32 per tonne experienced in
the third quarter of 2014. The increased cost in the 2015 period is
primarily due to increased development in the M3 and M4 zones and
extensions to the E Zone.
For the first nine months of 2015, the Goldex mill processed an average
of 6,377 tpd, compared to 5,647 tpd in the first nine months of 2014.
Minesite costs per tonne were approximately C$34 in the first nine
months of 2015 which is in line with C$33 in first nine months of 2014.
Payable gold production in the third quarter of 2015 was 32,068 ounces
of gold at total cash costs per ounce on a by-product basis of $479.
This compares with the third quarter of 2014, when production was
27,611 ounces of gold at total cash costs per ounce on a by-product
basis of $582. The higher production in the 2015 period was largely
due to increased tonnage and better grades (especially in the M Zone)
and higher recoveries. The decrease in total cash costs in the 2015
period was largely a result of increased production and favourable
foreign exchange rates compared to the 2014 period.
In the first nine months of 2015, Goldex produced 87,780 ounces of gold
at total cash costs per ounce of $546 on a by-product basis. This
compares to the first nine months of 2014 when the mine produced 70,970
ounces of gold at total cash costs per ounce of $661 on a by-product
basis. The higher production and lower costs in the 2015 period are
due to the same reasons as outlined above.
In late July 2015, the Company announced production approval for the
Goldex Deep 1 project (see July 29, 2015 news release). Mining will
focus on the lower part of the Dx zone and the top of the D zone from a
depth of 850 metres to 1,200 metres (level 120). The Company plans to
undertake development from the current Goldex infrastructure, with
existing equipment and personnel. The planned mining method is
long-hole stoping with cemented paste backfill, which is the same
method currently used at Goldex M & E zones. Gold production from the
Goldex Deep 1 project is currently expected to average in excess of
100,000 ounces per year from 2018 through 2024.
In the third quarter of 2015, approximately 1,462 metres of development
were carried out in the Deep zone. The ramp has now reached Level 115
on its way to an ultimate depth of level 120. In addition, full
restoration of the surface ramp is expected to be completed by the end
of this year. This ramp will improve on the ability to move equipment
and supplies from the surface into the underground workings.
The advancement of the Deep 1 project at Goldex also has the potential
to unlock other significant value creating opportunities including:
- Potential for additional mineral resource conversion in the Deep 1 zone
- Potential for mining at the Deep 2 (below level 120)
-
Potential to develop the South zone (a narrow high-grade zone accessible
via Deep 1 infrastructure) -
Potential development of the Akasaba West deposit, which is
approximately 30 kilometres to the East of Goldex
An EIA on the Akasaba West deposit was submitted during the quarter,
which allows the environmental review process to commence. The Company
anticipates the EIA approval in late 2017 or early 2018.
FINLAND AND SWEDEN
Agnico Eagle's Kittila mine in Finland is the largest primary gold
producer in Europe and hosts the Company's largest mineral reserves.
Exploration activities continue to expand the mineral resources and
studies are underway to evaluate the potential to cost-effectively
increase production.
Kittila – Focus Remains On Optimizing Future Production Levels and
Exploration Potential of the New Parallel Zone
The 100% owned Kittila mine in northern Finland achieved commercial
production in 2009.
The Kittila mill processed an average of 3,937 tpd in the third quarter
of 2015 compared to the 2,559 tpd in the third quarter of 2014.
Throughput in the 2014 period was lower due to a planned shutdown to
complete the mill expansion. Minesite costs per tonne at Kittila were
approximately €72 in the third quarter of 2015, compared to €86 in the
third quarter of 2014. Costs decreased in the third quarter of 2015
due to the increased throughput when compared with the 2014 period.
For the first nine months of 2015, the Kittila mill processed an average
of 3,981 tpd, compared to 2,895 tpd in the first nine months of 2014.
Minesite costs per tonne were approximately €75 in the first nine
months of 2015, compared to the €79 per tonne in the comparable 2014
period. Throughput was higher and costs were lower in the 2015 period
due to the reasons outlined above.
Since the expansion, the mill has shown potential to operate in excess
of 4,000 tpd and efforts are ongoing to optimize throughput and
recovery rates. In addition, the Company is also working to optimize
underground mining rates and evaluate the potential to develop new
mining areas. Unit costs are expected to decrease once steady state
operations are achieved.
Third quarter 2015 payable gold production at Kittila was 46,455 ounces
with total cash costs per ounce on a by-product basis of $639. In the
third quarter of 2014, the mine produced 28,230 ounces at total cash
costs per ounce on a by-product basis of $951. The higher production
in the 2015 period is a result of the increased mill capacity compared
to the 2014 period and the planned 2014 shutdown. Costs decreased in
the third quarter of 2015 primarily due to increased production and a
favourable foreign exchange rate.
In the first nine months of 2015, Kittila produced 133,095 ounces of
gold at total cash costs per ounce of $696 on a by-product basis. This
is in contrast to the first nine months of 2014, when the mine produced
98,612 ounces of gold at total cash costs per ounce of $861 on a
by-product basis. The lower cash costs in 2015 are mainly due to
reasons described above.
Drilling Extends New Parallel Zone at Kittila
Previous drilling from the surface at Kittila has outlined a significant
zone of deep mineralization at Rimpi with potentially wider widths and
better grades than those currently being mined. The main underground
ramp at Kittila is being extended to reach the Rimpi zone and a new
surface ramp is also being developed to access the shallower portions
of the Rimpi deposit. The surface ramp had advanced a total of 825
metres to 134 metres depth by the end of September.
In April and July, the Company announced that drilling had encountered a
mineralized lens east of the main Kittila ore zone, within the sheared
and altered structure that hosts the known Kittila deposits (see April
30, 2015 and July 29, 2015 news releases). The intercepts lay within
an area approximately 800 metres long north to south between 975 and
1,300 metres below surface, approximately 100 to 150 metres east of the
main ore zone. These intercepts indicate a new parallel lens (now
called the “Sisar lens” which in English means “sister lens”), that
could extend upwards to a similar elevation as the main exploration
ramp (currently at 800 metres depth) being driven towards Rimpi. This
new lens could provide additional tonnage should further drilling
outline an economic deposit.
Two recent holes drilled from the exploration ramp have confirmed
continuity within the Sisar lens. The table below shows the intercepts
of the two new holes as well as those reported previously from the
Sisar lens. Pierce points for all these holes are shown on the Kittila
composite longitudinal section and two cross sections (500 metres
apart). 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 Kittila mine
Drill hole | Zone |
From (metres) |
To (metres) |
Depth of midpoint below surface (metres) |
Estimated true width (metres) |
Gold grade (g/t) (uncapped) |
ROU10-037* | Sisar | 1,299.0 | 1,311.0 | 1,197 | 5.6 | 10.2 |
ROD14-003** | Sisar | 576.0 | 580.0 | 1,195 | 3.1 | 5.3 |
ROD14-005** | Sisar | 628.0 | 641.2 | 1,258 | 7.0 | 7.0 |
ROU15-600 | Sisar | 313.0 | 316.8 | 950 | 3.3 | 5.5 |
ROU15-603*** | Sisar | 323.0 | 338.0 | 977 | 13.3 | 5.2 |
ROD15-703 | Main zone | 378.0 | 389.0 | 1,028 | 6.1 | 14.3 |
and | Main zone | 442.0 | 448.0 | 1,077 | 3.5 | 5.8 |
and | Sisar | 641.8 | 654.0 | 1,235 | 8.0 | 8.1 |
* Previously reported in Company news release dated April 28, 2011 as 9.5 g/t over 6.0 metres. ** Previously reported in Company news release dated April 30, 2015 *** Previously reported in Company news release dated July 29, 2015 |
Kittila composite longitudinal section
Kittila composite cross sections – 7538000mN and 7538500mN
Hole ROD15-703 intersected two lenses in the main zone and one in the
Sisar lens. In the main ore zone, this hole intersected 14.3 g/t gold
over 6.1 metres at 1,028 metres depth, and 5.8 g/t gold over 3.5 metres
at 1,077 metres depth. The upper intercept verifies, widens and
increases the grade of the probable reserves between the Suuri and
Roura trends, while the lower one extends the mineralization to the
north, and will help to convert future resources. The hole then
intersected 8.1 g/t gold over 8.0 metres at 1,235 metres depth in the
Sisar lens, approximately 150 metres east of the main ore zone,
strongly confirming the continuity of the lens. This intercept is
between two previously reported intercepts at approximately the same
depth: it is approximately 116 metres north of hole ROU10-037 and 250
metres south of hole ROD14-003.
At shallower depths and approximately 560 metres farther north, hole
ROU15-600 intersected 5.5 g/t gold over 3.3 metres at 950 metres below
surface, approximately 100 metres east of the main zone
mineralization. This intercept is approximately 130 metres south of
the previously reported intercept of hole ROU15-603.
Additional holes have been drilled in the vicinity of the new Sisar lens
intercepts, and assays are pending. A second underground deep drill
rig is expected to start operating in the fourth quarter 2015 and carry
on into 2016 to determine continuity and test for extensions of the
Sisar lens.
At the Kuotko deposit, located approximately 15 kilometres north of
Kittila, drilling continues with a focus on infilling and expanding the
existing inferred resource of approximately 170,000 ounces (1.8 million
tonnes at 2.9 g/t gold). In addition, new mineralized zones have been
identified outside of the known resource areas. Metallurgical testing
is ongoing and unlike Kittila, the gold mineralization is free
milling. Upon completion of the drilling, studies will be carried out
to assess the viability of mining the deposit as a satellite open pit.
Barsele Project – Drilling Now Underway on the Central Zone
On June 11, 2015, Agnico Eagle acquired a 55% interest in the Barsele
project in Sweden. The Company can earn an additional 15% interest in
the project through the completion of a pre-feasibility study.
The Barsele property is known to contain intrusive-hosted gold
mineralization and gold-rich volcanogenic massive sulphide
mineralization. In 2015, the Company plans to spend approximately
$3.25 million on exploration to further evaluate the mineral potential
of the property.
In September 2015, trenching and mapping programs were carried out that
confirmed that the known intrusive-hosted deposits plunge to the
southeast. A 16-hole (9,300-metre) drill program commenced in early
October to test the depth extension of the Central Zone to 400 to 500
metres below surface.
NUNAVUT REGION
With the Company's largest producing mine (Meadowbank) and two
significant development assets and exploration projects (Meliadine and
Amaruq) located in Nunavut, Agnico Eagle has the potential to build an
operating platform that could have the ability to generate strong
production and cash flows over several decades.
Meadowbank – Increased Waste Stripping Capacity Provides Production
Flexibility
The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved
commercial production in March 2010.
The Meadowbank mill processed an average of 10,824 tpd in the third
quarter of 2015, compared to the 11,492 tpd achieved in the third
quarter of 2014. Mill throughput levels were lower in the 2015 period
due to a higher percentage of Vault ore processed which has a higher
hardness factor, which has an impact on both the primary and secondary
grinding circuit efficiency.
Minesite costs per tonne were approximately C$72 in the third quarter of
2015, which compares to C$74 per tonne in the third quarter of 2014.
The lower costs in the 2015 period were primarily due to an increase in
capitalized versus expensed waste stripping compared to the respective
2014 period.
For the first nine months of 2015, the Meadowbank mill processed an
average of 11,009 tpd, compared to 11,365 tpd in the first nine months
of 2014. Mill throughput levels were lower in the 2015 period
primarily due to the reasons outlined above. Minesite costs per tonne
were approximately C$72 in the first nine months of 2015, which was
similar to the C$73 per tonne in the comparable 2014 period.
Payable production in the third quarter of 2015 was 99,425 ounces of
gold at total cash costs per ounce on a by-product basis of $598. This
compares with the third quarter of 2014 when 91,557 ounces were
produced at total cash costs per ounce on a by-product basis of $777.
The higher production in the 2015 period compared to the 2014 period
was primarily due to the processing of higher grade ore (an increase of
approximately 15%) and slightly better recoveries. Costs in the 2015
period were lower due to increased production and favourable foreign
exchange rates.
In the first nine months of 2015, Meadowbank produced 279,224 ounces of
gold at total cash costs per ounce of $646 on a by-product basis. In
the first nine months of 2014, the mine produced 366,162 ounces of gold
at total cash costs per ounce of $561 on a by-product basis. The lower
production (down 24%) in the 2015 period compared to the previous
period was primarily due to processing fewer tonnes at lower grades and
lower mill recoveries (down 2.3%). During the first six months of the
2014 period, the Company encountered ore grades that were higher than
expected in both the Portage and Goose pits.
In 2013, approximately 246,000 ounces were removed from mineral reserves
at the Vault deposit due to a change in the gold price assumption used
to calculate mineral reserves at December 31, 2013. Given the current
US dollar to Canadian dollar foreign exchange rate (which yields
favourable revenues and costs in Canadian dollar terms), lower fuel
costs, and the growing significance of the Amaruq Project, the Company
made a decision in July 2015 to proceed with the expansion of the Vault
pit.
With the expansion, the Meadowbank mine is now expected to be in
production until the third quarter of 2018 (approximately one year
longer than originally forecast). The extension of the Meadowbank mine
life is expected to help bridge the production gap between the end of
production at Meadowbank and the potential start of production at a
satellite operation at Amaruq (not yet approved for construction).
The Meadowbank production profile has been revised to reflect the need
for additional waste stripping associated with the pit extension. As
previously reported, the revised production profile is shown below:
2015 | 2016 | 2017 | 2018 | |||||||||||||
February 2015 Guidance (gold ounces) | 400,000 | 365,000 | 290,000 | n/a | ||||||||||||
July 2015 Guidance (gold ounces) | 400,000 | 310,000 | 345,000 | 130,000 | ||||||||||||
With additional mining equipment now in place, better planning and
maintenance, revised bench heights, and shorter waste haulage
distances, total tonnage moved increased by approximately 30% in the
third quarter of 2015. The Company expects to exceed the previously
planned stripping rate going forward, which could potentially provide
additional production flexibility in the future.
Based on a new mining sequence in the Portage and Vault pits, production
at Meadowbank in the fourth quarter of 2015 is expected to be similar
to production in the third quarter.
Amaruq Project – Drilling Expands Scope of Whale Tail Deposit; Positive
Results from the V Zone Area; Phase Two Exploration Program Now
Completed
Agnico Eagle has a 100% interest in the Amaruq project. The large
property consists of 114,761 hectares, approximately 50 kilometres
northwest of the Meadowbank mine. In August 2015, the Company
announced an updated inferred mineral resource estimate as of June 30,
2015 of 2.0 million ounces gold (9.7 million tonnes grading 6.47 g/t
gold).
The phase two drilling program for 2015 was completed in mid-October.
Total drilling at Amaruq for the year was 108,000 metres (378 holes)
completed. This release incorporates some of the drill results
received since the last results were released on August 19, 2015. The
latest drill results are from the main Whale Tail deposit including the
east-plunging high-grade shoot and the former gap area between Whale
Tail West and Mammoth Lake. As well, there are recent exploration
drill results from the V zone. The 2016 drill program is expected to
start in February.
Phase Two Drill Results Continue to Expand Mineralized Zones
The phase two 2015 drilling program at the Amaruq project began in July
with several purposes, including step-out drilling to link Whale Tail
and Mammoth Lake mineralization; testing the down-plunge extent of the
ore shoot in the east of Whale Tail; and extending the I, V and R
zones.
Recent intercepts from the project are set out in the table below and
the drill hole collars are located on the Amaruq project local geology
map. The Whale Tail deposit pierce points are shown on the Whale Tail
composite longitudinal section, while the coordinates from the V zone
drill-hole collars are given in a second table. All intercepts
reported for the Amaruq project show capped grades over estimated true
widths, based on a preliminary geological interpretation that is being
updated as new information becomes available with further drilling.
Recent exploration drill results from the Whale Tail (WT) deposit and
the V zone area, Amaruq project
Drill hole | Location |
From (metres) |
To (metres) |
Depth of midpoint below surface (metres) |
Estimated true width (metres) |
Gold grade (g/t) (uncapped) |
Gold grade (g/t) (capped)* |
AMQ15-347 | WT | 444.0 | 461.8 | 383 | 11.4 | 6.3 | 6.3 |
AMQ15-368 | V zone | 23.0 | 28.0 | 19 | 3.8 | 2.8 | 2.8 |
AMQ15-369 | WT Shoot | 192.2 | 229.0 | 176 | 18.4 | 8.4 | 8.4 |
AMQ15-390 | V zone | 6.7 | 18.0 | 9 | 7.3 | 3.5 | 3.5 |
and | 48.2 | 55.5 | 40 | 5.2 | 90.2 | 30.1 | |
AMQ15-422 | WT Shoot | 364.0 | 397.0 | 270 | 29.9 | 5.7 | 5.7 |
including | 365.0 | 373.0 | 261 | 7.3 | 10.2 | 10.2 | |
including | 388.0 | 397.0 | 279 | 8.2 | 10.0 | 10.0 | |
AMQ15-442 | WT Shoot | 422.1 | 437.0 | 296 | 12.9 | 8.1 | 8.1 |
including | 431.0 | 435.2 | 298 | 3.6 | 12.6 | 12.6 | |
AMQ15-444 | WT Shoot | 432.4 | 453.4 | 359 | 14.8 | 6.3 | 6.3 |
including | 448.5 | 453.4 | 366 | 4.2 | 10.3 | 10.3 | |
and | 458.7 | 472.2 | 378 | 10.3 | 5.8 | 5.8 | |
AMQ15-448 | V zone | 150.0 | 154.0 | 111 | 3.9 | 3.8 | 3.8 |
AMQ15-450 |
WT-Mammoth gap |
213.5 | 243.0 | 166 | 16.9 | 4.5 | 4.5 |
including | 213.5 | 223.0 | 158 | 6.7 | 7.6 | 7.6 | |
AMQ15-461 | V zone | 103.6 | 130.5 | 115 | 23.4 | 22.9 | 7.9 |
including | 103.6 | 107.8 | 104 | 3.7 | 8.8 | 8.8 | |
including | 115.8 | 121.3 | 117 | 4.8 | 99.4 | 26.4 | |
AMQ15-463 | WT Shoot | 381.3 | 417.6 | 293 | 29.7 | 6.8 | 6.8 |
including | 399.5 | 414.5 | 298 | 11.5 | 8.8 | 8.8 | |
AMQ15-470 | WT Shoot | 481.0 | 502.0 | 357 | 16.1 | 6.9 | 6.9 |
including | 495.0 | 502.0 | 362 | 5.4 | 12.6 | 12.6 | |
AMQ15-472 | V zone | 26.7 | 32.6 | 28 | 5.5 | 4.7 | 4.7 |
and | 40.0 | 49.0 | 41 | 7.8 | 7.2 | 7.2 | |
AMQ15-491 | V zone | 169.3 | 174.4 | 155 | 3.6 | 33.8 | 21.1 |
*Holes at Amaruq use a capping factor of 60 g/t gold. |
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) |
AMQ15-368 | 7256422 | 606800 | 160 | 143 | -51 | 444 |
AMQ15-390 | 7256476 | 606882 | 158 | 142 | -50 | 411 |
AMQ15-448 | 7256294 | 607129 | 156 | 323 | -45 | 192 |
AMQ15-461 | 7256294 | 606973 | 158 | 319 | -78 | 218 |
AMQ15-472 | 7256407 | 606874 | 160 | 322 | -67 | 117 |
AMQ15-491 | 7256303 | 606721 | 162 | 166 | -63 | 249 |
* Coordinate System UTM Nad 83 zone 14 |
Whale Tail Deposit Composite Longitudinal Section
Recent drilling has confirmed that the Whale Tail and Mammoth zones form
a single mineralized system at least 2.3 kilometres long, between
surface and locally to a depth of 450 metres. A new intercept lies in
between several previously reported intercepts filling the former gap
between Whale Tail and the Mammoth Lake mineralization. Hole AMQ15-450
yielded 4.5 g/t gold over 16.9 metres at 166 metres depth including 7.6
g/t gold over 6.7 metres. This area will continue to be investigated
in 2016. The mineralized system remains open at depth and along
strike.
Drilling from the opposite direction (north to south) has enhanced the
understanding of the geometry of the deposit. Within the Whale Tail
deposit is a thickened higher-grade ore shoot that is at least one
kilometre long. This cigar-shaped shoot extends from surface (Whale
Tail West) plunging shallowly eastward to a depth of 380 metres (Whale
Tail East). The ore shoot remains open. Six recent intercepts within
this shoot, from west to east, are hole AMQ15-369 that intersected 8.4
g/t gold over 18.4 metres at 176 metres depth, hole AMQ15-463 that
yielded 6.8 g/t gold over 29.7 metres at 293 metres depth, hole
AMQ15-422 that intersected 5.7 g/t gold over 29.9 metres at 270 metres
depth, hole AMQ15-442 that intersected 8.1 g/t gold over 12.9 metres at
296 metres depth, hole AMQ15-470 that intersected 6.9 g/t gold over
16.1 metres at 357 metres depth and hole AMQ15-444, which yielded two
intercepts 6.3 g/t gold over 14.8 metres at 359 metres depth, and 5.8
g/t gold over 10.3 metres at 378 metres depth. (Note that holes
AMQ15-369 and AMQ15-444 were drilled from the south.)
The results described for the Whale Tail deposit are expected to have a
positive impact on the size of the upcoming resources estimate for the
Amaruq project.
Recent drilling and mapping has shown that the V zone is a significant
mineralized structure dipping shallowly to the southeast, with locally
abundant visible gold. The structure has been identified from outcrop
on surface to a depth of 155 metres in recent drilling; it remains open
at depth and laterally. Hole AMQ15-390 intersected the structure
yielding 30.1 g/t gold over 5.2 metres at 40 metres depth.
Approximately 100 metres to the south of this intercept, hole AMQ15-461
yielded 7.9 g/t gold over 23.4 metres at 115 metres depth.
Approximately 150 metres southwest of hole AMQ15-390 was a third
high-grade intersection in the V zone: hole AMQ15-491 intersected 21.1
g/t gold over 3.6 metres at 155 metres depth.
Other results from the V zone are included in the intercepts table
above. These results will lead to a reinterpretation of the I, V, and
R zones, which could have a positive impact on the year-end resource
estimate. Although additional drilling will be required, the Company
believes that the V zone could potentially be a second source of open
pit ore at Amaruq.
Engineering and environmental baseline studies are underway to support
the permitting process for the Amaruq project as a satellite open pit
operation to the Meadowbank mine. The most recent drilling at depth in
Whale Tail also indicates that this deposit hosts high-grade intercepts
below the preliminary ultimate pit shell, suggesting that Whale Tail
has underground potential. An application to construct an all-weather
access road between Meadowbank and the Amaruq site was filed in the
first quarter of 2015 and is currently working its way through the
Nunavut permitting process.
Meliadine Project – License B Granted; Regional Land Holdings Expanded
The Meliadine gold project was acquired in July 2010 and is the
Company's largest development project based on mineral reserves and
mineral resources. The Company has a 100% interest in the
111,757-hectare property, which is linked to the town of Rankin Inlet
in Nunavut by a 25-kilometre all-weather access road.
In March 2015, the Company completed and filed with Canadian securities
regulators an updated National Instrument 43-101 (“NI 43-101”)
technical report on the Meliadine gold project. The updated technical
study was based on extracting only the 3.3 million ounces of gold in
proven and probable mineral reserves (13.9 million tonnes of ore at
7.44 g/t gold), which is all contained in the Tiriganiaq and Wesmeg
deposits.
The Meliadine property also hosts 3.3 million ounces of measured and
indicated mineral resources (20.2 million tonnes at 5.06 g/t gold), and
3.5 million ounces of inferred mineral resources (14.1 million tonnes
at 7.65 g/t gold). In addition, there are numerous other known gold
occurrences in the 80-kilometre-long greenstone belt that require
further evaluation.
Internal studies are ongoing to evaluate the potential to extract
additional ounces from the Tiriganiaq and Wesmeg/Normeg deposits, which
could potentially extend the mine life, improve the project economics,
and increase the after-tax internal rate of return. These studies are
expected to be completed in the first half of 2016.
At the end of the third quarter of 2015, approximately 1,960 metres of
underground development had been completed, and additional underground
equipment has been transported to site to complete the 2015 plan that
calls for total underground development of approximately 2,500 metres.
This development will allow for more cost-effective exploration and
conversion drilling of the deeper parts of the Tiriganiaq and
Wesmeg/Normeg deposits and help to optimize potential mining plans.
On July 13, 2015, the Kivalliq Inuit Association and Agnico Eagle signed
the Inuit Impact Benefit Agreement (“IIBA”) for the Meliadine gold
project. The IIBA addresses protection of Inuit values, culture and
language, protection of the land, water and wildlife, provides
financial compensation to Inuit over the mine life, and contains
provision for training, Inuit employment and contracting.
On October 5, 2015, the Nunavut Water Board issued the permit (License
B) for Meliadine pre-development work. License A, which is required
for production activities, is expected to be granted in the second
quarter of 2016.
The timing of future capital expenditures on the Meliadine project
beyond 2015 and the determination of whether to build a mine at
Meliadine are subject to approval by Agnico Eagle's Board of Directors,
which will be based on prevailing market conditions and outcomes of the
various potential scenarios being evaluated.
Acquisition of New Properties in Nunavut
Agnico Eagle is currently studying options and alternatives in Nunavut
to capitalize on the large and growing mineral resource in the region.
As part of this initiative, the Company has recently staked claims
totaling 68,012 hectares on properties to the west-northwest of the
project, on the continuation of the greenstone belt that hosts the
Meliadine deposits.
This summer, an airborne VTEM magnetic and electromagnetic survey was
flown over the new properties. A field crew initiated prospecting and
sampling of areas with geophysical signatures typical of iron
formation-hosted Archean/Proto-Proterozoic deposits, similar to those
recognized at Meadowbank, Amaruq and Meliadine projects. Close to 800
rock samples have been collected from the properties. Initial results
have identified a 2-kilometre-long structure from which 21 rock samples
returned values above 1.0 g/t gold including seven values in excess of
10.0 g/t gold, with a maximum value of 42.0 g/t gold.
The new properties appear to be geologically similar to the Meadowbank,
Meliadine and Amaruq projects where our exploration team has
demonstrated the effectiveness of a systematic exploration approach and
the strong mineral potential of this part of Nunavut. Assembling and
analyzing the data collected this summer will assist in preparing a
drill program for 2016 to further investigate the higher potential
areas on the new properties.
SOUTHERN BUSINESS OPERATING REVIEW
Agnico Eagle's southern business operations are focused in Mexico.
These operations have been the source of growing precious metals
production (gold and silver), stable operating costs and strong free
cash flow since 2009.
Pinos Altos – Strong Performance Driven by Higher Mill Throughput and
Grades
The 100% owned Pinos Altos mine in northern Mexico achieved commercial
production in November 2009.
The Pinos Altos mill processed 5,403 tpd in the third quarter of 2015,
compared to 5,040 tpd processed in the third quarter of 2014. During
the third quarter of 2015, approximately 49,300 tonnes of ore were
stacked on the leach pad at Pinos Altos, compared to 143,500 tonnes in
the comparable 2014 period.
Minesite costs per tonne at Pinos Altos were $48 in the third quarter of
2015, which is in line with $48 in the third quarter of 2014. Although
minesite costs per tonne are unchanged on a year-over-year basis, these
costs are subject to variations in the proportion of heap leach ore to
milled ore and open pit ore to underground ore, currency exchange rates
and routine movements in the waste to ore stripping ratio in the open
pit mines.
For the first nine months of 2015, the Pinos Altos mill processed an
average of 5,638 tpd, compared to 5,311 tpd processed in the first nine
months of 2014. Approximately 238,500 tonnes of ore were stacked on
the Pinos Altos leach pad during the first nine months of 2015,
compared to 436,800 tonnes in the prior year period. Minesite costs
per tonne were approximately $46 compared to $48 per tonne in the first
nine months of 2014 with variance due to the proportion of heap leach
to mill ore and the proportion of underground ore to open pit,
variations in the proportion of waste to ore mined and variations in
the currency exchange rate.
Payable production in the third quarter of 2015 was 47,725 ounces of
gold at total cash costs per ounce on a by-product basis of $392. This
compares with production of 41,155 ounces at total cash costs per ounce
on a by-product basis of $545 in the third quarter of 2014. Higher
production in 2015 is largely due to higher mill throughput and higher
grades processed over the comparable prior year period. The decrease
in the year over year total cash costs per ounce is largely due to
increased gold production and higher silver production (offset in part,
by a decline in realized silver prices) and favourable foreign exchange
rates compared to the prior year period.
In the first nine months of 2015, Pinos Altos produced 148,478 ounces of
gold at total cash costs per ounce of $378 on a by-product basis. This
is in contrast to the first nine months of 2014 when the mine produced
130,350 ounces of gold at total cash costs per ounce of $513 on a
by-product basis. The lower cash costs in the first nine months of
2015 are primarily due to favourable foreign exchange rates and higher
gold and silver production compared to the prior year period.
The Pinos Altos shaft-sinking project remains on schedule for completion
in 2016. The shaft is currently at a depth of approximately 573
metres, and activities during the third quarter of 2015 focused on the
development of loading stations on levels 27 and 28. When the shaft is
completed (final depth of approximately 603 metres), it will allow
better matching of the mill capacity with the future mining capacity at
Pinos Altos once the open pit mining operation begins to wind down, as
planned over the next several years.
The Company continues to evaluate a number of regional satellite
opportunities. A 6,000-metre in-fill and conversion drill program on
the Sinter deposit is 95% complete with assays still pending from about
50% of the holes. Results received to date indicate that there is good
potential to add this deposit to the Pinos Altos mine plan beginning in
2020.
Creston Mascota Deposit at Pinos Altos – Initial In-pit Drilling Results
Indicate Potential to Extend Mine Life
The Creston Mascota deposit at Pinos Altos has been operating as a
satellite operation to the Pinos Altos mine since late 2010.
Approximately 434,300 tonnes of ore were stacked on the Creston Mascota
leach pad during the third quarter of 2015, compared to approximately
469,200 tonnes stacked in the third quarter of 2014. In the 2015
period, fewer tonnes were stacked mainly due to the adverse impact of
the rainy season on roads, loading and dumping zones, and the crushing
circuit. Minesite costs per tonne at Creston Mascota were $14 in the
third quarter of 2015, compared to $17 in the third quarter of 2014.
Costs in the 2015 period were lower due to currency fluctuations, lower
fuel consumption and reduced power requirements compared to the 2014
period.
For the first nine months of 2015, approximately 1,569,800 tonnes of ore
were stacked on the Creston Mascota leach pad, compared to 1,242,900
tonnes in the prior year period. In the 2015 period, additional ore
was encountered outside the block model, which resulted in more tonnes
being stacked in the first half of the year compared to the 2014
period.
For the first nine months of 2015, mine site costs per tonne at Creston
Mascota were $12, compared to $17 per tonne in the first nine months of
2014. Costs were lower in the 2015 period due to more tonnes stacked
and the other reasons outlined above.
Payable gold production at Creston Mascota in the third quarter of 2015
was 12,716 ounces at total cash costs per ounce on a by-product basis
of $436. This compares to 13,377 ounces at total cash costs per ounce
on a by-product basis of $556 during the third quarter of 2014.
Production was lower in the 2015 period due to fewer tonnes stacked,
compared to the 2014 period. Cash costs were lower in the 2015 period
based on lower minesite costs per tonne (see above), increased silver
production (partially offset by a lower realized silver price) and a
favourable foreign exchange rate compared to the 2014 period.
Payable gold production for the first nine months of 2015 was 40,770
ounces at total cash costs per ounce of $425 on a by-product basis.
This compares to 34,853 ounces at total cash costs per ounce of $587 on
a by-product basis in the first nine months of 2014. The higher
production in the 2015 period was due to more tonnes being stacked
(especially in the first half of 2015) compared to the 2014 period.
The lower costs in the 2015 period are due to higher gold production,
increased silver production (partially offset by a lower realized
silver price) and a favourable foreign exchange rate compared to the
2014 period.
In the third quarter of 2015, preparation and top soil recovery at the
Phase IV heap leach pad were completed. The earthworks have been
initiated, with commissioning expected by year-end 2015.
Over its mine life, Creston Mascota has added approximately 50% (179,000
ounces of contained gold) to its mineral reserves through infill
drilling and improved geological understanding. In April 2015, higher
grade mineralization was encountered at the bottom of the pit and
outside the Creston Mascota block model. An infill drill program was
completed in the third quarter of 2015 with encouraging results, and
the interpretation of drill hole assays is ongoing.
In September 2015, a 3,500-metre infill and conversion drill program
commenced on the Bravo satellite zone. This program is expected to be
completed by year-end 2015. The results of recent infill drilling in
the pit and the potential of nearby satellite deposits such as Bravo
could extend the projected life of the Creston Mascota operations
beyond 2018.
La India – New Record Set for Quarterly Gold Production
The La India mine property in Sonora, Mexico, located approximately 70
kilometres from the Company's Pinos Altos mine, was acquired in
November 2011 through the purchase of Grayd Resources, which held a
56,000-hectare land position in the Mulatos Gold belt. Commissioning of
the mine commenced ahead of schedule in the third quarter of 2013 and
commercial production was declared as of February 1, 2014.
Approximately 1,193,900 tonnes of ore were stacked on the La India leach
pad during the third quarter of 2015, compared to approximately
1,190,100 tonnes stacked in the third quarter of 2014. Minesite costs
per tonne at La India were $11 in the third quarter of 2015, compared
to the $10 in the third quarter of 2014. The increase in minesite costs
reflect slightly higher maintenance costs and cyanide consumption (due
to the rainy season) partially offset by lower costs for fuel and
labour, and favourable foreign exchange rates.
In the first nine months of 2015, approximately 3,931,900 tonnes of ore
were stacked on the La India leach pad, compared to approximately
3,346,500 stacked in the first nine months of 2014. Minesite costs per
tonne at La India were $9 in the first nine months of 2015, compared to
the $8 in the first nine months of 2014. Tonnage stacked in the 2014
period was lower given that the operation was still ramping up to full
capacity. The slightly higher costs in the 2015 period are primarily
due to the reasons outlined above.
Payable gold production at La India in the third quarter of 2015 was
28,604 ounces at total cash costs per ounce of $436 on a by-product
basis were. Production in the third quarter of 2014 was 20,311 ounces
at total cash costs per ounce on a by-product basis of $547.
Production in the 2015 period was positively impacted by rain flushing
residual ounces from the heaps and significantly higher ore grades
placed on the heaps than planned. Total cash costs in the 2015 period
were favourably impacted by higher production volumes and favourable
foreign exchange rates.
For the first nine months of 2015, La India produced 80,930 ounces of
gold at total cash costs per ounce of $422 on a by-product basis. This
compares to 51,820 ounces at total cash costs per ounce of $483 on a
by-product basis in the first nine months of 2014. The higher
production and lower costs in the 2015 period are primarily due to the
reasons outlined above.
During the third quarter of 2015, construction activities on the heap
leach expansion were negatively affected by the extraordinary rains
during the period. However, any delays related to the rains are not
expected to affect future production plans or capital costs.
Approximately 77% of the earthworks have been finished with full
completion expected later in the fourth quarter of 2015. This leach
pad expansion will provide the capacity for the current planned
life-of-mine production at La India and approximately 5.0 million
tonnes of additional stacking. Construction of the Main Zone haul road
was completed during the third quarter of 2015.
In the third quarter of 2015, several activities were undertaken to
improve the La India block model and potentially expand the mineral
reserves and mineral resource. Infill drilling and favourable
reconciliation data from the first full year of mining have led to an
improved geological model for the Main Zone oxides. In addition,
ongoing metallurgical investigations and field-proven production
experience with the North Zone sulphides have shown that some of the
transition and sulphide material in the Main Zone and La India Zone may
also be amenable to heap leaching.
Inclusion of sulphide material into the pit designs at the La India mine
has the potential to add further oxides as well as sulphides into the
year-end 2015 mineral reserve and mineral resource estimate expected to
be reported in mid-February 2016. Any additions could potentially
extend the mine life beyond 2020.
El Barqueno – Drilling Continues with a Focus on Resource Delineation
and Defining New Target Areas
Agnico Eagle has a 100% interest in the El Barqueno project. The
32,840-hectare property is in the Guachinango gold-silver mining
district, Jalisco State, Mexico, approximately 150 kilometres west of
the state capital of Guadalajara. It consists of three blocks of land:
the original El Barqueno package (El Barqueno I, II and III) acquired
from Cayden Resources in November 2014, and two adjacent blocks
acquired from Soltoro Limited in June 2015 (El Rayo and El Tecolote).
The Company last reported exploration results from this project in a
news release dated September 21, 2015.
The El Barqueno project contains a number of known mineralized zones and
several prospects that require further evaluation. There are currently
10 drill rigs working to define the limits of the Azteca-Zapoteca,
Angostura and Peña de Oro prospects, and delineate an initial mineral
resource estimate for these deposits. Several other prospects are also
under evaluation. An additional drill rig is testing the
Zapote-Mixteca prospect, which has been shown to be gold-bearing by
recent rock sample and trench results.
To the end of the third quarter, 171 holes (42,940 metres) had been
drilled. Drilling will continue at El Barqueno until the end of the
year. The Company expects that this drilling will lead to the
estimation of an initial inferred mineral resource at the
Azteca-Zapoteca, Angostura and Peña de Oro areas to open-pit mineable
depths. The resources are expected to be reported in mid-February
2016.
Conceptual design studies and additional metallurgical testing are
underway at El Barqueno. The project may host gold-silver deposits
that could potentially be developed into a series of open pits
utilizing heap leach processing, similar to Creston Mascota and the La
India mine.
While it is too early to estimate the extent of the mineral resources
and the number of deposits with economic potential at El Barqueno, the
Company already has the experience of developing cost-efficient mining
operations in Mexico, and increasing their size through successful
exploration as well as metallurgical innovation. This body of
knowledge will be applied as El Barqueno continues to be explored and
studied.
Exploration expenditures at El Barqueno in 2015 are currently expected
to total approximately $22 million.
Quarterly Dividend Declared
Agnico Eagle's Board of Directors has declared a quarterly cash dividend
of $0.08 per common share, payable on December 15, 2015 to shareholders
of record as of December 1, 2015. 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 program. Dividend Reinvestment Plan
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.
Note Regarding Certain Measures of Performance
This news release discloses certain measures, including ''total cash
costs per ounce'' and ''minesite costs per tonne'', “all-in sustaining
costs per ounce” and “adjusted net income” that are not recognized
measures under IFRS. These data may not be comparable to data
presented by other gold producers. For a reconciliation of these
measures to the most directly comparable financial information
presented in the consolidated financial statements prepared in
accordance with IFRS and for an explanation of how management uses
these measures, other than adjusted net income, see “Reconciliation of
Non-GAAP Financial Performance Measures” below. The 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 (before by-product metal revenues). The total cash
costs per ounce of gold produced on a by-product basis is calculated by
adjusting production costs as recorded in the consolidated statements
of income (loss) for by-product revenues, unsold concentrate inventory
production costs, smelting, refining and marketing charges and other
adjustments, and then dividing by the number of ounces of gold
produced. The total cash costs per ounce of gold produced on a
co-product basis is calculated in the same manner as the total cash
costs per ounce of gold produced on a by-product basis except that no
adjustment is made for by-product metal revenues. Accordingly, the
calculation of total cash costs per ounce of gold produced on a
co-product basis does not reflect a reduction in production costs or
smelting, refining and marketing charges associated with the production
and sale of by-product metals. The total cash costs per ounce of gold
produced is intended to provide information about the cash-generating
capabilities of the Company's mining operations. Management also uses
these measures to monitor the performance of the Company's mining
operations. As market prices for gold are quoted on a per ounce basis,
using the total cash costs per ounce of gold produced on a by-product
basis measure allows management to assess a mine's cash-generating
capabilities at various gold prices. All-in sustaining costs are used
to show the full cost of gold production from current operations. The
Company calculates all-in sustaining costs per ounce of gold produced
as the aggregate of total cash costs on a by-product basis, sustaining
capital expenditures (including capitalized exploration), general and
administrative expenses (including stock options) and reclamation
expenses divided by the amount of gold produced. The all-in sustaining
costs per ounce of gold produced on a co-product basis is calculated in
the same manner as the total cash costs per ounce of gold produced on a
by-product basis except that no adjustment is made for by-product metal
revenues. The Company's methodology for calculating all-in sustaining
costs may differ from to the methodology used by other producers that
disclose all-in sustaining costs. The Company may change the
methodology it uses to calculate all-in sustaining costs in the future,
including in response to the adoption of formal industry guidance
regarding this measure by the World Gold Council. 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
per ounce of gold produced on a by-product basis, by-product metal
prices. Management compensates for these inherent limitations by using
these measures in conjunction with minesite costs per tonne (discussed
below) as well as other data prepared in accordance with IFRS.
Management also performs sensitivity analyses in order to quantify the
effects of fluctuating exchange rates and metal prices. This news
release also contains information as to estimated future total cash
costs per ounce, all-in sustaining costs and minesite costs per tonne.
The estimates are based upon the total cash costs per ounce, all-in
sustaining costs and minesite costs per tonne that the Company expects
to incur to mine gold at its mines and projects and, consistent with
the reconciliation of these actual costs referred to above, do not
include production costs attributable to accretion expense and other
asset retirement costs, which will vary over time as each project is
developed and mined. It is therefore not practicable to reconcile
these forward-looking non-GAAP financial measures to the most
comparable IFRS measure.
Forward-Looking Statements
The information in this news release has been prepared as at October 28,
2015. Certain statements contained in this document 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 document, the words “anticipate”, “estimate”, “expect”,
“forecast”, “planned”, “will” and similar expressions are intended to
identify forward-looking statements. Such statements include without
limitation: the Company's forward-looking production guidance,
including estimated ore grades, project timelines, drilling results,
metal production, life of mine estimates, production, total cash costs
per ounce, minesite costs per tonne, all-in sustaining costs 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 expansion projects, recovery rates, mill
throughput, and projected exploration expenditures, including costs and
other estimates upon which such projections are based; estimates of
depreciation expense, general and administrative expense and tax rates;
the impact of maintenance shutdowns; 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 mining costs, total cash costs, minesite costs, all-in
sustaining costs and other expenses; estimates of future capital
expenditures and other cash needs, and expectations as to the funding
thereof; statements as to the projected development of certain ore
deposits, including estimates of exploration, development and
production and other capital costs, and estimates of the timing of such
exploration, development and production or decisions with respect to
such exploration, development and production; estimates of mineral
reserves and mineral resources, and statements and information
regarding anticipated future exploration; the anticipated timing of
events with respect to the Company's mine sites and statements and
information regarding the sufficiency of the Company's cash resources
and other statements and information regarding anticipated trends with
respect to the Company's operations, exploration and the funding
thereof. Such statements and information reflect the Company's views
as at the date of this document and are subject to certain risks,
uncertainties and assumptions, and undue reliance should not be placed
on such statements and information. 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, 2014 filed
with Canadian securities regulators and that are included in its Annual
Report on Form 40-F for the year ended December 31, 2014 (“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 and expansion at each of Agnico
Eagle's properties proceeds on a basis consistent with current
expectations and plans; that the relevant metal prices, 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 and information. 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, capital
expenditures, and other costs; currency fluctuations; financing of
additional capital requirements; cost of exploration and development
programs; mining risks; community protests; risks associated with
foreign operations; 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 document, 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 and information.
Notes to Investors Regarding the Use of Mineral Resources
Cautionary Note to Investors Concerning Estimates of Measured and
Indicated Mineral Resources
This document 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 document 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 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 Northern Business operations has been approved by Christian
Provencher, Ing., Vice-President, Canada and a “Qualified Person” for
the purposes of NI 43-101. The scientific and technical information
contained in this news release relating to Southern Business operations
has been approved by Tim Haldane, P.Eng., Senior Vice-President,
Operations – USA and Latin America and a “Qualified Person” for the
purposes of NI 43-101. The scientific and technical information
contained in this news release relating to exploration has been
approved by Alain Blackburn, Ing., Senior Vice-President, Exploration
and Guy Gosselin, Ing., Vice-President, Exploration each of whom is a
“Qualified Person” for the purposes of NI 43-101.
The scientific and technical information relating to Agnico Eagle's
mineral reserves and mineral resources contained herein has been
approved by Daniel Doucet, Senior Corporate Director, Reserve
Development, Ing., and a qualified person as defined by 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 resource
and reserve mineral estimates in accordance with the CIM guidelines for
the estimation, classification and reporting of mineral resources and
mineral reserves in accordance with the Canadian securities regulatory
authorities' 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 mineral
reserve determination is made. A “final” or “bankable” feasibility
study is required to meet the requirements to designate mineral
reserves under Industry Guide 7. Agnico Eagle uses certain terms in
this news release, such as “measured”, “indicated”, and “inferred”, and
“resources” that the SEC guidelines strictly prohibit U.S. registered
companies from including in their filings with the SEC.
In prior periods, mineral reserves for all properties were typically
estimated using historic three-year average metals prices and foreign
exchange rates in accordance with the SEC guidelines. These guidelines
require the use of prices that reflect current economic conditions at
the time of mineral reserve determination, which the Staff of the SEC
has interpreted to mean historic three-year average prices. Given the
current lower commodity price environment, Agnico Eagle has decided to
use price assumptions that are below the three-year averages. The
assumptions used for the mineral reserves estimates at all mines and
advanced projects as of December 31, 2014 (other than the Canadian
Malartic mine), reported by the Company on February 11, 2015, are
$1,150 per ounce gold, $18.00 per ounce silver, $1.00 per pound zinc,
$3.00 per pound copper, $0.91 per pound lead and C$/US$, US$/Euro and
MXP/US$ exchange rates of 1.08, 1.30 and 13.00, respectively.
For the mineral reserves estimate at the Canadian Malartic mine, the
Company has decided to continue to report the mineral reserves
estimated as of June 15, 2014, reported by the Company in a news
release dated August 13, 2014, minus the production to the end of
2014. The assumptions used were $1,300 per ounce gold, a cut-off grade
between 0.28 g/t and 0.35 g/t gold (depending on the deposit), and a
C$/US$ exchange rate of 1.10.
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.
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.
The mineral reserves presented in this news release are separate from
and not a portion of the mineral resources.
Property/Project name and location |
Date of most recent Technical Report (NI 43-101) filed on SEDAR |
LaRonde, Bousquet & 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 project), Ontario, Canada | November 5, 2012 |
Pinos Altos and Creston Mascota, Mexico | March 25, 2009 |
La India, Mexico | August 31, 2012 |
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 and Form 40-F.
AGNICO EAGLE MINES LIMITED | |||||||||||||
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS | |||||||||||||
(thousands of United States dollars, except where noted) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Operating margin(i) by mine: | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | $ | 32,443 | $ | 14,696 | $ | 95,256 | $ | 86,523 | |||||
Lapa mine | 13,813 | 13,748 | 39,852 | 38,140 | |||||||||
Goldex mine | 20,681 | 17,237 | 55,459 | 40,045 | |||||||||
Meadowbank mine | 55,493 | 52,504 | 151,670 | 265,193 | |||||||||
Canadian Malartic mine(ii) | 44,293 | 33,224 | 123,748 | 36,892 | |||||||||
Kittila mine | 21,528 | 12,128 | 65,088 | 45,315 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 37,217 | 28,837 | 116,407 | 101,318 | |||||||||
Creston Mascota deposit at Pinos Altos | 8,898 | 8,032 | 30,275 | 23,173 | |||||||||
La India mine(iii) | 19,845 | 13,189 | 59,269 | 39,835 | |||||||||
Total operating margin(i) | 254,211 | 193,595 | 737,024 | 676,434 | |||||||||
Amortization of property, plant and mine development | 157,968 | 117,396 | 451,480 | 294,533 | |||||||||
Exploration, corporate and other | 110,258 | 69,884 | 221,937 | 195,051 | |||||||||
Income (loss) before income and mining taxes | (14,015) | 6,315 | 63,607 | 186,850 | |||||||||
Income and mining taxes (recovery) expense | (15,309) | 21,365 | 23,487 | 82,597 | |||||||||
Net income (loss) for the period | $ | 1,294 | $ | (15,050) | $ | 40,120 | $ | 104,253 | |||||
Net income (loss) per share — basic (US$) | $ | 0.01 | $ | (0.07) | $ | 0.19 | $ | 0.55 | |||||
Net income (loss) per share — diluted (US$) | $ | 0.01 | $ | (0.10) | $ | 0.19 | $ | 0.53 | |||||
Cash flows: | |||||||||||||
Cash provided by operating activities | $ | 143,687 | $ | 71,244 | $ | 475,491 | $ | 504,368 | |||||
Cash used in investing activities | $ | (100,365) | $ | (131,662) | $ | (258,733) | $ | (728,493) | |||||
Cash provided by (used in) financing activities | $ | 7,396 | $ | (35,943) | $ | (180,300) | $ | 247,921 | |||||
Realized prices (US$): | |||||||||||||
Gold (per ounce) | $ | 1,119 | $ | 1,249 | $ | 1,173 | $ | 1,284 | |||||
Silver (per ounce) | $ | 14.93 | $ | 17.72 | $ | 16.04 | $ | 19.33 | |||||
Zinc (per tonne) | $ | 1,909 | $ | 2,365 | $ | 1,973 | $ | 2,227 | |||||
Copper (per tonne) | $ | 4,538 | $ | 7,500 | $ | 5,193 | $ | 6,842 | |||||
Payable production(iv): | |||||||||||||
Gold (ounces): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | 71,860 | 37,490 | 194,760 | 145,336 | |||||||||
Lapa mine | 25,668 | 24,781 | 71,038 | 67,011 | |||||||||
Goldex mine | 32,068 | 27,611 | 87,780 | 70,970 | |||||||||
Meadowbank mine | 99,425 | 91,557 | 279,224 | 366,162 | |||||||||
Canadian Malartic mine(ii) | 76,603 | 64,761 | 212,937 | 76,639 | |||||||||
Kittila mine | 46,455 | 28,230 | 133,095 | 98,612 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 47,725 | 41,155 | 148,478 | 130,350 | |||||||||
Creston Mascota deposit at Pinos Altos | 12,716 | 13,377 | 40,770 | 34,853 | |||||||||
La India mine(iii) | 28,604 | 20,311 | 80,930 | 51,820 | |||||||||
Total gold (ounces) | 441,124 | 349,273 | 1,249,012 | 1,041,753 | |||||||||
Silver (thousands of ounces): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | 221 | 224 | 619 | 918 | |||||||||
Lapa mine | 1 | – | 3 | – | |||||||||
Meadowbank mine | 39 | 34 | 191 | 85 | |||||||||
Canadian Malartic mine(ii) | 76 | 66 | 217 | 76 | |||||||||
Kittila mine | 3 | 1 | 8 | 4 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 606 | 425 | 1,744 | 1,307 | |||||||||
Creston Mascota deposit at Pinos Altos | 40 | 26 | 109 | 60 | |||||||||
La India mine(iii) | 67 | 44 | 208 | 111 | |||||||||
Total Silver (thousands of ounces) | 1,053 | 820 | 3,099 | 2,561 | |||||||||
Zinc (tonnes) | 739 | 2,230 | 2,502 | 8,083 | |||||||||
Copper (tonnes) | 1,306 | 989 | 3,606 | 3,601 | |||||||||
Payable metal sold: | |||||||||||||
Gold (ounces): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | 69,143 | 39,279 | 189,462 | 145,494 | |||||||||
Lapa mine | 23,331 | 22,422 | 67,599 | 64,035 | |||||||||
Goldex mine | 33,004 | 26,762 | 88,217 | 68,624 | |||||||||
Meadowbank mine | 100,440 | 98,604 | 282,090 | 364,282 | |||||||||
Canadian Malartic mine(ii)(v) | 72,651 | 60,093 | 199,433 | 76,470 | |||||||||
Kittila mine | 47,070 | 28,209 | 135,436 | 97,157 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 49,327 | 41,143 | 145,162 | 131,011 | |||||||||
Creston Mascota deposit at Pinos Altos | 12,911 | 12,793 | 40,847 | 33,758 | |||||||||
La India mine(iii) | 28,983 | 19,265 | 79,684 | 48,922 | |||||||||
Total gold (ounces) | 436,860 | 348,570 | 1,227,930 | 1,029,753 | |||||||||
Silver (thousands of ounces): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | 220 | 249 | 649 | 911 | |||||||||
Meadowbank mine | 36 | 32 | 193 | 84 | |||||||||
Canadian Malartic mine(ii)(v) | 53 | 57 | 186 | 72 | |||||||||
Kittila mine | 3 | 1 | 7 | 4 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 620 | 430 | 1,682 | 1,367 | |||||||||
Creston Mascota deposit at Pinos Altos | 39 | 18 | 107 | 50 | |||||||||
La India mine(iii) | 66 | 42 | 205 | 102 | |||||||||
Total Silver (thousands of ounces) | 1,037 | 829 | 3,029 | 2,590 | |||||||||
Zinc (tonnes) | 650 | 3,936 | 2,650 | 8,067 | |||||||||
Copper (tonnes) | 1,302 | 988 | 3,605 | 3,604 | |||||||||
Total cash costs per ounce of gold produced – Co-product basis (US$)(vi): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | $ | 701 | $ | 1,316 | $ | 795 | $ | 1,118 | |||||
Lapa mine | 522 | 606 | 582 | 689 | |||||||||
Goldex mine | 479 | 582 | 546 | 661 | |||||||||
Meadowbank mine | 604 | 783 | 657 | 566 | |||||||||
Canadian Malartic mine(ii) | 559 | 754 | 609 | 737 | |||||||||
Kittila mine | 640 | 952 | 697 | 862 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 578 | 724 | 565 | 706 | |||||||||
Creston Mascota deposit at Pinos Altos | 478 | 589 | 467 | 620 | |||||||||
La India mine(iii) | 470 | 584 | 462 | 528 | |||||||||
Weighted average total cash costs per ounce of gold produced | $ | 587 | $ | 794 | $ | 633 | $ | 716 | |||||
Total cash costs per ounce of gold produced – By-product basis (US$)(vi): | |||||||||||||
Northern Business | |||||||||||||
LaRonde mine | $ | 558 | $ | 861 | $ | 620 | $ | 701 | |||||
Lapa mine | 522 | 606 | 581 | 689 | |||||||||
Goldex mine | 479 | 582 | 546 | 661 | |||||||||
Meadowbank mine | 598 | 777 | 646 | 561 | |||||||||
Canadian Malartic mine(ii) | 544 | 735 | 593 | 717 | |||||||||
Kittila mine | 639 | 951 | 696 | 861 | |||||||||
Southern Business | |||||||||||||
Pinos Altos mine | 392 | 545 | 378 | 513 | |||||||||
Creston Mascota deposit at Pinos Altos | 436 | 556 | 425 | 587 | |||||||||
La India mine(iii) | 436 | 547 | 422 | 483 | |||||||||
Weighted average total cash costs per ounce of gold produced | $ | 536 | $ | 716 | $ | 574 | $ | 627 | |||||
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 100.0% of Osisko by way of the previously announced court-approved plan of arrangement (“the Arrangement”). As a result of the Arrangement, Agnico Eagle and Yamana each indirectly own 50.0% 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 50.0% interest in the Canadian Malartic mine since the date of acquisition. |
(iii) | The La India mine achieved commercial production on February 1, 2014. |
(iv) |
Payable production (a non-GAAP non-financial performance measure) is the quantity of mineral produced during a period contained in products that are or will be sold by the Company, whether such products are sold during the period or held as inventories at the end of the period. |
(v) |
The Canadian Malartic mine's payable metal sold excludes quantities of gold reflecting the 5.0% net smelter royalty granted to Osisko Gold Royalties Ltd., in connection with the Arrangement. |
(vi) |
Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data 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 (before 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 (loss) 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. 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. |
AGNICO EAGLE MINES LIMITED | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(thousands of United States dollars, except share amounts, IFRS basis) | ||||||||||
(Unaudited) | ||||||||||
As at | As at | |||||||||
September 30, | December 31, | |||||||||
2015 | 2014 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 201,964 | $ | 177,537 | ||||||
Short-term investments | 6,144 | 4,621 | ||||||||
Restricted cash | 19,499 | 33,122 | ||||||||
Trade receivables | 5,899 | 59,716 | ||||||||
Inventories | 490,833 | 446,660 | ||||||||
Income taxes recoverable | 58,473 | 1,658 | ||||||||
Available-for-sale securities | 31,960 | 56,468 | ||||||||
Fair value of derivative financial instruments | 321 | 4,877 | ||||||||
Other current assets | 171,835 | 123,401 | ||||||||
Total current assets | 986,928 | 908,060 | ||||||||
Non-current assets: | ||||||||||
Restricted cash | 765 | 20,899 | ||||||||
Goodwill | 696,809 | 696,809 | ||||||||
Property, plant and mine development | 5,082,342 | 5,155,865 | ||||||||
Other assets | 38,764 | 27,622 | ||||||||
Total assets | $ | 6,805,608 | $ | 6,809,255 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 251,969 | $ | 209,906 | ||||||
Reclamation provision | 8,349 | 6,769 | ||||||||
Interest payable | 21,135 | 13,816 | ||||||||
Income taxes payable | 9,495 | 19,328 | ||||||||
Finance lease obligations | 13,533 | 22,142 | ||||||||
Current portion of long-term debt | 14,932 | 52,182 | ||||||||
Fair value of derivative financial instruments | 14,356 | 8,249 | ||||||||
Total current liabilities | 333,769 | 332,392 | ||||||||
Non-current liabilities: | ||||||||||
Long-term debt | 1,203,266 | 1,322,461 | ||||||||
Reclamation provision | 235,965 | 249,917 | ||||||||
Deferred income and mining tax liabilities | 838,572 | 797,192 | ||||||||
Other liabilities | 38,780 | 38,803 | ||||||||
Total liabilities | 2,650,352 | 2,740,765 | ||||||||
EQUITY | ||||||||||
Common shares: | ||||||||||
Outstanding – 217,647,221 common shares issued, less 233,525 shares held in trust |
4,695,297 | 4,599,788 | ||||||||
Stock options | 213,602 | 200,830 | ||||||||
Contributed surplus | 37,254 | 37,254 | ||||||||
Deficit | (791,153) | (779,382) | ||||||||
Accumulated other comprehensive income | 256 | 10,000 | ||||||||
Total equity | 4,155,256 | 4,068,490 | ||||||||
Total liabilities and equity | $ | 6,805,608 | $ | 6,809,255 | ||||||
AGNICO EAGLE MINES LIMITED | ||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||||||||
(thousands of United States dollars, except per share amounts, IFRS basis) |
||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
REVENUES | ||||||||||||||
Revenues from mining operations | $ | 508,795 | $ | 463,388 | $ | 1,502,500 | $ | 1,393,676 | ||||||
COSTS, EXPENSES AND OTHER INCOME | ||||||||||||||
Production(i) | 254,584 | 269,793 | 765,476 | 717,242 | ||||||||||
Exploration and corporate development | 37,085 | 20,521 | 84,352 | 41,566 | ||||||||||
Amortization of property, plant and mine development | 157,968 | 117,396 | 451,480 | 294,533 | ||||||||||
General and administrative | 25,675 | 24,991 | 74,468 | 92,776 | ||||||||||
Impairment loss on available-for-sale securities | 7,076 | 462 | 8,106 | 2,881 | ||||||||||
Finance costs | 19,674 | 20,852 | 57,341 | 55,249 | ||||||||||
Loss on derivative financial instruments | 16,550 | 7,908 | 16,290 | 3,644 | ||||||||||
Gain on sale of available-for-sale securities | (875) | (83) | (24,599) | (5,372) | ||||||||||
Environmental remediation | 49 | 8,490 | 337 | 9,163 | ||||||||||
Foreign currency translation loss (gain) | 902 | (4,679) | (6,009) | (3,170) | ||||||||||
Other expenses (income) | 4,122 | (8,578) | 11,651 | (1,686) | ||||||||||
Income (loss) before income and mining taxes | (14,015) | 6,315 | 63,607 | 186,850 | ||||||||||
Income and mining taxes (recovery) expense | (15,309) | 21,365 | 23,487 | 82,597 | ||||||||||
Net income (loss) for the period | $ | 1,294 | $ | (15,050) | $ | 40,120 | $ | 104,253 | ||||||
Net income (loss) per share – basic | $ | 0.01 | $ | (0.07) | $ | 0.19 | $ | 0.55 | ||||||
Net income (loss) per share – diluted | $ | 0.01 | $ | (0.10) | $ | 0.19 | $ | 0.53 | ||||||
Weighted average number of common shares outstanding (in thousands): | ||||||||||||||
Basic | 217,182 | 208,815 | 215,728 | 189,498 | ||||||||||
Diluted | 217,712 | 209,687 | 216,627 | 190,481 | ||||||||||
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
OPERATING ACTIVITIES | |||||||||||||||
Net income (loss) for the period | $ | 1,294 | $ | (15,050) | $ | 40,120 | $ | 104,253 | |||||||
Add (deduct) items not affecting cash: | |||||||||||||||
Amortization of property, plant and mine development | 157,968 | 117,396 | 451,480 | 294,533 | |||||||||||
Deferred income and mining taxes | 37,783 | 6,982 | 43,403 | 26,189 | |||||||||||
Gain on sale of available-for-sale securities | (875) | (83) | (24,599) | (5,372) | |||||||||||
Stock-based compensation | 8,928 | 7,552 | 28,777 | 30,032 | |||||||||||
Impairment loss on available-for-sale securities | 7,076 | 462 | 8,106 | 2,881 | |||||||||||
Foreign currency translation loss (gain) | 902 | (4,679) | (6,009) | (3,170) | |||||||||||
Other | 4,874 | 19,065 | 7,007 | 26,971 | |||||||||||
Adjustment for settlement of reclamation provision | (143) | (2,456) | (852) | (3,491) | |||||||||||
Changes in non-cash working capital balances: | |||||||||||||||
Trade receivables | 55,296 | 6,972 | 53,834 | 15,225 | |||||||||||
Income taxes | (55,628) | 4,468 | (66,648) | 24,988 | |||||||||||
Inventories | (71,510) | (54,962) | (49,475) | (25,059) | |||||||||||
Other current assets | (25,761) | 4,490 | (48,784) | (315) | |||||||||||
Accounts payable and accrued liabilities | 15,959 | (26,046) | 31,812 | 9,710 | |||||||||||
Interest payable | 7,524 | 7,133 | 7,319 | 6,993 | |||||||||||
Cash provided by operating activities | 143,687 | 71,244 | 475,491 | 504,368 | |||||||||||
INVESTING ACTIVITIES | |||||||||||||||
Additions to property, plant and mine development | (122,402) | (125,442) | (316,800) | (342,059) | |||||||||||
Acquisitions, net of cash and cash equivalents acquired | – | – | (12,983) | (403,509) | |||||||||||
Net purchases of short-term investments | (475) | (2,600) | (1,523) | (4,604) | |||||||||||
Net proceeds from sale of available-for-sale securities and warrants | 4,724 | 493 | 61,035 | 40,635 | |||||||||||
Purchase of available-for-sale securities and warrants | – | (13,861) | (19,433) | (27,246) | |||||||||||
Decrease in restricted cash | 17,788 | 9,748 | 30,971 | 8,290 | |||||||||||
Cash used in investing activities | (100,365) | (131,662) | (258,733) | (728,493) | |||||||||||
FINANCING ACTIVITIES | |||||||||||||||
Dividends paid | (15,374) | (14,546) | (44,572) | (39,459) | |||||||||||
Repayment of finance lease obligations | (4,091) | (7,672) | (17,535) | (14,366) | |||||||||||
Sale-leaseback financing | – | – | – | 1,027 | |||||||||||
Proceeds from long-term debt | 250,000 | 230,000 | 325,000 | 960,000 | |||||||||||
Repayment of long-term debt | (275,000) | (250,707) | (501,086) | (674,640) | |||||||||||
Note issuance | 50,000 | – | 50,000 | – | |||||||||||
Long-term debt financing | (1,493) | (2,127) | (1,493) | (2,127) | |||||||||||
Repurchase of common shares for restricted share unit plan | – | – | (11,899) | (7,518) | |||||||||||
Proceeds on exercise of stock options | 1,052 | 6,538 | 14,010 | 16,994 | |||||||||||
Common shares issued | 2,302 | 2,571 | 7,275 | 8,010 | |||||||||||
Cash provided by (used in) financing activities | 7,396 | (35,943) | (180,300) | 247,921 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (7,085) | (4,385) | (12,031) | (4,074) | |||||||||||
Net increase (decrease) in cash and cash equivalents during the period | 43,633 | (100,746) | 24,427 | 19,722 | |||||||||||
Cash and cash equivalents, beginning of period | 158,331 | 259,569 | 177,537 | 139,101 | |||||||||||
Cash and cash equivalents, end of period | $ | 201,964 | $ | 158,823 | $ | 201,964 | $ | 158,823 | |||||||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||||||||
Interest paid | $ | 10,358 | $ | 13,513 | $ | 46,256 | $ | 43,969 | |||||||
Income and mining taxes paid | $ | 9,258 | $ | 16,911 | $ | 47,356 | $ | 38,232 | |||||||
AGNICO EAGLE MINES LIMITED | ||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES | ||||||||||||
(thousands of United States dollars, except where noted) | ||||||||||||
(Unaudited) | ||||||||||||
Total Production Costs by Mine | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||
(thousands of United States dollars) |
||||||||||||
LaRonde mine | $ | 49,243 | $ | 47,070 | $ | 140,242 | $ | 141,107 | ||||
Lapa mine | 12,279 | 13,887 | 39,919 | 43,593 | ||||||||
Goldex mine | 16,120 | 16,222 | 47,900 | 47,486 | ||||||||
Meadowbank mine | 57,404 | 72,838 | 181,387 | 203,725 | ||||||||
Canadian Malartic mine(i) | 42,008 | 47,882 | 125,380 | 66,215 | ||||||||
Kittila mine | 31,116 | 23,963 | 93,892 | 80,347 | ||||||||
Pinos Altos mine | 26,845 | 29,293 | 80,824 | 90,652 | ||||||||
Creston Mascota deposit at Pinos Altos |
6,101 | 7,644 | 19,208 | 20,278 | ||||||||
La India mine(ii) | 13,468 | 10,994 | 36,724 | 23,839 | ||||||||
Production costs per the interim condensed consolidated statements of income (loss) |
$ | 254,584 | $ | 269,793 | $ | 765,476 | $ | 717,242 | ||||
Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced(iii) by Mine and Reconciliation of Production Costs to Minesite Costs per Tonne(iv) by Mine |
||||||||||||
LaRonde Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
(thousands of United States dollars, except as noted) |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2014 |
Nine Months Ended September 30, 2015 |
Nine Months Ended September 30, 2014 |
||||||||
Production costs | $ | 49,243 | $ | 47,070 | $ | 140,242 | $ | 141,107 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | 1,106 | 2,273 | 14,570 | 21,437 | ||||||||
Cash operating costs (co-product basis) | $ | 50,349 | $ | 49,343 | $ | 154,812 | $ | 162,544 | ||||
By-product metal revenues | (10,291) | (17,078) | (34,125) | (60,722) | ||||||||
Cash operating costs (by-product basis) | $ | 40,058 | $ | 32,265 | $ | 120,687 | $ | 101,822 | ||||
Gold production (ounces) | 71,860 | 37,490 | 194,760 | 145,336 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 701 | $ | 1,316 | $ | 795 | $ | 1,118 | ||||
By-product basis | $ | 558 | $ | 861 | $ | 620 | $ | 701 | ||||
LaRonde Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 49,243 | $ | 47,070 | $ | 140,242 | $ | 141,107 | ||||
Inventory and other adjustments(vi) | (1,454) | (3,488) | 266 | 326 | ||||||||
Minesite operating costs | $ | 47,789 | $ | 43,582 | $ | 140,508 | $ | 141,433 | ||||
Minesite operating costs (thousands of C$) | C$ | 55,417 | C$ | 47,474 | C$ | 169,680 | C$ | 154,785 | ||||
Tonnes of ore milled (thousands of tonnes) | 551 | 426 | 1,678 | 1,547 | ||||||||
Minesite costs per tonne (C$)(iv) | C$ | 101 | C$ | 111 | C$ | 101 | C$ | 100 | ||||
Lapa Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 12,279 | $ | 13,887 | $ | 39,919 | $ | 43,593 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | 1,117 | 1,141 | 1,407 | 2,608 | ||||||||
Cash operating costs (co-product basis) | $ | 13,396 | $ | 15,028 | $ | 41,326 | $ | 46,201 | ||||
By-product metal revenues | (2) | (3) | (20) | (6) | ||||||||
Cash operating costs (by-product basis) | $ | 13,394 | $ | 15,025 | $ | 41,306 | $ | 46,195 | ||||
Gold production (ounces) | 25,668 | 24,781 | 71,038 | 67,011 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 522 | $ | 606 | $ | 582 | $ | 689 | ||||
By-product basis | $ | 522 | $ | 606 | $ | 581 | $ | 689 | ||||
Lapa Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 12,279 | $ | 13,887 | $ | 39,919 | $ | 43,593 | ||||
Inventory and other adjustments(vi) | 406 | 1,086 | 297 | 2,544 | ||||||||
Minesite operating costs | $ | 12,685 | $ | 14,973 | $ | 40,216 | $ | 46,137 | ||||
Minesite operating costs (thousands of C$) | C$ | 16,614 | C$ | 16,310 | C$ | 50,610 | C$ | 50,492 | ||||
Tonnes of ore milled (thousands of tonnes) | 146 | 157 | 424 | 477 | ||||||||
Minesite costs per tonne (C$)(iv) | C$ | 114 | C$ | 104 | C$ | 119 | C$ | 106 | ||||
Goldex Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 16,120 | $ | 16,222 | $ | 47,900 | $ | 47,486 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | (744) | (147) | 66 | (559) | ||||||||
Cash operating costs (co-product basis) | $ | 15,376 | $ | 16,075 | $ | 47,966 | $ | 46,927 | ||||
By-product metal revenues | (2) | (5) | (15) | (16) | ||||||||
Cash operating costs (by-product basis) | $ | 15,374 | $ | 16,070 | $ | 47,951 | $ | 46,911 | ||||
Gold production (ounces) | 32,068 | 27,611 | 87,780 | 70,970 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 479 | $ | 582 | $ | 546 | $ | 661 | ||||
By-product basis | $ | 479 | $ | 582 | $ | 546 | $ | 661 | ||||
Goldex Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 16,120 | $ | 16,222 | $ | 47,900 | $ | 47,486 | ||||
Inventory and other adjustments(vi) | (1,497) | (175) | (1,064) | (507) | ||||||||
Minesite operating costs | $ | 14,623 | $ | 16,047 | $ | 46,836 | $ | 46,979 | ||||
Minesite operating costs (thousands of C$) | C$ | 19,168 | C$ | 17,481 | C$ | 58,803 | C$ | 51,414 | ||||
Tonnes of ore milled (thousands of tonnes) | 570 | 538 | 1,741 | 1,542 | ||||||||
Minesite costs per tonne (C$)(iv) | C$ | 34 | C$ | 32 | C$ | 34 | C$ | 33 | ||||
Meadowbank Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 57,404 | $ | 72,838 | $ | 181,387 | $ | 203,725 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | 2,642 | (1,136) | 2,088 | 3,344 | ||||||||
Cash operating costs (co-product basis) | $ | 60,046 | $ | 71,702 | $ | 183,475 | $ | 207,069 | ||||
By-product metal revenues | (543) | (570) | (3,210) | (1,615) | ||||||||
Cash operating costs (by-product basis) | $ | 59,503 | $ | 71,132 | $ | 180,265 | $ | 205,454 | ||||
Gold production (ounces) | 99,425 | 91,557 | 279,224 | 366,162 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 604 | $ | 783 | $ | 657 | $ | 566 | ||||
By-product basis | $ | 598 | $ | 777 | $ | 646 | $ | 561 | ||||
Meadowbank Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 57,404 | $ | 72,838 | $ | 181,387 | $ | 203,725 | ||||
Inventory and other adjustments(vi) | (1,643) | (1,224) | (3,717) | 3,716 | ||||||||
Minesite operating costs | $ | 55,761 | $ | 71,614 | $ | 177,670 | $ | 207,441 | ||||
Minesite operating costs (thousands of C$) | 71,519 | C$ | 78,009 | C$ | 217,436 | C$ | 227,023 | |||||
Tonnes of ore milled (thousands of tonnes) | 996 | 1,057 | 3,005 | 3,102 | ||||||||
Minesite costs per tonne (C$)(iv) | C$ | 72 | C$ | 74 | C$ | 72 | C$ | 73 | ||||
Canadian Malartic Mine – Total Cash Costs per Ounce of Gold Produced(i)(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 42,008 | $ | 47,882 | $ | 125,380 | $ | 66,215 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | 781 | 935 | 4,335 | (9,762) | ||||||||
Cash operating costs (co-product basis) | $ | 42,789 | $ | 48,817 | $ | 129,715 | $ | 56,453 | ||||
By-product metal revenues | (1,134) | (1,213) | (3,453) | (1,541) | ||||||||
Cash operating costs (by-product basis) | $ | 41,655 | $ | 47,604 | $ | 126,262 | $ | 54,912 | ||||
Gold production (ounces) | 76,603 | 64,761 | 212,937 | 76,639 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 559 | $ | 754 | $ | 609 | $ | 737 | ||||
By-product basis | $ | 544 | $ | 735 | $ | 593 | $ | 717 | ||||
Canadian Malartic Mine – Minesite Costs per Tonne(i)(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 42,008 | $ | 47,882 | $ | 125,380 | $ | 66,215 | ||||
Inventory and other adjustments(vi) | 52 | 719 | 1,784 | (10,029) | ||||||||
Minesite operating costs | $ | 42,060 | $ | 48,601 | $ | 127,164 | $ | 56,186 | ||||
Minesite operating costs (thousands of C$) | C$ | 55,010 | C$ | 52,942 | C$ | 160,136 | C$ | 61,491 | ||||
Tonnes of ore milled (thousands of tonnes) | 2,470 | 2,417 | 7,117 | 2,815 | ||||||||
Minesite costs per tonne (C$)(iv) | C$ | 22 | C$ | 22 | C$ | 23 | C$ | 22 | ||||
Kittila Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 31,116 | $ | 23,963 | $ | 93,892 | $ | 80,347 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | (1,401) | 2,915 | (1,088) | 4,677 | ||||||||
Cash operating costs (co-product basis) | $ | 29,715 | $ | 26,878 | $ | 92,804 | $ | 85,024 | ||||
By-product metal revenues | (44) | (26) | (116) | (87) | ||||||||
Cash operating costs (by-product basis) | $ | 29,671 | $ | 26,852 | $ | 92,688 | $ | 84,937 | ||||
Gold production (ounces) | 46,455 | 28,230 | 133,095 | 98,612 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 640 | $ | 952 | $ | 697 | $ | 862 | ||||
By-product basis | $ | 639 | $ | 951 | $ | 696 | $ | 861 | ||||
Kittila Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 31,116 | $ | 23,963 | $ | 93,892 | $ | 80,347 | ||||
Inventory and other adjustments(vi) | (1,442) | 2,817 | (1,243) | 4,313 | ||||||||
Minesite operating costs | $ | 29,674 | $ | 26,780 | $ | 92,649 | $ | 84,660 | ||||
Minesite operating costs (thousands of €) | € | 26,160 | € | 20,217 | € | 81,169 | € | 62,488 | ||||
Tonnes of ore milled (thousands of tonnes) | 362 | 235 | 1,087 | 790 | ||||||||
Minesite costs per tonne (€)(iv) | € | 72 | € | 86 | € | 75 | € | 79 | ||||
Pinos Altos Mine – Total Cash Costs per Ounce of Gold Produced(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 26,845 | $ | 29,293 | $ | 80,824 | $ | 90,652 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | 731 | 485 | 3,084 | 1,395 | ||||||||
Cash operating costs (co-product basis) | $ | 27,576 | $ | 29,778 | $ | 83,908 | $ | 92,047 | ||||
By-product metal revenues | (8,865) | (7,344) | (27,842) | (25,229) | ||||||||
Cash operating costs (by-product basis) | $ | 18,711 | $ | 22,434 | $ | 56,066 | $ | 66,818 | ||||
Gold production (ounces) | 47,725 | 41,155 | 148,478 | 130,350 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 578 | $ | 724 | $ | 565 | $ | 706 | ||||
By-product basis | $ | 392 | $ | 545 | $ | 378 | $ | 513 | ||||
Pinos Altos Mine – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 26,845 | $ | 29,293 | $ | 80,824 | $ | 90,652 | ||||
Inventory and other adjustments(vi) | (498) | 96 | 449 | (1) | ||||||||
Minesite operating costs | $ | 26,347 | $ | 29,389 | $ | 81,274 | $ | 90,651 | ||||
Tonnes of ore processed (thousands of tonnes) | 546 | 607 | 1,778 | 1,887 | ||||||||
Minesite costs per tonne (US$)(iv) | $ | 48 | $ | 48 | $ | 46 | $ | 48 | ||||
Creston Mascota deposit at Pinos Altos – Total Cash Costs per Ounce of Gold Produced(iii) |
||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 6,101 | $ | 7,644 | $ | 19,208 | $ | 20,278 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | (27) | 233 | (171) | 1,317 | ||||||||
Cash operating costs (co-product basis) | $ | 6,074 | $ | 7,877 | $ | 19,037 | $ | 21,595 | ||||
By-product metal revenues | (534) | (442) | (1,692) | (1,152) | ||||||||
Cash operating costs (by-product basis) | $ | 5,540 | $ | 7,435 | $ | 17,345 | $ | 20,443 | ||||
Gold production (ounces) | 12,716 | 13,377 | 40,770 | 34,853 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 478 | $ | 589 | $ | 467 | $ | 620 | ||||
By-product basis | $ | 436 | $ | 556 | $ | 425 | $ | 587 | ||||
Creston Mascota deposit at Pinos Altos – Minesite Costs per Tonne(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 6,101 | $ | 7,644 | $ | 19,208 | $ | 20,278 | ||||
Inventory and other adjustments(vi) | (137) | 115 | (429) | 1,033 | ||||||||
Minesite operating costs | $ | 5,964 | $ | 7,759 | $ | 18,779 | $ | 21,311 | ||||
Tonnes of ore processed (thousands of tonnes) | 434 | 469 | 1,570 | 1,243 | ||||||||
Minesite costs per tonne (US$)(iv) | $ | 14 | $ | 17 | $ | 12 | $ | 17 | ||||
La India Mine – Total Cash Costs per Ounce of Gold Produced(ii)(iii) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 13,468 | $ | 10,994 | $ | 36,724 | $ | 23,839 | ||||
Adjustments: | ||||||||||||
Inventory and other adjustments(v) | (21) | 869 | 697 | 1,685 | ||||||||
Cash operating costs (co-product basis) | $ | 13,447 | $ | 11,863 | $ | 37,421 | $ | 25,524 | ||||
By-product metal revenues | (975) | (746) | (3,286) | (2,175) | ||||||||
Cash operating costs (by-product basis) | $ | 12,472 | $ | 11,117 | $ | 34,135 | $ | 23,349 | ||||
Gold production (ounces) | 28,604 | 20,311 | 80,930 | 48,328 | ||||||||
Total cash costs per ounce of gold produced ($ per ounce)(iii): | ||||||||||||
Co-product basis | $ | 470 | $ | 584 | $ | 462 | $ | 528 | ||||
By-product basis | $ | 436 | $ | 547 | $ | 422 | $ | 483 | ||||
La India Mine – Minesite Costs per Tonne(ii)(iv) | ||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
(thousands of United States dollars, except as noted) | September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||
Production costs | $ | 13,468 | $ | 10,994 | $ | 36,724 | $ | 23,839 | ||||
Inventory and other adjustments(vi) | (161) | 851 | 202 | 1,430 | ||||||||
Minesite operating costs | $ | 13,307 | $ | 11,845 | $ | 36,926 | $ | 25,269 | ||||
Tonnes of ore processed (thousands of tonnes) | 1,194 | 1,190 | 3,932 | 3,015 | ||||||||
Minesite costs per tonne (US$)(iv) | $ | 11 | $ | 10 | $ | 9 | $ | 8 |
Notes: | |
(i) |
On June 16, 2014, Agnico Eagle and Yamana jointly acquired 100.0% of Osisko by way of the Arrangement. As a result of the Arrangement, Agnico Eagle and Yamana each indirectly own 50.0% 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 50.0% interest in the Canadian Malartic mine since the date of acquisition. |
(ii) |
The La India mine achieved commercial production on February 1, 2014. 3,492 ounces of payable gold production were excluded from the calculation of total cash costs per ounce of gold produced in the nine months ended September 30, 2014 as they were produced prior to the achievement of commercial production. |
(iii) |
Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before 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 (loss) 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. 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 (discussed below) 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. |
(iv) |
Minesite costs per tonne is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. This measure is calculated by adjusting production costs as shown in the condensed interim consolidated statements of income (loss) for unsold concentrate inventory production costs, and then dividing by tonnes of ore milled. As the total cash costs per ounce of gold produced measure can be impacted 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. |
(v) |
Under the Company's revenue recognition policy, revenue is recognized on concentrates 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 sales margin on the portion of concentrate production not yet recognized as revenue. Other adjustments include the addition of smelting, refining and marketing charges to production costs. |
(vi) |
This inventory and other adjustment reflects production costs associated with unsold concentrates. |
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, 2015 |
Three Months Ended September 30, 2014 |
Nine Months Ended September 30, 2015 |
Nine Months Ended September 30, 2014 |
|||||||||||||
Production costs per the condensed interim consolidated statements of income (loss) (thousands of United States dollars) |
$ | 254,584 | $ | 269,793 | $ | 765,476 | $ | 717,242 | |||||||||
Adjusted gold production (ounces)(i) | 441,124 | 349,273 | 1,249,012 | 1,038,261 | |||||||||||||
Production costs per ounce of adjusted gold production(i) | $ | 577 | $ | 772 | $ | 613 | $ | 691 | |||||||||
Adjustments: | |||||||||||||||||
Inventory and other adjustments(ii) | 10 | 22 | 20 | 25 | |||||||||||||
Total cash costs per ounce of gold produced (co-product basis)(iii) | $ | 587 | $ | 794 | $ | 633 | $ | 716 | |||||||||
By-product metal revenues | (51) | (78) | (59) | (89) | |||||||||||||
Total cash costs per ounce of gold produced (by-product basis)(iii) | $ | 536 | $ | 716 | $ | 574 | $ | 627 | |||||||||
Adjustments: | |||||||||||||||||
Sustaining capital expenditures (including capitalized exploration) | 163 | 267 | 172 | 227 | |||||||||||||
General and administrative expenses (including stock options) | 58 | 72 | 60 | 89 | |||||||||||||
Non-cash reclamation provision and other | 2 | 4 | 2 | 4 | |||||||||||||
All-in sustaining costs per ounce of gold produced (by-product basis) | $ | 759 | $ | 1,059 | $ | 808 | $ | 947 | |||||||||
By-product metal revenues | 51 | 78 | 59 | 89 | |||||||||||||
All-in sustaining costs per ounce of gold produced (co-product basis) | $ | 810 | $ | 1,137 | $ | 867 | $ | 1,036 |
Notes: | |
(i) |
The La India mine achieved commercial production on February 1, 2014. 3,492 ounces of payable gold production were excluded from the calculation of total cash costs per ounce of gold produced in the nine months ended September 30, 2014 as they were produced prior to the achievement of commercial production. |
(ii) |
Under the Company's revenue recognition policy, revenue is recognized on concentrates 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 sales margin on the portion of concentrate production not yet recognized as revenue. Other adjustments include the addition of smelting, refining and marketing charges to production costs. |
(iii) |
Total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before 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 (loss) 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. 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