AGNICO EAGLE MINES LIMITED (All amounts expressed in U.S. dollars unless otherwise noted)
Stock Symbol: AEM (NYSE and TSX)
TORONTO, Oct. 29, 2014 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported a quarterly net loss of $15.1 million, or a net loss of $0.07 per share for the third quarter of 2014. This result includes a non-cash foreign currency translation loss on deferred tax liabilities of $11.3 million ($0.05 per share), other non-recurring losses of $4.9 million ($0.02 per share), various mark-to-market adjustment losses of $4.3 million ($0.02 per share), non-cash stock option expense of $3.5 million ($0.02 per share) and non-cash foreign currency translation gains of $4.7 million ($0.02 per share). Excluding these items would result in an adjusted net income of $4.2 million, or $0.02 per share. In the third quarter of 2013, the Company reported net income of $74.9 million, or $0.43 per share.
Earnings during the quarter were affected by: additional amortization expenses resulting from the increase in the net book value of depreciable assets under International Financial Reporting Standards ("IFRS"); increased exploration expenses at the new Amaruq project and at the Canadian Malartic Partnership; and lower realized gold prices on timing of sales (approximately 3% lower than the average London PM gold fix for the quarter).
The Company adopted IFRS as of July 1, 2014 and all financial results herein, including those for prior periods, have been calculated in accordance with IFRS.
For the first nine months of 2014, the Company reported net income of $104.3 million, or $0.55 per share. This compares with the first nine months of 2013 when net income was $93.6 million, or $0.54 per share. Financial results in the 2014 period were positively affected by significantly higher gold production (1,041,753 ounces as opposed to 776,892 ounces) due primarily to higher grades at Meadowbank, the acquisition of Canadian Malartic and contributions from commercial production at Goldex and La India.
Third quarter 2014 cash provided by operating activities was $71.2 million ($129.2 million before changes in non-cash components of working capital), compared to cash provided by operating activities of $88.4 million in the third quarter of 2013 ($176.1 million before changes in non-cash components of working capital).
For the first nine months of 2014, cash provided by operating activities was $504.4 million ($472.8 million before changes in non-cash components of working capital), as compared with the first nine months of 2013 when cash provided by operating activities was $340.3 million ($415.2 million before changes in non-cash components of working capital).
The higher net income and cash provided by operating activities in the first nine months of 2014 was in spite of lower realized metal prices and is a result of significantly higher gold production, as described above.
"In 2014, we have strengthened our businesses in each of our four principal operating regions, and we anticipate continued strong production performance in the fourth quarter of 2014 and for 2015 as a number of our key mines continue to expand and ramp up their output. As such, we are pleased to provide increased production guidance of approximately 1.6 million ounces for 2015", said Sean Boyd, President and Chief Executive Officer. "With the pending closure of the Cayden acquisition and a maiden resource expected at Amaruq by early next year, Agnico is well positioned to drive further growth on both our Northern and Southern business platforms well into the future", added Mr. Boyd.
Third quarter 2014 highlights include:
-- Continued strong operating performance in the third quarter
2014 -Payable production1 of 349,273 ounces at total cash
costs2 per ounce on a by-product basis of $716
-- Canadian Malartic mine achieves record quarterly mill
throughput and productivity - Mill processes an average of
52,539 tonnes per day ("tpd") with cost per tonne below budget
and top end of 2014 production guidance expected to be achieved
-- Upper end of 2014 guidance projected to be exceeded- Production
for 2014 is expected to be approximately 1.4 million ounces
with total cash costs on a by-product basis of $650 to $675 per
ounce
-- Updated 2015 guidance-Production for 2015 is now expected to be
approximately 1.6 million ounces as a result of expected
increased production at Meadowbank, Kittila and the Mexican
operations
-- Initial resource expected at Amaruq project by early 2015 -
31,400 metre drill program completed in October 2014, final
assays are being compiled, resource estimation in progress
-- Cayden acquisition receives overwhelming securityholder
approval - Acquisition expected to be completed by late 2014 or
early 2015 pending Mexican regulatory approval. A $15 million
exploration program has been proposed for 2015 after the
acquisition closes
-- Conversion to IFRS completed- 2013 and 2014 financials have
been restated to reflect the conversion
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(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 - Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced by Mine" below. 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 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 Performance Measures".
Payable gold production in the third quarter of 2014 was 349,273 ounces (including 64,761 ounces from the Canadian Malartic mine) compared to 315,828 ounces (including 1,505 ounces of pre-commercial production from Goldex) in the third quarter of 2013. A description of the production and cost performance for each mine is set out below.
Total cash costs per ounce of gold produced on a by-product basis for the third quarter of 2014 were $716. This compares with $591 per ounce on a by-product basis in the third quarter of 2013. The higher cash costs per ounce in the 2014 period were due primarily to lower production of gold at Meadowbank with the completion of mining in the higher grade Goose Pit, scheduled and unscheduled shutdowns at the LaRonde mill to upgrade the production and service hoist drives, and a two week tie-in shutdown for the mill expansion at Kittila.
Payable gold production for the first nine months of 2014 was 1,041,753 ounces (including 76,639 ounces from the Canadian Malartic mine) compared to payable gold production of 776,892 ounces (including 8,801 ounces of production from Kittila, Creston Mascota, and Goldex that were not included in the total cash cost calculation) in the comparable 2013 period.
For the first nine months of 2014, total cash costs on a by-product basis were $627 per ounce. This compares with total cash costs of $659 per ounce on a by-product basis in the first nine months of 2013. The higher production and lower total cash costs in 2014 are due to a strong first half contribution (higher production and lower costs) from Meadowbank and reflects contributions from Goldex, La India and Canadian Malartic.
Strong Operational Performance Across all Regions Drives Increased Production Guidance for 2014 and 2015
Over the course of 2014, the Company has strengthened its businesses in all four of its principal operating regions, which has resulted in an increase to both the 2014 and 2015 production guidance.
In the Abitibi region, the LaRonde, Goldex, and Canadian Malartic mines are positioned for improved operating performance moving through 2014 and beyond. The upgrading of the hoist drives at LaRonde in the third quarter of 2014 provides the mine better access to the higher grade, deeper portions of the orebody, which is expected to drive higher future production rates, anticipated to exceed 300,000 ounces per year by mid-2016.
At Goldex, lower than expected operating costs has allowed for the potential development of other satellite orebodies, which is expected to enhance the production profile and reduce costs. Development of an exploration ramp into the Deep zone is being advanced to facilitate drilling to delineate mineable reserves by late 2015 or early 2016. Given the strong operational performance achieved to date, the Goldex mining approach may also open up other mining opportunities in the Abitibi region.
At the Canadian Malartic mine, record quarterly mill and mine throughput levels have led to lower than expected costs and 2014 production is now forecast to come in at the higher end of the guidance range of 510,000 to 530,000 ounces (on a 100% basis). Ongoing optimization efforts are expected to result in further production and cost improvements in 2015.
The tie-in of the Kittila plant expansion led to lower than expected production in the third quarter of 2014. Production in the fourth quarter is expected to return to more normal levels, and the plant expansion (to approximately 4,000 tpd) is expected to result in increased production levels starting next year. Ramp development in the Rimpi zone is expected to provide future feed to the mill and enhance Kittila's production profile.
Given its strong mill and mine performance, Meadowbank is on track for a record production year in 2014. These operating efficiencies are expected to continue to drive strong production in 2015 as well. Impressive exploration results from an expanded 2014 exploration program at the new Amaruq discovery (approximately 50 km from the mine) appears to have the potential to extend the current Meadowbank mine life. A maiden resource is expected in early 2015 (just over a year from the time of the initial discovery at Amaruq) and studies are currently underway to evaluate how Amaruq can be incorporated into the Meadowbank mine plan with possible synergies to the Meliadine project.
The securityholders of Cayden Resources Inc. ("Cayden") voted 99.0% in favour of the plan of arrangement under which Agnico Eagle would acquire Cayden. On the closing of this acquisition Agnico Eagle will gain access to the El Barqueño property in Jalisco State, Mexico. The Company believes that this property has the potential to develop into a significant production asset, which could drive additional growth on the Southern Business platform. Once Cayden is acquired, the Company expects to commence exploration activities at El Barqueño with a budget of $15 million proposed for 2015.
Given the strong operating results over the first nine months, the 2014 production forecast has been increased for a second time and is now expected to be approximately 1.4 million ounces, exceeding the previously announced second quarter 2014 guidance range of 1.35 to 1.37 million ounces, while total cash costs on a by-product basis are expected to remain in the range of $650 to $675 per ounce. Expected all-in sustaining cost(3) ("AISC") guidance calculated on a by-product basis for 2014 is unchanged at $990 per ounce.
Given the favorable developments in the Company's four principal operating regions, production for 2015 is now expected to be approximately 1.6 million ounces as a result of increased production forecasts at Meadowbank, Kittila and the Mexican operations. Prior 2015 guidance (see the news release dated February 12, 2014) was 1.25 million ounces (excluding Canadian Malartic). Detailed guidance for 2015, 2016 and 2017 will be included in Agnico Eagle's regular three-year guidance news release to be provided in February 2015.
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(3) All-in sustaining costs is a Non-GAAP measure and is 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 Company's
methodology for calculating all-in sustaining costs may not be similar
to 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.
Quarterly Dividend Declared
The Board of Directors has approved the next quarterly dividend of 8 cents per share to be paid on December 15, 2014 to shareholders of record as of December 1, 2014. Agnico Eagle has paid a dividend every year since 1983.
Conversion to International Financial Reporting Standards
Effective as of the third quarter 2014, the Company converted its basis of accounting from US GAAP to IFRS with a transition date of January 1, 2013. Agnico Eagle is now reporting under IFRS for interim and annual periods, with comparative information restated under IFRS. Additional disclosure regarding the IFRS conversion will be included in the Company's Management's Discussion and Analysis in respect of the third quarter of 2014, which is expected to be filed in November 2014.
As a result of the conversion to IFRS, the Company's cost base for property, plant and equipment has been adjusted. For new depreciable asset balances by mine, see the financial statements at the back of this news release.
The measurement of deferred taxes under IFRS differs from US GAAP such that additional deferred tax expense in the amount of $10.3 million was recognized in the third quarter of 2014 due to the weakening of the Mexican peso and Euro relative to the US dollar during this period. The Company's expected overall tax rate for 2014 remains at 35% to 40%.
Cayden Resources Acquisition - Securityholders Approve Transaction, Mexican Regulatory Approval Pending
Securityholders of Cayden have overwhelmingly approved the acquisition by Agnico Eagle of all of the outstanding shares of Cayden. Mexican regulatory approval is pending and the Company expects to complete the transaction by late 2014 or early 2015.
The maximum number of shares issuable by Agnico Eagle for the acquisition of Cayden will be approximately 4.86 million, or approximately 2.3% of Agnico Eagle's outstanding shares (on a fully-diluted basis).
Cayden owns, has options to acquire or has staked, concessions constituting a 100% interest in the El Barqueño property, which covers approximately 41,000 hectares in the Guachinango gold district in Jalisco State, Mexico. El Barqueño hosts a significant epithermal bonanza type gold vein and disseminated stockwork system. Several gold bearing zones have been identified by drilling and trenching in an area approximately 13.5 km long by 4.7 km wide.
Cayden also owns a 100% interest in the Morelos Sur property, which covers approximately 13,000 hectares in the Guerrero gold belt in Guerrero State, Mexico. Morelos Sur consists of three properties (La Magnetita, Tenantla and Las Calles) and exploration by Cayden has outlined a 25 km(2) gold soil anomaly at La Magnetita, and Tenantla.
The Cayden acquisition is consistent with Agnico Eagle's long-term strategy of acquiring early stage projects where the Company believes it can add further value through focused exploration and mine building. A $15 million exploration budget has been proposed for the El Barqueño property in 2015.
Third Quarter 2014 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Thursday, October 30, 2014 at 11:00 AM (E.D.T.) to discuss the Company's financial and operating results.
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 in by telephone, please dial 416-847-6330
or Toll-free 1-866-530-1553. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 647-436-0148 or Toll-free 1-888-203-1112, access code
9653906. The conference call replay will expire on November 30, 2014 at
2:00 PM (E.S.T.).
The webcast along with presentation slides will be archived for 180 days on www.agnicoeagle.com.
Capital Expenditures
Capital expenditures in the third quarter of 2014 were $125.4 million, including $29.2 million at Kittila, $19.0 million at Meadowbank, $18.5 million at LaRonde, $14.0 million at Pinos Altos, $6.5 million at Goldex, $5.0 million at Lapa, $4.8 million at La India and $1.4 million at Creston Mascota. Capital expenditures at development projects included $10.8 million at Meliadine.
On a 100% basis, capital expenditures at the Canadian Malartic mine in the third quarter of 2014 were C$39.2 million (approximately C$106.3 million for the first nine months of 2014).
Capital expenditures for the first nine months of 2014 were $342.1 million. For 2014, capital expenditures are expected to total approximately $499 million, representing a $31 million increase from the previously announced figure of $468 million which is due primarily to the capitalization of deferred stripping expenses as a result of the conversion of the Company's accounting basis from US GAAP to IFRS and additional expenditures at Goldex to accelerate the exploration ramp development into the top of the deeper D zone.
Liquidity - Positive Amendments to Revolving Credit Facility
Cash and cash equivalents and short-term investments totaled $165.6 million at September 30, 2014, down from the June 30, 2014 balance of $265.4 million. The decrease in the cash balance is largely due to expenditures related to the seasonal sealift program at Meadowbank and the partial repayment of the Company's bank credit facility (the "Credit Facility"). The outstanding balance on the Credit Facility was $500 million at September 30, 2014 which decreased from the June 30, 2014 balance of $520 million. Available bank lines as of September 30, 2014 are approximately $700 million.
Agnico Eagle's share of the debt obligations associated with the Canadian Malartic GP (the "Partnership"), which operates the Canadian Malartic mine, are now consolidated on the Company's balance sheet.
As at September 30, 2014, the Partnership (on a 100% basis) had C$46.3 million of cash and cash equivalents, C$122.4 million in long-term debt, C$75 million of convertible debentures and C$78.9 million of capital lease obligations.
In addition to the Credit Facility, the Company's debt has five separate series of notes outstanding, with maturities spread out over a seven-year period, with the earliest maturity of $115 million due in 2017.
On September 8, 2014, the Company amended the Credit Facility to extend the maturity date from June 22, 2017 to June 22, 2019 and improved the pricing terms.
Northern Business Operating Review
LaRonde - Hoist Upgrade Complete, Q4 Production to Increase Significantly
The 100% owned LaRonde mine in northwestern Quebec, Canada, began operation in 1988. Current mine life is estimated to be through 2025.
The LaRonde mill processed an average of 4,634 tpd in the third quarter of 2014, compared to an average of 5,946 tpd in the corresponding quarter of 2013. The lower mill throughput in the current period was largely the result of a planned three week shutdown in July to upgrade the production and service hoist drives at the Penna shaft, and an unscheduled five day shutdown due to an electrical issue with the service hoist drive discovered during the commissioning phase.
During the shutdowns, adjustments were made to the mining sequence in the third quarter of 2014. As a result, less ore was mined from the deeper portion of the LaRonde mine with more ore coming from upper level stopes, which had lower gold grades.
With the hoist drive upgrade complete, production is expected to return to more normal levels (approximately 55,000 to 60,000 ounces) in the fourth quarter of 2014. Production is also expected to benefit from the mining of higher grade ore as the Level 293 pyramid advances to maturity. The mined gold grade (3.10 grams per tonne, year-to-date) is expected to continue to increase towards the average reserve grade (5.0 grams per tonne) over the next several years.
Minesite costs per tonne(4) were approximately C$111 in the third quarter of 2014 compared to C$107 per tonne in the third quarter of 2013. The higher cost in the 2014 period is largely due to lower throughput related to the shutdowns described above.
For the first nine months of 2014, the LaRonde mill processed an average of 5,668 tpd, compared to 6,228 tpd in the first nine months of 2013. Minesite costs per tonne were approximately C$100, compared to C$102 per tonne in the first nine months of 2013. Costs were lower primarily due to reduced labour costs, and lower material costs (electricity and consumables), which more than offset the impact of the shutdowns in the third quarter of 2014.
On a per ounce basis, LaRonde's total cash costs per ounce were $861 on a by-product basis in the third quarter of 2014 on production of 37,490 ounces of gold. This compares with the third quarter of 2013 when total cash costs per ounce were $772 on a by-product basis on production of 45,253 ounces of gold. The decreased production in the third quarter of 2014 is due to lower mill throughput that resulted from the shutdowns which also resulted in an increase of total cash costs per ounce. In addition, there was also less by-product (silver and zinc) revenue in the third quarter of 2014 compared to the third quarter of 2013, as a result of lower quantities produced and a reduction in the realized price of silver, offset in part by an increase in the price of zinc.
In the first nine months of 2014, LaRonde produced 145,336 ounces of gold at total cash costs per ounce of $701 on a by-product basis. This is in contrast with the first nine months of 2013 when the mine produced 130,445 ounces of gold at total cash costs per ounce of $812 on a by-product basis. The higher production is due to the proportion of higher grade ore being mined from the deeper portion of the mine which has been increasing towards the average reserve grade. The lower total cash costs in 2014 are largely related to increased gold production. An approximate increase of 19.7% in gold grade, period over period, more than offset the impact of the 2014 shutdowns.
After 2014, LaRonde is expected to increase production to an average life of mine production of more than 300,000 ounces of gold per year, reflecting the higher gold grades expected at depth.
Installation of a coarse ore conveyor system, which will extend from the
293 level to the crusher on the 280 level, remains on schedule and
budget for start-up in the second half of 2015. The new conveyor is
expected to minimize the impact on trucking capacity and reduce
congestion in the deeper portions of the mine. Studies are also
underway to investigate the potential to define reserves and carry out
mining activities below a depth of 3.1 km (the current lower limit of
the LaRonde reserve base).
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(4) Minesite costs per tonne is a Non-GAAP measure. For reconciliation to
production costs, see "Reconciliation of Non-GAAP Financial Performance
Measures - Reconciliation of Production Costs to Minesite Costs per
Tonne by Mine" contained herein. See also "Note Regarding Certain
Measures of Performance".
Canadian Malartic General Partnership - Quarterly Records for Mill Throughput and Mine Productivity
In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired all issued and outstanding common shares of Osisko Mining Corporation, and created the 50:50 Partnership that owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee.
During the third quarter of 2014, the Canadian Malartic mill (on a 100% basis) processed an average of 52,539 tpd, which was a new quarterly record. Minesite costs per tonne were lower than budget at approximately C$19.60 (excluding royalties) as throughput improves and optimization efforts continue. The third quarter included a five day scheduled shutdown for mill maintenance. The average stripping ratio was 2.6 to 1.0.
For the first nine months of 2014, the Canadian Malartic (on a 100% basis) mill processed an average of 50,580 tpd, with minesite costs per tonne of approximately C$20 (excluding royalties). Minesite costs per tonne have been better than the guidance of C$21 per tonne (excluding royalties) that was issued on July 30, 2014, largely due to better productivity.
For the third quarter of 2014, production at the Canadian Malartic mine (on a 100% basis) was 129,521 ounces of gold at a total cash cost per ounce of $735 on a by-product basis.
In the first nine months of 2014, the Canadian Malartic mine produced 402,732 ounces of gold (on a 100% basis). Canadian Malartic's total cash costs per ounce were $650 on a by-product basis in the first nine months of 2014. Given the strong operational performance this quarter, it is expected that gold production (on a 100% basis) will be near the upper end of the guidance forecast range of 510,000 ounces to 530,000 ounces for the full year 2014.
Since acquiring its interest in the Canadian Malartic mine on June 16, 2014, Agnico Eagle's share of production is 76,639 ounces at a total cash cost per ounce of $717 on a by-product basis.
The Partnership filed a NI 43-101 report on the Canadian Malartic mine on August 13, 2014 (for details please see the news release dated August 13, 2014).
In Agnico Eagle's second quarter news release, total capital costs for 2014 at the Canadian Malartic mine (on a 100% basis) were estimated at approximately C$169.3 million. Capital costs are now expected to be reduced to approximately C$154.6 million. The change is largely due to optimization of the Gouldie pit and minor deferrals into 2015.
Canadian Malartic Mine Optimization Update - Several Initiatives are Underway
The Partnership is looking at a variety of ways to optimize operations at the Canadian Malartic mine. The current crushing circuit has a nameplate capacity of 55,000 tpd. Although this rate has been exceeded on a daily basis and monthly basis, throughput levels are forecast to be 51,000 to 52,000 tpd for the next six to twelve months, with a ramp up to full capacity of 55,000 tpd over a one to two year timeframe. Various options are being evaluated to reach the design capacity.
Ounce reconciliation with the block model continues to be positive (3% to 4% higher), and could have a favourable impact on the quantity of gold produced going forward.
Near-term productivity improvements include:
-- Using a loader to manage the stockpile and keep the crusher
full at all times, which has also led to improved haul truck
cycle times
-- Ongoing optimization of the blasting pattern with the objective
of producing finer material to feed into the crushing and
grinding circuit
-- Progressive reduction in the use of blasting mats through 2015
(localized use will continue post 2015)
During the third quarter, the following programs or studies were initiated:
-- Creation of a productivity/continuous improvement team with a
focus on reducing operating costs
-- Evaluating the potential to convert to LNG fueled trucks, which
are cheaper to operate and have lower greenhouse gas emissions
-- Renegotiation of major contracts on fuel and consumables
(evaluating potential synergies with other Agnico Eagle Abitibi
operations)
-- Program to review manpower requirements (including contractors)
-- Optimization of the maintenance program for mobile equipment
-- Optimization of liner wear in all major crushing components
-- Looking at possible modification of the SAG mill liner design
to increase the grinding efficiency and expected liner life
-- Potential to use larger grinding media in the SAG mill
-- Initiation of projects to reduce consumables consumption
-- Optimization of waste rock management plans with an aim of
trying to reduce cycle times
-- Optimization of the life-of-mine plan
During the third quarter of 2014, the Partnership completed the transition and optimization of the previous Osisko head office in Montreal including relocating to a smaller administration office which is expected to result in annual savings of approximately C$25 to C$30 million. The Partnership is also committed to empowering its workforce to reduce/optimize costs at all levels of the organization.
Additional details on the optimization plan, and updated three year guidance will be provided with Agnico Eagle's year-end 2014 results in February 2015.
Exploration Activities - $8.0 million Budget Approved Through Year-End 2014
In addition to being joint operators at the Canadian Malartic mine, Agnico Eagle and Yamana are also jointly exploring a portfolio of properties in the Kirkland Lake area, and the Pandora and Wood-Pandora properties in the Abitibi region of Quebec.
Subsequent to a review of exploration work carried out earlier this year, approximately $8.0 million (on a 100% basis) has been allocated towards exploration through the balance of 2014, with a focus on the Upper Beaver project in Kirkland Lake, and the Pandora property. Activities will include the compilation of historical work at the various Kirkland Lake properties and the initiation of a technical report on the Upper Beaver project. Exploration expenditures in the third quarter of 2014 were approximately $2.8 million (on a 100% basis).
Work at Upper Beaver will focus on testing for near surface mineralization. In addition, several drill holes are planned to test for mineralization below the current intercepts that encountered high-grade intervals at depths below 1,500 metres. A technical report is expected to be completed by the end of 2014 that will evaluate the mineral potential and form the basis for a Preliminary Economic Assessment, which is expected to be completed in 2015.
At Pandora, drilling will evaluate the near surface North Branch zone, and several drill holes will also be drilled from the 101-W Exploration drift at the adjacent Lapa mine to test for mineralization at the South Branch target.
Underground drilling to test the South Branch target on the jointly owned Pandora property is currently underway from the 101-W drift. This drift may be extended onto the Pandora property depending on the success of the drill program.
Lapa - Strong Mill Performance and Continued Cost Containment
The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009. Current mine life is estimated to be through 2016.
The Lapa circuit at the LaRonde mill processed an average of 1,703 tpd in the third quarter of 2014, slightly higher than the 1,675 tpd processed in the third quarter of 2013.
Minesite costs per tonne were C$104 in the third quarter of 2014, compared to C$112 in the third quarter of 2013. Despite mining at a deeper depth, the lower minesite costs in the current quarter are due to ongoing cost containment (including using less cemented backfill and ventilation automation), lower labor costs and better mine development performance versus the comparable period last year.
For the first nine months of 2014, the Lapa mill processed an average of 1,747 tpd, compared to 1,732 tpd in the first nine months of 2013. Minesite costs per tonne were approximately C$106, below the C$112 per tonne in the first nine months of 2013 for the same reasons explained above.
Payable production in the third quarter of 2014 was 24,781 ounces of gold at total cash costs per ounce of $606 on a by-product basis. This compares with the third quarter of 2013, when production was 24,361 ounces of gold at total cash cost per ounce of $686 on a by-product basis. In the current period, the slight increase in gold production and lower total cash costs per ounce were generally due to slightly increased throughput levels, the processing of higher gold grades and lower minesite costs per tonne compared to the same quarter last year.
In the first nine months of 2014, Lapa produced 67,011 ounces of gold at total cash costs per ounce of $689 on a by-product basis. This compares to the first nine months of 2013 when the mine produced 74,407 ounces of gold at total cash costs per ounce of $696 on a by-product basis. The lower production in the 2014 period is primarily due to the processing of lower grades compared to the same period last year.
Development of the Zulapa Zone 7 (approximately 100 metres into the hangingwall of the main Lapa mining zone) is ahead of schedule with the first stope planned for Q4 2014 (about one quarter ahead of schedule). Development of the nearby Zulapa Zone 8 is also being prioritized.
Goldex Mine - Low Cost Operation Continues to Ramp Up, New Satellite Zones Under Development
The 100% owned Goldex mine in northwestern Quebec began operation in 2008 but mining operations in the Goldex Extension Zone (GEZ) orebody were indefinitely suspended in October 2011. Mining operations at the GEZ remain suspended. In July 2012, the M and E satellite zones were approved for development and these zones achieved commercial production in October 2013.
The Goldex mill processed an average of 5,851 tpd in the third quarter of 2014 and throughput is expected to increase to approximately 6,000 tpd by year end 2014. Minesite costs per tonne at Goldex were approximately C$32 in the third quarter of 2014.
For the first nine months of 2014, the Goldex mill processed an average of 5,647 tpd. Minesite costs per tonne were approximately C$33. Minesite costs per tonne have been significantly lower than 2014 guidance of C$37, primarily due to improved underground productivity, reduced labor costs and lower cement content in the paste backfill.
Payable gold production in the third quarter of 2014 was 27,611 ounces at a total cash cost per ounce of $582 on a by-product basis. In the first nine months of 2014, Goldex produced 70,970 ounces of gold at total cash costs per ounce of $661 on a by-product basis.
Development activities are continuing on the M2, M5 and E2 satellite zones. A new surface portal has been collared and approximately 50% of the pre-existing ramp has been refurbished to provide access to the M3 and M4 zones.
The Company is evaluating the potential to accelerate development of the exploration ramp into the DX zone (the top of the Deep zone). This ramp is designed to provide access for additional exploration drilling, with a goal of outlining a mineable reserve and the completion of a technical study by late 2015 or early 2016.
Development of the Deep zone would have the potential to further extend the mine's life. Economies of scale may also be available if additional zones are developed as the mill has the ability to operate at over 8,000 tpd. Given the strong operational performance achieved to date, the Goldex mining approach may also open up other mining opportunities in the Abitibi region.
Meadowbank - Lower Grade Mining Sequence Partially Offset by Strong Mill Performance
The 100% owned Meadowbank mine is located in Nunavut, Canada. Current mine life is estimated to be through 2017.
The Meadowbank mill processed an average of 11,492 tpd in the third quarter of 2014. This compares with 11,379 tpd in the third quarter of 2013. The slight increase in the 2014 period is largely due to the continued optimization of the mine plan and improved equipment availability.
Minesite costs per tonne were C$74 in the third quarter of 2014, compared with C$81 per tonne in the third quarter of 2013. Costs were lower in the 2014 period due to higher throughput in 2014 versus 2013, ongoing cost reduction initiatives, better fuel management and the positive currency impact from the weakening of the Canadian dollar.
For the first nine months of 2014, the Meadowbank mill processed an average of 11,365 tpd, compared to 11,334 tpd in the first nine months of 2013. Minesite costs per tonne were approximately C$73 in the first nine months of 2014, below the C$78 per tonne in the comparable 2013 period for the same reasons described above.
Payable production in the third quarter of 2014 was 91,557 ounces of gold at total cash costs per ounce of $777 on a by-product basis. This compares with payable production in the third quarter of 2013 of 133,489 ounces of gold at total cash costs per ounce of $610 on a by-product basis. The decrease in year-over-year production and higher total cash costs is due to the expected decrease in the grade (approximately 31%) compared to the previous period resulting from the mining sequence.
In the first nine months of 2014, Meadowbank produced 366,162 ounces of gold at total cash costs per ounce of $561 on a by-product basis. In the first nine months of 2013 the mine produced 307,180 ounces of gold at total cash costs per ounce of $761 on a by-product basis. The stronger 2014 results are due to the mining of higher grade ore in the Goose pit during first half of 2014, slightly better recoveries and considerably lower minesite costs per tonne.
Gold production in the fourth quarter is expected to be in line with the third quarter of 2014, while production in 2015 is expected to significantly exceed prior guidance (375,000 ounces as presented in the news release of February 12, 2014) due to the expectation of a strong grade cycle in the Portage pit.
Amaruq Project - Maiden Resource Expected in Early 2015
Exploration at the Amaruq project in September and October focused on drilling the Whale Tail gold zone which was discovered in Summer 2014. The $9-million exploration program (144 drill holes totaling 31,623 metres) concluded in mid-October. This represents a significant increase from the $1.5-million program initially budgeted, due to the impressive results obtained from geophysics, field work and drilling as the year progressed. Exploration expenditures during the quarter were $7.4 million.
Assay results have been received for more than 95% of this year's drilling, with the rest expected in early November. The 100%-owned Amaruq property is approximately 50 km northwest of the Meadowbank mine in Nunavut, and was last reported on in a news release dated September 29, 2014. The latest drill intercepts are expected to be included in a news release scheduled for November.
Work is already underway on an initial Amaruq mineral resource estimate, which is anticipated in early 2015. The current plan is to re-open the Amaruq exploration camp in late February 2015 and begin a winter drilling program in March, completing the camp expansion to accommodate 60 personnel by late March. Permitting and preliminary engineering activities continue for the possible construction of an all-weather exploration road linking the Amaruq exploration site to the Meadowbank mine for the transport of fuel, equipment and personnel.
Given the size and scope of the discovery, studies are currently underway to evaluate how Amaruq might be incorporated into the Meadowbank operational plan and possibly linked with the Meliadine project.
Kittila Mine - Mill Expansion Essentially Complete, Stronger Q4 Production Expected
The 100% owned Kittila mine in northern Finland achieved commercial production in May 2009. Current mine life is estimated to be through 2036.
In the third quarter of 2014, the Kittila mill processed an average of approximately 2,559 tpd. This compares with 3,341 tpd in the third quarter of 2013. The planned mill shutdown in September to tie-in the expansion was the primary reason for the lower throughput in the 2014 period.
Minesite costs per tonne at Kittila were approximately EUR86 in the third quarter of 2014, compared to EUR71 in the third quarter of 2013. The increase in minesite costs per tonne is largely due to the above mentioned shutdown.
For the first nine months of 2014, the Kittila mill processed an average of 2,895 tpd, compared to 2,293 tpd in the first nine months of 2013. The lower throughput in the 2013 period is primarily due to the 77 day shutdown related to the autoclave relining in the second quarter.
Minesite costs per tonne at Kittila were approximately EUR79 in the first nine months of 2014 and were EUR74 in the first nine months of 2013. Costs over the two periods are not considered comparable given that minesite costs per tonne in the 2013 period do not include the 77 day shutdown related to the autoclave relining in the second quarter.
Third quarter 2014 gold production at Kittila was 28,230 ounces with a total cash cost per ounce of $951 on a by-product basis. In the third quarter of 2013 the mine produced 56,177 ounces at total cash costs per ounce of $518. Gold production and costs in the 2014 period were adversely affected by the September mill shutdown, and the mining of lower grades. In addition, gold recoveries in the 2014 period were slightly below normal due to temporary site water balance issues. Recoveries had returned to more normal levels before the September shutdown.
In the first nine months of 2014, Kittila produced 98,612 ounces of gold at a total cash cost per ounce of $861 on a by-product basis. This is in contrast to the first nine months of 2013, when the mine produced 104,711 ounces of gold (including 5,389 ounces of production that were not included in the total cash cost calculation), at total cash costs per ounce of $564 on a by-product basis. The higher cash costs and lower production in the 2014 period are mainly due to the reasons outlined above.
All major tie-ins related to the previously announced Kittila mill expansion have essentially been completed. The expansion has provided upgrades to both the grinding and flotation circuits and the oxidation and cyanidation circuits.
As reported in the second quarter 2014 news release, the expansion capacity was increased, which is expected to enable the Kittila mill to process over 4,000 tpd. In order to utilize this increased capacity, the Company is looking at a combination of increased mine throughput and the processing of surface stockpiles. As part of the program to increase mine throughput, a priority focus will be on developing the Rimpi zone through a ramp system to provide sufficient future feed to the mill and enhance Kittila's production profile.
The higher plant throughput is expected to result in increased gold production in 2015 compared to guidance issued on February 12, 2014.
Meliadine - 2014 Project Activities Remain on Schedule and Budget
Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010, and is one of Agnico Eagle's largest gold projects in terms of reserves and resources. Underground development, exploration drilling, technical studies and permitting have continued in the third quarter of 2014.
In the first nine months of 2014, 148 exploration and conversion drill holes totaling 36,547 metres were completed. Year-to-date, the exploration ramp has been extended in length by 789 metres, and remains on track to reach the targeted depth of 225 metres by year-end. Recent drill results are expected to expand gold resources at the Pump, Wesmeg/Normeg and Wolf deposits. An updated technical study is expected in early 2015. For additional details on this project, readers are referred to Agnico Eagle's mid-year exploration news release dated July 30, 2014.
Final public hearings for Meliadine were successfully completed in late August 2014, with the Nunavut Impact Review Board ("NIRB") granting conditional approval of the project.
Southern Business Operating Review
Pinos Altos - Record Daily Mill Throughput in September
The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009. Current mine life is estimated to be through 2025.
The Pinos Altos mill processed an average of 5,040 tpd in the third quarter of 2014, compared to 5,458 tpd per day processed in the third quarter of 2013. Mill throughput in the 2014 period was lower due to an unplanned shutdown in July related to the replacement of the SAG mill transformer. Following the repair, mill throughput in September was a new monthly record at 5,769 tpd.
During the third quarter of 2014, approximately 143,500 tonnes of ore were stacked on the heap leach at Pinos Altos, compared to 158,800 tonnes in the comparable 2013 period.
Minesite costs per tonne were $48 in the third quarter of 2014, compared to $45 per tonne in the third quarter of 2013. Minesite costs per tonne at Pinos Altos are affected by normal operating variances in the proportion of heap leach to mill ore, the proportion of underground ore to open pit ore, variations in the proportion of waste to ore mined and variations in the currency exchange rate.
For the first nine months of 2014, the Pinos Altos mill processed an average of 5,311 tpd, compared to 5,244 tpd processed in the first nine months of 2013. Approximately 436,800 tonnes of ore were stacked on the Pinos Altos leach pad during the first nine months of 2014, compared to 620,900 tonnes in the prior year period. Minesite costs per tonne were approximately $48 compared to $42 per tonne in the first nine months of 2013 with variance due to the factors mentioned above.
Payable production in the third quarter of 2014 was 41,155 ounces of gold at a total cash cost per ounce of $545 on a by-product basis. This compares with production of 43,736 ounces at a total cash cost per ounce of $396 on a by-product basis in the third quarter of 2013. Production in the 2014 period was lower than the comparable 2013 period primarily due to the unplanned shutdown mentioned above. The higher total cash costs in the 2014 period are primarily due to the shutdown and lower by-product credits.
In the first nine months of 2014, Pinos Altos produced 130,350 ounces of gold at total cash costs per ounce of $513 on a by-product basis. This is in contrast to the first nine months of 2013 when the mine produced 135,283 ounces of gold at total cash costs per ounce of $348 on a by-product basis. The higher cash costs in the 2014 period are primarily due to lower silver production and lower realized silver prices in the first quarter of 2014 compared to the first quarter of 2013.
Shaft sinking activities at Pinos Altos continued during the quarter and remain on budget. The first phase of sinking, which involved slashing into a piloted raisebore hole, was completed to the 23 level during the quarter. The shaft is currently excavated to a depth of 416 metres, and the ultimate shaft depth is currently expected to be 793 metres. The shaft project will allow better matching of the mill capacity with the future mining capacity at Pinos Altos when the open pit mining operation begins to wind down as planned in the next several years.
Creston Mascota - New Agglomerator and Overland Conveyors Lead to Increased Throughput
The Creston Mascota heap leach has been operating as a satellite operation to the Pinos Altos mine since late 2010.
Approximately 469,200 tonnes of ore were stacked on the Creston Mascota leach pad during the third quarter of 2014, compared to approximately 334,600 tonnes stacked in the third quarter of 2013. The new agglomerator and overland conveyors were in full operation in the third quarter of 2014, resulting in approximately a 25% increase in throughput.
Minesite costs per tonne at Creston Mascota were $17 in the third quarter of 2014, compared to $19 in the third quarter of 2013. Costs were lower in the 2014 period primarily due to increased productivity as noted above.
For the first nine months of 2014, approximately 1,242,900 tonnes of ore were stacked on the Creston Mascota leach pad, compared to 950,700 tonnes in the prior year period. Stacking resumed at Creston Mascota in April 2013, following the suspension of activities on the Phase one leach pad in October 2012.
For the first nine months of 2014, mine site costs per tonne at Creston Mascota were $17, unchanged from the $17 per tonne recorded in the first nine months of 2013.
Payable gold production at Creston Mascota in the third quarter of 2014 was 13,377 ounces at a total cash cost per ounce of $556 on a by-product basis. This compares to 11,307 ounces at a total cash cost per ounce of $545 on a by-product basis during the third quarter of 2013. The higher production in the 2014 period is a result of more tonnes stacked, while the slightly higher cash costs are due to higher consumables costs and an increase in parts inventory.
Payable gold production for the first nine months of 2014 was 34,853 ounces at a total cash cost per ounce of $587 on a by-product basis. This compares to 23,361 ounces (including 1,907 ounces of production that are not included in the total cash cost calculation) at a total cash cost per ounce of $538 on a by-product basis in the first nine months of 2013. The higher production and higher costs in the 2014 period are due to the reasons outlined above.
Improvements are being made to the carbon columns and the leach pumping system, which are expected to have a positive effect on recoveries.
La India - Crushing Circuit Refinements Expected to Enhance Production
The La India mine in Sonora, Mexico, located approximately 70 kilometres from the Company's Pinos Altos mine, was acquired in November 2011 through the Company's purchase of Grayd Resources. Commissioning of the mine commenced ahead of schedule in the third quarter of 2013. Commercial production at La India was achieved on February 1, 2014.
Approximately 1,190,100 tonnes of ore were stacked on the La India leach pad during the third quarter of 2014. Stacking rates continue to ramp up and averaged approximately 12,936 tpd during the quarter. Minesite costs per tonne at La India were $10 in the third quarter of 2014.
In the first nine months of 2014, approximately 3,346,500 tonnes of ore were stacked on the La India leach pad, with stacking rates averaging approximately 12,258 tpd. Minesite costs per tonne at La India were $8 in the first nine months of 2014.
Payable gold production in the third quarter of 2014 was 20,311 ounces at a total cash cost per ounce of $547 on a by-product basis.
For the first nine months of 2014, La India produced 51,820 ounces of gold, including 3,492 ounces of pre-commercial production, at total cash cost per ounce of $483 on a by-product basis.
Operations continue to ramp up with month-over-month increases in production. Planned modifications to the crushing and stacking circuits were completed during the third quarter. Commissioning of the fine material crusher bypass system is underway and initial results have been positive. In addition, the block model has yielded slightly more ore than planned, which has had a positive impact on both production and costs.
Board of Directors
It is with regret that during the quarter, the Company received the resignation of Mr. Clifford Davis due to health reasons. Mr. Davis had been a director since 2008. "Cliff was a valued and active member of our Board of Directors, most recently serving as chair of the Health, Safety, Environment and Sustainable Development Committee. We will miss Cliff's knowledge, expertise, and contributions and we wish him well", said Mr. James D. Nasso, Chairman of the Board.
Dividend Reinvestment Program
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 nine mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions as well as in the United States. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
Further Information
For further information regarding Agnico Eagle, contact Investor Relations at info@agnicoeagle.com or call (416) 947-1212.
Note Regarding Certain Measures of Performance
This news release discloses certain measures, including ''total cash costs per ounce'' and ''minesite costs per tonne'' that are not recognized measures under IFRS. This 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, see "Reconciliation of Non-GAAP Financial Performance Measures" below. 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 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. 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. 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 cost 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 and 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.
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 The Canadian Securities Administrators' National Instrument 43-101 ("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 a "Qualified Person" for the purposes of NI 43-101.
Forward-Looking Statements
The information in this news release has been prepared as at October 29,
2014. 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", "expect", "estimate",
"forecast", "will", "planned" 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, mine estimates horizons, 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; the estimated timing and receipt
of Mexican regulatory approval with respect to the Cayden acquisition;
statements regarding timing and amounts of capital expenditures and
other assumptions; estimates of future reserves, 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 and information 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 reserves
and 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, 2103 filed with Canadian securities
regulators and that are included in its Annual Report on Form 40-F for
the year ended December 31, 2013 ("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 metals 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 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. The Company does not intend, and does not
assume any obligation, to update these forward-looking statements and
information. For a detailed breakdown of the Company's reserve and
resource position see the AIF or 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,
2014 2013 2014 2013
Operating margin
(i) by mine:
Northern Business
LaRonde mine $ 14,696 $ 25,461 $ 86,523 $ 74,015
Lapa mine 13,748 15,303 38,140 53,654
Goldex mine(ii) 17,237 - 40,045 -
Meadowbank 52,504 90,658 265,193 192,240
mine
Canadian
Malartic mine 33,224 - 36,892 -
(iii)
Kittila mine 12,128 39,150 45,315 83,863
Southern Business
Pinos Altos 28,837 40,529 101,318 148,020
mine
Creston Mascota
deposit at 8,032 10,445 23,173 13,787
Pinos Altos
La India mine 13,189 - 39,835 -
(iv)
Total operating 193,595 221,546 676,434 565,579
margin(i)
Amortization of
property, plant 117,396 79,266 294,533 223,102
and
mine development
Exploration,
corporate and 69,884 53,725 195,051 200,389
other
Income (loss)
before income and 6,315 88,555 186,850 142,088
mining taxes
Income and mining 21,365 13,637 82,597 48,521
taxes expense
Net income (loss) $ (15,050) $ 74,918 $ 104,253 $ 93,567
for the period
Net income (loss)
per share -- $ (0.07) $ 0.43 $ 0.55 $ 0.54
basic (US$)
Net income (loss)
per share -- $ (0.07) $ 0.43 $ 0.55 $ 0.54
diluted (US$)
Cash flows:
Cash provided by
operating $ 71,244 $ 88,365 $ 504,368 $ 340,254
activities
Cash used in
investing $ (131,662) $ (153,012) $ (728,493) $ (543,292)
activities
Cash provided by
(used in) $ (35,943) $ 68,745 $ 247,921 $ 17,918
financing
activities
Realized prices
(US$):
Gold (per ounce) $ 1,249 $ 1,333 $ 1,284 $ 1,418
Silver $ 17.72 $ 21.84 $ 19.33 $ 23.11
(per ounce)
Zinc (per tonne) $ 2,365 $ 1,874 $ 2,227 $ 1,891
Copper $ 7,500 $ 7,330 $ 6,842 $ 7,122
(per tonne)
Payable
production(v):
Gold (ounces):
Northern
Business
LaRonde mine 37,490 45,253 145,336 130,445
Lapa mine 24,781 24,361 67,011 74,407
Goldex mine 27,611 1,505 70,970 1,505
(ii)
Meadowbank 91,557 133,489 366,162 307,180
mine
Canadian
Malartic mine 64,761 - 76,639 -
(iii)
Kittila mine 28,230 56,177 98,612 104,711
Southern
Business
Pinos Altos 41,155 43,736 130,350 135,283
mine
Creston
Mascota 13,377 11,307 34,853 23,361
deposit at
Pinos Altos
La India mine 20,311 - 51,820 -
(iv)
Total gold 349,273 315,828 1,041,753 776,892
(ounces)
Silver (thousands
of ounces):
Northern
Business
LaRonde mine 224 571 918 1,606
Meadowbank 34 26 85 71
mine
Canadian
Malartic mine 66 - 76 -
(iii)
Kittila mine 1 2 4 4
Southern
Business
Pinos Altos 425 600 1,307 1,818
mine
Creston
Mascota 26 14 60 31
deposit at
Pinos Altos
La India mine 44 - 111 -
(iv)
Total Silver
(thousands of 820 1,213 2,561 3,530
ounces)
Zinc (tonnes) 2,230 3,648 8,083 15,342
Copper (tonnes) 989 1,241 3,601 3,603
Payable metal
sold:
Gold (ounces):
Northern
Business
LaRonde mine 39,279 47,185 145,494 133,726
Lapa mine 22,422 24,306 64,035 73,889
Goldex mine 26,762 - 68,624 -
(ii)
Meadowbank 98,604 132,010 364,282 299,820
mine
Canadian
Malartic mine 60,093 - 76,470 -
(iii)
Kittila mine 28,209 48,027 97,157 105,119
Southern
Business
Pinos Altos 41,143 44,554 131,011 137,847
mine
Creston
Mascota 12,793 12,761 33,758 21,460
deposit at
Pinos Altos
La India mine 19,265 - 48,922 -
(iv)
Total gold 348,570 308,843 1,029,753 771,862
(ounces)
Silver (thousands
of ounces):
Northern
Business
LaRonde mine 249 584 911 1654
Meadowbank 32 26 84 71
mine
Canadian
Malartic mine 57 - 72 -
(iii)
Kittila mine 1 1 4 4
Southern
Business
Pinos Altos 430 588 1367 1814
mine
Creston
Mascota 18 16 50 30
deposit at
Pinos Altos
La India mine 42 - 102 -
(iv)
Total Silver
(thousands of 829 1,215 2,590 3,573
ounces):
Zinc (tonnes) 3,936 3,030 8,067 15,309
Copper (tonnes) 988 1,253 3,604 3,611
Total cash costs
per ounce of gold
produced -
Co-product basis
(US$)(vi):
Northern Business
LaRonde mine $ 1,316 $ 1,470 $ 1,118 $ 1,526
Lapa mine 606 686 689 696
Goldex mine(ii) 582 - 661 -
Meadowbank 783 614 566 767
mine
Canadian
Malartic mine 754 - 737 -
(iii)
Kittila mine 952 518 862 565
(vii)
Southern Business
Pinos Altos 724 699 706 651
mine
Creston Mascota
deposit at 589 572 620 562
Pinos Altos
(viii)
La India mine 584 - 528 -
(iv)
Weighted average
total cash costs $ 794 $ 733 $ 716 $ 832
per ounce of gold
produced
Total cash costs
per ounce of gold
produced -
By-product basis
(US$)(vi):
Northern Business
LaRonde mine $ 861 $ 772 $ 701 $ 812
Lapa mine 606 686 689 696
Goldex mine(ii) 582 - 661 -
Meadowbank 777 610 561 761
mine
Canadian
Malartic mine 735 - 717 -
(iii)
Kittila mine 951 518 861 564
(vii)
Southern Business
Pinos Altos 545 396 513 348
mine
Creston Mascota
deposit at 556 545 587 538
Pinos Altos
(viii)
La India mine 547 - 483 -
(iv)
Weighted average
total cash costs $ 716 $ 591 $ 627 $ 659
per ounce of gold
produced
Notes:
(i) Operating margin is calculated as revenues from mining
operations less production costs.
(ii) The Goldex mine's M and E Zones achieved commercial production
on October 1, 2013.
(iii) On June 16, 2014, the Company and Yamana Gold Inc. ("Yamana")
completed the joint acquisition of 100.0% of the issued and
outstanding common shares of Osisko Mining Corporation by way
of a court-approved plan of arrangement (the "Arrangement").
As a result of the Arrangement, Agnico Eagle and Yamana each
own 50.0% of Canadian Malartic General Partnership ("CMGP"),
which operates the Canadian Malartic mine, and have formed a
joint committee to manage its operations. The information set
out in this table reflects the Company's 50.0% interest in the
Canadian Malartic mine.
(iv) 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 first quarter of 2014 as they were produced
prior to the achievement of commercial production.
(v) Payable production 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 inventory at the end of the period.
(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
interim unaudited consolidated statements of income (loss) and
comprehensive 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 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 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.
(vii) Excludes the Kittila mine's results for the second quarter of
2013. Due to scheduled maintenance, the Kittila mine only
operated for 14 days during the second quarter of 2013. The
Kittila mine incurred $18,159 in production costs during the
second quarter of 2013, which were excluded from the
calculation of total cash costs per ounce of gold produced and
minesite costs per tonne.
(viii) Excludes the Creston Mascota deposit at Pinos Altos' results
for the first quarter of 2013 due to the temporary suspension
of active leaching between October 1, 2012 and March 13, 2013
due to an unexpected movement of leached ore at the Phase One
leach pad. The Creston Mascota deposit at Pinos Altos incurred
$3,117 in production costs during the first quarter of 2013,
which were excluded from total cash costs per ounce of gold
produced.
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,
2014 2013
ASSETS
Current assets
Cash and cash equivalents $ 158,823 $ 139,101
Short-term investments 6,821 2,217
Restricted cash 22,057 28,723
Trade receivables 61,728 67,300
Inventories 452,335 345,083
Income taxes recoverable 1,540 18,682
Available-for-sale securities 64,725 74,581
Fair value of derivative financial 3,227 5,590
instruments
Other current assets 130,176 116,992
Total current assets 901,432 798,269
Non-current assets
Restricted cash 33,189 -
Goodwill 638,393 39,017
Property, plant and mine development 5,057,099 3,694,461
Other assets 44,756 48,334
Total assets $ 6,674,869 $ 4,580,081
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued $ 224,048 $ 173,374
liabilities
Reclamation provision 2,798 3,452
Interest payable 21,095 13,803
Income taxes payable 15,369 7,523
Capital lease obligations 22,308 12,035
Current portion of long-term debt 18,933 -
Fair value of derivative financial 535 323
instruments
Total current liabilities 305,086 210,510
Non-current liabilities
Long-term debt 1,359,549 987,356
Reclamation provision 241,641 184,009
Deferred income and mining tax 756,310 453,411
liabilities
Other liabilities 42,515 27,389
Total liabilities 2,705,101 1,862,675
EQUITY
Common shares:
Outstanding - 210,091,009 common
shares issued, less 1,060,386 shares 4,469,249 3,294,007
held in trust
Stock options 197,291 184,078
Contributed surplus 37,254 37,254
Deficit (740,445) (800,074)
Accumulated other comprehensive 6,419 2,141
income
Total equity 3,969,768 2,717,406
Total liabilities and equity $ 6,674,869 $ 4,580,081
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,
2014 2013 2014 2013
REVENUES
Revenues from 463,388 $ 444,320 $ 1,393,676 $ 1,201,166
mining operations $
COSTS, EXPENSES
AND OTHER INCOME
Production (i) 269,793 222,774 717,242 635,587
Exploration and
corporate 20,521 15,550 41,566 35,447
development
Amortization of
property, plant 117,396 79,266 294,533 223,102
and mine
development
General and 24,991 23,997 92,776 87,868
administrative
Impairment loss on
available-for-sale 462 299 2,881 28,607
securities
Finance costs 20,852 15,954 55,249 45,698
Loss (gain) on
derivative 7,908 (4,457) 3,644 (2,733)
financial
instruments
Gain on sale of
available-for-sale (83) - (5,372) -
securities
Environmental 8,490 - 9,163 -
remediation
Foreign currency
translation (gain) (4,679) 2,548 (3,170) 3,161
loss
Other (income) (8,578) (166) (1,686) 2,341
expenses
Income before
income and mining 6,315 88,555 186,850 142,088
taxes
Income and mining 21,365 13,637 82,597 48,521
taxes expense
Net income (loss) (15,050) $ 74,918 $ 104,253 $ 93,567
for the period $
Net income (loss) (0.07) $ 0.43 $ 0.55 $ 0.54
per share - basic $
Net income (loss)
per share - $ (0.07) $ 0.43 $ 0.55 $ 0.54
diluted
Weighted average
number of common
shares outstanding
(in thousands):
Basic 208,815 173,102 189,498 172,652
Diluted 208,815 173,452 190,139 173,032
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,
2014 2013 2014 2013
OPERATING
ACTIVITIES
Net income (loss) $ (15,050) $ 74,918 $ 104,253 $ 93,567
for the period
Add (deduct) items
not affecting cash:
Amortization of
property, plant 117,396 79,266 294,533 223,102
and mine
development
Deferred income 6,982 12,762 26,189 28,441
and mining taxes
Gain on sale of
available-for-sale (83) - (5,372) -
securities
Stock-based 10,153 30,032 35,619
compensation 7,552
Impairment loss
on 462 299 2,881 28,607
available-for-sale
securities
Foreign currency
translation (gain) (4,679) 2,548 (3,170) 3,161
loss
Other (1,050) 26,971 11,054
19,065
Adjustment for
settlement of (2,456) (2,845) (3,491) (8,387)
environmental
remediation
Changes in non-cash
working capital
balances:
Trade receivables (4,170) 15,225 3,579
6,972
Income taxes 4,468 (8,236) 24,988 (16,343)
Inventories (54,962) (76,932) (25,059) (55,682)
Other current 4,490 (29,081) (315) (49,937)
assets
Accounts payable
and accrued (26,046) 23,464 9,710 37,645
liabilities
Interest payable 7,133 7,269 6,993 5,828
Cash provided by 71,244 88,365 504,368 340,254
operating activities
INVESTING ACTIVITIES
Additions to
property, plant and (125,442) (149,670) (342,059) (482,596)
mine development
Acquisition of
Osisko Mining - - (403,509) -
Corporation, net
Acquisition of
Urastar Gold - - - (10,051)
Corporation, net
Net (purchases)
sales of short-term (2,600) 2,711 (4,604) 6,323
investments
Net proceeds from
sale of 493 - 40,635 -
available-for-sale
securities
Purchase of
available-for-sale (13,861) (2,769) (27,246) (55,028)
securities and
warrants
Decrease (increase) 9,748 (3,284) 8,290 (1,940)
in restricted cash
Cash used in (131,662) (153,012) (728,493) (543,292)
investing activities
FINANCING ACTIVITIES
Dividends paid (14,546) (32,618) (39,459) (94,267)
Repayment of capital (7,672) (2,582) (14,366) (8,644)
lease obligations
Sale-leaseback - - 1,027 -
financing
Proceeds from 230,000 150,000 960,000 240,000
long-term debt
Repayment of (250,707) (50,000) (674,640) (120,000)
long-term debt
Long-term debt (2,127) - (2,127) -
financing
Repurchase of common
shares for - - (7,518) (19,000)
restricted share
unit plan
Proceeds on exercise 6,538 - 16,994 8,006
of stock options
Common shares 2,571 3,945 8,010 11,823
issued
Cash (used in)
provided by (35,943) 68,745 247,921 17,918
financing activities
Effect of exchange
rate changes on cash (4,385) 634 (4,074) (837)
and cash equivalents
Net (decrease)
increase in cash and (100,746) 4,732 19,722 (185,957)
cash equivalents
during the period
Cash and cash
equivalents, 259,569 107,379 139,101 298,068
beginning of period
Cash and cash
equivalents, end of $ 158,823 $ 112,111 $ 158,823 $ 112,111
period
SUPPLEMENTAL CASH
FLOW INFORMATION
Interest paid $ 13,149 $ 7,344 $ 43,969 $ 35,891
Income and mining $ 16,911 $ 8,983 $ 38,232 $ 39,983
taxes paid
AGNICO EAGLE MINES LIMITED
RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES
(Unaudited)
Total
Production
Costs by Mine
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2014 2013 2014 2013
(thousands of
United States
dollars)
Production
costs per the
interim
unaudited
consolidated
statements of $ 269,793 $ 222,774 $ 717,242 $ 635,587
income
LaRonde mine 47,070 57,939 141,107 175,579
Lapa mine 13,887 17,219 43,593 52,004
Goldex mine 16,222 - 47,486 -
(i)
Meadowbank 72,838 84,858 203,725 235,885
mine
Canadian
Malartic mine 47,882 - 66,215 -
(ii)
Kittila mine 23,963 25,283 80,347 52,347
(iii)
Pinos Altos 29,293 30,499 90,652 86,917
mine
Creston
Mascota
deposit at 7,644 6,976 20,278 11,346
Pinos Altos
(iv)
La India mine 10,994 - 23,839 -
(v)
Total $ 269,793 $ 222,774 $ 717,242 $ 614,078
Reconciliation of Production Costs to Total Cash Costs per
Ounce of Gold Produced (vi) by Mine
LaRonde Mine - Total Cash Costs per Ounce of Gold Produced
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 47,070 $ 57,939 $ 141,107 $ 175,579
costs
Adjustments:
Inventory
and other 2,273 8,601 21,437 23,486
adjustments
(vii)
Cash
operating
costs $ 49,343 $ 66,540 $ 162,544 $ 199,065
(co-product
basis)
By-product
metal (17,078) (31,595) (60,722) (93,132)
revenues
Cash
operating
costs $ 32,265 $ 34,945 $ 101,822 $ 105,933
(by-product
basis)
Gold
production 37,490 45,253 145,336 130,445
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 1,316 $ 1,470 $ 1,118 $ 1,526
basis
By-product $ 861 $ 772 $ 701 $ 812
basis
Lapa Mine - Total Cash Costs per Ounce of Gold Produced (vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 13,887 $ 17,219 $ 43,593 $ 52,004
costs
Adjustments:
Inventory
and other 1,141 (514) 2,608 (208)
adjustments
(vii)
Cash
operating
costs $ 15,028 $ 16,705 $ 46,201 $ 51,796
(co-product
basis)
By-product
metal (3) (2) (6) (20)
revenues
Cash
operating
costs $ 15,025 $ 16,703 $ 46,195 $ 51,776
(by-product
basis)
Gold
production 24,781 24,361 67,011 74,407
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 606 $ 686 $ 689 $ 696
basis
By-product $ 606 $ 686 $ 689 $ 696
basis
Goldex Mine - Total Cash Costs per Ounce of Gold Produced (i)
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 16,222 $ - $ 47,486 $ -
costs
Adjustments:
Inventory
and other (147) - (559) -
adjustments
(vii)
Cash
operating
costs $ 16,075 $ - $ 46,927 $ -
(co-product
basis)
By-product
metal (5) - (16)
revenues
Cash
operating
costs $ 16,070 $ - $ 46,911 $ -
(by-product
basis)
Gold
production 27,611 - 70,970
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 582 $ - $ 661 $ -
basis
By-product $ 582 $ - $ 661 $ -
basis
Meadowbank Mine - Total Cash Costs per Ounce of Gold Produced
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 72,838 $ 84,858 $ 203,725 $ 235,885
costs
Adjustments:
Inventory
and other (1,136) (2,884) 3,344 (267)
adjustments
(vii)
Cash
operating
costs $ 71,702 $ 81,974 $ 207,069 $ 235,618
(co-product
basis)
By-product
metal (570) (559) (1,615) (1,751)
revenues
Cash
operating
costs $ 71,132 $ 81,415 $ 205,454 $ 233,867
(by-product
basis)
Gold
production 91,557 133,489 366,162 307,180
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 783 $ 614 $ 566 $ 767
basis
By-product $ 777 $ 610 $ 561 $ 761
basis
Canadian Malartic Mine - Total Cash Costs per Ounce of Gold Produced
(ii)(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 47,882 $ - $ 66,215 $ -
costs
Adjustments:
Inventory
and other
adjustments 935 - (9,762) -
(vii)
(viii)
Cash
operating
costs $ 48,817 $ - $ 56,453 $ -
(co-product
basis)
By-product
metal (1,213) - (1,541)
revenues
Cash
operating
costs $ 47,604 $ - $ 54,912 $ -
(by-product
basis)
Gold
production 64,761 - 76,639
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 754 $ - $ 737 $ -
basis
By-product $ 735 $ - $ 717 $ -
basis
Kittila Mine - Total Cash Costs
per Ounce of Gold Produced (iii)
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 23,963 $ 25,283 $ 80,347 $ 52,347
costs
Adjustments:
Inventory
and other 2,915 3,832 4,677 3,726
adjustments
(vii)
Cash
operating
costs $ 26,878 $ 29,115 $ 85,024 $ 56,073
(co-product
basis)
By-product
metal (26) (9) (87) (41)
revenues
Cash
operating
costs $ 26,852 $ 29,106 $ 84,937 $ 56,032
(by-product
basis)
Gold
production 28,230 56,177 98,612 99,322
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 952 $ 518 $ 862 $ 565
basis
By-product $ 951 $ 518 $ 861 $ 564
basis
Pinos Altos
Mine - Total
Cash Costs
per Ounce of
Gold Produced
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 29,293 $ 30,499 $ 90,652 $ 86,917
costs
Adjustments:
Inventory
and other 485 80 1,395 1,119
adjustments
(vii)
Cash
operating
costs $ 29,778 $ 30,579 $ 92,047 $ 88,036
(co-product
basis)
By-product
metal (7,344) (13,260) (25,229) (40,954)
revenues
Cash
operating
costs $ 22,434 $ 17,319 $ 66,818 $ 47,082
(by-product
basis)
Gold
production 41,155 43,736 130,350 135,283
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 724 $ 699 $ 706 $ 651
basis
By-product $ 545 $ 396 $ 513 $ 348
basis
Creston Mascota deposit at Pinos Altos - Total Cash Costs per
Ounce of Gold Produced (iv)(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 7,644 $ 6,976 $ 20,278 $ 11,346
costs
Adjustments:
Inventory
and other 233 (510) 1,317 706
adjustments
(vii)
Cash
operating
costs $ 7,877 $ 6,466 $ 21,595 $ 12,052
(co-product
basis)
By-product
metal (442) (308) (1,152) (515)
revenues
Cash
operating
costs $ 7,435 $ 6,158 $ 20,443 $ 11,537
(by-product
basis)
Gold
production 13,377 11,307 34,853 21,454
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 589 $ 572 $ 620 $ 562
basis
By-product $ 556 $ 545 $ 587 $ 538
basis
La India Mine
- Total Cash
Costs per
Ounce of Gold
Produced (v)
(vi)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 10,994 $ - $ 23,839 $ -
costs
Adjustments:
Inventory
and other 869 - 1,685 -
adjustments
(vii)
Cash
operating
costs $ 11,863 $ - $ 25,524 $ -
(co-product
basis)
By-product
metal (746) - (2,175)
revenues
Cash
operating
costs $ 11,117 $ - $ 23,349 $ -
(by-product
basis)
Gold
production 20,311 - 48,327
(ounces)
Total cash
costs per
ounce of gold
produced ($
per ounce)
(vi):
Co-product $ 584 $ - $ 528 $ -
basis
By-product $ 547 $ - $ 483 $ -
basis
Reconciliation of Production Costs
to Minesite Costs per Tonne(ix) by
Mine
LaRonde Mine
- Minesite
Costs per
Tonne(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 47,070 $ 57,939 $ 141,107 $ 175,579
costs
Inventory (3,488) (1,666) 326 (5,772)
adjustment*
Minesite
operating $ 43,582 $ 56,273 $ 141,433 $ 169,807
costs
Minesite
operating
costs C$ 47,474 C$ 58,438 C$ 154,785 C$ 173,810
(thousands of
C$)
Tonnes of ore
milled 426 547 1,547 1,700
(thousands of
tonnes)
Minesite
costs per C$ 111 C$ 107 C$ 100 C$ 102
tonne (C$)
(ix)
Lapa Mine -
Minesite
Costs per
Tonne(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 13,887 $ 17,219 $ 43,593 $ 52,004
costs
Inventory 1,086 (547) 2,544 (310)
adjustment*
Minesite
operating $ 14,973 $ 16,672 $ 46,137 $ 51,694
costs
Minesite
operating
costs C$ 16,310 C$ 17,314 C$ 50,492 C$ 52,913
(thousands of
C$)
Tonnes of ore
milled 157 154 477 473
(thousands of
tonnes)
Minesite
costs per C$ 104 C$ 112 C$ 106 C$ 112
tonne (C$)
(ix)
Goldex Mine -
Minesite
Costs per
Tonne(i)(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 16,222 $ - $ 47,486 $ -
costs
Inventory (175) - (507) -
adjustment*
Minesite
operating $ 16,047 $ - $ 46,979 $ -
costs
Minesite
operating
costs C$ 17,481 C$ - C$ 51,414 C$ -
(thousands of
C$)
Tonnes of ore
milled 538 - 1,542 -
(thousands of
tonnes)
Minesite
costs per C$ 32 C$ - C$ 33 C$ -
tonne (C$)
(ix)
Meadowbank
Mine -
Minesite
Costs per
Tonne(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 72,838 $ 84,858 $ 203,725 $ 235,885
costs
Inventory (1,224) (3,120) 3,716 (990)
adjustment*
Minesite
operating $ 71,614 $ 81,738 $ 207,441 $ 234,895
costs
Minesite
operating
costs C$ 78,009 C$ 84,880 C$ 227,023 C$ 240,596
(thousands of
C$)
Tonnes of ore
milled 1,057 1,047 3,102 3,095
(thousands of
tonnes)
Minesite
costs per C$ 74 C$ 81 C$ 73 C$ 78
tonne (C$)
(ix)
Canadian
Malartic Mine
- Minesite
Costs per
Tonne (ii)
(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 47,882 $ - $ 66,215 $ -
costs
Inventory
adjustment 719 (10,029)
(viii)*
Minesite
operating $ 48,601 $ - $ 56,186 $ -
costs
Minesite
operating
costs C$ 52,942 C$ - C$ 61,491 C$ -
(thousands of
C$)
Tonnes of ore
milled 2,417 - 2,815 -
(thousands of
tonnes)
Minesite
costs per C$ 22 C$ - C$ 22 C$ -
tonne (C$)
(ix)
Kittila Mine
- Minesite
Costs per
Tonne(iii)
(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 23,963 $ 25,283 $ 80,347 $ 52,347
costs
Inventory 2,817 3,759 4,313 3,465
adjustment*
Minesite
operating $ 26,780 $ 29,042 $ 84,660 $ 55,812
costs
Minesite
operating
costs EUR 20,217 EUR 21,893 EUR 62,488 EUR 42,473
(thousands of
EUR)
Tonnes of ore
milled 235 307 790 574
(thousands of
tonnes)
Minesite
costs per EUR 86 EUR 71 EUR 79 EUR 74
tonne
(EUR)(ix)
Pinos Altos
Mine -
Minesite
Costs per
Tonne(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 29,293 $ 30,499 $ 90,652 $ 86,917
costs
Inventory 96 (987) (1) (1,493)
adjustment*
Minesite
operating $ 29,389 $ 29,512 $ 90,651 $ 85,424
costs
Tonnes of ore
processed 607 661 1,887 2,052
(thousands of
tonnes)
Minesite
costs per $ 48 $ 45 $ 48 $ 42
tonne (US$)
(ix)
Creston
Mascota
deposit at
Pinos Altos -
Minesite
Costs per
Tonne(iv)(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 7,644 $ 6,976 $ 20,278 $ 11,346
costs
Inventory 115 (605) 1,033 541
adjustment*
Minesite
operating $ 7,759 $ 6,371 $ 21,311 $ 11,887
costs
Tonnes of ore
processed 469 335 1,243 698
(thousands of
tonnes)
Minesite
costs per $ 17 $ 19 $ 17 $ 17
tonne (US$)
(ix)
La India Mine
- Minesite
Costs per
Tonne(v)(ix)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(thousands of
United States September 30, September 30, September 30, September 30,
dollars, 2014 2013 2014 2013
except as
noted)
Production $ 10,994 $ - $ 23,839 $ -
costs
Inventory 851 - 1,430 -
adjustment*
Minesite
operating $ 11,845 $ - $ 25,269 $ -
costs
Tonnes of ore
processed 1,190 - 3,015 -
(thousands of
tonnes)
Minesite
costs per $ 10 $ - $ 8 $ -
tonne (US$)
(ix)
Notes:
(i) The Goldex mine's M and E Zones achieved commercial
production on October 1, 2013.
(ii) On June 16, 2014, the Company and Yamana Gold Inc.
("Yamana") completed the joint acquisition of 100.0% of the
issued and outstanding common shares of Osisko Mining
Corporation by way of a court-approved plan of arrangement
(the "Arrangement"). As a result of the Arrangement,
Agnico Eagle and Yamana each own 50.0% of Canadian Malartic
General Partnership ("CMGP"), which operates the Canadian
Malartic mine, and have formed a joint committee to manage
its operations. The information set out in this table
reflects the Company's 50.0% interest in the Canadian
Malartic mine.
(iii) Excludes the Kittila mine's results for the second quarter
of 2013. Due to an extended maintenance shutdown, the
Kittila mine only operated for 14 days during the second
quarter of 2013. The Kittila mine incurred $18,159 in
production costs during the second quarter of 2013, which
were excluded from the calculation of total cash costs per
ounce of gold produced and minesite costs per tonne.
(iv) Excludes the Creston Mascota deposit at Pinos Altos'
results for the first quarter of 2013 due to the temporary
suspension of active leaching between October 1, 2012 and
March 13, 2013. The Creston Mascota deposit at Pinos Altos
incurred $3,117 in production costs during the first
quarter of 2013, which were excluded from total cash costs
per ounce of gold produced.
(v) 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 first quarter of 2014 as they
were produced prior to the achievement of commercial
production.
(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 interim
unaudited consolidated statement 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. Accordingly, the calculation of
total cash costs per ounce of gold produced on a co-product
basis does not reflect a reduction in production costs or
smelting, refining and marketing charges associated with
the production and sale of by-product metals. The Company
believes that these generally accepted industry measures
provide a realistic indication of operating performance and
provide useful comparison points between periods. Total
cash costs per ounce of gold produced is intended to
provide information about the cash generating capabilities
of the Company's mining operations. Management also uses
these measures to monitor the performance of the Company's
mining operations. As market prices for gold are quoted on
a per ounce basis, using the total cash costs per ounce of
gold produced on a by-product basis measure allows
management to assess a mine's cash generating capabilities
at various gold prices. Management is aware that these per
ounce measures of performance can be affected by
fluctuations in exchange rates and, in the case of total
cash costs of gold produced on a by-product basis,
by-product metal prices. Management compensates for these
inherent limitations by using these measures in conjunction
with minesite costs per tonne (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.
(vii) Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. 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.
(viii) For the second quarter of 2014 the Canadian Malartic
inventory adjustment includes a fair value increment on
finished goods inventory related to the purchase price
allocation as part of the acquisition of the Canadian
Malartic assets.
(ix) 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 interim
unaudited consolidated statement 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.
* This inventory adjustment reflects production costs
associated with unsold concentrates.
AGNICO EAGLE MINES LIMITED
DEPRECIABLE ASSETS BALANCE BY MINE
(Unaudited)
As at
Depreciable Assets by Mine September 30, 2014
(thousands of United States dollars)
LaRonde mine $ 750,365
Lapa mine 65,236
Goldex mine 189,246
Meadowbank mine 363,368
Canadian Malartic mine 1,029,322
Kittila mine 702,510
Pinos Altos mine 409,682
Creston Mascota deposit at Pinos Altos 53,946
La India mine 409,939
Total $ 3,973,614
SOURCE Agnico Eagle Mines Limited
