Mr. Sean Boyd reports
AGNICO EAGLE REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS - STRONG OPERATIONAL PERFORMANCE YIELDS RECORD ANNUAL PRODUCTION; UPDATED AMARUQ MINERAL RESOURCES AND INITIAL MINERAL RESOURCES DECLARED AT EL BARQUENO AND THE SISAR ZONE AT KITTILA
Agnico Eagle Mines Ltd. had a quarterly net loss of $15.5-million or a net loss of seven cents per share for the fourth quarter of 2015. This result
includes a non-cash foreign currency translation loss on deferred tax
liabilities of $8.6-million (four cents per share), various mark-to-market
adjustment losses of $5.0-million (two cents per share), unrealized losses
on financial instruments of $3.3-million (one cent per share), non-cash
foreign currency translation losses of $1.3-million (one cent per share),
non-cash stock option expense of $3.6-million (two cents per share) and
non-recurring gains of $2.4-million
(one cent). Excluding these items
would result in adjusted net income of $3.9-million (two cents per share)
for the fourth quarter of 2015. In the fourth quarter of 2014, the
company reported a net loss of $21.3-million or a net loss of 10 cents per share (all amounts expressed in U.S. dollars unless otherwise
noted).
Fourth-quarter 2015 cash provided by operating activities was $140.7-million ($112.6-million before changes in non-cash components of
working capital); this compares with cash
provided by operating activities of $164.0-million in the fourth quarter
of 2014 ($151.6-million before changes in non-cash components of
working capital). The decrease in cash flow before changes in working
capital during the current period was largely due to a tax adjustment
in the fourth quarter of 2015.
"In 2015, our operations continued to perform well, which allowed us to
do better on both our production and cost guidance for the fourth
consecutive year. Despite a volatile gold price environment, we
doubled our exploration spending, continued to advance our pipeline of
development projects and reduced our net debt by approximately $190-million," said Sean Boyd, Agnico Eagle's chief executive officer.
"Over the next three years, we are forecasting stable annual production
and costs, which should allow us to continue to invest in our existing
mines, maintain funding levels at our key exploration projects, advance
our development pipeline in Nunavut at a steady and measured pace, and
maintain our history of continuous dividend payments to shareholders,"
added Mr. Boyd.
Fourth-quarter and full-year 2015 highlights include:
-
Guidance exceeded for fourth consecutive year -- Payable production (1) in 2015 was 1,671,340 ounces of gold at total cash costs (2) per ounce on a byproduct basis of $567, compared with guidance of
1.65 million ounces at total cash costs per ounce on a byproduct basis of
$600. All-in sustaining costs per ounce (3)(AISC) on a byproduct basis for 2015 were $810, compared with guidance
of $850 per ounce.
-
Stable production and costs expected through 2018 -- Average annual production from 2016 to 2018 is forecast to be
approximately 1.53 million ounces of gold. Production for 2016 is
forecast to be between 1,525,000 and 1,565,000 ounces of gold with
total cash costs per ounce on a byproduct basis of between $590 and
$630 per ounce. AISC for 2016 is forecast to be between $850 and $890
per ounce. Costs were calculated using a U.S.-to-Canadian-dollar exchange rate of 1.30,
euro-to-U.S.-dollar exchange rate of 1.10 and a U.S.-dollar-to-Mexican-peso exchange rate of 16.
-
Increased gold reserve grades at key mines, significant increase in
year-end 2015 gold resources, slight decline in gold reserves after
mining depletion -- Gold reserve grades increased at the LaRonde, Canadian Malartic,
Goldex and La India mines. Measured and indicated mineral resources
were up 1 per cent, while inferred mineral resources increased by 23 per cent. Mineral
reserves declined by only 5 per cent (900,000 ounces) to 19.1 million
ounces due to mine depletion of approximately 1.8 million ounces.
-
Gold resources increased by 67 per cent at Amaruq -- Inferred mineral resources at Amaruq now total 3.3 million ounces
(16.9 million tonnes grading 6.05 grams per tonne gold). The
2016 phase 1 drill program (approximately 75,000 metres) is now
under way with a focus on expanding and upgrading mineral resources, and
outlining a second open-pit deposit.
-
Initial inferred gold resources declared at El Barqueno and the Sisar
zone at Kittilla --
At El Barqueno, initial
inferred mineral resources are estimated to be 610,000 ounces (19.7
million tonnes grading 0.96 g/t gold), while at Kittila the recently
discovered Sisar Zone contains inferred mineral resources of 650,000 ounces (3.4 million tonnes grading 5.91 g/t gold).
-
Moderate 2016 capital spending preserves production optionality in
Nunavut
-- Expenditures at Amaruq are designed to expand and upgrade the gold
resources, and outline a second source of open-pit ore for the project.
Planned spending levels at Meliadine for 2016 are expected to be
sufficient to keep critical path elements moving forward. However,
decreased spending as compared with previous internal forecasts is
expected to delay the potential project start-up by approximately one
year to 2020.
-
Improved financial flexibility -- In 2015, net debt was reduced by $190-million, further strengthening
the company's investment-grade balance sheet
-
A quarterly dividend of eight cents per share declared.
(1) Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the company whether such products are shipped during the period or held as inventory at the end of the period.
(2) Total cash costs per ounce is a non-generally accepted accounting principles measure. For a reconciliation to production costs, see reconciliation of non-GAAP financial performance measures on-line. Total cash costs per ounce of gold produced is presented on both a byproduct basis (deducting byproduct metal revenues from production costs) and co-product basis (before byproduct metal revenues). Total cash costs per ounce of gold produced on a byproduct basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) for byproduct 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 byproduct basis except that no adjustment for by-product metal revenues is made. For information about the company's total cash costs per ounce on a co-product basis, please see reconciliation of non-GAAP performance measures on-line.
(3) All-in sustaining costs per ounce is a non-GAAP measure and is used to show the full cost of gold production from current operations. For a reconciliation to production costs, see reconciliation of non-GAAP financial performance measures -- reconciliation of production costs to all-in sustaining costs per ounce of gold produced on-line. The company calculates all-in sustaining costs per ounce of gold produced as the aggregate of total cash costs per ounce on a byproduct basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock option expense), and reclamation expenses divided by the amount of gold produced. All-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as all-in sustaining costs per ounce of gold produced on a byproduct basis except that no adjustment for byproduct metal revenues is made. The company's methodology for calculating all-in sustaining costs per ounce may not be similar to the methodology used by other producers that disclose all-in sustaining costs per ounce. The company may change the methodology it uses to calculate all-in sustaining costs per ounce in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council.
New three-year guidance plan -- stable production and cost profile
The company is announcing its production and cost guidance for 2016
through 2018. The company expects average annual production of
approximately 1.53 million ounces of gold over the next three years
with a stable cost profile.
Highlights from the new production and cost guidance for 2016 through
2018 include:
In 2016, payable production is expected to be between 1.525-million and
1.565-million ounces of gold. Total cash costs per ounce on a
by-product basis in 2016 are expected to be between $590 and $630 using
a US$/C$ exchange rate assumption of 1.30. Previous guidance for 2016
(from the February 2015 forecast) was 1.60-million ounces. The change
from previous guidance is primarily due to the expansion of the Vault
pit, which increased overall production from Meadowbank but deferred
ounces from 2016 to 2017 and 2018, thereby extending the mine life
Consolidated AISC for 2016 are expected to be between $850 and $890 per
ounce. In 2017 and 2018, the Company's goal is to reduce AISC below
this range
The estimated production level in 2017 is currently forecast to be
approximately 1.55-million ounces of gold (up from 1.50-million ounces
in its February 2015 forecast), while production in 2018 is forecast to
be approximately 1.50-million ounces of gold. However, the Company is
evaluating potential optimizations and opportunities (none of which
have yet been approved for construction) at a number of existing
operations to further enhance the production profile in 2018 and
beyond. These include:
LaRonde optimization potential
Bousquet Zone 5
Lapa Zone 8 - Upper mine and Zulapa 7 - Deep 2 Zone
Goldex optimization potential
Increased throughput from Deep Zone 1
Potential for accelerated development of Deep Zone 2
Potential development of the Akasaba West satellite deposit
Kittila optimization potential
Upper Rimpi Zone development
Potential development of the new Sisar Zone
Mexican optimization potential
Satellite zones at Pinos Altos and Creston Mascota
Potential to expand reserves at La India
Development Pipeline Expected to Provide Further Production Growth in
2019 and Beyond
The Amaruq and Meliadine projects in Nunavut, the El Barqueno project in
Mexico, the Odyssey Zone and near pit/underground opportunities at
Canadian Malartic (these opportunities are near or below the existing
mining infrastructure) and a possible expansion of the LaRonde mine at
depth have the potential to further add to the Company's production
profile in 2019 and beyond.
Fourth Quarter and Full Year 2015 Financial and Production Highlights
In the fourth quarter of 2015, strong operational performance continued
at the Company's mines. Payable production in the fourth quarter of
2015 was 422,328 ounces of gold compared with 387,535 ounces in the
fourth quarter of 2014. A detailed description of the production and
cost performance of each mine is set out below.
Total cash costs per ounce on a by-product basis for the fourth quarter
of 2015 were $547 compared with $662 per ounce for the fourth quarter
2014. The decrease in total cash costs per ounce on a by-product basis
in the fourth quarter of 2015 is mainly due to higher production levels
at the LaRonde, Canadian Malartic, Meadowbank, Kittila, Pinos Altos and
Creston Mascota mines and favourable foreign exchange rates.
In the fourth quarter of 2015, the average value of the Canadian dollar,
Euro and Mexican Peso were 10 per cent, 7 per cent, and 17 per cent lower, respectively, than
the Company's 2015 currency price assumptions (see February 11, 2015
news release).
For the full year 2015, the Company recorded net income of $24.6
-million, or $0.11 per share. In 2014, Agnico Eagle recorded net income
of $83.0-million, or $0.43 per share.
Compared with the prior year, 2015 earnings were affected by lower
realized gold and silver prices (down 8 per cent and 14 per cent, respectively, period
over period) and increased exploration expenses (up 97 per cent, period over
period). In 2015, exploration drilling yielded a significant increase
in inferred mineral resources at the Amaruq project in Nunavut, an
initial inferred mineral resource at the El Barqueno project in Mexico
and a maiden inferred mineral resource at the Sisar Zone at Kittila.
The decrease in realized gold and silver prices and increase in
exploration expenses were partially offset by higher gold production
and favourable foreign exchange rates.
For the full year 2015, cash provided by operating activities was $616.2
-million ($660.0-million before changes in non-cash components of
working capital). This represents a decrease over 2014, when cash
provided by operating activities totalled $668.3-million ($624.4
-million before changes in non-cash components of working capital). The
decrease was primarily due to increased inventory positions.
For the fourth consecutive year, Agnico Eagle has reported annual gold
production in excess of annual guidance. The Company's payable
production for the full year 2015 was 1,671,340 ounces of gold at total
cash costs per ounce on a by-product basis of $567, compared with
guidance of 1,650,000 ounces at total cash costs per ounce on a
by-product basis of $590 to $610. In 2014, full year production was
1,429,288 ounces at total cash costs per ounce on a by-product basis of
$637.
The improvement in gold production in 2015 was a result of strong
operating results from all of the mines, particularly Canadian Malartic
as a result of the full year inclusion of production, LaRonde as a
result of the higher grades from mining in more gold rich areas of the
lower areas of the mine (below the 215 level), Goldex due to better
productivity, increased throughput at Kittila from the ramp up of the
mill expansion, increased stacking capacity at La India, and higher
grades from Pinos Altos. The decrease in total cash costs per ounce on
a by-product basis in 2015 was primarily due to higher gold production
for 2015, strong cost control initiatives at all of the mines and the
positive effect of foreign exchange rates.
For the full year 2015, the average value of the Canadian dollar, Euro
and Mexican Peso were 5 per cent, 4 per cent, and 18 per cent lower, respectively than the
Company's 2015 currency price assumptions (see February 11, 2015 news
release).
AISC for 2015 on a by-product basis was $810 per ounce, which is below
the previous 2015 guidance between $840 and $860 per ounce. The lower
AISC is primarily due to lower than forecast total cash costs per ounce
on a by-product basis in 2015 and a reduction in sustaining capital
expenditures through a strong emphasis on sustaining capital
expenditure controls.
Quarterly Dividend Declared
Agnico Eagle's Board of Directors has declared a quarterly cash dividend
of $0.08 per common share, payable on March 15, 2016 to shareholders of
record as of March 1, 2016. Agnico Eagle has now declared a cash
dividend every year since 1983.
Expected Dividend Record and Payment Dates for 2016
Record Date Payment Date
March 1* March 16*
June 1 June 15
September 1 September 15
December 1 December 15
*Declared
Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend
reinvestment plan. Dividend Reinvestment Plan
Conference Call Tomorrow
The Company's senior management will host a conference call on Thursday, February 11, 2016
at
11:00 AM (E.S.T.)
to discuss financial and operating results.
Via Webcast:
A live audio webcast of the conference call will be available on the
Company's website www.agnicoeagle.com
.
Via Telephone:
For those preferring to listen by telephone, please dial 416-260-0113 or
toll-free 1-800-524-8950. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 1-647-436-0148 or toll-free 1-888-203-1112, access code
8252919. The conference call replay will expire on March 15, 2016 at
2:00 PM (E.S.T.). The webcast along with presentation slides will be
archived for 180 days
on www.agnicoeagle.com
.
Liquidity - Existing Cash and Credit Facility Provide Flexibility
Cash and cash equivalents and short term investments decreased to $131.6
-million at December 31, 2015, from the September 30, 2015 balance of
$208.1-million partly as a result of using cash to repay outstanding
balances on the Company's credit facility.
The outstanding balance on the Company's $1.2 billion credit facility
was reduced from $350-million at September 30, 2015 to $265-million at
December 31, 2015, resulting in availability under its credit lines of
approximately $935-million, not including the $300-million accordion
facility.
Total capital expenditures made by the Company in the fourth quarter of
2015 were $133.0-million, including $22.2-million at Meliadine, $20.0
-million at Pinos Altos, $18.0-million at Meadowbank, $18.0-million at
Kittila, $16.7-million at LaRonde, $13.6-million at Canadian Malartic
(50 per cent basis), $13.6-million at Goldex, $7.9-million at La India, $2.6
-million at Creston Mascota and $1.0-million at Lapa.
Total capital expenditures for the full year 2015 were $449.8-million
including $67.3-million at LaRonde, $66.7-million at Meliadine, $65.2
-million at Meadowbank, $61.8-million at Pinos Altos, $56.4-million at
Kittila, $48.8-million at Goldex, $43.4-million at Canadian Malartic
(50 per cent basis), $23.4-million at La India, $6.5-million at Lapa and $4.2
-million at Creston Mascota.
Total sustaining capital expenditures made by the Company in the fourth
quarter of 2015 were $90.4-million, including $18.0-million at
Meadowbank, $16.7-million at LaRonde, $15.1-million at Kittila, $13.6
-million at Canadian Malartic (50 per cent basis), $11.4-million at Pinos Altos,
$7.9-million at La India, $4.1-million at Goldex, $2.6-million at
Creston Mascota and $1.0-million at Lapa.
Total sustaining capital expenditures for the full year 2015 were $305.1
-million including $67.3-million at LaRonde, $65.2-million at
Meadowbank, $45.7-million at Kittila, $41.6-million at Canadian
Malartic (50 per cent basis), $35.5-million at Pinos Altos, $23.4-million at La
India, $15.7-million at Goldex, $6.5-million at Lapa, and $4.2-million
at Creston Mascota.
Three-Year Guidance Plan Outlines a Stable Production and Cost Profile
The Company is announcing its production and cost guidance for 2016
through 2018. The Company expects average annual production of
approximately 1.53-million ounces over the next three years with a
stable cost profile.
Various internal projects at current operating mines have the potential
to add incremental production in 2018, while Amaruq, Meliadine and El
Barqueno are expected to add significant production starting in 2019 to
2020. However, the Company continues to take a prudent and measured
approach to development while maintaining financial flexibility.
In 2016, payable production is expected to be between 1.525-million and
1.565-million ounces of gold. Total cash costs per ounce on a
by-product basis in 2016 are expected to be in a range from $590 and
$630 using a US$/C$ exchange rate assumption of 1.30. Previous
production guidance for 2016 (from the February 2015 forecast), was
1.60-million ounces.
The change in production compared with the previous 2016 guidance is
primarily due to the decision to proceed with the expansion of the
Vault pit at Meadowbank (thereby extending the mine life). With the
Vault extension, the production forecast at Meadowbank was reduced in
2016, but increased for 2017 and 2018.
Consolidated AISC for 2016 are expected to be between $850 and $890 per
ounce using a US$/C$ exchange rate assumption of 1.30.
Estimated Payable Gold Production
Northern Business 2015 Actual 2016Forecast* 2017Forecast 2018Forecast
LaRonde 267,921 275,000 320,000 375,000
Canadian Malartic (50 per cent) 285,809 280,000 295,000 305,000
Lapa 90,967 60,000 0 0
Goldex 115,426 105,000 105,000 130,000
Kittila 177,374 200,000 190,000 200,000
Meadowbank 381,804 305,000 320,000 155,000
1,319,301 1,225,000 1,235,000 1,165,000
Southern Business
Pinos Altos 192,974 175,000 175,000 180,000
Creston Mascota 54,703 45,000 40,000 40,000
La India 104,362 100,000 105,000 115,000
352,039 320,000 320,000 335,000
Total Gold Production 1,671,340 1,545,000 1,550,000 1,500,000
Total Cash Costs Per Ounce 2015 Actual 2016 Forecast*
Northern Business
LaRonde $590 $592
Canadian Malartic 596 593
Lapa 590 640
Goldex 538 601
Kittila 709 646
Meadowbank 613 750
609 644
Southern Business
Pinos Altos 387 443
Creston Mascota 430 604
La India 436 470
408 474
Total $567 $608
*midpoint of expected ranges
In 2017, payable production is expected to be approximately 1.55-million
ounces of gold. Previous guidance for 2017 (from the February 2015
forecast), was 1.50-million ounces. The increase in production
compared with the previous 2017 guidance is primarily due to the Vault
extension at Meadowbank, and increased production expected at Goldex
and La India. The increased production levels at Goldex and La India
are largely due to the forecast of improved operating efficiencies at
the mines.asza
In 2018, payable production is expected to be approximately 1.50-million
ounces of gold. However, the Company is evaluating potential
optimizations (none of which have yet been approved for construction)
at a number of existing operations to further enhance the Company's
production profile. These potential optimizations are discussed in
more detail below.
Total cash costs per ounce on a by-product basis for 2017 and 2018 are
expected to be similar to the 2016 forecast. In 2017 and 2018, the
Company's goal is to reduce AISC below the level forecast for 2016.
Continued Capital Discipline in 2016
Based on the Company's budget assumptions. Agnico Eagle expects to fund
this year's capital expenditures, which are estimated to total
approximately $491-million, from operating cash flow.
The estimated capital expenditures for 2016 include approximately $297
-million of sustaining capital at the mines and $179-million on
development projects, as set out in the table below. Additionally,
approximately $15-million is estimated to be spent on capitalized
exploration and approximately $138-million on expensed exploration,
project evaluation and corporate development.
Estimated 2016 CapitalExpendituresSustainingDevelopmentProjectsCapitalizedExplorationExpensedExploration
(millions of $)
Northern Business
LaRonde 62 - 2 2
Lapa - - - 1
Goldex 10 64 3 -
Kittila 56 10 3 9
Meadowbank 41 - - -
Amaruq - - - 43
Meliadine - 96 - -
Canadian Malartic 59 2 - 8
228 172 8 63
Southern Business
Pinos Altos 54 7 2 -
La India 8 - 2 2
Creston Mascota 7 - 1 -
69 7 5 2
Project Eval/Corp Dev 36
Other Exploration 2 37
Total Expenditures 297 179 15 138
2016 Exploration Program and Budget - Main Focus on Amaruq, El Barqueno
and the Sisar Zone at Kittila
A large component of the 2016 exploration program will be focused on the
Amaruq project near the Meadowbank mine in Nunavut, the El Barqueno
project in Jalisco State, Mexico and the Sisar Zone at the Kittila mine
in Finland. These exploration programs are designed to infill and
expand known deposits and test other favourable target areas. The goal
is to delineate mineral reserves and mineral resources that can
supplement the Company's existing production profile.
The 2016 Amaruq drill program commenced earlier this month with two
drills testing targets in the Mammoth Lake area. Eventually the
Company expects to have eight to ten drills operating with a focus on
infilling and expanding the known mineralized zones, testing other
nearby targets with a focus on developing a second source of open pit
ore and further evaluation of regional target areas. The initial 2016
exploration program contemplates approximately 75,000 metres of
drilling with a budget of approximately $19-million. The 2016 program
also includes engineering studies and permitting activities for the
construction of an initial open pit mine and an underground exploration
ramp.
Exploration expenditures at El Barqueno in 2016 are budgeted at $13
-million for mineral resource development, conversion and regional
exploration. There are currently 14 drills on the property working to
define the limits of the known prospects and test new target areas such
as: Olmeca, Zapote, Mixteca, El Rayo, and Pilarica.
El Barqueno's gold-silver deposits could potentially be developed into a
series of open pits utilizing heap leach processing, similar to Creston
Mascota and the La India mines.
In 2016, approximately $5-million will be spent on further deep drilling
at Kittila (which includes the Sisar Zone). The goal of this program
is to expand and upgrade the mineral resources and evaluate the
potential to possibly develop the Sisar Zone as a new mining horizon at
Kittila.
Depreciation Guidance
Agnico Eagle expects its 2016 depreciation and amortization expense to
be in the range of $630 to $660-million.
General & Administrative Cost Guidance
Agnico Eagle expects 2016 general and administration expense to be
between $70 and $80-million, excluding share based compensation. In
2016, share based compensation is expected to be between $20 and $25
-million including stock option expense (which is a non-cash item) of
between $18 and $22-million, which is consistent with previous years.
Please see the supplemental financial data section of the Financial and
Operating Database on the Company's website for additional historical
financial data.
Tax Guidance for 2016
For 2016, the jurisdictional tax rates are expected to be:
Canada - 40 per cent to 50 per cent
Mexico - 35 per cent to 40 per cent
Finland - 20 per cent
The Company's overall tax rate is expected to be between 40 per cent and 45 per cent.
Gold Reserves Decrease Slightly to Approximately 19.1M Ounces, Reserve
Grade Increased at Key Operations
To estimate the 2015 year-end mineral reserves, the Company continued to
use conservative assumptions: $1,100/ounce gold and $16/ounce silver,
US$/C$, euros/US$ and US$/MPX exchange rates of 1.16, 1.20 and 14.00,
respectively for all mines and projects, other than Lapa, Meadowbank,
Creston Mascota and the Santo Nino pit at Pinos Altos. Due to the
shorter mine life of these mining operations, the Company used exchange
rate assumptions for US$/C$ and US$/MXP of 1.30 and 16.00, respectively
(other assumptions unchanged).
At year-end 2015, the Company's proven and probable mineral reserves
(net of 2015 production) totaled 251-million tonnes of ore grading 2.37
g/t gold, containing approximately 19.1-million ounces of gold. This
is a decrease of approximately 0.9-million ounces of gold (5 per cent) compared
with a year earlier. The decrease in the Company's mineral reserves is
largely due to the 1,671,340 ounces of payable gold production in 2015
(1,910,000 ounces of in-situ gold mined), partially offset by
successful conversion of measured and indicated mineral resources to
mineral reserves at several operations.
Highlights from the December 31, 2015 Mineral Reserve Statement include:
Increased mineral reserve grades at LaRonde (5.31 g/t gold versus 5.20
g/t gold), Canadian Malartic (1.08 g/t gold versus 1.06 g/t gold),
Goldex (1.61 g/t gold versus 1.49 g/t gold), and La India (0.90 g/t
gold versus 0.85 g/t gold)
At Goldex, the mineral reserves almost doubled to 668,000 ounces of gold
with an 8 per cent increase in the mineral reserve grade
sax
At the Akasaba project, initial mineral reserves of 141,000 ounces of
gold are reported (4.8-million tonnes grading 0.92 g/t gold and 0.52 per cent
copper)
At La India, the mineral reserves increased by 28 per cent (188,000 ounces) to
867,000 ounces of gold (30.0-million tonnes of ore grading 0.90 g/t
gold and 4.23 g/t silver)
The Company's year-end 2015 gold reserves are set out below:
Gold Mineral Reserves Proven & Probable Average Gold
By Mine Mineral Reserve (000s goldounces)Mineral Reserve Grade (g/t)
2015 2014 Change 2015 2014 Change
Northern Business
LaRonde 3,109 3,432 -323 5.31 5.20 0.11
Canadian Malartic (50 per cent) 3,863 4,329 -466 1.08 1.06 0.02
Lapa 78 170 -92 5.49 5.84 -0.35
Goldex 668 340 328 1.61 1.49 0.12
Akasaba 141 0 141 0.92 -
Kittila 4,353 4,524 -171 4.80 4.93 -0.13
Meadowbank 943 1,168 -225 2.72 3.08 -0.36
Meliadine 3,417 3,335 82 7.32 7.44 -0.12
Subtotal/Average 16,572 17,299 -726 2.57 2.57 -
Southern Business
Pinos Altos 1,459 1,763 -304 2.88 3.01 -0.13
Creston Mascota 176 236 -59 1.30 1.25 0.05
La India 867 679 188 0.90 0.85 0.05
Subtotal/Average 2,502 2,678 -175 1.56 1.70 -0.14
Total Mineral Reserves 19,075 19,976 -902 2.37 2.40 -0.03
Amounts presented in the table and in this news release have been
rounded to the nearest thousand. See "Detailed Mineral Reserve and
Mineral Resource Data (as at December 31, 2015)" set out at the end of
this news release for more details.
In prior years, economic parameters used to model mineral reserves for
all properties were calculated using historic three-year average metals
prices and foreign exchange rates in accordance with the U.S.
Securities and Exchange Commission (the "SEC") guidelines. These
guidelines require the use of prices that reflect current economic
conditions at the time of mineral reserve estimation, which the SEC has
interpreted to mean historic three-year average prices. Given the
current lower commodity price environment, Agnico Eagle has decided to
continue to use more conservative gold and silver prices of $1,100 per
ounce and $16 per ounce, respectively, for the December 2015 mineral
reserve estimates. These prices are well below the three-year historic
gold and silver price averages (from January 1, 2013 to December 31,
2015) of approximately $1,279 per ounce and $19.54 per ounce,
respectively.
The assumptions used for the December 2015 mineral reserves and mineral
resources estimate at all mines and advanced projects reported by the
Company (other than the Canadian Malartic mine) were $1,100 per ounce
gold, $16 per ounce silver, $0.90 per pound zinc, $2.50 per pound
copper and exchange rates of C$1.16 per $1.00, 14.00 Mexican pesos per
$1.00 and $1.20 per euros1.00 for all mines and projects other than the
Lapa and Meadowbank mines in Canada, and the Creston Mascota mine and
Santo Nino pit at the Pinos Altos mine in Mexico; due to the shorter
mine life for the Lapa and Meadowbank mines in Canada, and the Creston
Mascota mine and Santo Nino pit at the Pinos Altos mine in Mexico, the
exchange rates used were C$1.30 per $1.00 and 16.00 Mexican pesos per
$1.00. The Canadian Malartic General Partnership (the "Partnership"),
owned by Agnico Eagle (50 per cent) and Yamana (50 per cent), which owns and operates
the Canadian Malartic mine, has estimated the mine's December 2015
mineral reserves and mineral resources using the following assumptions:
$1,150 per ounce gold, a cut-off grade between 0.30 g/t and 0.33 g/t
gold (depending on the deposit) and an exchange rate of C$1.24 per
$1.00.
Details of the economic parameters used in generating the December 2015
mineral reserves are shown with the "Detailed Mineral Reserve and
Mineral Resource Data (as at December 31, 2015)" tables below.
While the gold price (in U.S. dollars) and currency exchange rates have
changed, the gold price has remained relatively stable over the past 36
months, when reported in the Canadian dollar, Euro or Mexican peso.
The following table shows the changes in gold price (in various
currencies) and exchange rates used in the assumptions over the past
three years, using the exchange rate assumptions of the long-life mines
for the 2015 estimate.
The Company's overall mineral reserve gold grade has decreased slightly
to 2.37 g/t from 2.40 g/t. This is the result of a reduction in the
cut-off grades at each operation because of a slight increase of the
assumed gold price when converted to local currencies (shown in the
table above). Agnico Eagle has one of the highest mineral reserve
grades among its North American peers.
In the Northern Business, gold contained in mineral reserves decreased
by 726,000 ounces (4 per cent) in 2015; during the year this business segment
produced 1,319,301 ounces of gold (1,451,000 ounces of in-situ gold
mined).
The largest mineral reserve increase in the Northern Business was at the
Goldex mine, where the amount contained in mineral reserves increased
by 328,000 ounces of gold (96 per cent), year-over-year, to 668,000 ounces of
gold, with an 8 per cent increase in the mineral reserve grade to 1.61 g/t gold
from 1.49 g/t gold. The increase is largely due to the successful
conversion of mineral resources to mineral reserves, mainly in the D
Zone as well as in the M and E zones. These are the initial D Zone
probable mineral reserves (354,000 ounces of gold in 6.3-million tonnes
of ore grading 1.75 g/t gold), related to the approval of mining the
Deep 1 project announced in the Company's news release dated July 29,
2015. This increase was offset by the 2015 production of 115,426
ounces of gold (123,000 ounces of in-situ gold mined).
At the nearby Akasaba project, initial probable mineral reserves
reported are 141,000 ounces of gold (4.8-million tonnes grading 0.92
g/t gold and 0.52 per cent copper), the result of conversion of indicated
mineral resources to mineral reserves.
Canadian Malartic had the largest decline in mineral reserves; its
mineral reserves decreased by 466,000 ounces of gold, mainly due to
2015 gold production of 285,809 ounces (322,000 ounces of in-situ gold
mined). The remainder of the decline was due to a slight reduction in
the pit shells related to the incorporation of the 5 per cent net smelter
return royalty payable to Osisko Gold Royalties Ltd. and the
termination of the Gouldie open pit. All numbers shown for Canadian
Malartic reflect Agnico Eagle's 50 per cent ownership in the mine.
The decrease in the Meadowbank mine's mineral reserves by mine depletion
was partially offset by the conversion of mineral resources to mineral
reserves for the Vault pit extension, announced in the Company's news
release dated July 29, 2015.
At Kittila, the mining depletion was partially offset by successful
conversion of mineral resources to mineral reserves.
In the Southern Business, the gold contained in mineral reserves
decreased by approximately 175,000 ounces (7 per cent) in 2015. This business
segment had production of 352,039 ounces of gold (459,000 ounces of
in-situ gold mined) in 2015.
There was a large increase at the La India mine where the gold mineral
reserves increased by 28 per cent (188,000 ounces) to 867,000 ounces of gold
(30.0-million tonnes of ore grading 0.90 g/t gold and 4.23 g/t silver)
compared with a year ago. The mine depletion was more than offset by
the addition of new oxide reserves and by conversion of sulphide
mineral resources to mineral reserves in the Main pit, the result of
successful metallurgical investigations in 2015 and field-proven
experience with the North Zone sulphide material.
The 304,000-ounce decline in mineral reserves at Pinos Altos was due to
2015 production of 192,974 ounces of gold (205,000 ounces of in-situ
gold mined) as well as a change to the Cerro Colorado block model based
on information gained from geological mapping and mining development.
It is the Company's goal to maintain its global mineral reserves at
approximately 10 to 15 times its annual gold production rate. The
current mineral reserves are within this range when compared with the
Company's projected annual 2016 production rate.
In addition to gold, Agnico Eagle's proven and probable mineral reserves
include by-product metals of approximately 55-million ounces of silver
at the Pinos Altos, LaRonde, La India and Creston Mascota mines (68.2
-million tonnes of ore grading an average of 25.0 g/t silver), plus
147,927 tonnes of zinc and 43,357 tonnes of copper at the LaRonde mine
(18.2-million tonnes of ore grading 0.81 per cent zinc and 0.24 per cent copper) and
24,557 tonnes of copper at the Akasaba project (4.8-million tonnes
grading 0.52 per cent copper).
At a gold price of $1,200 per ounce (leaving all other assumptions
unchanged), there would be an approximate 5.4 per cent increase in the gold
contained in proven and probable mineral reserves. Conversely, using a
gold price of $1,000 (leaving all other assumptions unchanged), there
would be an estimated 5.4 per cent decrease in the gold contained in proven and
probable mineral reserves.
Measured and Indicated Mineral Resources Grow by Approximately 1 per cent, While
Inferred Mineral Resources Increase by Approximately 23 per cent
Highlights from the December 31, 2015 Mineral Resource Statement
include:
Measured and indicated mineral resources now total approximately 309
-million tonnes of ore grading 1.52 g/t gold, or approximately 15.1
-million ounces of gold. This represents an increase of approximately
1 per cent over the 2014 estimate
Inferred mineral resources total approximately 230-million tonnes of ore
grading 2.24 g/t gold, or approximately 16.5-million ounces of gold.
This represents an increase of approximately 23 per cent over the 2014 estimate
At Amaruq, inferred mineral resources increased by approximately 67 per cent to
3.3-million ounces of gold (16.9-million tonnes grading 6.05 g/t gold)
There was a 43 per cent increase (approximately 533,000 ounces of gold) in
inferred mineral resources at Kittila, which includes initial mineral
resources in the Sisar Zone discovered in 2015
An initial inferred mineral resource of 608,000 ounces of gold and 3.7
-million ounces of silver (19.7-million tonnes grading 0.96 g/t gold and
5.78 g/t silver) was estimated at the El Barqueno project in Mexico
At Canadian Malartic, the approach of tripling the cut-off grade of the
out-pit mineral resources had the effect of removing 343,000 ounces
from the measured and indicated mineral resources, leaving 625,000
ounces (12.8-million tonnes of ore grading 1.51 g/t gold) in measured
and indicated mineral resources. The same approach resulted in removing
344,000 ounces from the inferred mineral resource base, leaving 213,000
ounces (4.5-million tonnes of ore grading 1.47 g/t gold) of inferred
mineral resources. The cut-off grade used for the calculation of
mineral resources at Canadian Malartic is now similar to that used at
Goldex
The Company's measured and indicated mineral resources now total
approximately 309-million tonnes of ore grading 1.52 g/t gold, or 15.1
-million ounces of gold. This represents approximately a 1 per cent increase in
ounces and a slight increase in grade over the December 2014 measured
and indicated mineral resource (see the April 30, 2015 news release for
comparison). Two of the Kirkland Lake properties of CMC (50 per cent owned by
Agnico Eagle) reported increased indicated mineral resources: the Upper
Beaver project increased by 179,000 ounces of gold to 901,000 ounces
(4.4-million tonnes grading 6.36 g/t gold), while the Amalgamated
Kirkland ("AK") project reported initial indicated mineral resources of
133,000 ounces of gold (0.63-million tonnes grading 6.51 g/t gold)
(these amounts represent Agnico Eagle's 50 per cent interest).
Measured and indicated mineral resources at Kittila increased by 198,000
ounces of gold. La India's measured and indicated mineral resources
increased by 143,000 ounces of gold. These increases were offset by
the successful conversion drilling from inferred mineral resources at
several of the operations, particularly Akasaba and Meadowbank.
At Canadian Malartic, the gold in all mineral resource categories
declined as the result of adjusting the approach to the out-pit
material (adjacent to or below the pit outline) throughout the
property. The approach of tripling the cut-off grade of the out-pit
mineral resources had the effect of removing 343,000 ounces from the
measured and indicated mineral resources, leaving 625,000 ounces (12.8
-million tonnes of ore grading 1.51 g/t gold) in measured and indicated
mineral resources. The same approach resulted in removing 344,000
ounces from the inferred mineral resource base, leaving 213,000 ounces
(4.5-million tonnes of ore grading 1.47 g/t gold) of inferred mineral
resources. The cut-off grade used for the calculation of mineral
resources at Canadian Malartic is now similar to that used at Goldex.
All data shown for Canadian Malartic represent Agnico Eagle's 50 per cent
ownership.
The Company's inferred mineral resources now total 230-million tonnes of
ore grading 2.24 g/t, or approximately 16.5-million ounces of gold.
This represents an increase of 23 per cent or approximately 3.1-million ounces
of gold in inferred mineral resources (see the Company's April 30, 2015
news release for comparison).
The largest part of this increase is the significant updated inferred
mineral resource of 16.9-million tonnes grading 6.05 g/t gold
(approximately 3.3-million ounces of gold) at the higher-grade Amaruq
discovery, which is 50 kilometres from the Meadowbank mine in Nunavut.
This is an increase of 1.8-million ounces of gold compared with a year
ago. Approximately 56 per cent of the Amaruq mineral resources are
near-surface.
A portion of the 2015 exploration program at Amaruq involved drill
testing portions of the Whale Tail deposit from the north to the south
to gain a better understanding of the geological controls on the
mineralization. This drilling led to the modelling of thicker, but
slightly lower grade zones of mineralization, which resulted in a
modest decline in the grade of the inferred mineral resources reachable
by open pit.
As at December 31, 2015, an initial inferred mineral resource of 608,000
ounces of gold and 3.7-million ounces of silver (19.7-million tonnes
grading 0.96 g/t gold and 5.78 g/t silver) was estimated at the El
Barqueno project in Mexico. This maiden mineral resource consists of
inferred mineral resources from the Azteca-Zapoteca, Angostura and Pena
de Oro zones based on preliminary open pit designs.
Exploration drilling at depth was responsible for a 43 per cent increase
(approximately 533,000 ounces of gold) in inferred mineral resources at
Kittila, which includes initial mineral resources in the Sisar Zone,
which was discovered in 2015. More details about Sisar can be found in
the Kittila operations section of this news release.
The Upper Beaver and AK properties in the Kirkland Lake area (50 per cent owned
by Agnico Eagle) also reported increased inferred mineral resources,
the result of new drilling programs on these projects. The Upper
Beaver project increased inferred mineral resources by 136,000 ounces
of gold to 659,000 ounces (3.45-million tonnes grading 5.94 g/t gold),
while the AK project reported initial inferred mineral resources of
203,000 ounces of gold (1.19-million tonnes grading 5.32 g/t gold) (in
each case, representing Agnico Eagle's 50 per cent interest).
Successful conversion drilling at depth at the Goldex mine resulted in
approximately 329,000 ounces of gold from the inferred mineral resource
category to mineral reserves.
The distribution of mineral resources by property is set out in the
following table. For full details including tonnage and grade, see the
"Detailed Mineral Reserve and Mineral Resource Data (as at December 31,
2015)" below.
December 31, 2015 Mineral Resources
Measured & Indicated Inferred
Mineral ResourcesMineral Resources
(000 oz gold) (000 oz gold)
Northern Business
LaRonde 767 1,251
Canadian Malartic (50 per cent) 625 213
Lapa 155 302
Goldex 2,075 1,211
Kittila 1,548 1,764
Meadowbank 720 441
Meliadine 3,306 3,552
Amaruq - 3,283
Bousquet/Ellison 969 917
Hammond Reef (50 per cent) 2,250 6
Upper Beaver (Kirkland Lake) (50 per cent) 901 659
Akasaba 54 -
AK (Kirkland Lake) (50 per cent) 133 203
Other 31 420
Subtotal 13,535 14,221
Southern Business
Creston Mascota 70 145
Pinos Altos 655 505
La India 828 1,068
El Barqueno - 608
Subtotal 1,553 2,325
Total Mineral Resources 15,089 16,546
Annual General Meeting
Friday, April 29, 2016 at 11:00 am (E.D.T.)
Sheraton Centre Toronto Hotel (Dominion Ballroom)
123 Queen Street West
Toronto, ON M5H 2M9
Detailed Mineral Reserve and Mineral Resource Data (as at December 31,
2015)
Au Ag Cu Zn Pb AuTonnes
Category and Operation (g/t)(g/t) ( per cent) ( per cent) ( per cent)(000s oz)(000s)
Proven Mineral Reserve
Northern Business
LaRonde (underground) 4.0921.190.270.440.05 454 3,455
Canadian Malartic (open pit) (50 per cent) 0.97 86027,446
Lapa (underground) 5.49 78 444
Goldex (underground) 1.54 15 300
Kittila (open pit) 3.52 20 176
Kittila (underground) 4.43 126 883
Kittila Total Proven 4.28 146 1,059
Meadowbank (open pit) 1.51 58 1,203
Meliadine (open pit) 7.31 8 34
Southern Business
Pinos Altos (open pit) 2.0767.48 11 164
Pinos Altos (underground) 3.1483.46 263 2,605
Pinos Altos Total Proven 3.0882.51 274 2,769
Creston Mascota (open pit) 0.68 8.05 4 187
La India (open pit) 0.6812.69 5 244
Subtotal Proven Mineral Reserve 1.59 1,90337,141
Probable Mineral Reserve
Northern Business
LaRonde (underground) 5.5919.390.230.900.04 2,654 14,765
Canadian Malartic (open pit) (50 per cent) 1.12 3,002 83,320
Lapa (underground) - -
Goldex (underground) 1.61 653 12,644
Akasaba (open pit) 0.92 0.52 141 4,759
Kittila (open pit) 3.64 18 157
Kittila (underground) 4.83 4,189 26,979
Kittila Total Probable 4.82 4,208 27,136
Meadowbank (open pit) 2.87 885 9,586
Meliadine (open pit) 5.00 644 4,001
Meliadine (underground) 8.20 2,766 10,494
Meliadine Total Probable 7.32 3,410 14,495
Southern Business
Pinos Altos (open pit) 2.5471.21 281 3,440
Pinos Altos (underground) 2.9572.83 904 9,527
Pinos Altos Total Probable 2.8472.40 1,185 12,967
Creston Mascota (open pit) 1.3312.21 172 4,026
La India (open pit) 0.90 4.16 862 29,743
Subtotal Probable Mineral Reserve 2.50 17,172213,442
Northern Total Proven and Probable Mineral Reserves 2.57 16,572200,646
Southern Total Proven and Probable Mineral Reserves 1.56 2,502 49,937
Total Proven and Probable Mineral Reserves 2.37 19,075250,583
Au Ag Cu Zn Pb Tonnes
Category and Operation (g/t)(g/t) ( per cent) ( per cent) ( per cent) (000s)
Measured Mineral Resource
Northern Business
Canadian Malartic (open pit) (50 per cent) 1.32 1,752
Lapa (underground) 5.33 49
Goldex (underground) 1.86 12,360
Kittila (underground) 2.58 991
Meadowbank (open pit) 1.01 738
Hammond Reef (open pit) (50 per cent) 0.70 82,831
Southern Business
La India (open pit) 0.25 2.48 8,339
Subtotal Measured Mineral Resource 0.83 107,059
Indicated Mineral Resource
Northern Business
LaRonde (underground) 3.4918.250.240.820.07 6,842
Canadian Malartic (open pit) (50 per cent) 1.55 11,079
Lapa (underground) 4.21 1,086
Goldex (underground) 1.88 22,069
Akasaba 0.60 0.33 2,828
Kittila (open pit) 2.90 72
Kittila (underground) 3.05 14,863
Kittila Total Indicated 3.05 14,935
Meadowbank (open pit) 2.65 3,891
Meadowbank (underground) 4.85 2,341
Meadowbank Total Indicated 3.48 6,232
Meliadine (open pit) 4.24 7,867
Meliadine (underground) 5.38 12,911
Meliadine Total Indicated 4.95 20,778
Bousquet (underground) 2.47 11,380
Ellison (underground) 3.25 646
Hammond Reef (open pit) (50 per cent) 0.57 21,377
AK (underground) (50 per cent) 6.51 634
Upper Beaver (underground) (50 per cent) 6.36 0.36 4,404
Swanson (open pit) 1.93 504
Southern Business
Pinos Altos (open pit) 1.0420.78 224
Pinos Altos (underground) 1.8542.87 10,916
Pinos Altos Total Indicated 1.8342.43 11,141
Creston Mascota (open pit) 0.51 5.14 4,264
La India (open pit) 0.38 0.55 61,950
Subtotal Indicated Mineral Resource 1.88 202,147
Northern Total Measured and Indicated Mineral Resources 1.88 223,513
Southern Total Measured and Indicated Mineral Resources 0.56 85,693
Total Measured & Indicated Mineral Resources 1.52 309,206
Au Ag Cu Zn Pb Tonnes
Category and Operation (g/t)(g/t) ( per cent) ( per cent) ( per cent) (000s)
Inferred Mineral Resource
Northern Business
LaRonde (underground) 4.2615.070.230.900.06 9,142
Canadian Malartic (open pit) (50 per cent) 1.47 4,494
Lapa (open pit Zulapa) 3.14 391
Lapa (underground) 7.78 1,049
Lapa Total Inferred 6.52 1,440
Goldex (underground) 1.53 24,630
Akasaba (open pit) -
Kittila (open pit) 3.89 373
Kittila (underground) 4.66 11,460
Kittila Total Inferred 4.64 11,833
Meadowbank (open pit) 3.33 1,228
Meadowbank (underground) 4.36 2,213
Meadowbank Total Inferred 3.99 3,441
Amaruq (open pit) 5.48 10,365
Amaruq (underground) 6.96 6,515
Amaruq Total Inferred 6.05 16,880
Meliadine (open pit) 5.35 1,054
Meliadine (underground) 7.68 13,656
Meliadine Total Inferred 7.51 14,710
Bousquet (underground) 4.00 5,373
Ellison (underground) 4.03 1,746
Hammond Reef (open pit) (50 per cent) 0.74 251
AK (underground) (50 per cent) 5.32 1,187
Upper Beaver (underground) (50 per cent) 5.94 0.42 3,451
Kuotko, Finland (open pit) 2.89 1,823
Kylmakangas, Finland (underground) 4.1131.11 1,896
Southern Business
Pinos Altos (open pit) 0.9522.38 10,703
Pinos Altos (underground) 2.9668.95 1,877
Pinos Altos Total Inferred 1.2529.33 12,580
Creston Mascota (open pit) 1.0614.16 4,263
La India (open pit) 0.37 90,868
El Barqueno (open pit) 0.96 5.780.19 19,658
Northern Total Inferred Mineral Resource 4.32 102,294
Southern Total Inferred Mineral Resource 0.57 127,368
Total Inferred Mineral Resource 2.24 229,662
Tonnage amounts and contained metal amounts presented in this table have
been rounded to the nearest thousand. Amounts presented in this table
may not add up due to rounding. Mineral reserves are not a sub-set of
mineral resources.
Notes:
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(thousands of United States dollars, except share amounts, IFRS basis)
(Unaudited)
Three Months EndedDecember 31,Year EndedDecember 31,
2015 2014 2015 2014
REVENUES
Revenues from mining operations $ 482,932 $ 503,090 $ 1,985,432$1,896,766
COSTS, EXPENSES AND OTHER INCOME
Production (i) 229,819 287,317 995,295 1,004,559
Exploration and corporate development 26,001 14,436 110,353 56,002
Amortization of property, plant and mine development 157,129 139,095 608,609 433,628
General and administrative 22,505 25,995 96,973 118,771
Impairment loss on available-for-sale securities 3,929 12,882 12,035 15,763
Finance costs 17,887 18,144 75,228 73,393
Loss on derivative financial instruments 3,318 2,512 19,608 6,156
Gain on sale of available-for-sale securities (1) (263) (24,600) (5,635)
Environmental remediation 1,666 (949) 2,003 8,214
Foreign currency translation loss (gain) 1,281 6,951 (4,728) 3,781
Other expenses (income) 377 (5,318) 12,028 (7,004)
Income before income and mining taxes 19,021 2,288 82,628 189,138
Income and mining taxes expense 34,558 23,571 58,045 106,168
Net income (loss) for the period $ (15,537) $ (21,283) $ 24,583$ 82,970
Net income (loss) per share - basic $ (0.07) $ (0.10) $ 0.11$ 0.43
Net income (loss) per share - diluted $ (0.07) $ (0.12) $ 0.11$ 0.39
(i) Exclusive of amortization, which is shown separately.
We seek Safe Harbor.
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