AGNICO EAGLE MINES LIMITED 
Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, July 29, 2015 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $10.1 million, or net income of $0.05 per share for the second quarter of 2015. This result includes non-recurring losses of $12.9 million ($0.06 per share), unrealized gains on financial instruments of $9.4 million ($0.04 per share), non-cash foreign currency translation losses of $4.8 million ($0.02 per share), non-cash stock option expense of $4.1 million ($0.02 per share), a non-cash foreign currency translation gain on deferred tax liabilities of $3.2 million ($0.01 per share) and various mark-to-market and other adjustment gains of $0.8 million ($0.01 per share). Excluding these items would result in adjusted net income of $18.5 million or adjusted net income of $0.09 per share for the second quarter of 2015. In the second quarter of 2014, the Company reported net income of $22.2 million or net income of $0.12 per share.
For the first six months of 2015, the Company reported net income of $38.8 million, or $0.18 per share. This compares with the first six months of 2014 when net income was $119.3 million, or $0.66 per share. Financial results in the 2015 period were negatively impacted by lower gold prices (approximately 8% lower) and lower by-product metals revenues.
Second quarter 2015 cash provided by operating activities was $188.3 million ($152.8 million before changes in non-cash components of working capital). This compares to cash provided by operating activities of $182.7 million in the second quarter of 2014 ($136.5 million before changes in non-cash components of working capital). The increase in cash provided by operating activities before changes in working capital during the current period was mainly due to an increase of 24% in gold production.
For the first six months of 2015, cash provided by operating activities was $331.8 million ($329.6 million before changes in non-cash components of working capital), as compared with the first half of 2014 when cash provided by operating activities was $433.1 million ($343.6 million before changes in non-cash components of working capital). The decrease in cash provided by operating activities before changes in working capital during the period was mainly due to a decrease of 8% in gold prices compared to the 2014 period, which more than offset a 17% increase in gold production.
"With continued strong operating performance, favourable local currency foreign exchange rates, and near-term opportunities to increase production at several of our mines, we remain well-positioned to manage the current price volatility in the gold market", said Sean Boyd, Agnico Eagle's Chief Executive Officer. "In these challenging times, we will continue to focus on reducing costs and we will remain measured in our approach to managing and growing our business", added Mr. Boyd.
Second Quarter 2015 highlights include:
-- Quarterly gold production- Payable gold production1 in Q2 2015
was 403,678 ounces of gold at total cash costs2 per ounce on a
by-product basis of $601 and all-in sustaining costs3 ("AISC")
on a by-product basis of $864 per ounce
-- Second consecutive record quarter of precious metal production
from Mexican operations - In the second quarter of 2015,
payable gold and silver production from Mexican operations was
92,056 ounces and 685,869 ounces, respectively. Total cash
costs per ounce of gold on a by-product basis averaged $394
-- 2015 production guidance maintained and cost forecasts reduced-
Expected gold production for 2015 is maintained at
approximately 1.6 million ounces with total cash costs on a
by-product basis of $600 to $620 per ounce (previously $610 to
$630) and AISC of approximately $870 to $890 per ounce
(previously $880 to $900)
-- Vault Extension and Goldex Deep 1 approved for mining; 2015
capital for both projects increased by a total of approximately
$36 million -The Vault extension is expected to reduce the
potential production gap between the end of production at
Meadowbank and the start of production at Amaruq (not yet
approved for construction) by approximately one year. Goldex
Deep 1 adds approximately seven years of production at
approximately 100,000 ounces of gold per year
-- Drilling at Amaruq's Whale Tail deposit confirms grades and
thicknesses; mineralization extended to depth- Highlights
include: 13.2 grams per tonne ("g/t") gold over 14.3 metres at
133 metres depth, and 13.9 g/t gold over 11.0 metres at 194
metres depth. The deepest intercept to date on the property
yielded 8.8 g/t gold over 6.0 metres at 568 metres depth,
almost 200 metres deeper than previous intercepts
-- Continued focus on debt reduction- In Q2 2015, $25 million was
repaid under the Company's credit facility, C$20 million
(reflecting the Company's 50% interest) was repaid under the
Canadian Malartic General Partnership (the "Partnership")
secured loan facility, and the Canadian Malartic senior
unsecured convertible debentures (C$37.5 million, reflecting
the Company's 50% interest) were fully converted by the
holders. As a result, the Company's indebtedness was reduced
by approximately $70 million
-- A quarterly dividend of $0.08 per share was declared
____________________________________________
1 Payable production of a mineral means the quantity of mineral
produced during a period contained in products that are sold by the
Company, whether such products are shipped during the period or held
as inventory at the end of the period.
2 Total cash costs per ounce is a non-GAAP measure. For a
reconciliation to production costs, see "Reconciliation of Non-GAAP
Financial Performance Measures below. Total cash costs per ounce of
gold produced is calculated on both a by-product basis (deducting
by-product metal revenues from production costs) and co-product basis
(before by-product metal revenues). Total cash costs per ounce of
gold produced on a by-product basis is calculated by adjusting
production costs as recorded in the consolidated statements of income
(loss) for by-product revenues, unsold concentrate inventory
production costs, smelting, refining and marketing charges and other
adjustments, and then dividing by the number of ounces of gold
produced. Total cash costs per ounce of gold produced on a co-product
basis is calculated in the same manner as total cash costs per ounce
of gold produced on a by-product basis except that no adjustment for
by-product metal revenues is made. See "Note Regarding Certain
Measures of Performance". For information about the Company's total
cash costs per ounce on a co-product basis please see "Reconciliation
of Non-GAAP Performance Measures".
3All-in-sustaining costs is a non-GAAP measure and is used to show the
full cost of gold production from current operations. For a
reconciliation to production costs, see "Reconciliation of Non-GAAP
Financial Performance Measures - Reconciliation of Production Costs to
All-In Sustaining Costs" below. 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 option expense) and reclamation expenses
divided by the amount of gold produced. Reference to all-in sustaining
costs per ounce of gold produced in this news release is calculated on
a by-product basis as described above. All-in sustaining 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 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.
Second Quarter Financial and Production Highlights
In the second quarter of 2015, strong operational performance continued at the Company's mines.
Payable gold production in the second quarter of 2015 was 403,678 ounces compared to 326,059 ounces in the second quarter of 2014. The higher level of production in the 2015 period was primarily due to the inclusion of a full quarter of production from Canadian Malartic, increased throughput levels at Goldex, increased mill capacity at Kittila, higher grades at LaRonde and Pinos Altos and increased heap leach stacking at La India and Creston Mascota. 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 second quarter of 2015 were lower at $601 versus $631 per ounce for the second quarter 2014. The reduction in total cash costs per ounce on a by-product basis in the second quarter of 2015 was a result of higher silver production, higher gold production at most of the Company's mines and weaker local currencies compared to the second quarter of 2014.
In the second quarter of 2015 the value of the Canadian dollar, Euro and Mexican Peso were 1%, 2%, and 17% lower, respectively than the Company's 2015 currency price assumptions (see February 11, 2015 news release).
Payable gold production for the first half of 2015 was 807,888 ounces, compared to payable gold production of 692,480 ounces in the comparable 2014 period (which included only 11,878 ounces from Canadian Malartic for production from June 16 to June 30, 2014).
For the first half of 2015, total cash costs on a by-product basis were $595 per ounce. This compares with $582 per ounce on a by-product basis in the first half of 2014. The higher costs in the 2015 period are due to the increased costs at Meadowbank when compared to the 2014 period. In 2014, Meadowbank had record production and lower costs as a result of processing higher grade ore from the Goose and reserve grade ore from the Portage deposits.
AISC for the second quarter of 2015 was lower at $864 versus $1,003 per ounce for the second quarter 2014. The lower AISC is primarily due to higher production, lower than forecast total cash costs per ounce on a by-product basis, lower G&A expenditures and timing of capital expenditures.
For the first half of 2015, AISC was $835 versus $890 per ounce for the 2014 period. The lower AISC in the 2015 period are due to the same reasons set out above.
Cash Position Remains Strong; Debt Levels Reduced; and Capex Increased to Fund Near-term Production Opportunities
Cash and cash equivalents and short term investments increased to $183.9 million at June 30, 2015, from the March 31, 2015 balance of $172.1 million.
The outstanding balance on the Company's $1.2 billion credit facility was reduced from $400 million at March 31, 2015 to $375 million at June 30, 2015. This results in available credit lines of approximately $825 million, as well as the $300 million accordion feature.
As of June 30, 2015, C$20 million (reflecting the Company's 50% interest) was repaid under the Canadian Malartic General Partnership secured loan facility. Also, the Canadian Malartic convertible debentures with principal outstanding of C$37.5 million (reflecting the Company's 50% interest), assumed with the joint acquisition of Osisko Mining Corporation ("Osisko") on June 16, 2014, was fully converted by the holders.
Total capital expenditures made by the Company in the second quarter of 2015 were $111.5 million, including $18.9 million at LaRonde, $18.2 million at Meadowbank, $17.2 million at Pinos Altos, $13.9 million at Kittila, $12.0 million at Goldex, $11.4 million at Meliadine, $10.7 million at Canadian Malartic (50% basis), $6.2 million at La India, $1.7 million at Lapa and $0.2 million at Creston Mascota.
Total capital expenditures for the first six months of 2015 were $194.4 million including $35.5 million at LaRonde, $29.3 million at Pinos Altos, $27.7 million at Meadowbank, $24.3 million at Kittila, $21.9 million at Goldex, $21.4 million at Canadian Malartic (50% basis), $19.8 million at Meliadine, $8.5 million at La India, $4.4 million at Lapa and $0.5 million at Creston Mascota.
Total sustaining capital expenditures made by the Company in the second quarter were $81.9 million, including $18.9 million at LaRonde, $18.2 million at Meadowbank, $11.1 million at Kittila, $10.6 million at Canadian Malartic (50% basis), $10.3 million at Pinos Altos, $6.2 million at La India, $4.7 million at Goldex, $1.7 million at Lapa, and $0.2 million at Creston Mascota.
Total sustaining capital expenditures for the first six months of 2015 were $142.8 million including $35.5 million at LaRonde, $27.7 million at Meadowbank, $20.1 million at Kittila, $19.8 million at Canadian Malartic (50% basis), $17.3 million at Pinos Altos, $9.0 million at Goldex, $8.5 million at La India, $4.4 million at Lapa, and $0.5 million at Creston Mascota.
For 2015, capital expenditures are expected to total approximately $539 million, representing a $58 million increase from the previously announced figure. The increase is primarily due to additional expenditures for the development of Goldex Deep 1, the Vault pit extension, expansion of the existing Meliadine surface and underground infrastructure, and the sealift of additional equipment for the 2016 Meliadine work program.
Based on the exploration success in the first six months of the year, the 2015 expensed exploration budget has been increased by approximately $20 million to $114 million. The additional expenditure includes a phase two exploration program at the Amaruq project; an initial exploration program at the Barsele project in Sweden; a slight increase in exploration spending at the Pandora property and the Odyssey deposits; and additional drilling on the new parallel zone at Kittila. Expenditures at Amaruq and El Barqueno could potentially increase further, based on exploration results.
Revised 2015 Guidance - Production Maintained, Costs Lowered, Depreciation Increased
Production guidance for 2015 is maintained at approximately 1.6 million ounces of gold with total cash costs on a by-product basis of $600 to $620 per ounce (previously $610 to $630) and AISC of approximately $870 to $890 per ounce (previously $880 to $900).
The Company expects depreciation and amortization expense to be in the range of $575 to $600 million. Previous guidance was $550 to $575 million. The increase is primarily due to the finalization of the purchase price allocation associated with the Canadian Malartic acquisition.
Second Quarter 2015 Results Conference Call and Webcast Tomorrow
The Company's senior management will host a conference call on Thursday, July 30, 2015 at 11:00 AM (E.D.T.) to discuss financial results and provide an update of the Company's operating activities.
Via Webcast:
A live audio webcast of the meeting will be available on the Company's website www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 1-416-260-0113 or Toll-free 1-800-524-8950. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 1-647-436-0148 or Toll-free 1-888-203-1112, access code 6325908. The conference call replay will expire on August 30, 2015.
The webcast, along with presentation slides, will be archived for 180 days on www.agnicoeagle.com.
NORTHERN BUSINESS OPERATING REVIEW
ABITIBI REGION, QUEBEC
Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in three mines (LaRonde, Goldex and Lapa) and a 50% interest in the Canadian Malartic mine. These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.
LaRonde Mine - Gold Production Steadily Increasing, Commissioning of Coarse Ore Conveyor on Track for Late Q3 2015
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.
The LaRonde mill processed an average of 6,242 tonnes per day ("tpd") in the second quarter of 2015, compared with an average of 6,197 tpd in the corresponding period of 2014. Minesite costs per tonne(4) were approximately C$99 in the second quarter of 2015, higher than the C$96 per tonne experienced in the second quarter of 2014. The increased costs in the 2015 period were primarily due to higher underground development, mill maintenance and site administration costs compared to the prior-year period.
For the first six months of 2015, the LaRonde mill processed an average of 6,223 tpd, compared to 6,194 tpd in the first six months of 2014. Minesite costs per tonne were approximately C$101, compared to C$96 per tonne in the first six months of 2014. Costs were higher due to the reasons described above in spite of the higher throughput.
LaRonde's total cash costs per ounce on a by-product basis were $613 in the second quarter of 2015 on payable production of 64,007 ounces of gold. This compares with the second quarter of 2014 when total cash costs per ounce on a by-product basis were $732 on production of 48,494 ounces of gold. Costs in the 2015 period were positively impacted by higher gold grades and favourable foreign exchange rates.
In the first six months of 2015, LaRonde produced 122,900 ounces of gold at total cash costs per ounce of $656 on a by-product basis. This is in contrast with the first six months of 2014 when the mine produced 107,846 ounces of gold at total cash costs per ounce of $645 on a by-product basis. Production in the 2015 period was positively impacted by higher grades. Costs were lower in the 2014 period due to higher by-product production and revenues.
During the quarter, work continued on the installation of the coarse ore conveyor system that will extend from the 293 level to the crusher on the 280 level. Installation of the new conveyor and the connection of an internal ramp at the 281 level are expected to be completed by the end of the third quarter of 2015. These two infrastructure components should help to improve mining flexibility and reduce congestion in the deeper portions of the mine.
Studies are continuing to assess the potential to extend the mineral reserve base and carry out mining activities between the 311 and 371 levels at LaRonde. At present, the mineral reserve base extends to the 311 level, which is 3.1 kilometres below the surface. In 2014, conversion drilling added approximately 444,000 ounces of gold (2.6 million tonnes at 5.33 g/t gold) to the indicated mineral resources between the 311 and 341 levels.
Drilling is ongoing to further expand the known mineral resource between the 311 and 341 levels. Additional holes are also being drilled to evaluate the extent of the mineralization down to the 371 level (a depth of 3.7 km below the surface).
_________________________________
4 Minesite costs per tonne is a non-GAAP measure. For a reconciliation
of this measure to production costs as reported in the financial
statements, see "Reconciliation of Non-GAAP Financial Performance
Measures - Reconciliation of Production Costs to Minesite Costs per
Tonne by Mine" below. See also "Note Regarding Certain Measures of
Performance".
Canadian Malartic Mine - Mining Productivity Improves, North Zone Mining Rate Increases in Q2 2015
In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired all of the issued and outstanding common shares of Osisko and created the Canadian Malartic General Partnership (the "Partnership") that owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee. Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership.
During the second quarter of 2015, the Canadian Malartic mill processed an average of 50,705 tpd (on a 100% basis). This period included a five day planned shutdown for maintenance to the crushing and grinding circuit, and two days of unplanned maintenance on the conveying system, which reduced mill availability. Comparisons with the 2014 period are not relevant given that the Partnership only took control of the operations on June 16, 2014. Minesite costs per tonne were approximately C$20 (C$23 including royalties), which was in line with guidance. The average stripping ratio in the second quarter of 2015 was 2.64 to 1.0.
For the first six months of 2015, the Canadian Malartic mill processed an average of 51,343 tpd. Minesite costs per tonne were approximately C$20 (C$23 including royalties).
For the second quarter of 2015, Agnico Eagle's share of production at the Canadian Malartic mine was 68,441 ounces of gold at total cash costs per ounce of $609 on a by-product basis.
In the first six months of 2015, Agnico Eagle's share of production at the Canadian Malartic mine was 136,334 ounces of gold at total cash costs per ounce of $621 on a by-product basis.
Since acquiring the mine in June 2014, the Partnership has been working on several initiatives to optimize the operations. Current opportunities include:
-- Improving SAG mill liners in an attempt to reduce the number of
planned shutdowns to three per year (currently four per year)
-- Increasing gyratory crusher availability by redirecting ore
containing scrap steel to a separate crusher
-- Maintaining mining throughput levels at two million tonnes per
month in the North zone (which contains higher grades)
-- Waste rock backfilling of the Gouldie pit, to reduce haulage
distances and noise
In the first quarter of 2015, the Partnership reported that discussions were ongoing with permitting authorities regarding pre-crushing activities at Canadian Malartic. In the second quarter of 2015, discussions about improving the efficiency and environmental performance of the existing mobile crusher took place with the Quebec Ministry of Sustainable Development, Environment, Wildlife and Parks. The Ministry is reviewing this concept and an application for a Certificate of Authorization is being prepared for possible submission later this year. At this point, milling levels are expected to be approximately 53,000 tpd through 2016. For the full year 2015, Agnico Eagle's estimated share of gold production from Canadian Malartic remains unchanged at 280,000 ounces.
Permitting activities for the Barnat Extension and deviation of Highway 117 are continuing. An Environmental Impact Assessment ("EIA") was submitted in February 2015, and questions were received from permitting authorities in April and May 2015. Answers to the first round of questions are expected to be submitted by the end of August 2015. The process remains on schedule for receipt of the necessary permits in November 2016.
In March 2015, the Partnership increased its interest in the Malartic CHL property to 100% by acquiring the remaining 30% interest from Abitibi Royalties Inc. (RZZ:TSX-V). The Malartic CHL property adjoins the Canadian Malartic mine to the east and hosts part of the Odyssey North discovery. Drilling continues on the Odyssey North and Odyssey South zones with data currently being compiled and interpreted.
Exploration Update on Pandora and Kirkland Lake Projects
Canadian Malartic Corporation, a company in which each of Agnico Eagle and Yamana has an indirect 50% interest, is exploring, among other things, a portfolio of properties in the Kirkland Lake area of Ontario and the Pandora property in the Abitibi region of Quebec.
At the Upper Beaver property in Kirkland Lake, a mineral resource update is underway and the Partnership will decide the best alternative to develop the property.
At Pandora, underground development on the 101-W exploration drift from the adjacent Lapa mine commenced in February 2015 and approximately 285 metres of drifting was completed during the second quarter of 2015. Approximately 433 metres of development has been completed year to date, and for the full year, approximately 940 metres of development is planned.
In mid-June 2015, exploration drilling resumed from the 101-W drift and approximately 7,400 metres of underground drilling is planned in 2015 to test for extensions to the Branch zone and C zone on the Pandora property.
Lapa - Zulapa Z7 Zone Continues to Yield Higher Grades and Recoveries
The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.
The Lapa circuit, located at the LaRonde mill, processed an average of 1,387 tpd in the second quarter of 2015. This compares with an average of 1,789 tpd in the second quarter of 2014. Throughput in the 2015 period was lower because of downtime related to the discovery of fatigue cracks in the feed head of the Lapa ball mill. This component is being repaired and ore is currently being processed through the old LaRonde copper regrind circuit. As a result, throughput levels are expected to be lower than normal through at least the middle of the third quarter of 2015. Excess ore is currently being stockpiled and there is sufficient mill capacity that should allow the Company to meet its annual throughput rate (tonnes and ounces) over the balance of 2015.
Minesite costs per tonne were C$126 in the second quarter of 2015, compared to the C$105 in the second quarter of 2014. Costs in the 2015 period were higher due to lower throughput compared to the same period in 2014.
For the first six months of 2015, the Lapa mill processed an average of 1,538 tpd, compared to 1,769 tpd in the first six months of 2014. Minesite costs per tonne were approximately C$122, above the C$107 per tonne in the first six months of 2014 due to reasons explained above.
Payable production in the second quarter of 2015 was 19,450 ounces of gold at total cash costs per ounce on a by-product basis of $678. This compares with the second quarter of 2014, when production was 18,821 ounces of gold at total cash costs per ounce on a by-product basis of $832. In the 2015 period, production was higher and costs were lower due to higher gold grades, better recoveries and favourable foreign exchange rates.
In the first six months of 2015, Lapa produced 45,370 ounces of gold at total cash costs per ounce of $615 on a by-product basis. This compares to the first six months of 2014 when the mine produced 42,230 ounces of gold at total cash costs per ounce of $738 on a by-product basis. The higher production and lower costs in the 2015 period are due to the reasons outlined above.
At Lapa, 2015 is the last full year of production based on the current life of mine plan. In 2016, production is expected to exhibit a decline from the current level. Additional exploration drilling is ongoing in the Zulapa Z7 zone at depth and, if successful, could extend Lapa's mine life.
Goldex - Deep 1 Project Approved for Mining; Production Expected to Extend Through 2024
The 100% owned Goldex mine in northwestern Quebec began operation in 2008 but mining operations in the original orebody, the Goldex Extension Zone ("GEZ") were suspended in October 2011 (see October 19, 2011 news release). In July 2012, the M and E satellite zones were approved for development. Mining operations resumed on the M and E satellite zones in September 2013. Mining operations at GEZ remain suspended.
The Goldex mill processed an average of 6,640 tpd in the second quarter of 2015. This compares with an average of 5,692 tpd in the second quarter of 2014. The higher throughput in the 2015 period was due to more mature mining fronts and productivity improvements compared to the 2014 period.
Minesite costs per tonne were approximately C$34 in the second quarter of 2015, which was essentially unchanged from the C$34 per tonne experienced in the second quarter of 2014.
For the first six months of 2015, the Goldex mill processed an average of 6,468 tpd, compared to 5,544 tpd in the first six months of 2014. Minesite costs per tonne were approximately C$34, the same as the first six months of 2014.
Payable gold production in the second quarter of 2015 was 26,462 ounces of gold at total cash costs per ounce on a by-product basis of $633. This compares with the second quarter of 2014, when production was 23,929 ounces of gold at total cash costs per ounce on a by-product basis of $670. The decrease in total cash costs in the 2015 period was largely a result of increased production due to higher tonnage and favourable foreign exchange rates compared to the 2014 period.
In the first six months of 2015, Goldex produced 55,712 ounces of gold at total cash costs per ounce of $585 on a by-product basis. This compares to the first six months of 2014 when the mine produced 43,359 ounces of gold at total cash costs per ounce of $711 on a by-product basis. The higher production and lower costs in the 2015 period are due to the same reasons as outlined above.
Following the completion of a positive internal technical study, the Goldex Deep 1 Project was approved for production by Agnico Eagle's Board of Directors.
The study focused on mining the lower part of the Dx zone and the top of D zone (see Goldex composite longitudinal section below) from a depth of 850 metres to 1,200 metres (Level 120). The Company plans to undertake development from the current Goldex infrastructure, with existing equipment and personnel. The planned mining method is long-hole stoping with cemented paste backfill, which is the same method currently used at Goldex.
Mineralogy in the D and Dx zones is very similar to what is currently being mined in M, M2, M5, E and E2 zones. Metallurgical testing of both the D and Dx zones has indicated that recoveries for the Deep 1 project are expected to be approximately 91.5%, which is in line with current recoveries at Goldex. No changes to the processing plant are anticipated. Tailings deposition at the Manitou site is expected to continue, as the site has ample capacity.
The mining rate for Deep 1 is expected to be approximately 6,000 tpd, which would allow for the potential processing of up to 2,000 tpd of ore from other sources such as the Akasaba West Project. The average grade milled is expected to be approximately 1.69 g/t gold and the minesite costs per tonne are estimated to be approximately C$35 to C$40.
Gold production is expected to average in excess of 100,000 oz per year from 2018 through 2024 at an average total cash cost per ounce on a by-product basis of between $610 and $630. Development capital is forecast to be approximately $135 to $140 million, and sustaining capital is estimated at approximately $60 to $70 million per year. The development capital includes the cost of the installation of an automated conveyor system.
The Dx zone contains approximately 51,000 ounces of gold in indicated mineral resources (0.7 million tonnes at 2.12 g/t gold) and approximately 172,000 ounces of gold in inferred mineral resources (3.7 million tonnes at 1.46 g/t gold). The D zone contains approximately 727,000 ounces of gold in indicated mineral resources (10.2 million tonnes at 2.21 g/t gold) and approximately 709,000 ounces of gold in inferred mineral resources (12.9 million tonnes at 1.70 g/t gold). Additional details on the Goldex resources are presented in the table below:
Category Gold Gold (oz) Tonnes
(g/t) (x000) (x000)
Measured Resources
(Underground)
GEZ 1.86 739 12,360
Total Measured 1.86 739 12,360
Resources
Indicated Resources
(Underground)
GEZ 1.60 401 7,807
Dx zone 2.12 51 744
D zone 2.21 727 10,228
Other zones* 2.09 176 2,630
Total Indicated 1.97 1,356 21,409
Resources
Measured and 1.93 2,095 33,769
Indicated Resources
Inferred Resources
(Underground)
GEZ 1.80 146 2,529
Dx zone 1.46 172 3,667
D zone 1.70 709 12,943
Other zones* 1.58 513 10,102
Total Inferred 1.64 1,540 29,241
Resources
* "Other zones" includes M, E, P, S and South zones
The internal technical study was carried out using a gold price assumption of $1,200 per ounce and an US$/C$ exchange rate of 1.20.
Goldex composite longitudinal section
The advancement of the Deep 1 project at Goldex also unlocks significant upside potential through:
-- Potential for additional mineral resource conversion in Deep 1
-- Potential for mining at Deep 2 (below Level 120)
-- Potential to develop the South Zone (a narrow high-grade zone
accessible via Deep 1 infrastructure)
-- Potential development of the Akasaba West deposit
An Environmental Impact Assessment ("EIA") on the Akasaba West deposit is expected to be submitted later in the third quarter of 2015, which will allow the environmental review process to commence. The Company anticipates the EIA approval in the fall of 2017.
Based on an internal technical study, the Akasaba West deposit has the potential to produce approximately 20,000 to 25,000 ounces of gold and 8.5 to 10.0 million pounds of copper per year for four to five years. The average total cash costs per ounce on a by-product basis is estimated to be approximately $400. Capital costs (including closure costs) are estimated at approximately C$50 million.
At Goldex, 2015 capital spending guidance has been increased by $9 million. The higher planned capital expenditure is due to:
-- Use of a contractor to complete the near surface ramp access to
the M3 and M4 zones
-- Acceleration of the Deep 1 underground development program
-- Accelerated mineral resource conversion drilling at Deep 1
FINLAND AND SWEDEN
Agnico Eagle's Kittila mine in Finland is the largest primary gold producer in Europe, and hosts the Company's largest mineral reserve base. Exploration activities continue to expand the mineral resource base and studies are underway to evaluate the potential to cost-effectively increase production.
Kittila - Gold Production Increases, Unit Costs Decline, Drilling Encounters New Parallel Zone in Close Proximity to Main Rimpi Ramp
The 100% owned Kittila mine in northern Finland achieved commercial production in 2009.
The Kittila mill processed an average of 4,170 tpd in the second quarter of 2015 compared to the 2,720 tpd in the second quarter of 2014. The higher throughput in the 2015 period is a result of the mill expansion completed in the fourth quarter of 2014.
Minesite costs per tonne at Kittila were approximately EUR75 in the second quarter of 2015, compared to EUR81 in the second quarter of 2014. Costs decreased in the second quarter of 2015 due to the increased throughput when compared with the 2014 period.
For the first six months of 2015, the Kittila mill processed an average of 4,004 tpd, compared to 3,065 tpd in the first six months of 2014. Minesite costs per tonne were approximately EUR76 in the first six months of 2015, the same as the EUR76 per tonne in the comparable 2014 period.
Since the expansion, the mill has shown potential to operate in excess of 4,000 tpd and efforts are ongoing to optimize throughput and recovery rates; in conjunction, the Company is also working to optimize underground mining rates and evaluate the potential to develop new mining areas. Unit costs are expected to improve once steady state operations are achieved.
Second quarter 2015 payable gold production at Kittila was 41,986 ounces with a total cash costs per ounce on a by-product basis of $776. In the second quarter of 2014, the mine produced 31,830 ounces at total cash costs per ounce on a by-product basis of $862. The higher production in the 2015 period is a result of the increased mill capacity compared to the 2014 period. Costs decreased in the second quarter of 2015 primarily due to increased production, lower energy costs and a favourable foreign exchange rate.
In the first six months of 2015, Kittila produced 86,640 ounces of gold at a total cash cost per ounce of $727 on a by-product basis. This is in contrast to the first six months of 2014, when the mine produced 70,382 ounces of gold at total cash costs per ounce of $825 on a by-product basis. The lower cash costs in 2015 are mainly due to reasons described above.
Previous drilling from the surface at Kittila has outlined a significant zone of mineralization at Rimpi with potentially wider widths and better grades than those currently being mined. The main underground ramp at Kittila is being extended to reach the Rimpi Zone and a new surface ramp is also being developed to access the shallower portions of the Rimpi deposit. The surface ramp had advanced 715 metres to 119 metres depth by the end of June.
In April, the Company announced that drilling had encountered a new parallel lens of mineralization approximately 1.3 kilometres below surface and 150 metres east of the main Kittila ore zone, within the sheared and altered structure that hosts the known Kittila deposits (see April 30, 2015 press release). A recent hole in this area (ROU15-603) yielded 5.2 g/t gold (uncapped) over 13.3 metres (estimated true width) at approximately 975 metres below surface. Further details on this intercept and the drill hole coordinates are set out in the tables below.
This latest intersection is located approximately 150 metres below the main exploration ramp being driven towards Rimpi and opens up the possibility that the up-dip extension of the new mineralized zone may be present at a similar elevation east of the ramp. This new lens could provide additional tonnage should further drilling confirm the continuity of the mineralization. Additional drilling is underway, and a second underground deep drill rig is expected to start operating in the fourth quarter 2015 to test for extensions of the new parallel zone.
Recent exploration drill results from the Kittila mine
____________________________________________________________________
| | | | |Depth of| | |
| | | From | To |midpoint|Estimated |Gold grade|
|Drill hole| Zone |(metres)|(metres)| below |true width| (g/t) |
| | | | |surface | (metres) |(uncapped)|
| | | | |(metres)| | |
|__________|________|________|________|________|__________|__________|
| | new | | | | | |
|ROU15-603 |parallel| 323 | 338 | 977 | 13.3 | 5.2 |
| | lens | | | | | |
|__________|________|________|________|________|__________|__________|
Kittila mine exploration drill collar coordinates
_____________________________________________________________________
| | Drill collar coordinates* |
|_____________|_______________________________________________________|
| | | |Elevation| | | |
|Drill hole ID|UTM North|UTM East| (metres |Azimuth| Dip | Length |
| | | |above sea| |(degrees)|(metres)|
| | | | level) | | | |
|_____________|_________|________|_________|_______|_________|________|
| ROU15-603 | 7538600 |2558637 | -572 | 088 | -36 | 432 |
|_____________|_________|________|_________|_______|_________|________|
* Finnish Coordinate System KKJ Zone 2
At the Kuotko deposit, located approximately 15 kilometres north of Kittila, drilling is ongoing to infill and expand the existing approximately 170,000 ounce inferred resource (1.8 million tonnes at 2.9 g/t gold). Metallurgical testing is underway, and on completion of the drilling, studies will be carried out to assess the viability of mining the deposit as an open pit. If the studies are positive, permit applications would then be expected to be submitted by the end of 2015.
Barsele Project - Joint Venture Transaction Completed Late Q2 2015
On June 11, 2015, Agnico Eagle acquired a 55% interest in Orex Minerals Inc's (REX: TSX-V) Barsele project in Sweden. The Company can earn an additional 15% interest in the project through the completion of a pre-feasibility study.
The Barsele property is known to contain intrusive-hosted gold mineralization and gold-rich volcanogenic massive sulphide mineralization. In 2015, the Company plans to spend approximately $3.25 million on exploration to further evaluate the mineral potential of the property.
NUNAVUT REGION
With the Company's largest producing mine (Meadowbank) and two significant development assets and exploration projects (Meliadine and Amaruq) located in Nunavut, Agnico Eagle has the potential to build an operating platform that could have the ability to generate strong production and cash flows over several decades.
Meadowbank - Mine Life Extended as Vault Pit Extension Approved
The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010.
The Meadowbank mill processed an average of 11,199 tpd in the second quarter of 2015, compared to the 11,549 tpd achieved in the second quarter of 2014. Year-over-year mill throughput levels were lower due to a higher percentage of Vault ore processed which has a higher hardness factor.
Minesite costs per tonne were approximately C$74 in the second quarter of 2015. These costs were higher than the C$70 per tonne in the second quarter of 2014. The higher costs per tonne were primarily due to lower throughput compared to the respective 2014 period.
For the first six months of 2015, the Meadowbank mill processed an average of 11,103 tpd, compared to 11,299 tpd in the first six months of 2014. Minesite costs per tonne were approximately C$73 in the first six months of 2015, which was the same as the C$73 per tonne in the comparable 2014 period.
Payable production in the second quarter of 2015 was 91,276 ounces of gold at total cash costs per ounce on a by-product basis of $688. This compares with the second quarter of 2014 when 118,161 ounces were produced at total cash costs per ounce on a by-product basis of $563. The lower production and higher costs in the 2015 period compared to the 2014 period are primarily due to the processing of lower grade ore (down 18%) and lower recoveries (down 2.5%).
In the first six months of 2015, Meadowbank produced 179,799 ounces of gold at total cash costs per ounce of $672 on a by-product basis. In the first six months of 2014 the mine produced 274,605 ounces of gold at total cash costs per ounce of $489 on a by-product basis. The lower production and higher costs in the 2015 period compared to the previous period was a result of the final high grade ore from the Goose and Portage pits that was mined in the first quarter 2014.
In 2013, approximately 246,000 ounces were removed from mineral reserves at the Vault deposit due to a change in the gold price assumption used to calculate mineral reserves at December 31, 2013. Given the current US dollar to Canadian dollar foreign exchange rate (which yields favourable revenues and costs in Canadian dollar terms), lower fuel costs, and the growing significance of the Amaruq Project, the Company has decided to proceed with the expansion of the Vault pit. With the expansion, the Meadowbank mine is now expected to be in production until the third quarter of 2018 (approximately one year longer than originally forecast). The extension of the Meadowbank mine life is expected to help bridge the production gap between the end of production at Meadowbank and the potential start of production at a satellite operation at Amaruq (not yet approved for construction).
The Meadowbank production profile has been revised to reflect the need for additional waste stripping associated with the pit extension. The revised production profile is shown below (ounces of gold):
2015 2016 2017 2018
February 2015
Guidance 400,000 365,000 290,000 na
July 2015
Guidance 400,000 310,000 345,000 130,000
The Meadowbank 2015 guidance for total cash costs per ounce of gold on a by-product basis is unchanged at $656. Meadowbank's average annual total cash costs per ounce of gold on a by-product basis for 2016 through 2018 are expected to be approximately $750 to $800.
Including the revised Meadowbank production profile, the Company's average annual production for 2015 to 2017 is still expected to be approximately 1.6 million ounces.
The 2015 capital budget at Meadowbank has been increased by $27 million to reflect additional costs associated with developing the Vault extension (higher deferred stripping and the purchase of additional mining trucks).
Amaruq Project - Drilling Continues to Infill Whale Tail Zone; Positive Results at Mammoth Lake; Phase Two Exploration Program Underway
Agnico Eagle has a 100% interest in the Amaruq project in Nunavut, northern Canada. The large property consists of 114,761 hectares of Inuit-owned and federal Crown land, located approximately 50 kilometres northwest of the Meadowbank mine.
The purpose of the 2015 winter and spring exploration program was to infill the Whale Tail zone from surface to 200 metres depth in order to convert inferred to indicated mineral resources at open pit depths, with some additional exploration drill holes as deep as 350 metres and drilling into geophysical (magnetic and electromagnetic) targets in the Mammoth Lake area. The Company last reported exploration results from this project on June 9, 2015. As of June 30, the $16-million phase one 2015 drill program was complete with a total of 162 holes (48,081 metres).
Drilling Confirms and Expands Whale Tail Mineralized Zone
To date, the Whale Tail deposit has been defined over at least 1.2 kilometres of strike length between surface and 450 metres depth, suggesting potential for both open pit and underground mining. The deposit remains open at depth and along strike.
Recent work confirms that Whale Tail consists of multiple lenses of mineralization with a high-grade wide core. Some of the most significant results include 10.2 g/t gold over 6.8 metres at 109 metres depth and 13.2 g/t gold over 14.3 metres at 133 metres depth (hole AMQ15-249). Hole AMQ15-236 intersected three lenses between 226 and 276 metres depth including 13.0 g/t gold over 7.1 metres at 276 metres depth. Hole AMQ15-250 intersected three lenses: 13.9 g/t gold over 11.0 metres at 194 metres depth, 4.8 g/t gold over 6.5 metres at 219 metres depth, and 10.2 g/t gold over 9.8 metres at 279 metres depth. Hole AMQ15-221 intersected two lenses below 300 metres depth including 7.3 g/t gold over 5.4 metres at 336 metres depth.
The deepest intercept to date on the property is in a structure north of Whale Tail (first described in the June 9, 2015 news release): hole AMQ15-234 intersected 8.8 g/t gold over 6.0 metres at 568 metres depth, almost 200 metres deeper than any previous intercept. Another intercept that may be associated with the same structure is between the east end of the Whale Tail zone and the R zone, where hole AMQ15-225 intersected 4.9 g/t gold over 3.9 metres at 164 metres depth. This opens up a new exploration area that could potentially connect the Whale Tail deposit with the IVR deposit.
Positive Results from Initial Drill Holes at Mammoth Lake
The first drill results in the east part of Mammoth Lake area (located west of the Whale Tail zone) show mineralization between 50 and 300 metres depth that appears to connect with the Whale Tail deposit, possibly extending the strike length of the combined mineralization to approximately 2.0 kilometres. In the extreme east part of Mammoth Lake, 600 metres west of the known Whale Tail zone, hole AMQ15-261 intersected 6.2 g/t gold over 11.3 metres at 74 metres depth. Two hundred metres farther west, hole AMQ15-246 yielded two intercepts: 2.0 g/t gold over 8.8 metres at 248 metres depth and 6.8 g/t gold over 12.9 metres at 277 metres depth. As well, hole AMQ15-264 yielded 8.0 g/t gold over 8.4 metres at 195 metres depth. Another 1,400 metres farther southwest on the west side of Mammoth Lake, hole AMQ15-226 intersected 13.3 g/t gold over 3.0 metres at 162 metres depth.
Recent drill intercepts from the Whale Tail zone and Mammoth Lake area are set out in the table below and the drill hole collars are located on the Amaruq project local geology map. Pierce points are shown on the Whale Tail composite longitudinal section; the Mammoth Lake collar coordinates are given in a second table. All intercepts reported for the Amaruq project show capped grades over estimated true widths, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling.
Recent exploration drill results from the Whale Tail (WT) deposit and the Mammoth Lake area, Amaruq project
______________________________________________________________________________
| | | | |Depth of|Estimated| | Gold |
| | | From | To |midpoint| true |Gold grade| grade |
|Drill hole|Location |(metres)|(metres)| below | width | (g/t) | (g/t) |
| | | | |surface |(metres) |(uncapped)|(capped)*|
| | | | |(metres)| | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-191 | Mammoth | 73.6| 80.0| 56| 4.0| 3.9| 3.9|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-205 | Mammoth | 188.0| 191.3| 150| 2.6| 6.7| 6.7|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-209A| WT | 166.2| 171.9| 142| 5.6| 15.5| 11.5|
| | Central | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | WT | 247.5| 254.5| 210| 3.5| 5.2| 5.2|
| | Central | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 295.9| 300.0| 249| 3.2| 11.8| 11.8|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 308.7| 319.5| 262| 4.6| 11.9| 11.9|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT new | 365.8| 369.5| 307| 3.4| 7.5| 7.5|
| |structure| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-221 | WT Deep | 367.6| 373.2| 304| 3.9| 11.3| 11.3|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 405.5| 412.0| 336| 5.4| 7.3| 7.3|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-225 | WT new | 195.0| 199.0| 164| 3.9| 4.9| 4.9|
| |structure| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-226 | Mammoth | 188.9| 194.0| 162| 3.0| 13.3| 13.3|
| |Lake West| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-230 | Mammoth | 231.0| 236.0| 190| 4.4| 3.4| 3.4|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | Mammoth | 252.0| 261.0| 209| 7.1| 3.9| 3.9|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-234 | WT new | 664.0| 672.5| 568| 6.0| 8.8| 8.8|
| |structure| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-236 | WT Deep | 263.0| 273.7| 226| 10.3| 3.7| 3.7|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 306.6| 310.4| 260| 3.1| 11.7| 11.7|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 322.5| 331.2| 276| 7.1| 13.0| 13.0|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-239 | Mammoth | 214.9| 219.0| 175| 3.2| 6.0| 6.0|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | | 380.8| 386.0| 312| 3.7| 3.8| 3.8|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-243 | WT Deep | 282.0| 305.6| 245| 8.1| 11.6| 11.6|
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 328.0| 333.0| 275| 3.2| 4.8| 4.8|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-246 | Mammoth | 297.9| 310.0| 248| 8.8| 2.0| 2.0|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | Mammoth | 328.5| 351.1| 277| 12.9| 9.4| 6.8|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| | | 328.5| 332.8| 270| 2.5| 28.2| 14.4|
|including | | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| | | 345.0| 351.1| 284| 3.5| 8.8| 8.8|
|including | | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-249 | WT | 127.5| 135.0| 109| 6.8| 14.7| 10.2|
| | Central | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | | 153.3| 168.5| 133| 14.3| 13.2| 13.2|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-250 | WT | 224.7| 239.1| 194| 11.0| 37.7| 13.9|
| | Central | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | WT | 254.6| 267.6| 219| 6.5| 4.8| 4.8|
| | Central | | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
| and | WT Deep | 323.2| 342.9| 279| 9.8| 10.2| 10.2|
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-261 | Mammoth | 98.2| 112.0| 74| 11.3| 6.2| 6.2|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-264 | Mammoth | 255.0| 264.5| 195| 8.4| 8.0| 8.0|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
|AMQ15-267 | Mammoth | 85.5| 91.0| 62| 4.8| 5.5| 5.5|
| |Lake East| | | | | | |
|__________|_________|________|________|________|_________|__________|_________|
* Holes at Amaruq use a capping factor of 60 g/t gold
Amaruq project's Mammoth Lake area exploration drill collar coordinates
___________________________________________________________________
| | Drill collar coordinates* |
|__________|________________________________________________________|
| | | |Elevation | | | |
|Drill hole|UTM North|UTM East| (metres |Azimuth| Dip | Length |
| ID | | | above | |(degrees)|(metres)|
| | | |sea level)| | | |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-191 | 7255007 | 605562 | 152 | 161 | -47 | 171 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-205 | 7254862 | 605216 | 152 | 340 | -54 | 285 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-226 | 7254428 | 604097 | 152 | 340 | -61 | 267 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-230 | 7254792 | 605379 | 152 | 339 | -55 | 471 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-239 | 7254774 | 605310 | 152 | 341 | -56 | 438 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-246 | 7254778 | 605448 | 152 | 340 | -55 | 564 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-261 | 7255062 | 605620 | 153 | 159 | -46 | 182 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-264 | 7254755 | 605357 | 153 | 340 | -53 | 330 |
|__________|_________|________|__________|_______|_________|________|
|AMQ15-267 | 7255074 | 605702 | 153 | 159 | -47 | 267 |
|__________|_________|________|__________|_______|_________|________|
* Coordinate System UTM Nad 83 zone 14
Amaruq project local geology map
Amaruq project - Whale Tail composite longitudinal section
In February 2015, the Company announced an initial inferred mineral resource containing 1.5 million ounces of gold (6.6 million tonnes at 7.07 g/t gold) at the Amaruq project, based on drilling from 2013 through October 2014. An updated Amaruq mineral resource including initial indicated mineral resources is expected later this summer based on the drilling completed through the end of June.
The phase two exploration program, budgeted at approximately $15 million, is now underway. This program, which is planned to include approximately 50,000 metres of drilling, prospecting, and geochemical sampling (soil, till, and rock), is expected to continue through August 2015. The main objectives of the phase two program are:
-- Step out drilling between the Mammoth Lake and Whale Tail areas
to try and link the two zones together
-- Continue drilling in the western part of Mammoth Lake with the
objective of defining the extent (size) of this new discovery
-- Drilling at IVR to test for a potential link with the Whale
Tail zone and investigate continuity of mineralization at depth
and long strike to the east where field work has identified
coincident geophysical and geochemical anomalies
-- Additional deep drilling at Whale Tail (at a depth of
approximately 500 metres below surface)
The Company has also expanded the airborne geophysical (VTEM) coverage on the Amaruq project. This year an additional 68,044 hectares were surveyed resulting in total coverage of approximately 81,000 hectares (approximately 71% of the Amaruq property). Data from the VTEM survey is currently being reviewed with the intent of developing additional targets for evaluation. Studies are ongoing to evaluate the potential to develop the Amaruq deposit as a satellite operation to Meadowbank.
Meliadine Project - Inuit Impact Benefit Agreement Signed and 2015 Budget Increased
The Meliadine gold project was acquired in July 2010 and is the Company's largest development project based on mineral reserves and mineral resources. The Company has a 100% interest in the 111,757 hectare property, which is linked to the town of Rankin Inlet in Nunavut by a 25 kilometre all-weather access road.
On July 13, 2015, the Kivalliq Inuit Association (KIA) and Agnico Eagle signed the Inuit Impact Benefit Agreement (IIBA) for the Meliadine gold project. Through the IIBA both Agnico Eagle and the KIA are intent on ensuring that business opportunities, employment and training opportunities arising from this potential mine will benefit the Inuit of the Kivalliq Region.
The IIBA addresses protection of Inuit values, culture and language, protection of the land, water and wildlife and provides financial compensation to Inuit over the mine life. In moving forward, Agnico Eagle and the KIA will work toward a rate of 50% Inuit employment. With the signing of the Meliadine IIBA, the first financial payment from Agnico Eagle to KIA totaling C$1.5 million has been made.
On March 12, 2015, the Company completed and filed with Canadian securities regulators an updated National Instrument 43-101 ("NI 43-101") technical report on the Meliadine gold project. The updated technical study was based on extracting only the 3.3 million ounces of gold in proven and probable mineral reserves (13.9 million tonnes of ore at 7.44 g/t gold), which is all contained in the Tiriganiaq and Wesmeg deposits.
The Meliadine property also hosts 3.3 million ounces of measured and indicated mineral resources (20.2 million tonnes at 5.06 g/t gold), and 3.5 million ounces of inferred mineral resources (14.1 million tonnes at 7.65 g/t gold). In addition, there are numerous other known gold occurrences in the 80 km long greenstone belt that require further evaluation.
Internal studies suggest that if the mine were to be developed there could be considerably more gold available to be added to the mine plan from the Tiriganiaq and Wesmeg/Normeg deposits, which could potentially extend the mine life, improve the project economics, and increase the after-tax internal rate of return ("IRR"). The Company is currently evaluating potential expanded production scenarios at Meliadine.
At the end of the second quarter 2015, the underground ramp had been advanced by 867 metres, and is now at a depth of approximately 275 metres below surface. This year's plan calls for total underground development of approximately 2,500 metres. This development will allow for more cost-effective exploration and conversion drilling of the deeper parts of the Tiriganiaq and Wesmeg/Normeg deposits and help to optimize potential mining plans.
The Company is currently studying options and alternatives in Nunavut to capitalize on the large and growing mineral resource base in the region and to maximize value. In order to keep the Meliadine project on track for a potential late 2019 startup, the 2015 capital budget has been increased by $22 million. The increased budget will be used to expand the existing surface and underground infrastructure and sealift additional equipment for the 2016 work program.
The timing of future capital expenditures on the Meliadine project beyond 2015 and the determination of whether to build a mine at Meliadine are subject to approval by Agnico Eagle's Board of Directors, prevailing market conditions and outcomes of the various potential scenarios being evaluated.
SOUTHERN BUSINESS OPERATING REVIEW
At present, Agnico Eagle's southern business operations are focused in Mexico. These operations have been the source of growing precious metals production (gold and silver) with stable operating costs since 2009.
Pinos Altos - Strong Performance Driven by Lower Costs and Higher Throughput
The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.
The Pinos Altos mill processed 5,854 tpd in the second quarter of 2015, compared to 5,513 tpd processed in the second quarter of 2014. During the second quarter of 2015, approximately 114,800 tonnes of ore were stacked on the leach pad at Pinos Altos, compared to 154,200 tonnes in the comparable 2014 period. Minesite costs per tonne at Pinos Altos were $43 in the second quarter of 2015, slightly lower than the $46 in the second quarter of 2014. The difference in minesite costs per tonne was largely attributable to variations in the proportion of heap leach ore to milled ore and open pit ore to underground ore, currency variations and routine fluctuations in the waste to ore stripping ratio in the open pit mines.
For the first six months of 2015, the Pinos Altos mill processed an average of 5,758 tpd, compared to 5,448 tpd processed in the first six months of 2014. Approximately 189,200 tonnes of ore were stacked on the Pinos Altos leach pad during the first six months of 2015, compared to 293,300 tonnes in the prior year period. Minesite costs per tonne were approximately $45 compared to $48 per tonne in the first six months of 2014 with variance due to the proportion of heap leach to mill ore and the proportion of underground ore to open pit, and variations in the proportion of waste to ore mined, and variations in the currency exchange rate.
Payable production in the second quarter of 2015 was 50,647 ounces of gold at a total cash costs per ounce on a by-product basis of $384. This compares with production of 43,978 ounces at total cash costs per ounce on a by-product basis of $516 in the second quarter of 2014. Higher production in 2015 is largely due to higher throughput and higher grades processed over the comparable prior year period. The decrease in the year over year total cash costs per ounce is largely due to higher silver production (offset, in part by a decline in realized silver prices) and favourable foreign exchange rates compared to the prior year period.
In the first six months of 2015, Pinos Altos produced 100,753 ounces of gold at total cash costs per ounce of $371 on a by-product basis. This is in contrast to the first six months of 2014 when the mine produced 89,195 ounces of gold at total cash costs per ounce of $498 on a by-product basis. The lower cash costs in the first six months of 2015 are primarily due to favourable foreign exchange rates and higher silver production compared to the prior year period of 2014.
Site clearing and geotechnical studies have been completed for the Phase IV heap leach pad at Pinos Altos. Engineering design work is in progress with completion expected by year-end 2015.
The Pinos Altos shaft sinking project remains on schedule for completion in 2016. At the end of the second quarter of 2015, the shaft had reached a depth of approximately 573 metres, and development activities had commenced on level 28. When the shaft is completed, it will allow better matching of the mill capacity with the future mining capacity at Pinos Altos once the open pit mining operation begins to wind down as planned over the next several years.
The Company continues to evaluate a number of regional satellite opportunities. A 6,000 metre in-fill and conversion drill program on the Sinter deposit is 50% complete with the expectation to add this deposit to the Pinos Altos mine plan beginning in 2020.
Creston Mascota Deposit at Pinos Altos - Improved Ore Stacking in Q2 2015
The Creston Mascota deposit at Pinos Altos has been operating as a satellite operation to the Pinos Altos mine since late 2010.
Approximately 608,500 tonnes of ore were stacked on the Creston Mascota leach pad during the second quarter of 2015, compared to approximately 394,800 tonnes stacked in the second quarter of 2014. In the 2015 period, additional ore was encountered outside the block model, which resulted in more tonnes at lower grades being stacked compared to the 2014 period. Minesite costs per tonne at Creston Mascota were $11 in the second quarter of 2015, compared to $18 in the second quarter of 2014. Costs in the 2015 period were lower due to currency fluctuations, a reduced stripping ratio, lower fuel consumption and reduced power requirements compared to the 2014 period.
For the first six months of 2015, approximately 1,135,500 tonnes of ore were stacked on the Creston Mascota leach pad, compared to 773,700 tonnes in the prior year period.
For the first six months of 2015, mine site costs per tonne at Creston Mascota were $11, compared to $18 per tonne in the first six months of 2014. Costs were lower in the 2015 period due to the reasons outlined above.
Payable gold production at Creston Mascota in the second quarter of 2015 was 15,606 ounces at a total cash costs per ounce on a by-product basis of $402. This compares to 11,159 ounces at a total cash costs per ounce on a by-product basis of $613 during the second quarter of 2014. Production was higher in the 2015 period due to more tonnes stacked, compared to the 2014 period. Cash costs were lower in the 2015 period based on lower minesite costs per tonne (see above), increased production and a favourable foreign exchange rate compared to the 2014 period.
Payable gold production for the first six months of 2015 was 28,054 ounces at a total cash costs per ounce of $421 on a by-product basis. This compares to 21,476 ounces at a total cash costs per ounce of $606 on a by-product basis in the first six months of 2014. The higher production and lower costs in the 2015 period are due to the reasons outlined above.
In April 2015, higher grade mineralization was encountered at the bottom of the pit and outside the Creston Mascota block model. Additional drilling is in progress to test for continuity of this mineralization, and results are currently being compiled. In the second half of 2015, a 3,500 metre infill and conversion drill program is planned on the Bravo satellite zone which would offer the potential to extend the Creston Mascota mine life.
La India - Gold Production Exceeds Design Expectation as Growth Studies Continue
The La India mine property in Sonora, Mexico, located approximately 70 kilometres from the Company's Pinos Altos mine, was acquired in November 2011 through the purchase of Grayd Resources, which held a 56,000 hectare land position in the Mulatos Gold belt. Commissioning of the mine commenced ahead of schedule in the third quarter of 2013 and commercial production was declared as of February 1, 2014.
Approximately 1,359,500 tonnes of ore were stacked on the La India leach pad during the second quarter of 2015, compared to approximately 1,137,500 tonnes stacked in the second quarter of 2014. Minesite costs per tonne at La India were $9 in the second quarter of 2015, compared to the $8 in the second quarter of 2014. Tonnage variation reflects the ramp up to design capacity and the increased minesite costs reflect normal variations in waste/ore stripping ratio.
In the first six months of 2015, approximately 2,738,000 tonnes of ore were stacked on the La India leach pad, compared to approximately 2,156,400 stacked in the first six months of 2014. Minesite costs per tonne at La India were $9 in the first six months of 2015, compared to the $7 in the first six months of 2014. The higher production and costs in the 2015 period are due to the reasons outlined above.
Payable gold production at La India in the second quarter of 2015 was 25,803 ounces at total cash costs per ounce of $410 on a by-product basis were. Production in the second quarter of 2014 was 17,809 ounces at a total cash costs per ounce on a by-product basis of $443. Total cash costs in the 2015 period were favourably impacted by higher production volumes and favourable foreign exchange rates.
For the first six months of 2015, La India produced 52,326 ounces of gold at total cash costs per ounce of $414 on a by-product basis. This compares to 28,017 ounces at a total cash costs per ounce of $437 on a by-product basis in the first six months of 2014.
During the quarter, approximately 40% of the earthworks had been completed on the second phase leach pad. An additional contractor is being used to expedite the process. This leach pad expansion will provide the capacity for the current planned life-of-mine production at La India and approximately 5.0 million tonnes of additional stacking. Construction of the Main Zone haul road is 65% complete, with work expected to be finished late in the third quarter of 2015.
Block model reconciliation remains favourable. Infill drilling and technical evaluations are underway to develop a more predictive model. Drilling is expected to be completed later this fall, and the information is expected to be incorporated into the year-end 2015 mineral reserve and mineral resource estimates.
A re-logging program has been completed on holes drilled between 2004 and 2011 on the Main Zone and the La India Zone. This resulted in the delineation of new geological domains containing gold bearing sulphide mineralization. Preliminary metallurgical testing of this material indicates that some transition and sulphide mineralization at La India may be heap leachable. Follow-up work is in progress with the potential to reassign some of the sulphide mineral inventory back into the mineral resource category.
El Barqueno - Soltoro Acquisition Further Consolidates Land Position, Drilling Continues with a Focus on Resource Delineation
The El Barqueno property in Jalisco State, Mexico now covers a land position of 41,112 hectares. Exploration by previous operators outlined several mineralized zones through surface exploration and diamond drilling, which in comparison is larger than the strike length of the mineralized systems at both the La India and Pinos Altos properties combined.
In early June 2015, Agnico Eagle completed the acquisition of Soltoro Ltd., which added more than 30,000 hectares of property in the Barqueno district in Jalisco state, including the El Rayo silver-gold project and the El Tecolote property that are contiguous with and to the east of Agnico Eagle's El Barqueno property.
The Company believes that the El Barqueno and surrounding properties have the potential to host significant gold-silver mineralization that could be developed as a combination open pit and underground mine with heap leach and/or mill processing facilities.
In the second quarter of 2015, 60 holes totaling approximately 12,714 metres were drilled at El Barqueno. Work primarily focused on the Pena de Oro, Azteca-Zapoteca and Angostura zones.
At Pena de Oro, drilling has been on 80 metre by 80 metre centres along a one kilometre strike length. The mineralization shows good continuity and remains open along strike and at depth. At Azteca-Zapoteca, mineralization extends for over one kilometre along strike and is also open at depth and along strike. The Company last reported results from these target areas on June 9, 2015, and additional results from these zones are expected to be released in the third quarter of 2015.
The initial 2015 drill program was completed in June and a supplemental program has been approved to infill the mineralized areas as well as to test extensions to the known mineralization. Metallurgical and mineralogical studies have been commissioned to further increase the understanding of the mineral resource potential.
An inferred/indicated mineral resource is expected to be completed by the end of the year for the Peña de Oro and Azteca-Zapoteca areas to open-pit mineable depths (surface to 200 metres depth). The Angostura prospect is also being studied for a potential inferred mineral resource estimate by year-end.
An additional 10,000-metre reconnaissance drill program is being proposed to commence in the third quarter of the year. The program will be designed to test other new high-priority targets outside the main deposits such as the Zapote, Poncho East and West, Esperanza and Falco areas defined last year and earlier this year using prospecting, geological mapping and sampling, and geochemical (stream sediment and soil surveys) and geophysical (magnetic, radiometrics, and electromagnetic) surveys.
Dividend Record and Payment Dates for the Third Quarter of 2015
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.08 per common share, payable on September 15, 2015 to shareholders of record as of September 1, 2015. Agnico Eagle has declared a cash dividend every year since 1983.
Other Expected Dividend and Record Dates for 2015
________________________
|Record Date|Payment Date|
|___________|____________|
|December 1 | December 15|
|___________|____________|
Dividend Reinvestment Plan
Please follow the link below for information on the Company's dividend reinvestment program. Dividend Reinvestment Plan
About Agnico Eagle
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States and Sweden. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
Note Regarding Certain Measures of Performance
This news release discloses certain measures, including ''total cash costs per ounce'' and ''minesite costs per tonne'', "all-in sustaining costs per ounce" and "adjusted net income" that are not recognized measures under IFRS. These data may not be comparable to data presented by other gold producers. For a reconciliation of these measures to the most directly comparable financial information presented in the consolidated financial statements prepared in accordance with IFRS and for an explanation of how management uses these measures, see "Reconciliation of Non-GAAP Financial Performance Measures" below. The total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before by-product metal revenues). The total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis except that no adjustment is made for by-product metal revenues. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The total cash costs per ounce of gold produced is intended to provide information about the cash-generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash-generating capabilities at various gold prices. All-in sustaining costs are used to show the full cost of gold production from current operations. The Company calculates all-in sustaining costs per ounce of gold produced as the aggregate of total cash costs on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock options) and reclamation expenses divided by the amount of gold produced. The all-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis except that no adjustment is made for by-product metal revenues. The Company's methodology for calculating all-in sustaining costs may not be similar to the methodology used by other producers that disclose all-in sustaining costs. The Company may change the methodology it uses to calculate all-in sustaining costs in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council. Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates, and, in the case of total cash costs per ounce of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne (discussed below) as well as other data prepared in accordance with IFRS.
Management also performs sensitivity analyses in order to quantify the effects of fluctuating exchange rates and metal prices. This news release also contains information as to estimated future total cash costs per ounce, all-in sustaining costs and minesite costs per tonne. The estimates are based upon the total cash costs per ounce, all-in sustaining costs and minesite costs per tonne that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable IFRS measure.
Forward-Looking Statements
The information in this news release has been prepared as at July 29, 2015. Certain statements contained in this document constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" under the provisions of Canadian provincial securities laws and are referred to herein as "forward-looking statements". When used in this document, the words "anticipate", "estimate", "expect", "forecast", "planned", "will" and similar expressions are intended to identify forward-looking statements. Such statements include without limitation: the Company's forward-looking production guidance, including estimated ore grades, project timelines, drilling results, metal production, life of mine estimates, production, total cash costs per ounce, minesite costs per tonne, all-in sustaining costs and cash flows; the estimated timing and conclusions of technical reports and other studies; the methods by which ore will be extracted or processed; statements concerning expansion projects, recovery rates, mill throughput, and projected exploration expenditures, including costs and other estimates upon which such projections are based; estimates of depreciation expense, general and administrative expense and tax rates; the impact of maintenance shutdowns; statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future mineral reserves, mineral resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future mining costs, total cash costs, minesite costs, all-in sustaining costs and other expenses; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements 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 mineral reserves and mineral resources, and statements and information regarding anticipated future exploration; the anticipated timing of events with respect to the Company's mine sites and statements and information regarding the sufficiency of the Company's cash resources and other statements and information regarding anticipated trends with respect to the Company's operations, exploration and the funding thereof. Such statements and information reflect the Company's views as at the date of this document and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements and information. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material factors and assumptions used in the preparation of the forward looking statements contained herein, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in management's discussion and analysis ("MD&A") and the Company's Annual Information Form ("AIF") for the year ended December 31, 2104 filed with Canadian securities regulators and that are included in its Annual Report on Form 40-F for the year ended December 31, 2014 ("Form 40-F") filed with the U.S. Securities and Exchange Commission (the "SEC") as well as: that there are no significant disruptions affecting operations; that production, permitting and expansion at each of Agnico Eagle's properties proceeds on a basis consistent with current expectations and plans; that the relevant metal prices, exchange rates and prices for key mining and construction supplies will be consistent with Agnico Eagle's expectations; that Agnico Eagle's current estimates of mineral reserves, mineral resources, mineral grades and metal recovery are accurate; that there are no material delays in the timing for completion of ongoing growth projects; that the Company's current plans to optimize production are successful; and that there are no material variations in the current tax and regulatory environment. Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward looking statements and information. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, capital expenditures, and other costs; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's by-product metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company's ability to achieve the expectations set forth in the forward-looking statements contained in this document, see the AIF and MD&A filed on SEDAR at www.sedar.com and included in the Form 40-F filed on EDGAR at www.sec.gov, as well as the Company's other filings with the Canadian securities regulators and the SEC. Other than as required by law, the Company does not intend, and does not assume any obligation, to update these forward-looking statements and information.
Notes to Investors Regarding the Use of Mineral Resources
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources
This document uses the terms "measured mineral resources" and "indicated mineral resources". Investors are advised that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into mineral reserves.
Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources
This document also uses the term "inferred mineral resources". Investors are advised that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
Scientific and Technical Data
The scientific and technical information contained in this news release relating to Northern Business operations has been approved by Christian Provencher, Ing., Vice-President, Canada and a "Qualified Person" for the purposes of NI 43-101. The scientific and technical information contained in this news release relating to Southern Business operations has been approved by Tim Haldane, P.Eng., Senior Vice-President, Operations - USA and Latin America and a "Qualified Person" for the purposes of NI 43-101. The scientific and technical information contained in this news release relating to exploration has been approved by Alain Blackburn, Ing., Senior Vice-President, Exploration and a "Qualified Person" for the purposes of NI 43-101.
The scientific and technical information relating to Agnico Eagle's mineral reserves and mineral resources contained herein has been approved by Daniel Doucet, Senior Corporate Director, Reserve Development. Mr. Doucet is a designated Ing. with the Ordredes ingénieurs du Québec and a qualified person as defined by NI 43-101.
Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Agnico Eagle reports mineral resource and reserve mineral estimates in accordance with the CIM guidelines for the estimation, classification and reporting of mineral resources and mineral reserves in accordance with the Canadian securities regulatory authorities' National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). These standards are similar to those used by the SEC's Industry Guide No. 7, as interpreted by Staff at the SEC ("Guide 7"). However, the definitions in NI 43-101 differ in certain respects from those under Guide 7. Accordingly, mineral reserve information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the mineral reserve determination is made. A "final" or "bankable" feasibility study is required to meet the requirements to designate mineral reserves under Industry Guide 7. Agnico Eagle uses certain terms in this news release, such as "measured", "indicated", and "inferred", and "resources" that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC.
In prior periods, mineral reserves for all properties were typically estimated using historic three-year average metals prices and foreign exchange rates in accordance with the SEC guidelines. These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices. Given the current lower commodity price environment, Agnico Eagle has decided to use price assumptions that are below the three-year averages. The assumptions used for the mineral reserves estimates at all mines and advanced projects as of December 31, 2014 (other than the Canadian Malartic mine), reported by the Company on February 11, 2015, are $1,150 per ounce gold, $18.00 per ounce silver, $1.00 per pound zinc, $3.00 per pound copper, $0.91 per pound lead and C$/US$, US$/Euro and MXP/US$ exchange rates of 1.08, 1.30 and 13.00, respectively.
For the mineral reserves estimate at the Canadian Malartic mine, the Company has decided to continue to report the mineral reserves estimated as of June 15, 2014, reported by the Company in a news release dated August 13, 2014, minus the production to the end of 2014. The assumptions used were $1,300 per ounce gold, a cut-off grade between 0.28 g/t and 0.35 g/t gold (depending on the deposit), and a C$/US$ exchange rate of 1.10.
NI 43-101 requires mining companies to disclose mineral reserves and mineral resources using the subcategories of "proven" mineral reserves, "probable" mineral reserves, "measured" mineral resources, "indicated" mineral resources and "inferred" mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of modifying factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.
Modifying factors are considerations used to convert mineral resources to mineral reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
A proven mineral reserve is the economically mineable part of a measured mineral resource. A proven mineral reserve implies a high degree of confidence in the modifying factors. A probable mineral reserve is the economically mineable part of an indicated and, in some circumstances, a measured mineral resource. The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.
A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.
Investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
A feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.
The mineral reserves presented in this news release are separate from and not a portion of the mineral resources.
_____________________________________________________________________
| |Date of most recent |
|Property/Project name and location |Technical Report (NI 43-101)|
| |filed on SEDAR |
|________________________________________|____________________________|
|LaRonde, Bousquet & Ellison, Quebec, | |
|Canada |March 23, 2005 |
|________________________________________|____________________________|
|Canadian Malartic, Quebec, Canada |June 16, 2014 |
|________________________________________|____________________________|
|Kittila, Kuotko and Kylmakangas, Finland|March 4, 2010 |
|________________________________________|____________________________|
|Swanson, Quebec, Canada | |
|________________________________________|____________________________|
|Meadowbank, Nunavut, Canada |February 15, 2012 |
|________________________________________|____________________________|
|Goldex, Quebec, Canada |October 14, 2012 |
|________________________________________|____________________________|
|Lapa, Quebec, Canada |June 8, 2006 |
|________________________________________|____________________________|
|Meliadine, Nunavut, Canada |February 11, 2015 |
|________________________________________|____________________________|
|Akasaba, Quebec, Canada | |
|________________________________________|____________________________|
|Amaruq, Nunavut, Canada | |
|________________________________________|____________________________|
|Hammond Reef, Ontario, Canada |July 2, 2013 |
|________________________________________|____________________________|
|Upper Beaver (Kirkland Lake project), | |
|Ontario, Canada |November 5, 2012 |
|________________________________________|____________________________|
|Pinos Altos and Creston Mascota, Mexico |March 25, 2009 |
|________________________________________|____________________________|
|La India, Mexico |August 31, 2012 |
|________________________________________|____________________________|
Additional information about each of the mineral projects that is
required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c)
and (d) can be found in Technical Reports, which may be found at www.sedar.com. Other important operating information can be found in the Company's
AIF and Form 40-F.
AGNICO EAGLE MINES LIMITED
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS
(thousands of United States dollars, except where noted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Operating margin
(i) by mine:
Northern Business
LaRonde mine $ 32,799 $ 26,402 $ 62,813 $ 71,826
Lapa mine 11,351 9,050 26,038 24,391
Goldex mine 15,525 13,283 34,778 22,809
Meadowbank
mine 49,600 88,727 96,177 212,687
Canadian
Malartic mine
(ii) 44,737 3,669 79,456 3,668
Kittila mine 16,145 14,184 43,560 33,186
Southern Business
Pinos Altos
mine 44,538 33,417 79,190 72,482
Creston Mascota
deposit at
Pinos Altos 12,968 7,428 21,377 15,143
La India mine
(iii) 18,834 12,978 39,424 26,647
Total operating
margin(i) 246,497 209,138 482,813 482,839
Amortization of
property, plant
and
mine development 157,615 93,656 293,512 177,137
Exploration,
corporate and
other 67,973 81,665 111,679 125,167
Income before
income and mining
taxes 20,909 33,817 77,622 180,535
Income and mining
taxes expense 10,826 11,659 38,796 61,232
Net income for $ $ $ $
the period 10,083 22,158 38,826 119,303
Net income per
share -- $ $ $ $
basic (US$) 0.05 0.12 0.18 0.66
Net income per
share -- $ $ $ $
diluted (US$) 0.05 0.12 0.18 0.66
Cash flows:
Cash provided by
operating $ $ $ $
activities 188,349 182,728 331,804 433,124
Cash used in
investing $ $ $ $
activities (104,476) (488,543) (158,368) (596,831)
Cash provided by
(used in) $ $ $ $
financing
activities (64,514) 381,951 (187,696) 283,864
Realized prices
(US$):
Gold (per ounce) $ 1,196 $ 1,291 $ 1,199 $ 1,300
Silver $ $ $ $
(per ounce) 16.41 19.45 16.68 20.06
Zinc (per tonne) $ 2,231 $ 2,142 $ 2,130 $ 2,096
Copper $ $ $ $
(per tonne) 6,274 6,893 5,656 6,594
Payable
production(iv):
Gold (ounces):
Northern
Business
LaRonde mine 64,007 48,494 122,900 107,846
Lapa mine 19,450 18,821 45,370 42,230
Goldex mine 26,462 23,929 55,712 43,359
Meadowbank
mine 91,276 118,161 179,799 274,605
Canadian
Malartic mine
(ii) 68,441 11,878 136,334 11,878
Kittila mine 41,986 31,830 86,640 70,382
Southern
Business
Pinos Altos
mine 50,647 43,978 100,753 89,195
Creston
Mascota
deposit at
Pinos Altos 15,606 11,159 28,054 21,476
La India mine
(iii) 25,803 17,809 52,326 31,509
Total gold
(ounces) 403,678 326,059 807,888 692,480
Silver (thousands
of ounces):
Northern
Business
LaRonde mine 201 345 398 694
Lapa mine 1 - 1 -
Meadowbank
mine 57 25 153 51
Canadian
Malartic mine
(ii) 69 10 141 10
Kittila mine 2 1 5 3
Southern
Business
Pinos Altos
mine 576 422 1,139 882
Creston
Mascota
deposit at
Pinos Altos 37 18 69 34
La India mine
(iii) 72 40 141 67
Total Silver
(thousands of
ounces) 1,015 861 2,047 1,741
Zinc (tonnes) 827 3,793 1,763 5,853
Copper (tonnes) 1,133 1,058 2,300 2,612
Payable metal
sold:
Gold (ounces):
Northern
Business
LaRonde mine 59,376 48,115 120,319 106,215
Lapa mine 20,771 18,162 44,268 41,613
Goldex mine 27,306 22,255 55,213 41,862
Meadowbank
mine 96,870 118,176 181,649 265,678
Canadian
Malartic mine
(ii)(v) 67,522 16,377 126,783 16,377
Kittila mine 39,385 31,519 88,366 68,948
Southern
Business
Pinos Altos
mine 54,402 43,058 95,835 89,868
Creston
Mascota
deposit at
Pinos Altos 16,537 10,737 27,936 20,965
La India mine
(iii) 23,803 15,025 50,701 29,657
Total gold
(ounces) 405,972 323,424 791,070 681,183
Silver (thousands
of ounces):
Northern
Business
LaRonde mine 225 322 429 662
Meadowbank
mine 59 24 157 52
Canadian
Malartic mine
(ii)(v) 80 15 134 15
Kittila mine 2 1 5 3
Southern
Business
Pinos Altos
mine 616 430 1,062 937
Creston
Mascota
deposit at
Pinos Altos 48 18 68 32
La India mine
(iii) 76 34 139 60
Total Silver
(thousands of
ounces): 1,106 844 1,994 1,761
Zinc (tonnes) 733 2,458 1,997 4,131
Copper (tonnes) 1,131 1,074 2,291 2,616
Total cash costs
per ounce of gold
produced -
Co-product basis
(US$)(vi):
Northern Business
LaRonde mine $ 811 $ 1,185 $ 850 $ 1,050
Lapa mine 679 832 616 738
Goldex mine 633 671 585 712
Meadowbank
mine 699 567 686 493
Canadian
Malartic mine
(ii) 626 641 638 641
Kittila mine 777 863 728 826
Southern Business
Pinos Altos
mine 570 702 559 698
Creston Mascota
deposit at
Pinos Altos 441 646 462 639
La India mine
(iii) 456 489 458 488
Weighted average
total cash costs $ $ $ $
per ounce of gold
produced 666 730 658 676
Total cash costs
per ounce of gold
produced -
By-product basis
(US$)(vi):
Northern Business
LaRonde mine $ 613 $ 732 $ 656 $ 645
Lapa mine 678 832 615 738
Goldex mine 633 670 585 711
Meadowbank
mine 688 563 672 489
Canadian
Malartic mine
(ii) 609 613 621 613
Kittila mine 776 862 727 825
Southern Business
Pinos Altos
mine 384 516 371 498
Creston Mascota
deposit at
Pinos Altos 402 613 421 606
La India mine
(iii) 410 443 414 437
Weighted average
total cash costs $ $ $ $
per ounce of gold
produced 601 631 595 582
Notes:
(i) Operating margin is calculated as revenues from mining
operations less production costs.
(ii) On June 16, 2014, Agnico Eagle and Yamana Gold Inc.
("Yamana") jointly acquired 100.0% of Osisko by way of
the plan of arrangement (the "Arrangement"). As a
result of the Arrangement, Agnico Eagle and Yamana each
indirectly own 50.0% of Osisko (now Canadian Malartic
Corporation) and Canadian Malartic GP, which now holds
the Canadian Malartic mine. The information set out in
this table reflects the Company's 50.0% interest in the
Canadian Malartic mine since the date of acquisition.
(iii) The La India mine achieved commercial production on
February 1, 2014.
(iv) Payable production (a non-GAAP financial performance
measure) is the quantity of mineral produced during a
period contained in products that are or will be sold by
the Company, whether such products are sold during the
period or held as inventories at the end of the period.
(v) The Canadian Malartic mine's payable metal sold excludes
quantities of gold reflecting the 5.0% net smelter
royalty granted to Osisko Gold Royalties Ltd., in
connection with the Arrangement.
(vi) Total cash costs per ounce of gold produced is not a
recognized measure under IFRS and this data may not be
comparable to data presented by other gold producers.
Total cash costs per ounce of gold produced is presented
on both a by-product basis (deducting by-product metal
revenues from production costs) and co-product basis
(before by-product metal revenues). Total cash costs per
ounce of gold produced on a by-product basis is
calculated by adjusting production costs as recorded in
the condensed interim consolidated statements of income
for by-product metal revenues, unsold concentrate
inventory production costs, smelting, refining and
marketing charges and other adjustments, and then
dividing by the number of ounces of gold produced. Total
cash costs per ounce of gold produced on a co-product
basis is calculated in the same manner as total cash
costs per ounce of gold produced on a by-product basis
except that no adjustment for by-product metal revenues
is made. The calculation of total cash costs per ounce
of gold produced on a co-product basis does not reflect
a reduction in production costs or smelting, refining
and marketing charges associated with the production and
sale of by-product metals. The Company believes that
these generally accepted industry measures provide a
realistic indication of operating performance and
provide useful comparison points between periods. Total
cash costs per ounce of gold produced is intended to
provide information about the cash generating
capabilities of the Company's mining operations.
Management also uses these measures to monitor the
performance of the Company's mining operations. As
market prices for gold are quoted on a per ounce basis,
using the total cash costs per ounce of gold produced on
a by-product basis measure allows management to assess a
mine's cash generating capabilities at various gold
prices. Management is aware that these per ounce
measures of performance can be affected by fluctuations
in exchange rates and, in the case of total cash costs
of gold produced on a by-product basis, by-product metal
prices. Management compensates for these inherent
limitations by using these measures in conjunction with
minesite costs per tonne as well as other data prepared
in accordance with IFRS. Management also performs
sensitivity analyses in order to quantify the effects of
fluctuating metal prices and exchange rates.
AGNICO EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, except share amounts, IFRS basis)
(Unaudited)
As at As at
June 30, December 31,
2015 2014
ASSETS
Current assets:
Cash and cash equivalents $ 158,331 $ 177,537
Short-term investments 5,669 4,621
Restricted cash 19,939 33,122
Trade receivables 61,195 59,716
Inventories 439,875 446,660
Income taxes recoverable 11,838 1,658
Available-for-sale securities 46,029 56,468
Fair value of derivative financial
instruments 899 4,877
Other current assets 146,529 123,401
Total current assets 890,304 908,060
Non-current assets:
Restricted cash 19,436 20,899
Goodwill 696,809 696,809
Property, plant and mine
development 5,120,069 5,155,865
Other assets 23,197 27,622
Total assets $ 6,749,815 $ 6,809,255
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 232,674 $ 209,906
Reclamation provision 7,666 6,769
Interest payable 13,611 13,816
Income taxes payable 18,488 19,328
Finance lease obligations 15,218 22,142
Current portion of long-term debt 16,033 52,182
Fair value of derivative financial
instruments 12,796 8,249
Total current liabilities 316,486 332,392
Non-current liabilities:
Long-term debt 1,180,326 1,322,461
Reclamation provision 246,572 249,917
Deferred income and mining tax
liabilities 802,261 797,192
Other liabilities 44,401 38,803
Total liabilities 2,590,046 2,740,765
EQUITY
Common shares:
Outstanding - 217,377,496 common
shares issued, less 344,510 4,685,089 4,599,788
shares held in trust
Stock options 209,529 200,830
Contributed surplus 37,254 37,254
Deficit (775,073) (779,382)
Accumulated other comprehensive
income 2,970 10,000
Total equity 4,159,769 4,068,490
Total liabilities and equity $ 6,749,815 $ 6,809,255
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(thousands of United States dollars, except per share amounts, IFRS
basis)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
REVENUES
Revenues from mining
operations $ 510,109 $ 438,521 $ 993,705 $ 930,288
COSTS, EXPENSES AND
OTHER INCOME
Production (i) 263,612 229,383 510,892 447,449
Exploration and
corporate
development 30,616 11,627 47,267 21,045
Amortization of
property, plant and
mine development 157,615 93,656 293,512 177,137
General and
administrative 23,572 41,515 48,793 67,785
Impairment loss on
available-for-sale
securities 345 2,419 1,030 2,419
Finance costs 17,955 17,259 37,667 34,397
Gain on derivative
financial
instruments (8,836) (518) (260) (4,264)
Gain on sale of
available-for-sale
securities (2,675) (5,016) (23,724) (5,289)
Environmental
remediation (141) 501 288 673
Foreign currency
translation loss
(gain) 4,779 6,568 (6,911) 1,509
Other expenses 2,358 7,310 7,529 6,892
Income before income
and mining taxes 20,909 33,817 77,622 180,535
Income and mining
taxes expense 10,826 11,659 38,796 61,232
Net income for the
period $ 10,083 $ 22,158 $ 38,826 $ 119,303
Net income per share
- basic $ 0.05 $ 0.12 $ 0.18 $ 0.66
Net income per share
- diluted $ 0.05 $ 0.12 $ 0.18 $ 0.66
Weighted average
number of common
shares outstanding
(in thousands):
Basic 215,426 185,718 214,996 179,845
Diluted 216,722 186,426 216,186 180,426
(i) Exclusive of amortization, which is shown separately.
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, IFRS basis)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
OPERATING ACTIVITIES
Net income for the
period $ 10,083 $ 22,158 $ 38,826 $ 119,303
Add (deduct) items not
affecting cash:
Amortization of
property, plant
and mine
development 157,615 93,656 293,512 177,137
Deferred income
and mining taxes
(13,680) (757) 5,620 19,207
Gain on sale of
available-for-sale
securities (2,675) (5,016) (23,724) (5,289)
Stock-based
compensation 8,131 9,872 19,849 22,480
Impairment loss on
available-for-sale
securities 345 2,419 1,030 2,419
Foreign currency
translation loss
(gain) 4,779 6,568 (6,911) 1,509
Other (11,403) 7,681 2,133 7,906
Adjustment for
settlement of
reclamation provision
(407) (101) (709) (1,035)
Changes in non-cash
working capital
balances:
Trade receivables
22 15,364 (1,462) 8,253
Income taxes
13,043 (1,227) (11,020) 20,520
Inventories
11,623 6,432 22,035 29,903
Other current
assets (18,186) (20,325) (23,023) (4,805)
Accounts payable
and accrued
liabilities 36,435 53,161 15,853 35,756
Interest payable
(7,376) (7,157) (205) (140)
Cash provided by
operating activities
188,349 182,728 331,804 433,124
INVESTING ACTIVITIES
Additions to property,
plant and mine
development (111,511) (115,157) (194,398) (216,617)
Acquisitions, net of
cash and cash
equivalents acquired
(5,983) (403,509) (12,983) (403,509)
Net purchases of
short-term investments
(947) (2,004) (1,048) (2,004)
Net proceeds from sale
of available-for-sale
securities and
warrants 18,643 39,529 56,311 40,142
Purchase of
available-for-sale
securities and
warrants (14,158) - (19,433) (13,385)
Decrease (increase) in
restricted cash 9,480 (7,402) 13,183 (1,458)
Cash used in investing (5
activities (104,476) (488,543) (158,368) 96,831)
FINANCING ACTIVITIES
Dividends paid
(14,423) (12,940) (29,198) (24,913)
Repayment of finance
lease obligations (5,039) (2,442) (13,444) (6,694)
Sale-leaseback
financing - - - 1,027
Proceeds from
long-term debt 75,000 730,000 75,000 730,000
Repayment of long-term
debt (126,086) (343,933) (226,086) (423,933)
Repurchase of common
shares for restricted
share unit plan (1,257) - (11,899) (7,518)
Proceeds on exercise
of stock options 4,735 8,471 12,958 10,456
Common shares issued
2,556 2,795 4,973 5,439
Cash (used in)
provided by financing
activities (64,514) 381,951 (187,696) 283,864
Effect of exchange
rate changes on cash
and cash equivalents 966 1,658 (4,946) 311
Net increase
(decrease) in cash and
cash equivalents
during the period 20,325 77,794 (19,206) 120,468
Cash and cash
equivalents, beginning
of period 138,006 181,775 177,537 139,101
Cash and cash
equivalents, end of
period $ 158,331 $ 259,569 $ 158,331 $ 259,569
AGNICO EAGLE MINES LIMITED
RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES
(thousands of United States dollars, except where noted)
(Unaudited)
Total
Production
Costs by Mine
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2015 2014 2015 2014
(thousands of
United States
dollars)
Production
costs per the
consolidated
statements of
income (loss)
and
comprehensive
income (loss) $ 263,612 $ 229,383 $ 510,892 $ 447,449
LaRonde mine 45,133 46,758 90,999 94,037
Lapa mine 13,656 14,356 27,641 29,706
Goldex mine 16,913 15,419 31,780 31,264
Meadowbank
mine 66,888 63,808 123,983 130,888
Canadian
Malartic mine
(i) 42,185 18,333 83,371 18,333
Kittila mine 30,777 26,925 62,776 56,384
Pinos Altos
mine 29,768 29,940 53,979 61,359
Creston
Mascota
deposit at
Pinos Altos 7,501 6,809 13,107 12,633
La India mine
(ii) 10,791 7,035 23,256 12,845
Total $ 263,612 $ 229,383 $ 510,892 $ 447,449
Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced(iii) by
Mine and Reconciliation of Production Costs to Minesite Costs per Tonne(iv) by Mine
LaRonde Mine - Total Cash Costs
per Ounce of Gold Produced (iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 45,133 $ 46,758 $ 90,999 $ 94,037
Adjustments:
Inventory
and other
adjustments
(v) 6,786 10,701 13,464 19,164
Cash
operating
costs
(co-product
basis) $ 51,919 $ 57,459 $ 104,463 $ 113,201
By-product
metal
revenues (12,701) (21,947) (23,835) (43,645)
Cash
operating
costs
(by-product
basis) $ 39,218 $ 35,512 $ 80,628 $ 69,556
Gold
production
(ounces) 64,007 48,494 122,900 107,846
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 811 $ 1,185 $ 850 $ 1,050
By-product
basis $ 613 $ 732 $ 656 $ 645
LaRonde Mine
- Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 45,133 $ 46,758 $ 90,999 $ 94,037
Inventory and
other
adjustments
(vi) 854 2,666 1,719 3,814
Minesite
operating
costs $ 45,987 $ 49,424 $ 92,718 $ 97,851
Minesite
operating
costs
(thousands of
C$) C$ 56,474 C$ 53,898 C$ 114,263 C$ 107,342
Tonnes of ore
milled
(thousands of
tonnes) 568 564 1,126 1,121
Minesite
costs per
tonne (C$)
(iv) C$ 99 C$ 96 C$ 101 C$ 96
Lapa Mine - Total Cash Costs per
Ounce of Gold Produced (iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 13,656 $ 14,356 $ 27,641 $ 29,706
Adjustments:
Inventory
and other
adjustments
(v) (459) 1,307 290 1,467
Cash
operating
costs
(co-product
basis) $ 13,197 $ 15,663 $ 27,931 $ 31,173
By-product
metal
revenues (1) (1) (18) (3)
Cash
operating
costs
(by-product
basis) $ 13,196 $ 15,662 $ 27,913 $ 31,170
Gold
production
(ounces) 19,450 18,821 45,370 42,230
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 679 $ 832 $ 616 $ 738
By-product
basis $ 678 $ 832 $ 615 $ 738
Lapa Mine -
Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 13,656 $ 14,356 $ 27,641 $ 29,706
Inventory and
other
adjustments
(vi) (658) 1,340 (109) 1,458
Minesite
operating
costs $ 12,998 $ 15,696 $ 27,532 $ 31,164
Minesite
operating
costs
(thousands of
C$) C$ 15,919 C$ 17,117 C$ 33,996 C$ 34,187
Tonnes of ore
milled
(thousands of
tonnes) 126 163 278 320
Minesite
costs per
tonne (C$)
(iv) C$ 126 C$ 105 C$ 122 C$ 107
Goldex Mine - Total Cash Costs
per Ounce of Gold Produced (iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 16,913 $ 15,419 $ 31,780 $ 31,264
Adjustments:
Inventory
and other
adjustments
(v) (163) 626 810 (411)
Cash
operating
costs
(co-product
basis) $ 16,750 $ 16,045 $ 32,590 $ 30,853
By-product
metal
revenues (5) (5) (13) (11)
Cash
operating
costs
(by-product
basis) $ 16,745 $ 16,040 $ 32,577 $ 30,842
Gold
production
(ounces) 26,462 23,929 55,712 43,359
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 633 $ 671 $ 585 $ 712
By-product
basis $ 633 $ 670 $ 585 $ 711
Goldex Mine -
Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 16,913 $ 15,419 $ 31,780 $ 31,264
Inventory and
other
adjustments
(vi) (328) 686 432 (332)
Minesite
operating
costs $ 16,585 $ 16,105 $ 32,212 $ 30,932
Minesite
operating
costs
(thousands of
C$) C$ 20,318 C$ 17,563 C$ 39,635 C$ 33,932
Tonnes of ore
milled
(thousands of
tonnes) 604 518 1,171 1,003
Minesite
costs per
tonne (C$)
(iv) C$ 34 C$ 34 C$ 34 C$ 34
Meadowbank Mine - Total Cash
Costs per Ounce of Gold Produced
(iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 66,888 $ 63,808 $ 123,983 $ 130,888
Adjustments:
Inventory
and other
adjustments
(v) (3,094) 3,168 (554) 4,479
Cash
operating
costs
(co-product
basis) $ 63,794 $ 66,976 $ 123,429 $ 135,367
By-product
metal
revenues (978) (493) (2,667) (1,045)
Cash
operating
costs
(by-product
basis) $ 62,816 $ 66,483 $ 120,762 $ 134,322
Gold
production
(ounces) 91,276 118,161 179,799 274,605
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 699 $ 567 $ 686 $ 493
By-product
basis $ 688 $ 563 $ 672 $ 489
Meadowbank
Mine -
Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 66,888 $ 63,808 $ 123,983 $ 130,888
Inventory and
other
adjustments
(vi) (3,768) 3,551 (2,074) 4,939
Minesite
operating
costs $ 63,120 $ 67,359 $ 121,909 $ 135,827
Minesite
operating
costs
(thousands of
C$) C$ 75,290 C$ 73,457 C$ 145,917 C$ 149,002
Tonnes of ore
milled
(thousands of
tonnes) 1,019 1,051 2,010 2,045
Minesite
costs per
tonne (C$)
(iv) C$ 74 C$ 70 C$ 73 C$ 73
Canadian Malartic Mine - Total
Cash Costs per Ounce of Gold
Produced (i)(iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 42,185 $ 18,333 $ 83,371 $ 18,333
Adjustments:
Inventory
and other
adjustments
(v) 688 (10,721) 3,554 (10,721)
Cash
operating
costs
(co-product
basis) $ 42,873 $ 7,612 $ 86,925 $ 7,612
By-product
metal
revenues (1,177) (329) (2,319) (329)
Cash
operating
costs
(by-product
basis) $ 41,696 $ 7,283 $ 84,606 $ 7,283
Gold
production
(ounces) 68,441 11,878 136,334 11,878
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 626 $ 641 $ 638 $ 641
By-product
basis $ 609 $ 613 $ 621 $ 613
Canadian
Malartic Mine
- Minesite
Costs per
Tonne (i)(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 42,185 $ 18,333 $ 83,371 $ 18,333
Inventory and
other
adjustments
(vi) 48 (10,754) 1,733 (10,754)
Minesite
operating
costs $ 42,233 $ 7,579 $ 85,104 $ 7,579
Minesite
operating
costs
(thousands of
C$) C$ 51,937 C$ 8,160 C$ 105,126 C$ 8,160
Tonnes of ore
milled
(thousands of
tonnes) 2,307 398 4,647 398
Minesite
costs per
tonne (C$)
(iv) C$ 23 C$ 21 C$ 23 C$ 21
Kittila Mine - Total Cash Costs
per Ounce of Gold Produced (iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 30,777 $ 26,925 $ 62,776 $ 56,384
Adjustments:
Inventory
and other
adjustments
(v) 1,855 529 312 1,762
Cash
operating
costs
(co-product
basis) $ 32,632 $ 27,454 $ 63,088 $ 58,146
By-product
metal
revenues (38) (24) (73) (61)
Cash
operating
costs
(by-product
basis) $ 32,594 $ 27,430 $ 63,015 $ 58,085
Gold
production
(ounces) 41,986 31,830 86,640 70,382
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 777 $ 863 $ 728 $ 826
By-product
basis $ 776 $ 862 $ 727 $ 825
Kittila Mine
- Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 30,777 $ 26,925 $ 62,776 $ 56,384
Inventory and
other
adjustments
(vi) 1,858 414 199 1,496
Minesite
operating
costs $ 32,635 $ 27,339 $ 62,975 $ 57,880
Minesite
operating
costs
(thousands of
EUR) EUR 28,296 EUR 19,939 EUR 55,010 EUR 42,236
Tonnes of ore
milled
(thousands of
tonnes) 379 247 725 555
Minesite
costs per
tonne
(EUR)(iv) EUR 75 EUR 81 EUR 76 EUR 76
Pinos Altos Mine - Total Cash
Costs per Ounce of Gold Produced
(iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 29,768 $ 29,940 $ 53,979 $ 61,359
Adjustments:
Inventory
and other
adjustments
(v) (892) 913 2,353 911
Cash
operating
costs
(co-product
basis) $ 28,876 $ 30,853 $ 56,332 $ 62,270
By-product
metal
revenues (9,404) (8,165) (18,978) (17,885)
Cash
operating
costs
(by-product
basis) $ 19,472 $ 22,688 $ 37,354 $ 44,385
Gold
production
(ounces) 50,647 43,978 100,753 89,195
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 570 $ 702 $ 559 $ 698
By-product
basis $ 384 $ 516 $ 371 $ 498
Pinos Altos
Mine -
Minesite
Costs per
Tonne(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 29,768 $ 29,940 $ 53,979 $ 61,359
Inventory and
other
adjustments
(vi) (1,732) 466 948 (96)
Minesite
operating
costs $ 28,036 $ 30,406 $ 54,927 $ 61,263
Tonnes of ore
processed
(thousands of
tonnes) 648 656 1,231 1,279
Minesite
costs per
tonne (US$)
(iv) $ 43 $ 46 $ 45 $ 48
Creston Mascota deposit at Pinos
Altos - Total Cash Costs per
Ounce of Gold Produced (iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 7,501 $ 6,809 $ 13,107 $ 12,633
Adjustments:
Inventory
and other
adjustments
(v) (611) 403 (143) 1,084
Cash
operating
costs
(co-product
basis) $ 6,890 $ 7,212 $ 12,964 $ 13,717
By-product
metal
revenues (611) (376) (1,158) (710)
Cash
operating
costs
(by-product
basis) $ 6,279 $ 6,836 $ 11,806 $ 13,007
Gold
production
(ounces) 15,606 11,159 28,054 21,476
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 441 $ 646 $ 462 $ 639
By-product
basis $ 402 $ 613 $ 421 $ 606
Creston Mascota deposit at Pinos
Altos - Minesite Costs per Tonne
(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 7,501 $ 6,809 $ 13,107 $ 12,633
Inventory and
other
adjustments
(vi) (691) 336 (292) 918
Minesite
operating
costs $ 6,810 $ 7,145 $ 12,815 $ 13,551
Tonnes of ore
processed
(thousands of
tonnes) 609 395 1,135 774
Minesite
costs per
tonne (US$)
(iv) $ 11 $ 18 $ 11 $ 18
La India Mine - Total Cash Costs
per Ounce of Gold Produced (ii)
(iii)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 10,791 $ 7,035 $ 23,256 $ 12,845
Adjustments:
Inventory
and other
adjustments
(v) 963 1,676 718 816
Cash
operating
costs
(co-product
basis) $ 11,754 $ 8,711 $ 23,974 $ 13,661
By-product
metal
revenues (1,179) (830) (2,311) (1,429)
Cash
operating
costs
(by-product
basis) $ 10,575 $ 7,881 $ 21,663 $ 12,232
Gold
production
(ounces) 25,803 17,809 52,326 28,017
Total cash
costs per
ounce of gold
produced ($
per ounce)
(iii):
Co-product
basis $ 456 $ 489 $ 458 $ 488
By-product
basis $ 410 $ 443 $ 414 $ 437
La India Mine
- Minesite
Costs per
Tonne(ii)(iv)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(thousands of
United States
dollars,
except as June 30, June 30, June 30, June 30,
noted) 2015 2014 2015 2014
Production
costs $ 10,791 $ 7,035 $ 23,256 $ 12,845
Inventory and
other
adjustments
(vi) 771 1,518 362 578
Minesite
operating
costs $ 11,562 $ 8,553 $ 23,618 $ 13,423
Tonnes of ore
processed
(thousands of
tonnes) 1,360 1,138 2,738 1,825
Minesite
costs per
tonne (US$)
(iv) $ 9 $ 8 $ 9 $ 7
Notes:
(i) On June 16, 2014, Agnico Eagle and Yamana jointly
acquired 100.0% of Osisko by way of the Arrangement. As
a result of the Arrangement, Agnico Eagle and Yamana
each indirectly own 50.0% of Osisko (now Canadian
Malartic Corporation) and Canadian Malartic GP, which
now holds the Canadian Malartic mine. The information
set out in this table reflects the Company's 50.0%
interest in the Canadian Malartic mine since the date of
acquisition.
(ii) The La India mine achieved commercial production on
February 1, 2014. 3,492 ounces of payable gold
production were excluded from the calculation of total
cash costs per ounce of gold produced in the first
quarter of 2014 as they were produced prior to the
achievement of commercial production.
(iii) Total cash costs per ounce of gold produced is not a
recognized measure under IFRS and this data may not be
comparable to data presented by other gold producers.
Total cash costs per ounce of gold produced is presented
on both a by-product basis (deducting by-product metal
revenues from production costs) and co-product basis
(before by-product metal revenues). Total cash costs per
ounce of gold produced on a by-product basis is
calculated by adjusting production costs as recorded in
the condensed interim consolidated statements of income
for by-product metal revenues, unsold concentrate
inventory production costs, smelting, refining and
marketing charges and other adjustments, and then
dividing by the number of ounces of gold produced. Total
cash costs per ounce of gold produced on a co-product
basis is calculated in the same manner as total cash
costs per ounce of gold produced on a by-product basis
except that no adjustment for by-product metal revenues
is made. The calculation of total cash costs per ounce
of gold produced on a co-product basis does not reflect
a reduction in production costs or smelting, refining
and marketing charges associated with the production and
sale of by-product metals. The Company believes that
these generally accepted industry measures provide a
realistic indication of operating performance and
provide useful comparison points between periods. Total
cash costs per ounce of gold produced is intended to
provide information about the cash generating
capabilities of the Company's mining operations.
Management also uses these measures to monitor the
performance of the Company's mining operations. As
market prices for gold are quoted on a per ounce basis,
using the total cash costs per ounce of gold produced on
a by-product basis measure allows management to assess a
mine's cash generating capabilities at various gold
prices. Management is aware that these per ounce
measures of performance can be affected by fluctuations
in exchange rates and, in the case of total cash costs
of gold produced on a by-product basis, by-product metal
prices. Management compensates for these inherent
limitations by using these measures in conjunction with
minesite costs per tonne (discussed below) as well as
other data prepared in accordance with IFRS. Management
also performs sensitivity analyses in order to quantify
the effects of fluctuating metal prices and exchange
rates.
(iv) Minesite costs per tonne is not a recognized measure
under IFRS and this data may not be comparable to data
presented by other gold producers. This measure is
calculated by adjusting production costs as shown in the
condensed interim consolidated statements of income for
unsold concentrate inventory production costs, and then
dividing by tonnes of ore milled. As the total cash
costs per ounce of gold produced measure can be impacted
by fluctuations in by-product metal prices and exchange
rates, management believes that the minesite costs per
tonne measure provides additional information regarding
the performance of mining operations, eliminating the
impact of varying production levels. Management also
uses this measure to determine the economic viability of
mining blocks. As each mining block is evaluated based
on the net realizable value of each tonne mined, in
order to be economically viable the estimated revenue on
a per tonne basis must be in excess of the minesite
costs per tonne. Management is aware that this per tonne
measure of performance can be impacted by fluctuations
in processing levels and compensates for this inherent
limitation by using this measure in conjunction with
production costs prepared in accordance with IFRS.
(v) Under the Company's revenue recognition policy, revenue
is recognized on concentrates when legal title and risk
is transferred. As total cash costs per ounce of gold
produced are calculated on a production basis, this
inventory adjustment reflects the sales margin on the
portion of concentrate production not yet recognized as
revenue. Other adjustments include the addition of
smelting, refining and marketing charges to production
costs.
(vi) This inventory and other adjustment reflects production
costs associated with unsold concentrates.
Reconciliation of Production Costs to All-in Sustaining Costs per Ounce of Gold Produced
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(United States
dollars per
ounce of gold
produced, except June 30, June 30, June 30, June 30,
where noted) 2015 2014 2015 2014
Production costs
per the
condensed
interim
consolidated
statements of
income
(thousands of
United States
dollars)
$ 263,612 $ 229,383 $ 510,892 $ 447,449
Adjusted Gold
production
(ounces)(i) 403,678 326,059 807,888 688,988
Production costs
per ounce of
adjusted gold
production(i) $653 $704 $632 $649
Adjustments:
Inventory and
other
adjustments
(ii) 13 26 26 27
Total cash costs
per ounce of
gold produced
(co-product
basis)(iii) $ 666 $ 730 $ 658 $ 676
Byproduct
metal revenues (65) (99) (63) (94)
Total cash costs
per ounce of
gold produced
(by-product
basis)(iii) $ 601 $ 631 $ 595 $ 582
Adjustments:
Sustaining
capital
expenditures
(including
capitalized
exploration) 203 241 177 207
General and
administrative
expenses
(including
stock options) 58 127 60 98
Non-cash
reclamation
provision and
other 2 4 3 3
All-in
sustaining costs
per ounce of
gold produced
(by-product
basis) $ 864 $ 1,003 $ 835 $ 890
Byproduct
metal revenues 65 99 63 94
All-in
sustaining costs
per ounce of
gold produced
(co-product
basis) $ 929 $ 1,102 $ 898 $ 984
Notes:
(i) The La India mine achieved commercial production on
February 1, 2014. 3,492 ounces of payable gold
production were excluded from the calculation of total
cash costs per ounce of gold produced in the first
quarter of 2014 as they were produced prior to the
achievement of commercial production.
(ii) Under the Company's revenue recognition policy, revenue
is recognized on concentrates when legal title and risk
is transferred. As total cash costs per ounce of gold
produced are calculated on a production basis, this
inventory adjustment reflects the sales margin on the
portion of concentrate production not yet recognized as
revenue. Other adjustments include the addition of
smelting, refining and marketing charges to production
costs.
(iii) Total cash costs per ounce of gold produced is not a
recognized measure under IFRS and this data may not be
comparable to data presented by other gold producers.
Total cash costs per ounce of gold produced is presented
on both a by-product basis (deducting by-product metal
revenues from production costs) and co-product basis
(before by-product metal revenues). Total cash costs per
ounce of gold produced on a by-product basis is
calculated by adjusting production costs as recorded in
the condensed interim consolidated statements of income
for by-product metal revenues, unsold concentrate
inventory production costs, smelting, refining and
marketing charges and other adjustments, and then
dividing by the number of ounces of gold produced. Total
cash costs per ounce of gold produced on a co-product
basis is calculated in the same manner as total cash
costs per ounce of gold produced on a by-product basis
except that no adjustment for by-product metal revenues
is made. The calculation of total cash costs per ounce
of gold produced on a co-product basis does not reflect
a reduction in production costs or smelting, refining
and marketing charges associated with the production and
sale of by-product metals. The Company believes that
these generally accepted industry measures provide a
realistic indication of operating performance and
provide useful comparison points between periods. Total
cash costs per ounce of gold produced is intended to
provide information about the cash generating
capabilities of the Company's mining operations.
Management also uses these measures to monitor the
performance of the Company's mining operations. As
market prices for gold are quoted on a per ounce basis,
using the total cash costs per ounce of gold produced on
a by-product basis measure allows management to assess a
mine's cash generating capabilities at various gold
prices. Management is aware that these per ounce
measures of performance can be affected by fluctuations
in exchange rates and, in the case of total cash costs
of gold produced on a by-product basis, by-product metal
prices. Management compensates for these inherent
limitations by using these measures in conjunction with
minesite costs per tonne as well as other data prepared
in accordance with IFRS. Management also performs
sensitivity analyses in order to quantify the effects of
fluctuating metal prices and exchange rates.
SOURCE Agnico Eagle Mines Limited
