Agnico Eagle Reports Fourth Quarter and Full Year 2019 Results – Record Annual and Quarterly Gold Production; Production Guidance Outlines 18% Growth Through 2022 With Declining Unit Costs in 2021 and 2022; Pipeline Projects Continue to Advance; Quarterly Dividend Increased
TORONTO, Feb. 13, 2020 – Agnico Eagle Mines Limited (NYSE:AEM,TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $331.7 million, or net income of $1.39 per share, for the fourth quarter of 2019. This result includes an impairment reversal (net of tax) relating to the Meliadine mine of $223.4 million ($0.93 per share), non-cash foreign currency translation gains on deferred tax liabilities and non-recurring tax adjustments of $10.6 million ($0.05 per share), mark-to-market gains and other adjustments of $7.2 million ($0.03 per share) and derivative gains on financial instruments of $3.1 million ($0.01 per share). Excluding these items would result in adjusted net income1 of $87.4 million or $0.37 per share for the fourth quarter of 2019. For the fourth quarter of 2018, the Company reported a net loss of $393.7 million or a loss of $1.68 per share.
Included in the fourth quarter of 2019 net income, and not adjusted above, is a non-cash stock option expense of $3.2 million ($0.01 per share).
For the full year 2019, the Company reported net income of $473.2 million, or $2.00 per share. This compares with the full year 2018, when the company reported a net loss of $326.7 million, or loss of $1.40 per share.
In the fourth quarter of 2019, cash provided by operating activities was $257.5 million ($263.8 million before changes in non-cash components of working capital), as compared with the fourth quarter of 2018 when cash provided by operating activities was $140.3 million ($150.4 million before changes in non-cash components of working capital).
For the full year 2019, cash provided by operating activities was a record $881.7 million ($867.3 million before changes in non-cash components of working capital), as compared with the full year 2018 when cash provided by operating activities was $605.7 million ($645.5 million before changes in non-cash components of working capital).
The increase in net income and cash provided by operating activities during the fourth quarter of 2019 and for the full year 2019, compared to the prior year periods, was mainly due to higher gold sales volumes and higher realized gold prices, partially offset by higher costs relating to the slower than expected ramp up at the Amaruq satellite deposit and the Meliadine mine. Higher gold sales volumes were largely a result of the increased production due to the completion of the Meliadine project in 2019.
“With two new mines coming into production in Nunavut, 2019 was a pivotal year for the Company. We set new records for both annual gold production and cash provided by operating activities. Despite setting these production and cash flow records, the production ramp up in Nunavut has been slower than expected, which has resulted in higher than anticipated costs in the fourth quarter of 2019 and slight revisions to our 2020 production guidance,” said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “In 2020, we have put plans in place to improve productivity and optimize the operations as they continue to ramp up and we expect quarterly production growth and lower costs as we move through the year. We remain confident in our business with 18% production growth forecast through 2022 and our confidence is demonstrated with a further 14% increase in our quarterly dividend,” added Mr. Boyd.
1 Adjusted net income is a non-GAAP measure. For a discussion regarding the Company’s use of non-GAAP measures, please see “Note Regarding Certain Measures of Performance”.
Fourth quarter of 2019 and full year 2019 highlights include:
- Record quarterly and annual gold production – Payable gold production2 in the fourth quarter of 2019 was 494,678 ounces (including pre-commercial production ounces of 3,137 (50% basis) at Canadian Malartic from the Barnat deposit) at production costs per ounce of $763, total cash costs per ounce3 of $745 and all-in sustaining costs per ounce4 (“AISC”) of $1,039. Payable gold production for the full year 2019 was 1,782,147 ounces (including pre-commercial production ounces of 47,281 at Meliadine, 35,281 at Amaruq and 3,137 at Canadian Malartic from the Barnat deposit), at production costs per ounce of $735 and total cash costs per ounce of $673, compared to the most recent guidance of 1.77 to 1.78 million ounces of gold at total cash costs per ounce of $620 to $670. AISC for the full year 2019 were $938, compared to the most recent guidance of $875 to $925 per ounce
- Gold production is forecast to increase by 18% from 2019 to 2022 – The gold production forecast for 2020 is now 1.875 million ounces, compared to the most recent guidance of 1.9 to 2.0 million ounces. The gold production guidance for 2020 was reduced largely due to revisions to the mine plans at the Nunavut operations and LaRonde. The mid-point of gold production guidance for 2021 is essentially unchanged at 2.05 million ounces and the mid-point of gold production guidance for 2022 is 2.10 million ounces
- Unit costs expected to decline from 2020 to 2022 – In 2020, total cash costs per ounce are forecast to be between $725 and $775 and AISC are forecast to be between $975 and $1,025 per ounce. Costs in 2020 are forecast to increase over 2019 largely due to the ongoing ramp up of the Nunavut operations and a more conservative mining plan at LaRonde. The Company expects production to increase and costs to be reduced after the first quarter of the year as plans are in place to resolve the key outstanding ramp up issues in Nunavut and LaRonde infrastructure upgrades are completed. Total cash costs per ounce and AISC are expected to continue to decline from 2020 through 2022
- 2019 gold mineral reserves declined slightly while gold grades increased 5%; measured and indicated mineral resources increased by 4% and inferred mineral resources increased by 19% – The increase in inferred mineral resources was largely due to additions at East Gouldie and East Malartic. The average gold mineral reserve grade in 2019 increased from 2.7 grams per tonne (“g/t”) to 2.83 g/t, which is the fourth consecutive year of improvement. Average mineral resource grades for the year-ended 2019 were essentially unchanged from the previous year
- Dividend increased by 14% – A quarterly dividend of $0.20 per share has been declared. The previous quarterly dividend was $0.175 per share
- Project pipeline shows potential to support future production growth
- Meliadine Phase 2 expansion approved – The current Meliadine mill has shown that it can operate well in excess of its nameplate 3,750 tonnes per day (“tpd”) capacity. As a result, the Company has decided to accelerate the Phase 2 expansion to utilize this extra mill capacity. The initial source of open pit ore will be from two pits developed on the Tiriganiaq deposit, which contain probable mineral reserves of 590,412 ounces of gold (3.8 million tonnes grading 4.89 g/t gold). Approximately 16,500 pre-commercial gold ounces are expected to be produced from Tiriganiaq pits in 2020
- Amaruq underground project continues to advance – Amaruq mineral reserves increased 15% year-over-year to 3.3 million ounces of gold (26 million tonnes grading 3.96 g/t gold), with the addition of initial underground probable mineral reserves in the Whale Tail deposit of 577,000 ounces of gold (3.3 million tonnes grading 5.43 g/t gold). The Company believes that there is good potential for the Amaruq underground to contribute to its production profile starting in 2022
- Underground mineral resources expanded at Canadian Malartic – An initial inferred mineral resource of 1.4 million ounces of gold (12.8 million tonnes grading 3.34 g/t gold) (50% basis), has been declared at the East Gouldie Zone, which was discovered in late 2018. Drilling highlights from 2019 include 8.6 g/t gold over 25.8 metres at 1,071 metres depth. At East Malartic, inferred mineral resources of 1.2 million ounces of gold (50% basis) were added with the inclusion of deeper portions of the deposit between 1,000 metres to 1,800 metres depth, increasing total inferred mineral resources at East Malartic to 2.6 million ounces of gold (39.4 million tonnes grading 2.05 g/t gold) (50%)
- Drilling at Santa Gertrudis extends high-grade mineral resources – The Amelia deposit continues to grow with an updated inferred mineral resource of 70,000 ounces of gold (1.6 million tonnes grading 1.38 g/t gold) at open pit depth, as well as an initial underground inferred mineral resource of 451,000 ounces of gold (3.1 million tonnes grading 4.58 g/t gold) in higher-grade sulphide material
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