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Agnico Eagle Reports Fourth Quarter and Full Year 2019 Results - Record Annual and Quarterly Gold Production; Production Guidance Outlines 18% Growth Through 2022...

Stock Symbol: AEM (NYSE and TSX)

(All amounts expressed in U.S. dollars unless otherwise noted)

TORONTOFeb. 13, 2020 /CNW/ - 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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2 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.

3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".

4 All-in-sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".

Fourth Quarter and Full Year 2019 Financial and Production Highlights

In the fourth quarter of 2019, strong operational performance continued at the Company's mines, which led to record quarterly payable gold production of 494,678 ounces, which includes the pre-commercial production from the Barnat deposit at Canadian Malartic. Excluding the pre-commercial production ounces at Barnat, payable gold production was 491,541 ounces, compared to 410,712 ounces in the fourth quarter of 2018.

For the full year 2019, payable gold production was a record 1,782,147 ounces, which includes the pre-commercial production ounces at the Meliadine mine, the Amaruq satellite deposit and the Barnat deposit. Excluding the pre-commercial production ounces, payable gold production was 1,696,443 ounces, compared to 1,626,669 ounces in 2018.

The higher level of gold production in the fourth quarter of 2019 and the full year 2019, when compared with the prior-year periods, was primarily due to the start of production at the Meliadine mine in 2019. A detailed description of the production at each mine is set out below.

Production costs per ounce in the fourth quarter of 2019 were $763, compared to $693 in the prior-year period. Total cash costs per ounce in the fourth quarter of 2019 were $745, compared to $608 in the prior-year period.

Production costs per ounce for the full year 2019 were $735, compared to $713 in the prior-year period. Total cash costs per ounce for the full year 2019 were $673, compared to $637 in the prior-year period.

Production costs per ounce and total cash costs per ounce in the fourth quarter of 2019 and the full year 2019 increased when compared to the prior-year periods primarily due to higher costs relating to the slower than expected ramp up at the Amaruq satellite deposit and the Meliadine mine, partially offset by higher gold production.

AISC in the fourth quarter of 2019 was $1,039 per ounce, compared to $852 in the prior-year period. AISC for the full year 2019 was $938 per ounce, compared to $877 in the prior-year period.

AISC in the fourth quarter of 2019 and for the full year 2019 increased when compared to the prior-year periods primarily due to higher total cash costs per ounce and higher sustaining capital costs, partially offset by expected higher gold production. A detailed description of the cost performance of each mine is set out below.

In the fourth quarter of 2019, an impairment reversal, net of tax, of $223.4 million relating to the Meliadine mine was recorded in connection with an impairment review performed under International Financial Reporting Standards. The impairment reversal was recognized as a result of various factors including the decrease in project risk.

Cash Position Continues to Grow, Resulting in Increasing Financial Flexibility

Cash and cash equivalents and short-term investments increased to $327.9 million at December 31, 2019, from the September 30, 2019 balance of $265.2 million.

The outstanding balance on the Company's credit facility remained nil at December 31, 2019. This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

With the upcoming debt maturity of $360 million of notes due in April 2020, the Company is evaluating various options to maintain financial flexibility. The Company remains committed to maintaining an investment grade balance sheet and expects to reduce gross debt in 2020 while maintaining strong liquidity.

Approximately 16% of the Company's 2020 Canadian dollar exposure is hedged at an average floor price of approximately 1.30 C$/US$. Approximately 8% of the Company's 2020 Mexican peso exposure is hedged at an average floor price of approximately 19.40 MXP/US$. The Company's 2020 Euro exposure is currently unhedged. The Company's full year 2020 cost guidance is based on assumed exchange rates of 1.30 C$/US$, 18.00 MXP/US$ and 1.15 US$/EUR. The Company anticipates adding to its operating currency hedges, subject to market conditions.

Approximately 77% of the Company's diesel exposure relating to its Nunavut operations for 2020 is hedged at prices better than the 2020 cost guidance assumption of C$0.85 per litre (excluding transportation costs). The Company anticipates adding to its diesel hedges, subject to market conditions.

Capital Expenditures

Total capital expenditures (including sustaining capital) for the full year 2019 were $824.8 million, compared to guidance of $790 million. The increase in capital expenditures compared to the previous guidance primarily related to additional spending at Kittila and the Amaruq satellite deposit.  Approximately $16 million of additional capital expenditures at Kittila was due to the acceleration of costs in connection with tailings storage and the expansion project. At Amaruq, additional capital costs totaling $13 million were incurred in the fourth quarter of 2019 primarily related to additional mobile equipment and increased stripping costs.

The following table sets out capital expenditures (including sustaining capital) in the fourth quarter and the full year 2019.

Capital Expenditures





(In thousands of US dollars)







Three Months Ended


Twelve Months Ended



December 31, 2019


December 31, 2019

Sustaining Capital





LaRonde mine


$

18,794



$

72,165


LaRonde Zone 5


2,140



6,207


Canadian Malartic mine


13,960



45,880


Meadowbank Complex


18,801



18,801


Meliadine mine


12,554



30,937


Kittila mine


17,490



78,182


Goldex mine


7,795



22,711


Pinos Altos mine


9,511



28,098


Creston Mascota mine





La India mine


3,479



10,851


Total Sustaining Capital


$

104,524



$

313,832







Development Capital





LaRonde mine


$

10,481



$

20,011


LaRonde Zone 5




2,770


Canadian Malartic mine


9,554



37,171


Meadowbank Complex


17,556



174,866


Amaruq underground project


8,300



38,400


Meliadine mine


6,015



91,554


Kittila mine


37,023



101,597


Goldex mine


4,056



21,223


Pinos Altos mine


2,645



13,861


Creston Mascota mine





La India mine


931



4,516


Other


2,984



5,027


Total Development Capital


$

99,545



$

510,996


Total Capital Expenditures


$

204,069



$

824,828


Senior Management Changes

As we continue to position Agnico Eagle for the future, some changes to our senior management team were made at the end of 2019. These changes are part of our leadership development and succession plan, which is designed to ensure we have the right leaders in the right roles to build on our long-term success.

Don Allan retired as Senior Vice-President, Corporate Development and his responsibilities were transferred to Jean Robitaille, who was appointed Senior Vice-President – Corporate Development, Business Strategy and Technical Services. Jean's mandate will be to increase alignment between these functions as we continue to advance and build our pipeline of sustainable, high quality projects.

Transitioning to her retirement at the end of 2020, Louise Grondin's responsibilities for Environment and Sustainable Development were transferred to Carol Plummer, who was appointed Senior Vice-President, Sustainability. For 2020, Louise will remain as Senior Vice-President, People and Culture.

Quarterly Dividend Increased by 14%

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.20 per common share, payable on March 16, 2020 to shareholders of record as of February 28, 2020. Agnico Eagle has now declared a cash dividend every year since 1983.

Expected Dividend Record and Payment Dates for 2020

Record Date

Payment Date

February 28*

March 16*

June 1

June 15

August 31

September 15

November 25

December 15

*Declared

Dividend Reinvestment Plan

Please see the following link for information on the Company's dividend reinvestment plan: Dividend Reinvestment Plan

Fourth Quarter 2019 Results Conference Call and Webcast Tomorrow

Agnico Eagle's senior management will host a conference call on Friday, February 14, 2020 at 11:00 AM (E.S.T.) to discuss the Company's fourth quarter and full year financial and operating results.

Via Webcast:

A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com.

Via Telephone:

For those preferring to listen by telephone, please dial 1-647-427-7450 or toll-free 1-888-231-8191. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

Replay Archive:

Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 7265864. The conference call replay will expire on Friday, March 14, 2020.

The webcast along with presentation slides will be archived for 180 days on the Company's website.

New Three-Year Guidance – Forecast Shows Continued Production Growth

The Company is announcing its detailed production and cost guidance for 2020, and mine by mine production forecasts for 2020 through 2022. Gold production in 2020 is now forecast to be 1.875 million ounces. This compares to previous guidance of 1.9 to 2.0 million ounces. Gold production in 2021 is now forecast to be between 2.01 million and 2.09 million ounces (mid-point of 2.05 million ounces), which is the same as previous guidance. Gold production in 2022 is forecast to be between 2.07 million and 2.14 million ounces (mid-point of 2.1 million ounces).

The new guidance in 2020 largely reflects a slower than previously expected ramp up of production at the new Nunavut operations and a more conservative mining plan in the West mine area at LaRonde.  Further details on this guidance are provided below.

In 2020, gold production is expected to ramp up sequentially on a quarter-over-quarter basis. The first quarter of 2020 is expected to be the weakest quarter for gold production and the Company expects production over the remaining quarters to average approximately 470,000 to 490,000 ounces of gold per quarter.

Total cash costs per ounce in 2020 are expected to be between $725 and $775 using a C$/US$ foreign exchange rate assumption of 1.30. The higher costs in 2020, when compared to 2019, are largely a result of higher costs in Nunavut due to the slower than expected production ramp up, and general industry cost pressures (3% to 5% increase primarily on consumables and labour). The Company remains focused on reducing costs through productivity improvements (primarily in Nunavut) and innovation initiatives at all of its operations. As a result, in 2021, using a C$/US$ foreign exchange rate assumption of 1.30, total cash costs per ounce are forecast to decline to between $675 and $725. Costs are then forecast to then remain stable through 2022.

AISC for 2020 are expected to be between $975 and $1,025 per ounce. The higher AISC in 2020, when compared to 2019, is largely due to higher total cash costs. In 2021, using a C$/US$ foreign exchange rate assumption of 1.30, AISC are forecast to decline to between $900 and $950 per ounce, largely due to higher gold production, and lower total cash costs. The Company expects AISC to be steady to declining in 2022 and beyond (based on the same foreign exchange rate assumption).

With the start-up of operations at Meliadine and Amaruq in 2019, the Company now has four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex) each with annual production rates of approximately 250,000 to 400,000 ounces of gold. In addition, with the expected completion of the shaft and mill expansion at Kittila in late 2021, annual production in 2022 and beyond is expected to increase by approximately 25-30% over current levels, to more than 250,000 ounces at Kittila as new sources of ore are developed underground.

With gold production expected to increase, and total cash costs forecast to decline on a quarter-over-quarter basis in 2020, the Company expects to see a significant improvement in cash flow generation through year-end.

Three-Year Guidance Shows 18% Growth Over 2019 Production Level; Costs Forecast to Decline as Gold Production Increases Through 2022

Mine by mine production and cost guidance for 2020, and mine by mine production forecasts for 2021 and 2022 are set out below. Opportunities to further optimize and improve production and unit cost forecasts from 2020 through 2022 are being evaluated.

Estimated Payable Gold Production


2019*


2020*


2021


2022


Actual


Forecast


Forecast


Forecast






Range


Mid-Point


Range


Mid-Point

Northern Business














LaRonde Complex

402,984


342,500


342,500

357,500


350,000


352,500

367,500


360,000

Canadian Malartic (50%)

334,596


330,000


345,000

355,000


350,000


325,000

335,000


330,000

Goldex mine

140,884


137,500


130,000

140,000


135,000


127,500

132,500


130,000

Kittila mine

186,101


195,000


230,000

240,000


235,000


257,500

267,500


262,500

Meadowbank Complex

193,489


245,000


367,500

377,500


372,500


412,500

417,500


415,000

Meliadine mine

238,394


350,000


380,000

390,000


385,000


392,500

402,500


397,500


1,496,448


1,600,000


1,795,000

1,860,000


1,827,500


1,867,500

1,922,500


1,895,000

Southern Business













Pinos Altos mine

155,124


150,000


125,000

135,000


130,000


132,500

142,500


137,500

Creston Mascota mine

48,380


35,000





La India mine

82,190


90,000


85,000

95,000


90,000


65,000

70,000


67,500


285,694


275,000


210,000

230,000


220,000


197,500

212,500


205,000

Total Gold Production

1,782,142


1,875,000


2,005,000

2,090,000


2,047,500


2,065,000

2,135,000


2,100,000













* Includes pre-commercial gold production of 35,281 ounces at Amaruq and 47,281 ounces at Meliadine

** Includes estimated pre-commercial gold production of 15,500 ounces at Canadian Malartic relating to the Barnat pit and 16,500 ounces at Meliadine relating to phase 2 expansion

In 2021, the estimated mid-point production level is currently forecast to be approximately 2.05 million ounces of gold, which is essentially unchanged from the February 2019 forecast. In 2022, the estimated mid-point production level is currently forecast to be approximately 2.10 million ounces of gold.

Total cash costs per ounce on a by-product basis of gold produced ($ per ounce):






2019


2020






Actual


Forecast
(mid-point)

Northern Business




LaRonde Complex

$

502


$

620

Canadian Malartic mine (50%)

606


624

Goldex mine

584


650

Kittila mine

736


745

Meadowbank Complex

1,152


1,282

Meliadine mine

748


670


$

672


$

753

Southern Business




Pinos Altos mine

639


707

Creston Mascota mine

554


452

La India mine

823


803


$

678


$

706

Total

$

673


$

746

Currency and commodity price assumptions used for 2020 cost estimates and sensitivities are set out in the table below:

2020 commodity and currency

price assumptions

Approximate impact on total cash

costs per ounce basis

Silver ($/oz)

17.50

$1 / oz change in silver price

$2

Copper ($/lb)

2.75

10% change in copper price

$1

Zinc ($/lb)

1.10

10% change in zinc price

$1

Diesel (C$/ltr)

0.85

10% change in diesel price

$3

C$/US$

1.30

1.0% change in C$/US$

$6

US$/EUR

1.15

1.0% change in US$/EUR

$1

MXP/US$

18.00

10% change in MXP/US$

$4

Depreciation Guidance

Agnico Eagle expects its 2020 depreciation and amortization expense to be between $625 and $675 million.

General & Administrative Cost Guidance

Agnico Eagle expects 2020 general and administration expenses to be between $85 and $95 million, excluding share-based compensation. In 2020, share based compensation expense is expected to be between $25 and $35 million (including non-cash stock option expense of between $10 and $15 million).

Please see the supplemental financial data section of the Financial and Operating Database on the Company's website for additional historical financial data.

Tax Guidance

For 2020, the Company expects its effective tax rates to be:

Canada - 40% to 50%
Mexico - 35% to 40%
Finland - 20%

The Company's overall tax rate is expected to be between 40% and 45% for the full year 2020.

Updated Three Year Guidance Plan

Since the prior three-year gold production guidance of February 14, 2019 ("Previous Guidance"), there have been several operating developments resulting in changes to the overall three-year production profile. Descriptions of these changes are set out below.

Northern Business

ABITIBI REGION, QUEBEC

LaRonde Complex Forecast

2019

2020

2021

2022

Previous Guidance (oz)

380,000

390,000

385,000

 n.a.

Current Guidance (oz)

402,984 (actual)

342,500

350,000

360,000

LaRonde
Complex
Forecast  2020

Ore Milled
('000
tonnes)

Gold
(g/t)

Gold Mill
Recovery
(%)

Silver
(g/t)

Silver Mill
Recovery
(%)

Zinc (%)

Zinc Mill
Recovery
(%)

Copper
(%)

Copper Mill
Recovery
(%)

Minesite
Costs per
Tonne

(C$)5


2,866

3.93

94.6%

9.7

76.6%

0.29%

69.5%

0.15%

80.6%

$108

In 2019, the Company was granted a revision to the Certificate of Authorization at the LaRonde Complex, which allowed for the processing of ore from LaRonde Zone 5 ("LZ5") through the LaRonde mill circuit. As a result, the Company will report the operational parameters from both LZ5 and LaRonde on a combined basis starting in 2020.

At the LaRonde Complex, the lower production guidance for 2020 and 2021 (as compared to Previous Guidance) is related to lowered anticipated production rates at the LaRonde mine, partially offset by increased mining rates at LZ5, which is lower grade.

__________________

5 Minesite costs per tonne is a non-GAAP measure. For a reconciliation of this measure to production costs as reported in the financial statements, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance" below.

The lower gold production at the LaRonde mine in 2020 is primarily due to strengthening ground support and more conservative seismic protocols in the West mine area.  This impact (lower production and higher total cash costs per ounce) will be concentrated in the first quarter of the year as ground support infrastructure work is completed.  Changes in the mining sequence related to the merging of the mining pyramids in the East and West mine areas is also expected to impact production in 2020 and into 2021. Production is expected to increase (and costs decrease) in 2022 and beyond.

Canadian Malartic Forecast

2019*

2020

2021

2022

Previous Guidance (oz)

330,000

350,000

350,000

 n.a.

Current Guidance (oz)

334,596 (actual)

330,000

350,000

330,000

Canadian Malartic Forecast 2020**

Ore Milled
('000 tonnes)

Gold (g/t)

Gold Mill
Recovery (%)

Minesite Costs
per Tonne
(C$)


9,710

1.15

87.9%

$27

*Includes 2019 pre-commercial gold production of 3,137 ounces at the Barnat pit

**2020 Canadian Malartic guidance in the table above excludes estimated pre-commercial production tonnes from the Barnat pit. Estimated pre-commercial production is expected to be approximately 15,500 ounces of gold

At Canadian Malartic (in which Agnico Eagle has 50% ownership), the lower production guidance for 2020 (as compared to Previous Guidance) is primarily due to the processing of lower-grade ore. A reduced mining footprint and a higher density of underground openings in the Canadian Malartic pit has limited the access to higher-grade tonnes, which will be supplemented by lower-grade stockpiles in 2020.

Goldex Forecast

2019

2020

2021

2022

Previous Guidance (oz)

115,000

120,000

117,500

n.a.

Current Guidance (oz)

140,884 (actual)

137,500

135,000

130,000

Goldex Forecast 2020

Ore Milled
('000 tonnes)

Gold (g/t)

Gold Mill
Recovery (%)

Minesite Costs
per Tonne
(C$)


2,765

1.70

91%

$42

At Goldex, the higher production guidance for 2020 and 2021 (as compared to Previous Guidance) is largely due to the acceleration of mining rates from the Deep 1 area as well as the South Zone. The increased mining rates have been supported by strong performance of the Rail-Veyor haulage system, which is now at design rates. A new maintenance bay is expected to be completed later this year, which could result in additional Rail-Veyor capacity.

NUNAVUT REGION

Meadowbank Complex Forecast

2019*

2020

2021

2022

Previous Guidance (oz)

200,000

272,500

351,000

n.a.

Current Guidance (oz)

193,489 (actual)

245,000

372,500

415,000

*Includes 2019 pre-commercial gold production of 35,281 ounces at Amaruq (previous guidance of 40,000 ounces)

Meadowbank Complex Forecast
2020

Ore Milled
('000 tonnes)

Gold (g/t)

Gold Mill
Recovery (%)

Minesite Costs
per Tonne


2,826

2.90

93%

$145

At the Meadowbank Complex, the lower production guidance for 2020 (as compared to Previous Guidance) is due to a slower than expected ramp up of mining activities in the Amaruq Whale Tail pit, which will primarily impact the first quarter of 2020. Efforts are underway to optimize operations, both increasing production and reducing costs.

The higher production guidance for 2021 (as compared to Previous Guidance) is due to a slight increase in expected grade and improved productivity expected to result from initiatives being put in place in 2020. Costs in 2021 are expected to improve significantly over 2020.

The Company is taking a phased approach to development at the Amaruq underground project.  Additional capital is being spent in 2020 to further extend underground development at the Whale Tail deposit.  At year-end 2019, the Company declared an initial underground probable mineral reserve of 577,000 ounces of gold (3.3 million tonnes grading 5.43 g/t gold).  The Company believes that there is good potential to further increase the mineral reserves.  The Company's current evaluations forecast approximately 50,000 to 60,000 ounces gold being produced from underground operations beginning in 2022.

Meliadine Forecast

2019*

2020

2021

2022

Previous Guidance (oz)

230,000

385,000

365,000

375,000

Current Guidance (oz)

238,394 (actual)

350,000

385,000

397,500

*Includes pre-commercial gold production of 47,281 ounces at Meliadine (previous guidance of 60,000 ounces)

Meliadine Forecast 2020**

Ore Milled
('000 tonnes)

Gold (g/t)

Gold Mill
Recovery (%)

Minesite Costs
per Tonne
(C$)


1,345

8.00

96.4%

$216

**2020 Meliadine guidance in the table above excludes estimated pre-commercial production tonnes relating to the Meliadine Phase 2 expansion. Estimated pre-commercial production is expected to be approximately 16,500 ounces of gold

At Meliadine, the lower production guidance for 2020 (as compared to Previous Guidance) is primarily due to a more conservative ramp up in the mining plan, which will result in lower grade and tonnage processed in 2020, primarily in the first half of the year.  The lower grades are primarily related to changes in the mining sequence, while the lower tonnage is largely due to modifications to the front end of the crushing circuit.

The higher production guidance for 2021 and 2022 (as compared to Previous Guidance) is primarily due to the advancement of the Phase 2 expansion, which results in increased tonnage processed, albeit at lower grades (from the Tiriganiaq open pits). Additional details on the Phase 2 expansion are provided in the Meliadine operating section below.

Minesite costs per tonne at Meliadine are expected to decline as production levels increase.

FINLAND

Kittila Forecast

2019

2020

2021

2022

Previous Guidance (oz)

175,000

215,000

245,000

n.a

Current Guidance (oz)

186,101 (actual)

195,000

235,000

262,500

Kittila Forecast 2020

Ore Milled
('000 tonnes)

Gold (g/t)

Gold Mill
Recovery (%)

Minesite Costs
per Tonne
(EUR)


1,640

4.30

86%

77

At Kittila, the lower production guidance for 2020 and 2021 (as compared to Previous Guidance) is primarily due to a slight decrease in the reserve grade due to minor revisions to the reserve methodology, and mining sequence changes related to the underground expansion project, which is expected to be completed in 2022.

Southern Business

Pinos Altos Forecast

2019

2020

2021

2022

Previous Guidance (oz)

165,000

150,000

146,500

 n.a.

Current Guidance (oz)

155,124 (actual)

150,000

130,000

137,500

Pinos Altos Forecast 2020

Total Ore
('000 tonnes)

Gold (g/t)

Gold
Recovery

(%)

Silver (g/t)

Silver Mill
Recovery

(%)

Minesite

Costs per

Tonne


2,260

2.2

93.9%

55.50

48.2%

$62

At Pinos Altos, the lower production guidance for 2021 (as compared to Previous Guidance) is largely due to a reduction in grade related to the mining sequence at Pinos Altos and a higher proportion of lower-grade ore being sourced from the Sinter deposit. The Company is evaluating the potential to develop the Reyna de Plata deposits and the Cubiro satellite zone, which could extend the mine life at Pinos Altos.

Creston Mascota Forecast

2019

2020

2021

2022

Previous Guidance (oz)

35,000

22,500

 n.a.

Current Guidance (oz)

48,380 (actual)

35,000

Creston Mascota Forecast

2020

Total Ore
('000 tonnes)

Gold (g/t)

Gold
Recovery

(%)

Silver (g/t)

Silver
Recovery

(%)

Minesite

Costs per

Tonne


420

2.77

93.8%

143.36

36.4%

$67

At Creston Mascota, the significantly higher production guidance for 2020 (as compared to Previous Guidance) is largely due to higher grade ore. Additional higher-grade ore was identified in the fourth quarter of 2019, but access was limited due to higher than expected rainfall. Mining activities are now forecast to continue through the first half of 2020, with leaching activities expected to continue through year-end 2020. Costs are expected to decline once mining activities have ceased.

La India Forecast

2019

2020

2021

2022

Previous Guidance (oz)

90,000

95,000

90,000

n.a.

Current Guidance (oz)

82,190 (actual)

90,000

90,000

67,500

La India Forecast 2020

Total Ore
('000 tonnes)

Gold (g/t)

Gold
Recovery

(%)

Silver (g/t)

Silver
Recovery

(%)

Minesite

Costs per

Tonne


6,118

0.69

66.3%

1.98

16.1%

$12

At La India, current guidance is essentially in line with the Previous Guidance. The Company continues to evaluate the potential to develop other satellite zones such as El Realito and Chipriona.

Total Capital Expenditures Expected to Decline in 2021; Sustaining Capital Costs Expected to Remain Stable through 2022

The estimated capital expenditures for 2020 total approximately $740 million, which includes approximately $332 million of sustaining capital at the Company's operating mines and $382 million on growth projects, as set out in the table below.  Additionally, approximately $26 million is estimated to be spent on capitalized exploration, approximately $90 million on expensed exploration and approximately $40 million on corporate development, project evaluations and technical services.

Estimated 2020 Capital Expenditures

(In thousands of US dollars)



Sustaining

Capital


Development

Capital

 

Capitalized Exploration




Sustaining


Non-

sustaining









LaRonde Complex

$

87,900


$

37,100


$

2,000


Canadian Malartic mine (50%)*

52,600


22,400



Meadowbank Complex

46,600


47,200



Amaruq Underground project


29,000



Meliadine mine*

37,800


64,500


2,900


4,000

Kittila mine

38,600


134,100


9,000


Goldex mine

25,500


14,700


4,300


2,100

Pinos Altos mine

29,100


8,200


500


Creston Mascota mine




La India mine

12,200


24,900


700


Other

2,000



100


Total Capital Expenditures

$

332,300


$

382,100


$

19,500


$

6,100


*2020 forecast capital expenditures relating to Canadian Malartic and Meliadine incorporate anticipated pre-production gold ounces of 15,500 and 16,500, respectively.

Using the Company's 2020 budget assumptions, total capital expenditures are forecast to be approximately $650 to $700 million in 2021. Annual sustaining capital expenditures (included in the above) for 2021 and beyond are expected to remain stable at approximately $325 to $375 million. Based on the extensive list of high-quality development growth opportunities, which are set out below, and depending on prevailing gold prices and the timing of project approvals, the Company expects that total future growth and sustaining capital expenditures in future years could be at similar levels to 2021.

2020 Exploration Program and Budget – Key Programs at Kittila, Goldex, Kirkland Lake, Canadian Malartic, Santa Gertrudis and Satellite Targets at Pinos Altos

A large component of the 2020 exploration program will be focused on the Canadian Malartic and Goldex mines in the Abitibi region of northwest Quebec, the Sisar-Rimpi zones at the Kittila mine in Finland, the Kirkland Lake project in northeastern Ontario, the Santa Gertrudis project in Sonora State, Mexico and satellite targets at the Pinos Altos mine in Mexico. The goal of these exploration programs is to delineate mineral reserves and mineral resources that can help supplement the Company's existing production profile.

At the Kittila mine, the Company expects to spend $11.8 million for work that will include 58,000 metres of drilling focused on the Main Zone in the Roura and Rimpi areas as well as the Sisar Zone. The goal of this program is to further explore the Kittila mineral reserve and mineral resource potential and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.

The drilling includes 46,000 metres of capitalized conversion drilling at the mine as described above and 12,000 metres of expensed regional exploration drilling on targets beyond the current mineral resource area.

At the Goldex mine, the Company expects to spend $6.9 million for 79,000 metres of exploration and conversion drilling focused on the M Zone, Deep 1, Deep 2 and South zones.

At the Kirkland Lake project in Ontario, the Company expects to spend $10.3 million for 48,000 metres of exploration drilling focused on converting and expanding mineral resources at the Upper Beaver and Upper Canada deposits, which is expected to lead to an updated mineral resource estimate for the Upper Beaver deposit at year-end 2020.

At the Amaruq deposit at the Meadowbank Complex, the Company expects to spend $2.9 million for 8,400 metres of exploration drilling to test regional targets with a focus on deposits with open-pit potential. Drilling will also test the vertical extensions of near surface mineral occurrences at Mammoth Lake.

Another $2.0 million is budgeted for 5,500 metres of exploration drilling on other properties around Amaruq to test near surface open-pit targets close to existing road infrastructure between Amaruq and Baker Lake.

At the Canadian Malartic mine, the Company expects to spend $7.5 million (50% basis) for 90,000 metres (100% basis) of exploration and conversion drilling primarily focused on declaring new inferred mineral resources at the East Gouldie Zone and infilling the current inferred mineral resources in the zone to convert them into indicated mineral resources by year-end 2020.  In addition to the drilling at East Gouldie, the Company is planning to spend another $5.0 million (50% basis) on 22,000 metres (100% basis) of exploration drilling to test other regional targets at Canadian Malartic and on studies.

At the Santa Gertrudis project in Sonora, Mexico, the Company expects to spend $10.4 million for approximately 25,000 metres of drilling that will be focused on expanding the mineral resource, testing the extensions of high-grade structures such as the Amelia deposit and exploring new targets.

At the Pinos Altos mine, the Company expects to spend $7.8 million for 42,000 metres of drilling, in work that will include 5,000 metres of drilling to extend the new Reyna East Zone along strike and at depth and 10,000 metres to infill and expand the mineral resource at Cubiro and Cubiro North.

2020 Global Exploration Program and Corporate Development Budget


Expensed Exploration


Capitalized Exploration


US$ millions


000 metres


US$ millions


000 metres

Nunavut








Amaruq

$

2.9


8.4





Meliadine

1.7


4.9


6.9


30.0

Other

2.5


6.3





Nunavut subtotal

7.1


19.6


6.9


30.0

Quebec








LaRonde and LZ5

1.5


9.5


2.0


20.6

Goldex

0.5


3.0


6.4


76.0

Other

2.7


14.2





Quebec subtotal

4.7


26.7


8.4


96.6

Canadian Malartic projects*








Canadian Malartic mine*

7.5


90.0





Regional exploration and studies

5.0


22.0





Canadian Malartic subtotal

12.5


112.0



Ontario








  Kirkland Lake projects

10.3


48.0





  Hammond Reef

1.1


5.0





Ontario subtotal

11.4


53.0





Europe








Kittila

2.8


12.0


9.0


46.0

Barsele

1.9


8.3





Other

1.1






Europe subtotal

5.8


20.3


9.0


46.0

Mexico








Pinos Altos, Creston Mascota

7.3


39.0


0.5


3.0

La India

6.6


22.0


0.7


5.0

El Barqueno

2.3






Santa Gertrudis

10.4


25.0





Other

7.3


13.0


0.1



Mexico subtotal

33.9


99.0


1.3


8.0

USA

7.8


12.0





G&A, land fees, etc.

6.4







Total Exploration

$

89.6


342.6


$

25.6


180.6









Total Corporate Development, Project Evaluations and
Technical Services

$

40.3















Total Exploration and Corporate Development

$

129.9







*For the Canadian Malartic Mine operations and projects, in which Agnico Eagle holds a 50% indirect interest, the expenses in this table represent 50% of the total expenses, but the metres represent 100% of the metres of drilling.

Pipeline Projects Continue to Advance – Opportunities to Enhance Short-Term and Longer-Term Production

The Company has an extensive pipeline of development and advanced exploration projects, several of which are located near its existing mining operations. These projects have the potential to add further value and enhance the current gold production profile in the short-term (2022-2023) and longer-term (2023 and beyond). Updates on the various projects are set out below.

Near-Term Opportunities to Enhance Production Starting in 2022

The Company is evaluating several potential opportunities (none of which has yet been approved for construction, with the exception of the Meliadine Phase 2 expansion) at a number of existing operations to build further value and enhance the gold production profile starting in 2022. These opportunities are set out in the table below with certain projects discussed in more detail below.

Minesite/

Region

Opportunity

Gold Mineral Resources/Mineral Reserves*

LaRonde Complex

Drilling continues to encounter high-grade mineralization in the West mine at depth. Exploration strategy is being reviewed to evaluate extensions of previously mined zones and areas that have seen limited exploration activity (portions of the Bousquet property).  At LZ5, drilling will be carried out to expand mineral reserves and mineral resources at depth and test other nearby satellite zones (Ellison)

Ellison has indicated mineral resources of 71koz and inferred mineral resources of 461koz

Goldex

Potential for increased throughput from Deep 1 and potential for additional development of Deep 2.  Also potential for increased gold production from the South Zone

Deep 2 has mineral reserves of 179koz, indicated mineral resources of 177koz and inferred mineral resources of 381koz.  The South Zone has mineral reserves of 107koz, indicated mineral resources of 43koz and inferred mineral resources of 228koz

Meadowbank Complex

Ongoing evaluation of the potential to develop portions of the higher grade underground deposits at Amaruq in permafrost only

The Amaruq underground has mineral reserves of 577koz in permafrost only

Meliadine

Staged implementation of the Phase 2 expansion.  Initial work will focus on open pit development at the Tiriganiaq Zone.  Additional drilling is planned to expand and upgrade the existing mineral resource base in the immediate mine area

Tiriganiaq has open pit mineral reserves of 590koz

Canadian Malartic (50%)

Continued evaluation of potential production scenarios from the Odyssey and East Malartic underground zones to a depth of 1,000 metres.  Drilling in 2020 will be largely focused on the newly discovered East Gouldie Zone


Pinos Altos/Creston Mascota

Ongoing exploration and evaluation of potential development scenarios for the Cubiro and Reyna de Plata satellite zones

Cubiro has underground indicated mineral resources of 212koz gold and 1,403koz silver and inferred mineral resources of 136koz gold and 912koz silver.  Reyna de Plata has probable mineral reserves of 64koz gold and 2,007koz silver, indicated mineral resources of 159koz gold and 4,307koz silver and inferred mineral resources of 121koz gold and 2,970koz silver

La India

Continued exploration and evaluation of the El Realito and Chipriona zones

Chipriona has indicated mineral resources of 45koz gold, 2.1Moz silver, 359 tonnes of copper and 17,000 tonnes of zinc and inferred mineral resources of 238koz gold, 29.5Moz silver, 15,400 tonnes of copper and 86,900 tonnes of zinc El Realito has mineral reserves of 106koz gold and 485koz silver, measured and indicated mineral resources of 38koz gold and 232koz silver and inferred mineral resources of 4koz gold

*For a detailed discussion of mineral reserves and mineral resources see "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2019)".

The original Meliadine mine plan envisioned a 3,750 tpd mill with ore being sourced entirely from underground in years one to four. The mill capacity for Phase 2 was expected to increase to approximately 6,000 tpd, with ore being sourced from both underground and open pits starting in year five. The increased tonnage from the Phase 2 expansion was forecast to offset an expected decline in ore grade and keep production stable at approximately 400,000 ounces of gold per year.

The current Meliadine mill facility has demonstrated the ability to operate well in excess of the initial 3,750 tpd capacity (maximum daily rate in 2019 reached of 4,950 tpd). As a result, the Company has decided to accelerate the start of the Phase 2 expansion by approximately two years to utilize this extra mill capacity. The mill expansion will be undertaken in stages with processing expected to increase from current levels to 4,600 tpd in the fourth quarter of 2020 and ultimately reaching 6,000 tpd in 2024. The initial source of open pit ore will be from pits developed on the Tiriganiaq deposit. Development of the open pits is expected to provide additional mining flexibility.

The Tiriganiaq open pits contain probable gold mineral reserves of 590,412 ounces (3.8 million tonnes grading 4.89 g/t gold). These pits are expected to be mined in 2020 through 2027, with production gradually ramping up over the eight-year reserve life. The acceleration of the Phase 2 expansion is expected to result in slightly higher gold production (compared to Previous Guidance) in 2021 and 2022. Production from the Tiriganiaq pit in 2020 is forecast to be approximately 16,500 ounces, all of which is considered pre-commercial.

At Amaruq, conversion drilling of underground mineral resources was successful in 2019 beneath the planned Whale Tail pit bottom and in the V Zone at depth. Amaruq's mineral reserves increased 15% year-over-year to approximately 3.3 million ounces of gold, divided between open-pit proven and probable mineral reserves of approximately 2.7 million ounces of gold (22.8 million tonnes grading 3.74 g/t gold) in the Whale Tail deposit and V Zone, and initial underground probable mineral reserves in the Whale Tail deposit of approximately 577,000 ounces of gold (3.3 million tonnes grading 5.43 g/t gold).

Aided by an exploration ramp that is currently 255 metres below surface and continues to be extended, exploration drilling has confirmed grades and widths of the Whale Tail and V Zone high-grade ore shoots at depth. Recent highlight intercepts include 16.8 g/t gold over 9.2 metres at 354 metres depth in the Whale Tail ore shoot and 12.3 g/t gold over 8.2 metres at 607 metres depth in the V Zone ore shoot. See the Meadowbank Complex section later in this news release for details.

The plan for 2020 is to spend $2.9 million for 8,400 metres of exploration drilling to test new exploration targets outside of the mineral resources area in the eastern extension of the V Zone and in Mammoth Lake.

Work is continuing at Amaruq to evaluate the potential for an underground operation, which could run concurrent with the open pit deposits. Exploration continues to focus on finding additional sources of open pit ore. Preliminary work suggests that there is an opportunity to selectively mine portions of the higher-grade underground deposits at Amaruq in permafrost only. This approach is expected to reduce operating and capital costs (limited heating requirements), while preserving the option to mine additional underground mineral reserves and/or mineral resources.

The Company believes it is possible that underground production could begin in 2022 and run through 2026. Initial annual gold production from underground could be at a rate of approximately 50,000 to 60,000 ounces, and average approximately 110,000 ounces per year over the life of mine. Additional work is being carried out to evaluate the potential to increase mineral reserves and exploit a portion of the underground mineral resources. A more detailed project evaluation is expected to be released before year-end. The Company will continue to use a phased approach to the underground development program at Amaruq in 2020.

At Canadian Malartic (50% owned), most of the exploration in 2019 was focused on the East Gouldie Zone, which was discovered in late 2018. East Gouldie is located south of the East Malartic and Odyssey zones starting at a depth of approximately 700 metres below surface.

The Canadian Malartic General Partnership (the "Partnership") completed approximately 82,000 metres (100% basis) of exploration drilling in 2019, culminating in an initial inferred mineral resource in the central portion of the East Gouldie Zone of 1.4 million ounces of gold (12.8 million tonnes grading 3.34 g/t gold) (reflecting Agnico Eagle's 50% interest), as of December 31, 2019.

Infill drilling highlights from the fourth quarter include 8.6 g/t gold over 25.8 metres at 1,071 metres depth and 4.2 g/t gold over 39.3 metres at 1,631 metres depth. In 2020 at East Gouldie, the aim of the drill program is to declare new inferred mineral resources at the zone and infill the current inferred mineral resources in the zone to convert them into indicated mineral resources by year-end 2020.

At East Malartic, 1.2 million ounces of gold (50% basis) have been added to inferred mineral resources with the inclusion of a deeper portion of the deposit between 1,000 metres to 1,800 metres depth. Indicated mineral resources are 347,000 ounces of gold (5.0 million tonnes grading 2.18 g/t gold). Total inferred mineral resources at East Malartic have grown 85% year-over-year to 2.6 million ounces of gold (39 million tonnes grading 2.05 g/t gold) (50% basis), as of December 31, 2019.

Additional details are available in the Mineral Reserves and Mineral Resources sections of this news release.

The substantial increases in mineral resources, particularly at the East Gouldie and East Malartic zones, are anticipated to eventually replace mineral reserves currently being mined at the adjacent Canadian Malartic pit.  The Partnership continues to evaluate the Odyssey project with consideration being given to potential new development synergies between the various zones at East Gouldie, Odyssey, East Malartic and Canadian Malartic.  Subject to a positive development decision, initial production could potentially start in 2023.  The Partnership is evaluating scenarios to optimize the project, which include discussions with royalty holders and other stakeholders to enhance the economics of the project.  Given the Company's robust pipeline of development projects, the Company does not currently anticipate approving the project for development unless these discussions are successful and the project economics are significantly improved.

At Goldex, the Company continues to evaluate the potential to accelerate mining rates in the Deep 1 and Deep 2 zones as well as the South Zone. Mineralization at Deep 2 remains open laterally and at depth, while the South Zone is open in all directions. Future exploration is expected to focus on the conversion of portions of the mineral resources into mineral reserves in each of these zones.

Development of the Akasaba West open pit has been postponed indefinitely based on the prioritization of development capital spending. Akasaba West contains mineral reserves of 147,000 ounces of gold and 25,900 tonnes of copper (5.4 million tonnes grading 0.85 g/t gold and 0.48% copper) and has the potential to contribute approximately 20,000 ounces of gold per year to the Goldex production profile if developed into production.

Longer-Term Opportunities to Provide Production Growth Beyond 2023

Agnico Eagle has a strong pipeline of development projects that could provide further gold production growth beyond 2023. These opportunities are typically at an earlier stage than those outlined above. A summary of the longer-term opportunities is set out in the following table with certain projects discussed in further detail below.

Minesite/Region

Opportunity

Gold Mineral Resources/Mineral Reserves*

Goldex

Evaluation of the Deep 2 Zone (below 1,500 metres)


Kittila

Drilling continues to extend the mineralization at depth and there is good potential to further optimize the development of the lower mine with shaft access (shaft construction is expected to be completed in the second quarter of 2021)


Meadowbank Complex

Continued evaluation of the regional potential at Amaruq.  A new surface discovery could potentially extend the underground mine life


Meliadine

Further drill-testing of known zones and gold occurrences on the 80-kilometre long greenstone belt

Approximately 50 gold showings have been documented at the Meliadine property

Canadian

Malartic (50%)

Evaluation of the potential for production from deeper portions (below 1,000 metres) of the Odyssey and East Malartic underground zones and development of the higher-grade East Gouldie Zone


Barsele (55%)

Testing additional mineralized zones, with a focus on volcanogenic massive sulphide ("VMS") targets

Barsele has 176koz of indicated mineral resources and 1.0Moz of inferred mineral resources

Santa Gertrudis

Evaluation of known mineralized trends with a view to potentially restart operations at this past-producing heap leach mine.  The recent discovery of high-grade mineralization at Amelia opens up the potential to add a mill circuit to process higher grade sulphide ore from underground

Santa Gertrudis mineral resources at open pit depths (including Amelia): 104koz of indicated mineral resources and 717koz of inferred mineral resources.  The Amelia underground deposit has 451koz of inferred mineral resources in sulphides

Kirkland Lake

Continued evaluation of potential production scenarios at Upper Beaver.  Recent drilling and reinterpretation has led to a significant increase in mineral resources at the past producing Upper Canada mine that could have synergies with the potential development of a mine at the adjacent Upper Beaver project

Upper Beaver has 1.4Moz of mineral reserves,  403koz of indicated mineral resources and 1.4Moz of inferred mineral resources.  Upper Canada has 693koz of indicated mineral resources and 1.8Moz of inferred mineral resources

Hammond Reef

A re-interpretation of the deposit model is under way to evaluate potential production scenarios in a higher gold price environment

Hammond Reef has 4.5Moz of measured and indicated mineral resources

*For a detailed discussion of mineral reserves and mineral resources see "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2019)".

At the Kirkland Lake project in Ontario, the Company is evaluating potential development strategies at the Upper Beaver and Upper Canada deposits. Solid drill results from the 2019 exploration program, including 12.8 g/t gold over 3.3 metres at 409 metres depth in the MQ Zone, have helped to increase the mineral resources at the Upper Canada deposit. (See the Kirkland Lake section later in this news release for details). The validation of historic data has led to a reinterpretation of the entire Upper Canada deposit that resulted in initial indicated mineral resources of 693,000 ounces of gold (9.7 million tonnes grading 2.23 g/t gold) as of December 31, 2019, divided between 592,000 ounces of gold at underground depth and 102,000 ounces of gold at open-pit depth. The inferred mineral resources for Upper Canada have been maintained at 1.8 million ounces of gold (17 million tonnes grading 3.22 g/t gold) at open pit and underground depths. Further details are available in the Mineral Resources section later in this news release.

The Company expects to publish an updated mineral resource estimate for the Upper Beaver deposit at year-end 2020. An increase in the mineral resources in the shallow basalts would have a significant positive impact on project economics, and could provide added flexibility for a future underground operation.

At the Hammond Reef project in Ontario, agreements with local First Nations are in place and the project has received environmental approval from both Federal and Provincial agencies. In 2020, the Company will continue to evaluate optimization of the deposit and potential mining scenarios to improve project economics. The Company will also be carrying out ore-sorting studies and evaluating other regional opportunities. Hammond Reef contains measured and indicated mineral resources of 4.5 million ounces of gold (208 million tonnes grading 0.67 g/t gold). Initial optimization studies suggest that there could be potential for slightly higher grades.

In January 2020, the Company exercised its right of first refusal to repurchase a 2% net smelter return royalty on the Hammond Reef project from Kinross Gold Corporation for $12 million.

At the Santa Gertrudis project in Sonora State, Mexico, the high-grade Amelia deposit continues to grow. Exploration has extended the Amelia ore shoot to 677 metres below surface, where drilling has intersected 13.4 g/t gold and 436 g/t silver over 3.8 metres. (See the Santa Gertrudis section later in this news release for details.) The updated inferred mineral resource at Amelia is 70,000 ounces of gold (1.6 million tonnes grading 1.38 g/t gold) in oxides 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 the high-grade sulphide material.

The Amelia mineral resources are part of the Santa Gertrudis project mineral resource estimate.  Extensive drilling and studies in 2019 on the whole Santa Gertrudis property have led to initial indicated mineral resources of 104,000 ounces of gold (5.1 million tonnes grading 0.64 g/t gold) at open pit depth and an increased inferred mineral resource of 1.2 million ounces of gold (22.1 million tonnes grading 1.64 g/t gold) mainly at open pit depth, as of December 31, 2019. Further details are available in the Mineral Resources section later in this news release.

The 2019 Espiritu Santo discovery, 500 metres east-southeast of Amelia, includes high-grade shallow mineralized structures yielding intersections such as 5.9 g/t gold and 159 g/t silver over 6.5 metres at 90 metres depth. More drilling is planned this year to test the extension of the new discovery in Espiritu Santo.

The Company is currently evaluating a potential production scenario that utilizes a heap leach for lower grade mineralization and a small mill facility to process higher-grade ore. The Company believes that the Santa Gertrudis project has the potential to be a similar size operation to La India.

Mineral Reserve Gold Grade Improves by 5% and Ounces Decrease Slightly in 2019, Driven by Record Gold Production, Depletion at Low-Grade Mines and Conversion Drilling Success at Amaruq, Meliadine and Goldex

At December 31, 2019, the Company's proven and probable mineral reserves (net of 2019 gold production) totaled 237 million tonnes of ore grading 2.83 g/t gold, containing approximately 21.6 million ounces of gold. This is a decrease of approximately 454,000 ounces of gold (2%) compared with the prior year. The ore extracted from mines in 2019 contained 2.0 million ounces of gold in-situ (30.1 million tonnes grading 2.04 g/t gold).

The Company's overall mineral reserve gold grade improved 5% to 2.83 g/t from 2.70 g/t, largely due to depletion of lower-grade Canadian Malartic ore as well as inclusion of initial, high-grade underground mineral reserves at the Amaruq deposit and an increase in mineral reserves at the Meliadine mine from four open pits. Agnico Eagle continues to have one of the highest mineral reserve grades among its North American peers.

Highlights from the December 31, 2019 Mineral Reserve statement include:

  • At the Amaruq deposit at the Meadowbank Complex, initial underground probable mineral reserves of 0.6 million ounces of gold (3.3 million tonnes grading 5.43 g/t gold). Amaruq's combined open-pit and underground mineral reserves saw a net increase of 0.4 million ounces gold at year-end 2019
  • At the Meliadine mine, increase of 0.3 million ounces of gold in mineral reserves due to conversion to initial mineral reserves at the new F Zone, Wesmeg, Normeg and Pump open pits, as well as underground conversion
  • At the Goldex mine, addition of 0.1 million ounces of gold in mineral reserves (net of 2019 gold production) due to conversion drilling in the Deep 1, Deep 2 and South zones

The Company's December 31, 2019 gold mineral reserves are set out below, compared with the gold mineral reserves a year earlier:

Gold Mineral Reserves

By Mine or Deposit

Proven & Probable

Average Mineral

Reserve Gold Grade

(g/t)

Mineral Reserve

(000s gold ounces)


2019

2018

Change

(000s oz

gold)

2019

2018

Change

(g/t

gold)

Northern Business







LaRonde

2,888

3,081

(193)

6.02

5.85

0.17

LaRonde Zone 5

686

681

5

2.30

2.25

0.05

Canadian Malartic (50%)

2,389

2,780

(391)

1.11

1.10

0.01

Goldex

1,088

962

125

1.61

1.58

0.03

Akasaba West

147

147

0

0.85

0.84

0.01

Meadowbank mine

3

98

(95)

2.24

1.89

0.35

Amaruq

3,318

2,882

436

3.96

3.59

0.37

Meadowbank (incl. Amaruq)

3,320

2,979

341

3.96

3.49

0.47

Meliadine

4,067

3,753

314

6.10

6.97

(0.87)

Upper Beaver

1,395

1,395

0

5.43

5.43

0

Kittila

4,096

4,414

(318)

4.40

4.50

(0.10)

Subtotal

20,077

20,192

(116)

3.10

2.98

0.12

Southern Business







Pinos Altos

957

1,184

(227)

2.06

2.15

(0.09)

Creston Mascota

61

82

(21)

2.49

1.77

0.72

La India

490

581

(90)

0.75

0.74

0.01

Subtotal

1,508

1,847

(338)

1.32

1.34

(0.02)

Total Mineral Reserves

21,585

22,039

(454)

2.83

2.70

0.13

Data set out in the table above and certain other data in this news release have been rounded to the nearest thousand.  See "Detailed Mineral Reserves and Mineral Resources Data (as of December 31, 2019)" at the end of this news release for more details.  Mineral reserves are in-situ, taking into account all mining recoveries and dilutions, before mill or heap-leach recoveries.

The economic parameters used to estimate mineral reserves and mineral resources for all properties are set out in the table below. In prior years, the Company's economic parameters were determined using historic three-year average metals prices and foreign exchange rates in accordance with the U.S. Securities and Exchange Commission (the "SEC") guidelines. These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve estimation, which the SEC has interpreted to mean historic three-year average prices.  Given the current commodity price environment, Agnico Eagle continues to use more conservative gold and silver prices.

Assumptions used for the December 31, 2019 mineral reserves estimate at all mines and advanced projects reported by the Company


Metal prices

Exchange rates


Gold

(US$/oz)

Silver

(US$/oz)

Copper

(US$/lb)

Zinc

(US$/lb)

C$ per

US$1.00

Mexican

peso per

US$1.00

US$ per

€1.00

Long-life operations
and projects

$1,200

$15.50

$2.50

$1.00

$1.25

MXP17.00

$1.15

Short-life operations

– Creston Mascota

(Bravo) and Sinter

satellite operations

at Pinos Altos

$1.30

MXP18.00

Not
applicable

Upper Beaver*,

Canadian Malartic

mine**

$1,200

Not
applicable

$2.75

Not
applicable

$1.25

Not
applicable

Not
applicable

*The Upper Beaver project has a net smelter return (NSR) cut-off value of C$125/tonne

**The Canadian Malartic mine uses a cut-off grade between 0.40 g/t and 0.43 g/t gold (depending on the deposit)

The above metal price assumptions are below the three-year historic gold and silver price averages (from January 1, 2017 to December 31, 2019) of approximately $1,302 per ounce and $16.57 per ounce, respectively. The mineral resources at all properties (except Canadian Malartic) are estimated using 75% of the cut-off grades used to estimate the mineral reserves. At the Canadian Malartic mine, the mineral resources are estimated using 80% of the cut-off grades used to estimate the mineral reserves.

At the Amaruq deposit at the Meadowbank Complex, the Company estimated initial underground probable mineral reserves of 577,000 ounces of gold (3.3 million tonnes grading 5.43 g/t gold). Delineation and conversion drilling added another 44,000 ounces of gold, offset by the initiation of commercial mining from the open pit at Amaruq in 2019. Amaruq's combined open-pit and underground mineral reserves saw a net increase of approximately 436,000 ounces of gold at year-end 2019. As mining came to an end at Meadowbank in 2019, Meadowbank recorded a net decrease of 95,000 ounces of gold in mineral reserves to almost nil at year end. During the 2019 transition year at the Meadowbank Complex, as mining commenced at Amaruq and ceased at Meadowbank, approximately 208,000 in-situ ounces of gold were mined in total at the Meadowbank Complex.

At the Meliadine mine, the conversion from indicated mineral resources to mineral reserves of the F Zone, Wesmeg, Normeg and Pump open pits added 364,000 ounces of gold in mineral reserves (2.4 million tonnes grading 4.73 g/t gold). Delineation drilling and the reinterpretation of mineralization added another approximately 36,000 ounces of gold to mineral reserves while approximately 98,000 ounces of gold was gained in mineral reserves by using a lower cut-off grade. Offset by the mining of approximately 253,000 in-situ ounces of gold in 2019, overall there was a net increase of approximately 314,000 ounces of gold in mineral reserves at Meliadine.

At the Goldex mine, approximately 264,000 ounces of gold were added to mineral reserves due to conversion drilling in the Deep 1, Deep 2 and South zones. This was partially offset by the mining of approximately 153,000 in-situ ounces of gold in 2019, resulting in a net increase of approximately 125,000 ounces of gold in mineral reserves at Goldex.

At the Canadian Malartic mine, the net decrease of approximately 391,000 ounces of gold in mineral reserves (reflecting Agnico Eagle's 50% interest) is largely due to the mining of approximately 376,000 in-situ ounces of gold (50%) in 2019. Some of the increasing mineral resources at the Odyssey, East Gouldie and East Malartic deposits may be converted into mineral reserves in the future, to replace the ore currently being mined at the adjacent Canadian Malartic pit.

At the Kittila mine, conversion and exploration drilling, as well as a revision of reserve-estimation parameters, resulted in a decrease of approximately 86,000 ounces of gold in mineral reserves.  With the mining of 212,000 ounces of in-situ gold in 2019, the result was an overall decrease in mineral reserves of 318,000 ounces of gold at Kittila.

At Pinos Altos, a review of mining parameters reduced mineral reserves by approximately 41,000 ounces of gold while a new cut-off grade reduced mineral reserves further by approximately 24,000 ounces of gold. With the mining of approximately 164,000 in-situ ounces of gold in 2019, there was a net decrease of approximately 227,000 ounces of gold in mineral reserves at Pinos Altos. There were smaller net decreases of gold in mineral reserves at the nearby Creston Mascota mine and the La India mine.

At the LaRonde mine, delineation and conversion drilling programs added approximately 160,000 ounces of gold to mineral reserves. This was more than offset by approximately 361,000 ounces of in-situ gold mined in 2019, resulting in a net decrease of approximately 193,000 ounces of gold in mineral reserves at LaRonde.

It is the Company's goal to maintain its global mineral reserves at approximately 10 times its annual gold production rate. The current mineral reserves remain within this range when compared to the Company's projected annual 2020 gold production guidance.

In addition to gold, Agnico Eagle's proven and probable mineral reserves include by-product metals of approximately 37 million ounces of silver at the Pinos Altos, LaRonde, La India and Creston Mascota mines (50.6 million tonnes grading an average of 22.46 g/t silver), plus 120,000 tonnes of zinc and 39,000 tonnes of copper at the LaRonde mine (14.9 million tonnes grading 0.80% zinc and 0.26% copper); 26,000 tonnes of copper at the Akasaba West project (5.4 million tonnes grading 0.48% copper) and 20,000 tonnes of copper at the Upper Beaver project (8.0 million tonnes grading 0.25% copper).

At an assumed gold price of $1,325 per ounce (leaving other assumptions unchanged), the Company estimates there would be an approximate 5.2% increase in the gold contained in proven and probable mineral reserves. Conversely, using a gold price of $1,075 (leaving other assumptions unchanged), the Company estimates there would be an approximate 6.6% decrease in the gold contained in proven and probable mineral reserves.

Measured and Indicated Mineral Resources Increase by 4% to 18.1 Million Ounces of Gold Due to Initial Indicated Mineral Resources at Upper Canada, Optimization of Estimation Method at Goldex and Conversion Drilling at Multiple Projects

Highlights from the December 31, 2019 Measured and Indicated Mineral Resource statement include:

  • At the Upper Canada deposit at the Kirkland Lake project, initial indicated mineral resources of 0.7 million ounces of gold (9.7 million tonnes grading 2.23 g/t gold)
  • At Goldex, indicated mineral resources increased by 328,000 ounces of gold mainly due to optimizing the estimation method

The Company's measured and indicated mineral resources now total 425 million tonnes grading 1.32 g/t gold, or 18.1 million ounces of gold. This represents a 4% (665,000-ounce) increase in ounces of gold, but a small decrease in grade from 1.36 g/t gold a year earlier (see the Company's news release dated February 14, 2019 for details of previous mineral resource estimate).

The increase in the Company's measured and indicated mineral resources is mainly due to the inclusion of an initial indicated mineral resources of 693,000 ounces of gold (9.7 million tonnes grading 2.23 g/t gold) at the Upper Canada deposit at the Kirkland Lake project, where the mineral resource confidence level was increased based on the validation of historic data. These mineral resources are divided between 592,000 ounces of gold (7.8 million tonnes grading 2.36 g/t gold) in underground indicated mineral resources and 102,000 ounces of gold (1.8 million tonnes grading 1.72 g/t gold) of open-pit indicated mineral resources.

Indicated mineral resources at Goldex have increased 19% (328,000 ounces of gold) as the confidence level increased with conversion drilling and improved resource estimation and categorization method added approximately 586,000 ounces of gold. This was partially offset by the re-categorization to mineral reserves of several zones that reduced measured and indicated mineral resources by approximately 257,000 ounces of gold.

Conversion drilling at the Goldex, Pinos Altos, Amaruq, Kittila and Chipriona properties resulted in gains of approximately 249,000 ounces of gold to measured and indicated mineral resources. Studies at LZ5 resulted in the addition of approximately 196,000 ounces of gold (3 million tonnes grading 2.00 g/t gold) in measured and indicated mineral resources on levels 54 to 65. Offsetting these gains was the conversion of approximately 844,000 ounces of gold to mineral reserves at Amaruq and Meliadine.

Initial Inferred Mineral Resources at East Gouldie Discovery and Additional Inferred Mineral Resources Below 1,000 Metres at East Malartic Increase Inferred Mineral Resources by 19% to 21.5 Million Ounces

Highlights from the December 31, 2019 Inferred Mineral Resource statement include:

  • At the East Gouldie discovery at the Canadian Malartic mine property, initial inferred mineral resources of 1.4 million ounces of gold (12.8 million tonnes grading 3.34 g/t gold) (reflecting Agnico Eagle's 50% interest)
  • At East Malartic, the revision of the cut-off grade and mining assumptions resulted in the inclusion of new mineral resources below 1,000 metres depth and have increased inferred mineral resources by 1.2 million ounces of gold (reflecting Agnico Eagle's 50% interest)
  • At Kittila, inferred mineral resources have increased 70% (716,000 ounces of gold) due to exploration at Roura and Rimpi, new estimation parameters and changing the bottom limit for resources reporting from 1,400 metres to 1,540 metres below surface
  • At the Amelia deposit at Santa Gertrudis, initial underground inferred mineral resources have added 0.5 million ounces of gold (3.1 million tonnes grading 4.58 g/t gold)

The Company's inferred mineral resources now total 250 million tonnes grading 2.67 g/t gold, or approximately 21.5 million ounces of gold. This represents an approximate 19% (3.36 million ounce) increase in ounces of gold, at a slight decrease in grade from 2.69 g/t gold in the December 2018 inferred mineral resources (see the Company's news release dated February 14, 2019 for details regarding the Company's December 2018 inferred mineral resources).

The increase to inferred mineral resources was mainly due to substantial new inferred mineral resources being estimated at underground depths on the Canadian Malartic mine property in the East Gouldie and East Malartic deposits east of the open pits, partially offset by the conversion of inferred mineral resources to indicated mineral resources at Goldex, Upper Canada, Amaruq and Santa Gertrudis.

At East Gouldie, continued exploration and infill drilling (announced in the Company's news release dated October 23, 2019) has resulted in the estimation of an initial inferred mineral resource of 1.4 million ounces of gold (12.8 million tonnes grading 3.34 g/t gold) (reflecting Agnico Eagle's 50% interest). At East Malartic, the revision of the cut-off grade and mining assumptions resulted in the inclusion of new mineral resources below 1,000 metres depth and have increased inferred mineral resources by 1.2 million ounces of gold (reflecting Agnico Eagle's 50% interest), bringing total inferred mineral resources at East Malartic to 2.6 million ounces of gold (39 million tonnes grading 2.05 g/t gold) (50% basis).

At Kittila, inferred mineral resources have increased by 70% (716,000 ounces gold) due to several factors. Approximately 327,000 ounces of gold was added due to exploration drilling at Roura and Rimpi; approximately 243,000 ounces of gold was added from the adoption of new estimation parameters for the mineral resources estimate; and approximately 146,000 ounces of gold was added by lowering the bottom limit for estimating mineral resources from 1,400 metres to 1,540 metres depth below surface. At Kittila, inferred mineral resources now total 1.7 million ounces of gold (13.8 million tonnes grading 3.90 g/t gold).

At Santa Gertrudis, the Company has estimated an initial underground inferred mineral resource in the Amelia deposit of approximately 451,000 ounces of gold (3.1 million tonnes grading 4.58 g/t gold). This more than offset the conversion of 104,000 ounces of gold from inferred mineral resources at open pit depth to indicated mineral resources. Santa Gertrudis now has a total inferred mineral resource of 1.2 million ounces of gold (22 million tonnes grading 1.64 g/t gold).

The distribution of mineral resources by property is set out in the following table. For full details including tonnage and grade, see the "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2019)" later in this news release.

December 31, 2019 Mineral Resources*


Measured & Indicated

Mineral Resources


Inferred Mineral

Resources

(000 oz gold)


(000 oz gold)

Northern Business




LaRonde

488


854

LaRonde Zone 5

624


611

Ellison

71


461

Canadian Malartic (50%)

431


92

Odyssey (50%)

68


833

East Malartic (50%)

347


2,596

East Gouldie (50%)

0


1,369

Goldex

2,011


1,212

Akasaba West

98


0

Zulapa

0


39

Meadowbank

90


0

Amaruq

1,070


1,520

Meadowbank Complex (incl. Amaruq)

1,160


1,520

Meliadine

2,799


2,631

Hammond Reef

4,501


12

Upper Beaver (Kirkland Lake)

403


1,416

Amalgamated Kirkland (Kirkland Lake)

265


406

Anoki/McBean (Kirkland Lake)

320


382

Upper Canada (Kirkland Lake)

693


1,768

Kittila

1,520


1,735

Kuotko

0


29

Kylmäkangas

0


250

Barsele (55%)

176


1,005

Subtotal Northern Business

15,976


19,221





Southern Business




Pinos Altos

1,057


435

Creston Mascota

24


10

La India

238


15

Tarachi

294


68

Chipriona

45


238

El Barqueno Gold

318


325

Santa Gertrudis

104


1,168

Subtotal Southern Business

2,079


2,259

Total Mineral Resources

18,055


21,480

*Ownership of mines and projects is 100% unless otherwise indicated. Where Agnico Eagle's interest is less than
100%, the stated mineral resources reflect the Company's interest.

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in the LaRonde Complex (which includes the LaRonde and LaRonde Zone 5 mines), Goldex and a 50% interest in the Canadian Malartic mines.  These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.

LaRonde Mine – Record Gold Grade in November 2019 Drives Strong Quarterly Production; West Mine Drilling Continues to Encounter High Grade Mineralization

The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.

LaRonde Mine – Operating Statistics





Three Months Ended


Three Months Ended


December 31, 2019


December 31, 2018

Tonnes of ore milled (thousands of tonnes)

505


515

Tonnes of ore milled per day

5,489


5,598

Gold grade (g/t)

6.35


5.14

Gold production (ounces)

97,470


81,022

Production costs per tonne (C$)

$

131


$

136

Minesite costs per tonne (C$)

$

128


$

117

Production costs per ounce of gold produced ($ per ounce):

$

513


$

666

Total cash costs per ounce of gold produced ($ per ounce):

$

422


$

441

Production costs per tonne in the fourth quarter of 2019 decreased when compared to the prior-year period primarily due to the timing of unsold concentrate inventory, partially offset by higher underground mining and development costs and lower throughput levels. Production costs per ounce in the fourth quarter of 2019 decreased when compared to the prior-year period due to the reasons described above and higher gold production.

Minesite costs per tonne in the fourth quarter of 2019 increased when compared to the prior-year period due to higher underground mining and development costs and lower throughput levels. Total cash costs per ounce in the fourth quarter of 2019 decreased when compared to the prior-year period due to higher gold production, partially offset by higher underground mining and development costs.

Gold production in the fourth quarter of 2019 increased when compared to the prior-year period due to higher grades and better localized block model reconciliation from the West mine area. In November, 2019, the mine achieved record gold grades of 7.1 g/t.

LaRonde Mine – Operating Statistics





Year Ended


Year Ended


December 31, 2019


December 31, 2018

Tonnes of ore milled (thousands of tonnes)

2,057


2,108

Tonnes of ore milled per day

5,636


5,775

Gold grade (g/t)

5.46


5.32

Gold production (ounces)

343,154


343,686

Production costs per tonne (C$)

$

139


$

139

Minesite costs per tonne (C$)

$

125


$

119

Production costs per ounce of gold produced ($ per ounce):

$

627


$

664

Total cash costs per ounce of gold produced ($ per ounce):

$

464


$

445

Production costs per tonne for the full year 2019 were the same when compared to the prior-year period. Production costs per ounce for the full year 2019 decreased when compared to the prior-year period mainly due to the timing of unsold concentrate inventory.

Minesite costs per tonne for the full year 2019 increased when compared to the prior-year period due to higher underground mining and development costs and slightly lower throughput levels. Total cash costs per ounce for the full year 2019 increased when compared to the prior-year period due to the reasons described above.

Gold production for the full year 2019 was essentially the same when compared to the prior year period.

As discussed in previous news releases, the risks of more frequent and larger seismic events increase as the Company mines deeper at LaRonde. Over the years, the Company has continued to adapt and manage this risk. In early December 2019, the Company saw an increase in seismicity in the West mine area outside of normal protocols. In addition, as development has progressed in the West mine area, additional geological structures (faulting and fracturing) have been recognized. This information has now been incorporated into a revised ground support plan for the West mine area.

This revised plan has been developed to ensure the safety of the Company's employees, secure the higher-grade orebody to the west and preserve existing mine infrastructure in the area. To implement this plan, mining activity in the West mine was temporarily suspended in mid-December 2019 and refocused in the East mine area.

In the West mine area, the Company is currently reinforcing ground support including installing additional support (shotcrete, bolts and cables) in the main ramp and access points on various levels. Seismicity is expected to continue but ground support will be better adapted to manage stress levels.

In 2020, approximately 12% of the tonnage mined at LaRonde is expected to be from the West mine area.  This tonnage is expected to increase to approximately 29% in 2021.  The capital cost for additional ground support in the West mine area in 2020 is approximately $1.5 million.  The increase in operating costs related to the additional ground support in 2020 is still being evaluated, but is expected to be less than C$1.00 per tonne.

Normal mining activities in the West mine area are expected to restart in late March or early April 2020.  This delay is expected to result in lower gold production in the first quarter of 2020 (approximately 70,000 ounces of expected gold production for the quarter) as gold grades are lower in the East mine area.  Production and unit costs are expected to return to more normalized levels in the second quarter through the fourth quarter of 2020 (approximately 90,000 ounces per quarter) as higher grade ore is extracted from the West mine area.

Infrastructure continues to be developed to provide further access to mine LaRonde 3 and construction of the level 308 East mine cooling plant is ongoing. Development continues on the access ramp to LaRonde 11-3.  Production activities are expected to begin at this zone in 2022.

Drilling continues to encounter high gold grades in the West mine area of LaRonde 3 project

Exploration work at the LaRonde mine is focused on conversion drilling in the LaRonde 3 project below 3,100 metres depth. The LaRonde 3 mineral reserves and indicated mineral resources currently extend to approximately 3,380 metres depth, while the inferred mineral resources continue to down to 3,800 metres

Selected recent drill results are set out in the table below; drill hole collar coordinates are set out in a table in the Appendix of this news release. Pierce points for all these holes are shown on the LaRonde Composite Longitudinal Section. All intercepts reported for the LaRonde mine show capped gold grades and uncapped silver, copper and zinc grades over estimated true widths.

Recent exploration and infill drill results from the West mine area of LaRonde 3 (below Level 311)

Drill hole

From (metres)

To (metres)

Depth of

midpoint

below

surface (metres)

Estimated

true width (metres)

Gold grade

(g/t) (uncapped)

Gold grade (g/t) (capped)

Silver

grade (g/t) (uncapped)

Copper

grade (%)

Zinc

grade (%)

LR-290-104

714.5

728.4

3,452

8.3

8.3

8.3

6.7

0.33

0.01

LR-290-107

674.9

682.9

3,413

4.9

26.0

22.0

15.5

0.62

0.02

*Holes at LaRonde 3 use a capping factor of 80 g/t gold and 1,000 g/t silver.  None of the silver, copper or zinc values in this table were capped.

[LaRonde Mine Composite Longitudinal Section]

Below approximately 2.8 kilometres depth, the LaRonde mine divides into two parallel lobes called the "East mine" and the slightly offset "West mine", as shown in the LaRonde Mine Composite Longitudinal Section. The gold grade generally increases with depth in the deep part of the mine. The 2019 conversion drill program has extended the core of higher gold grades in the West mine downward to 3,450 metres depth. Recent results in this area include hole LR-290-107 that intersected 22.0 g/t gold, 15.5 g/t silver, 0.62% copper and 0.02% zinc over 4.9 metres at 3,413 metres depth. Slightly deeper, hole LR-290-104 intersected 8.3 g/t gold, 6.7 g/t silver, 0.33% copper and 0.01% zinc over 8.3 metres at 3,452 metres depth.

These new high-grade intersections support and improve the geological model, and are expected to result in conversion of inferred mineral resources to indicated mineral resources in the western portion of the LaRonde 3 project, in the year-end 2020 update.

The 2020 exploration budget at the LaRonde mine includes $2.0 million for 9,600 metres of conversion drilling at the LaRonde 3 project, 9,500 metres of drilling to explore the potential of Zone 6 at depth and 1,500 metres of conversion drilling at LZ5.

Exploration is also planned at the adjacent Bousquet property, where the Company is achieving strong operating results at LZ5 and the LaRonde 11-3 mine development.  An exploration budget of $1.5 million in 2020 will include 6,000 metres of drilling targeting historic Bousquet zones, which exhibit good exploration potential between 2,000 and 3,000 metres depth, and 3,500 metres of drilling to explore Zones 6 and 20N at depth.  Compilation of historic data from the whole Bousquet property will continue.

The development drift that is currently being driven west from LaRonde's level 146 to the LaRonde 11-3 project at level 149 will have the additional benefit of allowing for underground exploration drilling into previously unexplored targets in Zone 6 and 20N, starting in 2021.

LaRonde Zone 5 – Operations Continue to Exceed Expectations; Further Production and Mineral Reserve Growth Expected in 2020

The Company acquired the LZ5 project in 2003.  The property lies adjacent to and west of the LaRonde mine and previous operators exploited the zone by open pit.  In February 2017, the LZ5 project was approved by Agnico Eagle's Board of Directors for development.  Commercial production was achieved in June 2018.

Production costs per tonne in the fourth quarter of 2019 were C$74.  Production costs per ounce in the fourth quarter of 2019 were $840.  Minesite costs per tonne in the fourth quarter of 2019 were C$69.  Total cash costs per ounce in the fourth quarter of 2019 were $771.  Gold production in the fourth quarter of 2019 was 15,234 ounces of gold.

Production costs per tonne for the full year 2019 were C$63.  Production costs per ounce for the full year 2019 were $689.  Minesite costs per tonne for the full year 2019 were C$66.  Total cash costs per ounce for the full year 2019 were $722.  Gold production for the full year 2019 was 59,830 ounces of gold.

In the fourth quarter and for the full year 2018, the LZ5 circuit at the LaRonde mill processed ore for 55 days and 116 days respectively, as the mine achieved commercial production in June 2018 and remaining Lapa ore was still being processed on that circuit.  As a result, the operating results in the fourth quarter and for the full year 2019 are not comparable to the prior year periods.

Continued productivity improvements and successful automation implementation (autonomous mucking and hauling) led to an increase in daily tonnage to 2,600 tpd by the end of the fourth quarter of 2019.  Production in 2020 is forecast to increase to 2,800 tpd.

Given the success in mining the upper portions of the LZ5 deposit (from surface to 330 metres), mining activities will be extended to 480 metres starting in 2020.  The Company is also evaluating the potential to develop deeper portions of LZ5 (480 metres to 700 metres) and potentially mine portions of the neighboring Ellison property from the LZ5 underground infrastructure.

In 2020, the Company will continue to test and refine automated mining techniques at LZ5 with a goal to increase the tonnage mined remotely to greater than 15% of the total tonnes mined.

Canadian Malartic Mine – Main Highway By-Pass Opened and First Pre-production Ore Processed From Barnat in the Fourth Quarter of 2019

In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired Osisko Mining Corporation and created the Partnership.  The Partnership owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee.  Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership.  All volume numbers in this section reflect the Company's 50% interest in the Canadian Malartic mine, except as otherwise indicated.

Canadian Malartic Mine – Operating Statistics




All metrics exclude pre-production tonnes and ounces

Three Months Ended


Three Months Ended


December 31, 2019


December 31, 2018

Tonnes of ore milled (thousands of tonnes) (100%)

5,174


5,084

Tonnes of ore milled per day (100%)

59,144


55,261

Gold grade (g/t)

1.11


1.18

Gold production (ounces)

81,905


84,732

Production costs per tonne (C$)

$

27


$

26

Minesite costs per tonne (C$)

$

26


$

25

Production costs per ounce of gold produced ($ per ounce):

$

668


$

604

Total cash costs per ounce of gold produced ($ per ounce):

$

630


$

562

Production costs per tonne in the fourth quarter of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the fourth quarter of 2019 increased when compared to the prior-year period due to higher contractor costs, lower deferred capitalized stripping costs and lower gold production.

Minesite costs per tonne in the fourth quarter of 2019 were essentially the same when compared to the prior-year period.  Total cash costs per ounce in the fourth quarter of 2019 increased when compared to the prior-year period due to the reasons described above.

Gold production in the fourth quarter of 2019 decreased when compared to the prior-year period primarily due to lower grades resulting from less flexibility in the mining sequence.  Pre-commercial production in 2019 from the Barnat pit was 3,137 ounces of gold.

Canadian Malartic Mine – Operating Statistics




All metrics exclude pre-production tonnes and ounces

Year Ended


Year Ended


December 31, 2019


December 31, 2018

Tonnes of ore milled (thousands of tonnes) (100%)

20,782


20,484

Tonnes of ore milled per day (100%)

57,669


56,121

Gold grade (g/t)

1.12


1.20

Gold production (ounces)

331,459


348,600

Production costs per tonne (C$)

$

26


$

25

Minesite costs per tonne (C$)

$

26


$

25

Production costs per ounce of gold produced ($ per ounce):

$

628


$

573

Total cash costs per ounce of gold produced ($ per ounce):

$

606


$

559

Production costs per tonne for the full year 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2019 increased when compared to the prior-year period due to higher contractor costs, lower deferred capitalized stripping costs and lower gold production.

Minesite costs per tonne for the full year 2019 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2019 increased when compared to the prior-year period due to the reasons described above.

Gold production for the full year 2019 decreased when compared to the prior-year period due to lower grades resulting from less flexibility in the mining sequence.  A reduced mining footprint and a higher density of underground openings in the Canadian Malartic pit has limited the access to higher-grade tonnes, which will be supplemented by lower-grade stockpiles in 2020.

In the fourth quarter of 2019, pre-commercial production began at the Barnat extension project as the new Highway 117 deviation opened for traffic in early October.  Mining activities at the Barnat pit are expected to continue to ramp up during 2020.  Approximately 15,500 ounces of pre-commercial gold production are expected from the Barnat pit during the first nine months of 2020.

As part of ongoing stakeholder engagement, the Partnership is in discussions with four First Nations groups concerning a potential collaboration agreement, which will include a financial component.  As with the Good Neighbour Guide and other community relations efforts at Canadian Malartic, the Partnership is working collaboratively with stakeholders to establish cooperative relationships that support the long-term potential of the mine.

First Inferred Mineral Resource of 1.4 Million Ounces of Gold at East Gouldie Zone; Inferred Mineral Resource Almost Doubles at East Malartic

The Canadian Malartic property, together with the Rand Malartic and Midway properties, cover in excess of 25 kilometres along the Cadillac-Larder Lake deformation zone.

Deep drilling east of the open pit in late 2018 resulted in the discovery of a new gold-mineralized zone, located south of the East Malartic and Odyssey zones, named the East Gouldie Zone.  The East Gouldie Zone has a strike length of 1,300 metres in an east-west direction, dips 60 degrees north, and extends from 700 metres to 1,900 metres depth below surface.  East Gouldie is a silicified and carbonatized mineralized zone with fine disseminated pyrite developed in sheared greywacke units.  Exploration results from East Gouldie were last reported in the Company's news release dated October 23, 2019.

Five drill rigs completed 15,339 metres of exploration drilling (100% basis) in the fourth quarter of 2019, aiming to reduce drill spacing in the central portion of the East Gouldie Zone (from 1,000 metres to 1,800 metres depth).  There was a total of 82,379 metres (100% basis) drilled in 2019.  This drilling allowed for the estimation of initial inferred mineral resources at East Gouldie of 1.4 million ounces of gold (12.8 million tonnes grading 3.34 g/t gold) (reflecting Agnico Eagle's 50% interest), as of December 31, 2019.

More details are available in the Mineral Resources section of this news release.

Selected recent drill intercepts from the East Gouldie Zone are set out in the table below.  The drill hole collars are located on the Canadian Malartic and Odyssey – Local Geology Map, and the pierce points are shown on the Canadian Malartic and Odyssey – Composite Longitudinal Section.  The intercepts reported for East Gouldie show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

Selected recent drill results from the East Gouldie Zone at Canadian Malartic









Drill hole

Zone

From
(metres)

To
(metres)

Depth of
midpoint
below
surface
(metres)

Estimated
true width
(metres)

Gold grade
(g/t)
(uncapped)

Gold grade
(g/t)
(capped)*

MEX19-135W

East Gouldie

1,871.0

1,917.0

1,631

39.3

5.1

4.2

MEX19-145WA

East Gouldie

1,848.6

1,866.0

1,626

13.6

4.1

4.0

and

East Gouldie

1,878.0

1,906.0

1,650

21.6

5.9

5.3

MEX19-149AWB

North of East Gouldie

1,680.0

1,690.7

1,546

8.6

2.6

2.6

and

East Gouldie

1,989.0

2,010.0

1,789

16.5

2.5

2.5

MEX19-152W

East Gouldie

1,592.8

1,606.0

1,153

10.9

7.0

6.7

MEX19-153

East Gouldie

1,723.8

1,756.0

1,551

29.3

3.1

3.1

MEX19-155

East Gouldie

1,650.0

1,669.4

1,392

18.1

4.0

4.0

MEX19-156

East Gouldie

1,749.0

1,805.0

1,524

49.6

3.2

3.2

MEX19-157

East Gouldie

1,720.0

1,728.0

1,241

7.0

6.4

4.6

MEX19-158A

East Gouldie

1,517.0

1,545.0

1,071

25.8

8.9

8.6

and

East Gouldie

1,551.6

1,559.1