For the first quarter of 2020, the Company reported a net loss of $21.6 million or a net loss of $0.09 per share.
In the first quarter of 2021, the higher mine operating margins were primarily a result of strong operating performance at the LaRonde and Meadowbank complexes, the Meliadine and Canadian Malartic mines and the contribution from the recently acquired Hope Bay mine, and higher average realized metal prices.
“We significantly increased our exploration budget for 2021 and we are already starting to see positive results from this initiative, with drilling encountering high-grade gold mineralization at Hope Bay and a significant drill result suggesting the potential for an almost one-kilometre extension to the East Gouldie Zone at the Odyssey underground project.
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.
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.
In the first quarter of 2021, the Company set a second consecutive record in quarterly payable gold production of 504,545 ounces .
The higher gold production in the first quarter of 2021, when compared to the prior-year period, was primarily due to strong performance at the LaRonde and Meadowbank complexes and at the Canadian Malartic, Meliadine and Kittila mines, especially in the month of March 2021, partially offset by lower production at Pinos Altos resulting from lower gold grades encountered under the mining sequence, at La India related to water conservation efforts and at Creston Mascota where only residual leaching remains.
Production costs per ounce in the first quarter of 2021 were $782 , compared to $836 in the prior-year period.
In the first quarter of 2021, total cash costs per ounce decreased when compared to the prior-year period primarily due to higher gold production and higher by-product revenues, partially offset by the strengthening of the Canadian dollar against the U.S.
AISC in the first quarter of 2021 decreased when compared to the prior-year period primarily due to lower total cash costs per ounce.
Cash and cash equivalents and short-term investments decreased to $132.0 million at March 31, 2021, from the December 31, 2020 balance of $406.5 million, as the Company used its cash position and the free cash flow generated from operations to acquire TMAC Resources Inc.
Approximately 32% of the Company’s remaining 2021 estimated Canadian dollar exposure is hedged at an average floor price above 1.32 C$/US$.
As a result, some variability is likely depending on the timing of the achievement of commercial production, prevailing gold prices and foreign exchange rates.
Production guidance for 2021 remains unchanged at approximately 2,047,500 ounces of gold in the second quarter of 2021 that results in changes in the mining sequence which brings in slightly lower grades.
Of these, approximately $76.0 million related to top-up payments for taxes related to the 2020 tax year for Canada in Mexico of approximately $10.0 million.
The Company will release its 2020 Sustainability Report on April 30, 2021, highlighting the progress achieved during the past year in the areas of sustainability and responsible mining.
In 2020, they represented the Company’s commitment to remain focused on advancing its sustainability goals while protecting the health and safety of its employees and the communities in which it operates.
Agnico Eagle’s Board of Directors has declared a quarterly cash dividend of $0.35 per common share, payable on June 15, 2021 to shareholders of record as of June 1, 2021.
Although the Company believes the risk for business interruption remains low considering the rigorous protocols that have been implemented in all of the regions, the situation remains challenging and it requires close attention and adaptation from the sites.
During the first quarter of 2021, the Company continued to donate food for vulnerable people and health and safety supplies to the surrounding communities of Pinos Altos and La India.
In Mexico, the Company provides transportation for health personnel to the community to administer COVID-19 vaccines and transportation for employees to bring them to vaccination centres.
These costs relate mainly to the purchase of sanitizing equipment and consumables; procurement of masks; testing of employees; rental of trailers for screening; additional employee transportation; and supplies and health support to surrounding communities.
The Company is in the process of establishing a reintegration plan taking into account logistics, testing and health protocols, as well as training plans required to ensure a smooth and safe reintegration.
To date, the Company believes these protocols have been effective at detecting COVID-19 cases and preventing the spread of the virus within the Company’s operations.
Due to the continuing public health impact of the COVID-19 pandemic, and having regard to the health and safety of the Company’s employees and shareholders as well as public health guidelines to limit gatherings of people, the AGM will be held in a virtual-only meeting format and conducted via live webcast using the LUMI meeting platform at https://web.lumiagm.com/272684657.
For details on how to attend, communicate and vote at the virtual AGM, please see the Company’s Management Information Circular dated March 22, 2021 as well as the additional materials filed under the Company’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Agnico Eagle is currently Quebec’s largest gold producer with a 100% interest in the LaRonde Complex and the Goldex mine and a 50% interest in the Canadian Malartic mine.
In the prior-year period, access to higher grade ore from the West mine area was delayed as additional ground support was being completed and the operations were temporarily suspended on March 23, 2020 as ordered by the Government of Quebec in response to COVID-19 .
Production costs per ounce in the first quarter of 2021 increased when compared to the prior-year period due to the reasons described above and the strengthening of the Canadian dollar against the U.S.
Total cash costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to higher gold production and higher by-product revenues due to higher average realized by-product metal prices, partially offset by the strengthening of the Canadian dollar against the U.S.
. The Partnership owns the Canadian Malartic mine in northwestern Quebec and operates it through a joint management committee.
Gold production in the first quarter of 2021 increased when compared to the prior-year period primarily due to higher gold grades, higher throughput and higher gold recovery.
Production costs per tonne in the first quarter of 2021 were essentially the same when compared to the prior-year period as higher open pit production costs resulting from a higher stripping ratio were offset by higher throughput and the timing of inventory.
Minesite costs per tonne in the first quarter of 2021 were essentially the same when compared to the prior-year period as higher open pit production costs due to a higher stripping ratio were offset by higher throughput.
Exploration at Canadian Malartic is undertaken through the Partnership.
As of December 31, 2020, East Gouldie was estimated to contain inferred mineral resources of 6.4 million ounces of gold, with Agnico Eagle’s 50% interest representing 3.2 million ounces of gold .
The aggressive infill drilling program at the Canadian Malartic property continued during the first quarter of 2021, with 10 drill rigs completing 23,400 metres , mainly focused on East Gouldie with the objective of reducing the drill spacing to 75 metres from 150 metres within the current mineral resource envelope in preparation for converting mineral resources to mineral reserves in the future.
The intercepts reported for East Gouldie show uncapped and capped gold grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.
The infill drilling program at East Gouldie during the first quarter of 2021 continued to deliver robust results such as in drill hole MEX19-153W, which intercepted 3.7 g/t gold over 58.6 metres at 1,580 metres depth in the western, lower portion of the zone.
Hole RD21-4680A intersected 2.7 g/t gold over 10.9 metres at 1,995 metres depth, including 3.1 g/t over 7.2 metres at 1,993 metres depth along the down-plunge eastern projection of the current mineral resources at East Gouldie.
Gold production in the first quarter of 2021 increased when compared to the prior-year period primarily due to higher mill throughput levels, partially offset by lower gold grade related to the mining sequence.
Production costs per ounce in the first quarter of 2021 increased when compared to the prior-year period primarily due to the lower gold grades processed as planned and the strengthening of the Canadian dollar against the U.S.
An update on the drilling program is expected to be released in the second quarter of 2021 and an internal technical evaluation of the project is expected to be completed in late 2021.
Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential.
The 100% owned Meadowbank Complex is located approximately 110 kilometres by road north of Baker Lake in the Kivalliq District of Nunavut, Canada.
Amaruq ore is transported using long haul off-road type trucks to the mill at the Meadowbank site for processing.
In the first quarter of 2021, gold production increased when compared to the prior-year period primarily due to higher throughput resulting from strong operational performance, optimization of processing facility throughput and expected higher grade with deepening of the pit and the contribution from the IVR open pit.
Production costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to the reasons described above and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S.
Total cash costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to the reasons described above and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S.
In February 2017, the Company’s Board of Directors approved the construction of the Meliadine project and commercial production was declared on May 14, 2019.
Gold production in the first quarter of 2021 increased when compared to the prior-year period primarily due to higher throughput as Meliadine delivered a strong performance over the quarter with the processing rate at over 4,600 tpd and higher gold grades than planned which resulted from an adjustment in the mining sequence.
Production costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to lower production costs per tonne and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S.
Total cash costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to lower minesite costs per tonne and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S.
At the time the Hope Bay mine was acquired, construction at the Doris deposit was complete and commercial production had been achieved in the second quarter of 2017. In 2021, the Company expects to continue mining at the Doris deposit while undertaking optimization efforts.
Gold production in the first quarter of 2021 at Hope Bay was 12,259 ounces.
While the costs related to those additional gold sales are included in the production costs for the quarter, only the tonnes of ore milled and gold produced from February 2, 2021 to March 31, 2021 are included for the production costs per tonne and the production costs per ounce metrics.
An internal team has been established to evaluate expanded production scenarios that would potentially involve the Madrid and Boston deposits.
The Company has launched a major delineation, conversion and exploration drilling program at the Hope Bay property, using three rigs from underground and three rigs at surface.
The Company expects to spend $16.2 million for 69,600 metres of drilling at the Hope Bay property in 2021, including $5.5 million for 29,800 metres of delineation drilling to support production at the Doris mine and $10.7 million for 39,800 metres of drilling on exploration targets around the Doris, Madrid and Boston deposits and other regional targets along the 80-kilometre-long Hope Bay greenstone belt.
The pierce points are shown on the Doris Deposit at Hope Bay Mine – Composite Longitudinal Section, and drill hole collar coordinates are set out in a table in the Appendix.
Veins typically range from a few centimetres to several metres in width and the veins can be traced for up to 3.0 kilometres along strike.
Results were in line with expectations, with some local wide zones such as in drill hole DBE21-50285 which intersected 9.8 g/t gold over 16.7 metres at 343 metres depth, including 17.1 g/t gold over 5.0 metres at 343 metres depth.
For further details on the historical estimates of mineral reserves and mineral resources at Hope Bay refer to the Company’s press release dated February 11, 2021.
To date, over 90 regional exploration targets have been defined by surface mapping and sampling, and geophysical and geochemical surveys.
Exploration activities continue to expand the mineral reserves and mineral resources at the Kittila mine and an expansion to add an underground shaft and increase expected mill throughput by 25% to 2.0 million tonnes per annum is under construction.
Production costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to the lower production costs per tonne, higher gold grades and the timing of inventory, partially offset by the strengthening of the Euro against the U.S.
Total cash costs per ounce in the first quarter of 2021 decreased when compared to the prior-year period due to lower minesite costs per tonne and higher gold grades, partially offset by the strengthening of the Euro against the U.S.
The Company retained a 2% net smelter return royalty on the Projects, 1% of which may be purchased at any time by EMX for $1.0 million.
Production costs per tonne in the first quarter of 2021 decreased when compared to the prior-year period primarily due to the timing of inventory, partially offset by higher processing costs related to higher unit costs for grinding media and higher diesel consumption to run generators during a one week power outage that affected northern Mexico in February 2021.
Minesite costs per tonne in the first quarter of 2021 increased when compared to the prior-year period primarily due to higher processing costs for the reasons described above, partially offset by higher throughput.
With the depletion of the Bravo pit in the third quarter of 2020, gold production in the first quarter of 2021 came only from residual leaching.
In the first quarter of 2021, production costs per ounce decreased when compared to the prior-year period primarily due to lower overall costs as only reduced heap leach and site administration costs remain.
Production costs per tonne in the first quarter of 2021 decreased when compared to the prior-year period primarily due to the build-up of heap leach ore inventory resulting from reduced irrigation of the heap leach, the timing of inventory and by higher production rates.
Minesite costs per tonne in the first quarter of 2021 decreased when compared to the prior-year period primarily due to the build-up of heap leach ore inventory resulting from reduced irrigation of the heap leach, partially offset by higher production rates.
The property was the site of historic heap-leach operations that produced approximately 565,000 ounces of gold at a grade of 2.1 g/t gold between 1991 and 2000.
In the second quarter of 2021, additional drilling and metallurgical testing are planned to continue expanding the mineral resources, to generate and test new targets and to advance an oxide heap-leach project concept.
Its operating mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States, Sweden and Colombia.
For a reconciliation of these measures to the most directly comparable financial information reported in the consolidated financial statements prepared in accordance with IFRS, other than adjusted net income and free cash flow, see “Reconciliation of Non-GAAP Financial Performance Measures” below.
The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis, except that no adjustment is made for by-product metal revenues.
Adoption of the AISC metric is voluntary and, notwithstanding the Company’s adoption of the WGC’s guidance, AISC per ounce of gold produced reported by the Company may not be comparable to data reported by other gold mining companies.
As the total cash costs per ounce of gold produced can be affected by fluctuations in by–product metal prices and foreign exchange rates, management believes that minesite costs per tonne provide additional information regarding the performance of mining operations, eliminating the impact of varying production levels.
Management believes that adjusted net income is a useful measure of performance because foreign currency translation gains and losses, mark-to-market adjustments, non-recurring gains and losses and unrealized gains and losses on financial instruments do not reflect the underlying operating performance of the Company and may not be indicative of future operating results.
The Company believes that operating margin is a useful measure that represents the operating performance of its mines associated with the ongoing production and sale of gold and by-product metals.
Free cash flow is calculated by deducting additions to property, plant and mine development from cash provided by operating activities including changes in non-cash working capital balances.
The estimates are based upon the total cash costs per ounce, AISC per ounce and minesite costs per tonne that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined.
Such statements include, without limitation: statements regarding the impact of the COVID-19 pandemic and measures taken to reduce the spread of COVID-19 on the Company’s future operations, including its employees and overall business; the Company’s forward-looking guidance, including metal production, estimated ore grades, recovery rates, project timelines, drilling results, life of mine estimates, total cash costs per ounce, AISC per ounce, minesite costs per tonne, other expenses, cash flows and free cash flow; the estimated timing and conclusions of technical studies and evaluations; the methods by which ore will be extracted or processed; statements concerning the Company’s expansion plans at Kittila, Meliadine Phase 2, the Amaruq underground project and the Odyssey project, including the timing, funding, completion and commissioning thereof and production therefrom; statements about the Company’s plans at the Hope Bay mine; statements about the potential for the Hope Bay mine to be a 250,000 to 300,000 ounces of gold per year operation; statements concerning other expansion projects, recovery rates, mill throughput, optimization and projected exploration, including costs and other estimates upon which such projections are based; statements regarding timing and amounts of capital expenditures, other expenditures and other cash needs, and expectations as to the funding thereof; estimates of future mineral reserves, mineral resources, mineral production and sales; the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of mineral reserves and mineral resources and the effect of drill results on future mineral reserves and mineral resources; statements regarding the Company’s ability to obtain the necessary permits and authorizations in connection with its proposed or current exploration, development and mining operations and the anticipated timing thereof; statements regarding anticipated future exploration; the anticipated timing of events with respect to the Company’s mine sites; statements regarding the sufficiency of the Company’s cash resources; statements regarding future activity with respect to the Company’s unsecured revolving bank credit facility; future dividend amounts and payment dates; and statements regarding anticipated trends with respect to the Company’s operations, exploration and the funding thereof.
Under the SEC’s Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.
United States investors are cautioned that while the SEC now recognizes “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”, investors should not assume that any part or all of the mineral deposits in these categories will ever be converted into a higher category of mineral resources or into mineral reserves.
Further, “inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility.
The mineral reserve and mineral resource data set out in this news release are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized.
The scientific and technical information contained in this news release relating to Quebec operations has been approved by Daniel Paré, P.Eng., Vice-President Operations – Eastern Canada; relating to Nunavut operations has been approved by Dominique Girard, Eng., Senior Vice-President, Operations – Canada and Europe; relating to Finland operations has been approved by Francis Brunet, Eng., Corporate Director, Business Strategy; relating to Southern Business operations has been approved by Marc Legault, Eng., Senior Vice-President, Operations – U.S.A.
NI 43-101 requires mining companies to disclose mineral reserves and mineral resources using the subcategories of “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”.
It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of modifying factors.
Modifying factors are considerations used to convert mineral resources to mineral reserves.
The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.
A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.
An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.
A feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors, together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified .
Additional information about each of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4, as well as other information, can be found in Technical Reports, which may be found at www.sedar.com.
Payable production for the three months ended March 31, 2021 includes 8,123 ounces of gold from the Tiriganiaq open pit deposit at the Meliadine mine, which were produced during this period as commercial production at the Tiriganiaq open pit deposit has not yet been achieved.
As the total cash costs per ounce of gold produced are calculated on a production basis, an inventory adjustment is made to reflect the portion of production not yet recognized as revenue.
Under the Company’s revenue recognition policy, revenue from contracts with customers is recognized upon the transfer of control over metals sold to the customer.