Agnico Eagle Reports First Quarter 2016 Operating and Financial Results – Continued Strong Operational Performance – Amaruq, El Barqueno and Barsele Drill Programs Yield Positive Results
Press Release
April 28, 2016
TORONTO, April 28, 2016 – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $27.8 million, or $0.13 per share, for the first quarter of 2016. This result includes unrealized gains on financial instruments of $9.6 million ( $0.04 per share), non-cash foreign currency translation gains on deferred tax liabilities of $8.0 million ( $0.04 per share), non-cash foreign currency translation losses of $6.8 million ( $0.03 per share), non-cash stock option expense of $5.9 million ( $0.03 per share), non-recurring losses of $1.9 million ( $0.01 per share) and various mark-to-market and other adjustment losses of $0.9 million (nil per share). Excluding these items would result in adjusted net income of $25.7 million or $0.12 per share for the first quarter of 2016. In the first quarter of 2015, the Company reported net income of $28.7 million or $0.13 per share.
First quarter 2016 cash provided by operating activities was $145.7 million ( $167.5 million before changes in non-cash components of working capital). This compares to cash provided by operating activities of $143.5 million in the first quarter of 2015 ( $176.8 million before changes in non-cash components of working capital). The decrease in cash provided by operating activities before changes in working capital during the current period was largely due to higher exploration and corporate development expenditures (up 70%, period over period) which were partially offset by higher sales volumes.
“The year is off to a good start with a more constructive gold price environment and continued strong operating performance from all of our mines. As a result of the strong operating results, we now expect to meet the top end of our production guidance for 2016,” said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “At current margins, Agnico Eagle is generating sufficient cash flow to support its expanded exploration and development activities and potentially pay down additional debt,” added Mr. Boyd.
First Quarter 2016 highlights include:
- Quarterly gold production – Payable gold production1 in the first quarter of 2016 was 411,336 ounces of gold at total cash costs2 per ounce on a by-product basis of $573 and all-in sustaining costs per ounce3 (“AISC”) on a by-product basis of $797
- Strong operational performance at Mexican operations – In the first quarter of 2016, payable gold production was 87,899 ounces at the Company’s Mexican mines. Silver production was a new quarterly record of 752,000 ounces. Total cash costs per ounce of gold on a by-product basis averaged $364
- 2016 production now expected to reach high end of the guidance range – Production for 2016 is now expected to meet the high end of the guidance range of approximately 1.525 to 1.565 million ounces of gold with total cash costs per ounce on a by-product basis of between $590 to $630 and AISC of approximately $850 to $890 per ounce
- Continued strong operating performance enhances financial flexibility – In the first quarter of 2016, $55 million was repaid under the Company’s credit facility and net debt was reduced by approximately $89 million to $923 million at March 31, 2016. For the sixth consecutive quarter, the Company has reduced net debt
- Amaruq Project, Nunavut – Further drilling refines the geometry of the Whale Tail Ore Shoot and IVR deposit – Drilling resumed in January and results show that the Whale Tail Ore shoot is larger in the central area than previously interpreted and confirms that the IVR deposit extends to the East and to a depth of 230 metre
- Drilling at Barsele, in Sweden, extends the mineralization at depth and suggests the potential for a Goldex type deposit – Highlights include: 2.01 grams per tonne (“g/t”) gold (capped) over an estimated true width of 84.0 metres at a depth of approximately 310 metres in the Skirasen zone
- A quarterly dividend of $0.08 per share was declared
1 Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
2 Total cash costs per ounce is a Non-GAAP measure. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures” below. Total cash costs per ounce of gold produced is presented on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before by-product metal revenues). Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold produced. Total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as total cash costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. See “Note Regarding Certain Measures of Performance”. For information about the Company’s total cash costs per ounce on a co-product basis please see “Reconciliation of Non-GAAP Performance Measures”.
3 All-in-sustaining costs per ounce is a Non-GAAP measure and is used to show the full cost of gold production from current operations. For a reconciliation to production costs, see “Reconciliation of Non-GAAP Financial Performance Measures below. The Company calculates all-in sustaining costs per ounce of gold produced as the aggregate of total cash costs per ounce on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock option expense) and reclamation expenses divided by the amount of gold produced. All-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as all-in sustaining costs per ounce of gold produced on a by-product basis except that no adjustment for by-product metal revenues is made. For information about the Company’s AISC on a co-product basis please see “Reconciliation of Non-GAAP Performance Measures”. The Company’s methodology for calculating all-in sustaining costs per ounce may not be similar to the methodology used by other producers that disclose all-in sustaining costs per ounce. See “Note Regarding Certain Measures of Performance”. The Company may change the methodology it uses to calculate all-in sustaining costs per ounce in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council.
First Quarter Financial and Production Highlights – Higher Gold Production and Lower Production Costs
In the first quarter of 2016, strong operational performance continued at the Company’s mines, which led to payable gold production of 411,336 ounces compared to 404,210 ounces in the first quarter of 2015. The higher level of production in the 2016 period was primarily due to higher grades and better recoveries at LaRonde, increased throughput at Goldex and Kittila and higher grades at Canadian Malartic. A detailed description of the production and cost performance of each mine is set out below.
Total cash costs per ounce on a by-product basis for the first quarter of 2016 were lower at $573 compared to $588 per ounce for the first quarter 2015. Total cash costs per ounce on a by-product basis in the first quarter of 2016 were positively affected by higher production levels at LaRonde, Goldex, Canadian Malartic and La India compared to the first quarter of 2015, as well as weaker local currencies (the Canadian dollar was 9% lower and the Mexican peso was 17% lower when compared to the first quarter of 2015).
AISC for the first quarter of 2016 were $797 per ounce on a by-product basis compared to $804 in the first quarter of 2015. The lower AISC is primarily due to lower total cash costs per ounce on a by-product basis compared to the first quarter of 2015.
Cash Position Remains Strong and Debt Levels Reduced
Cash and cash equivalents and short term investments increased to $168.0 million at March 31, 2016 from the December 31, 2015 balance of $131.6 million. The outstanding balance on the Company’s $1.2 billion credit facility was reduced from $265 million at December 31, 2015 to $210 million at March 31, 2016, resulting in current availability under the Company’s credit lines of approximately $990 million, not including the $300 million accordion facility.
Total capital expenditures (including sustaining) made by the Company in the first quarter of 2016 were $100.7 million, including $16.0 million at Pinos Altos, $15.2 million at Goldex, $15.1 million at Meliadine, $14.3 million at LaRonde, $14.1 million at Kittila, $11.5 million at Meadowbank, $10.5 million at Canadian Malartic, $1.7 million at La India and $1.3 million at Creston Mascota.
Sustaining capital expenditures made by the Company in the first quarter of 2016 were $66.3 million, including $14.3 million at LaRonde, $11.7 million at Kittila, $11.5 million at Meadowbank, $10.8 million at Pinos Altos, $10.0 million at Canadian Malartic, $5.0 million at Goldex, $1.7 million at La India and $1.3 million at Creston Mascota.
Dividend Record and Payment Dates for the Second Quarter of 2016
Agnico Eagle’s Board of Directors has declared a quarterly cash dividend of $0.08 per common share, payable on June 15, 2016 to shareholders of record as of June 1, 2016. Agnico Eagle has declared a cash dividend every year since 1983.
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