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

RECORD QUARTERLY PRODUCTION; RECORD ANNUAL EARNINGS AND CASHFLOW; RECORD RESERVES; GOLD PRODUCTION FORECAST TO GROW 24% FROM 2020 THROUGH 2024; ODYSSEY PROJECT AND AMARUQ UNDERGROUND APPROVED FOR DEVELOPMENT

Stock Symbol: AEM (NYSE and TSX)

TORONTO, Feb. 11, 2021 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $205.2 million, or net income of $0.85 per share, for the fourth quarter of 2020.  This result includes non-cash mark-to-market gains on warrants of $29.3 million ($0.12 per share), foreign currency translation gains on deferred tax liabilities of $28.8 million ($0.12 per share), derivative gains on financial instruments of $21.7 million ($0.09 per share), losses on environmental remediation of $16.6 million ($0.07 per share), non-cash foreign currency translation losses of $11.0 million ($0.04 per share) and various other adjustment losses of $9.1 million ($0.04 per share).  Excluding these items would result in adjusted net income¹ of $162.1 million or $0.67 per share for the fourth quarter of 2020.  For the fourth quarter of 2019, the Company reported net income of $331.7 million or $1.39 per share.

Included in the fourth quarter of 2020 net income, and not adjusted above, are non-cash stock option expense of $3.0 million ($0.01 per share) and workforce costs of employees affected by the COVID-19 pandemic (primarily Nunavut-based) of $2.3 million ($0.01 per share).

In the full year 2020, the Company reported record net income of $511.6 million, or $2.12 per share.  This compares with the full year 2019, when net income was $473.2 million, or $2.00 per share.

In the fourth quarter of 2020, cash provided by operating activities was $403.5 million ($386.8 million before changes in non-cash components of working capital), compared to the fourth quarter of 2019 when cash provided by operating activities was $257.5 million ($263.8 million before changes in non-cash components of working capital).  The cash provided by operating activities in the fourth quarter of 2020 resulted in another strong quarter of free cash-flow² generation.

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”.
² Free cash flow 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”.  

In the full year 2020, cash provided by operating activities was $1,192 million ($1,211 million before changes in non-cash components of working capital), compared to the full year 2019 when cash provided by operating activities was $882 million ($867 million before changes in non-cash components of working capital).  The cash provided by operating activities in the full year of 2020 sets a yearly record for the Company and resulted in strong annual free cash-flow generation.

The decrease in net income in the fourth quarter of 2020, compared to the prior-year period, is primarily due to the impairment reversal (net of tax) relating to the Meliadine mine of $223.4 million in the fourth quarter of 2019, partially offset by higher revenues from mining operations resulting from higher average realized gold and silver prices as well as changes in non-cash items related to mark-to-market gains on warrants and other financial instruments owned by the Company.

The increase in net income in the full year 2020, compared to the prior-year, is primarily due to higher average realized gold prices as well as changes in non-cash items related to mark-to-market gains on warrants and other financial instruments owned by the Company, partially offset by the impairment reversal (net of tax) relating to the Meliadine mine of $223.4 million in the fourth quarter of 2019, higher amortization costs from the Meliadine and Canadian Malartic mines and lower gold sales volume.  The lower gold sales volume was primarily driven by the suspension of seven of the Company’s eight mines in the second quarter of 2020 in response to the COVID-19 pandemic.

The increase in cash provided by operating activities in the fourth quarter of 2020, compared to the prior-year period, was mainly due to an increase in revenues from mining operations resulting from higher average realized gold and silver prices, partially offset by higher cash taxes related to higher operating margins in the quarter. 

The increase in cash provided by operating activities in the full year 2020, compared to the prior-year, was mainly due to an increase in revenues from mining operations resulting from higher average realized gold prices, partially offset by lower gold sales volume, higher production costs from the Meadowbank Complex as mining transitioned to the Amaruq satellite deposit, temporary suspension costs related to the COVID-19 pandemic and higher cash taxes related to higher operating margins.

“Despite 2020 being very challenging, we ended the year with record quarterly gold production, our largest gold reserve base and our best ever safety performance as a result of the excellent work of our employees.  With gold production expected to increase by approximately 300,000 ounces in 2021, combined with an anticipated decline in total cash costs per ounce of 6%, we expect to continue to generate strong net free cash flow in 2021 while we steadily advance our pipeline of growth projects,” said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “As we move forward, our focus will be on maximizing the full potential of our existing mines through mineral reserve additions and incremental production expansions while also building new projects like the recently approved underground mines at Canadian Malartic and Amaruq.  At the same time, we will continue to look to strengthen our business and build additional value by adding projects with excellent potential to grow and become important cash flow generators, like the recently acquired Hope Bay project,” added Mr. Boyd.

Fourth quarter of 2020 and full year 2020 highlights include:

• Record quarterly gold production – Payable gold production³ in the fourth quarter of 2020 was 501,445 ounces (including 15,504 ounces of pre-commercial gold production from the IVR open pit at the Meadowbank Complex and the Tiriganiaq open pit at Meliadine) at production costs per ounce of $771, total cash costs per ounce⁴ of $701 and all-in sustaining costs (“AISC”) per ounce⁵ of $985. Payable gold production in the full year 2020 was 1,736,568 ounces (including 36,416 ounces of pre-commercial gold production from the IVR deposit, Tiriganiaq open pit, and Barnat pit at Canadian Malartic) at production costs per ounce of $838, with total cash costs per ounce of $775. This compares to the most recent guidance of 1.68 to 1.73 million ounces of gold at total cash costs per ounce of $740 to $790. AISC per ounce in the full year 2020 were $1,051, compared to the most recent guidance of $1,025 to $1,075 per ounce. Production costs, total cash costs per ounce and AISC per ounce exclude the pre-commercial production ounces from IVR, Tiriganiaq and Barnat
  
  
• Optimization of existing assets supports 24% Growth in Expected Production From 2020 Through 2024 – The mid-point of gold production guidance for 2021 and 2022 is 2.05 and 2.1 million ounces, respectively (unchanged from previous guidance issued in February 2020). The mid-point for gold production guidance for 2023 is 2.125 million ounces, while gold production in 2024 is expected to be approximately 2.15 million ounces. At this time, gold production guidance excludes production from the newly acquired Hope Bay deposits
  
  
• Cost guidance for 2021 essentially in line with prior year’s guidance – In 2021, total cash costs per ounce are forecast to be between $700 and $750. This compares to last year’s guidance range for 2021 of $675 to $725, before adding COVID-19 related costs of approximately $10 per ounce. In 2021, AISC are forecast to be between$950 and $1,000 per ounce. Although the Company expects some variability in operating costs over the period, total cash costs per ounce and AISC per ounce are expected to average approximately $750 and $990 per ounce, respectively, through 2024. In 2021, capital expenditures are forecast to be approximately $803 million. Annual capital expenditures are expected to be approximately $750 million to $800 million through 2024
  
• Gold mineral reserves increase to record level – Year-end 2020 gold mineral reserves increased by 12% to 24.1 million ounces of gold (348 million tonnes grading 2.15 grams per tonne (“g/t”) gold). Approximately 1.1 million ounces of the increase comes from operating mines (primarily the LaRonde Complex, Canadian Malartic, Goldex, Meliadine, Pinos Altos and Kittila) with the balance coming from the Hammond Reef project. Gold contained in measured and indicated mineral resources decreased by 15% to 15.3 million ounces (341million tonnes grading 1.40g/t gold), largely due to conversion into mineral reserves. Inferred mineral resources increased by 9% to 23.4 million ounces (283million tonnes grading 2.57g/t gold), largely due to additions at the East Gouldie deposit at Canadian Malartic
  
  
• 2021 exploration budget increased by over 40% with a focus on expansion and conversion drilling at existing properties and delineation of new target areas – The exploration budget in 2021 has been increased to approximately $163 million (from $113 million in 2020). The focus will be on the expansion of mineral reserves and mineral resources at operating mines and pipeline projects. In addition, new target areas will be tested at LaRonde, Kittila, East Gouldie, Santa Gertrudis and Hope Bay
  
  
• Near-Term Opportunities Support Production Growth in 2021 to 2023; Kittila and Meliadine expansions progressing as planned; Amaruq underground and Odyssey projects approved for development
  
  
  • Kittila and Meliadine – At Kittila, the mill expansion was completed in the fourth quarter of 2020 (ahead of schedule) and shaft sinking remains on budget despite delays related to COVID-19 travel restrictions impacting the Canadian-based contractor. At Meliadine, the Phase 2 expansion remains on track with mill throughput expected to increase from an average of approximately 4,600 tonnes per day (“tpd”) in 2021 to 6,000 tpd in 2025
    
    
  • Amaruq underground project – First gold production is expected in 2022. Over the current estimated 5-year mine life, approximately 500,000 ounces of gold are expected to be produced with a positive impact expected on overall production and costs at the Meadowbank Complex in 2023 to 2026. Additional mineral reserves may be available for mining, but will be contingent on the development of new open pit ore sources
    
    
  • Odyssey project – Initial production is expected in 2023 from the underground ramp. Shaft sinking and development to access the higher-grade East Gouldie deposit is expected to continue until the end of 2028. Starting in 2029, the mine is expected to produce an average of 545,400 ounces of gold per year (100% basis) at total cash costs per ounce of $630. Over an expected 17-year mine life, total payable gold production is expected to be approximately 6.93 million ounces (100% basis)
    
    
• Project pipeline provides future production optionality: Upper Beaver technical evaluations advancing; Hope Bay acquisition completed; Hammond Reef declares Initial Mineral Reserves
  
  
  • Upper Beaver – 2020 drilling focused on infilling and expanding mineral resources. Additional drilling is planned at Upper Beaver in 2021 to test an open pit concept and an internal technical study is expected to be completed at year-end 2021
    
    
  • Hope Bay – In 2021, the Company expects to continue mining at the Doris deposit while undertaking optimization efforts, as well as initiating a property wide exploration program and evaluating the Madrid and Boston deposits for future production. Hope Bay is expected to be approximately cash flow neutral in 2021, and is currently not included in the Company’s production or cost guidance for 2021
    
    
  • Hammond Reef – A positive internal technical study was completed in 2020, resulting in the declaration of the first open pit mineral reserves of 3.32 million ounces of gold (123.5 million tonnes grading 0.84 g/t gold). Going forward, the Company will continue to evaluate optimization of the deposit and potential mining scenarios to further improve project economics
    
    
• A quarterly dividend of $0.35 per share has been declared

³Payable 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.
⁴Total 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”.
⁵AISC 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 2020 Financial and Production Highlights

In the fourth quarter of 2020, strong operational performance continued at the Company’s eight mines, which led to record quarterly payable gold of 501,445 ounces (including pre-commercial gold production of 10,995 ounces from the IVR pit at the Meadowbank Complex and 4,509 ounces from the Tiriganiaq open pit at Meliadine), compared to 494,678 ounces in the prior-year period (which included 3,137 ounces of pre-commercial gold production from the Barnat deposit at Canadian Malartic).

The higher gold production in the fourth quarter of 2020, when compared to the prior-year period, was primarily due to the strong performance of the Nunavut operations which achieved their targeted operating rates, partially offset by lower production from the LaRonde Complex due to lower grade and throughput as a result of adjustments to the mining sequences and lower production from the Kittila mine due to a planned shutdown at the start of the quarter.

In the full year 2020, payable gold production was 1,736,568 ounces (including pre-commercial gold production of 18,930 ounces from the Barnat deposit at Canadian Malartic, 10,995 ounces from the IVR pit at the Meadowbank Complex and 6,491 ounces from the Tiriganiaq open pit at Meliadine), compared to 1,782,147 ounces in the prior-year period (which included an aggregate of 85,699 ounces of pre-commercial gold production at the Meliadine mine, the Amaruq satellite deposit and the Barnat deposit).

The lower gold production in the full year 2020, when compared to the prior-year period, was primarily due to lower production at four of the Company’s eight mines as a result of temporary shutdowns or reduction in activities in the second quarter of 2020 related to government mandated COVID-19 restrictions, partially offset by the contribution of a full year of production from the Meliadine mine which achieved commercial production in May 2019 and strong performance at the Kittila mine.  A detailed description of the production at each mine is set out below.

Production costs per ounce in the fourth quarter of 2020 were $771, compared to $763 in the prior-year period.  Total cash costs per ounce in the fourth quarter of 2020 were $701, compared to $745 in the prior-year period.

In the fourth quarter of 2020, production costs per ounce increased when compared to the prior-year period primarily due to additional costs at all sites related to COVID-19 protocols and higher production costs at the Kittila mine resulting from contractor cost pressures and lower gold production.  In the fourth quarter of 2020, total cash costs per ounce decreased when compared to the prior-year period primarily due to higher by-product revenues at the LaRonde Complex and the Mexican operations and the timing of inventory at the Meadowbank Complex, partially offset by the reasons described above.

Production costs per ounce in the full year 2020 were $838, compared to $735 in the prior-year.  Total cash costs per ounce in the full year 2020 were $775, compared to $673 in the prior-year period.

Production costs per ounce and total cash costs per ounce in the full year 2020 increased when compared to the prior-year primarily due to higher production costs at the Meadowbank Complex as mining transitioned to the Amaruq satellite deposit, higher production costs at the Kittila mine as a result of contractor cost pressures and higher costs per ounce at the Goldex, Canadian Malartic and Pinos Altos mines, mainly related to lower gold production at those sites as a result of temporary shutdowns or reduction in activities in the second quarter of 2020 related to government mandated COVID-19 restrictions.

AISC in the fourth quarter of 2020 was $985 per ounce, compared to $1,039 in the prior-year period.  AISC in the fourth quarter of 2020 decreased when compared to the prior-year period primarily due to lower total cash costs per ounce and lower sustaining capital expenditures.

AISC in the full year 2020 was $1,051 per ounce, compared to $938 in the prior-year period.  AISC in the full year 2020 increased when compared to the prior-year primarily due to higher total cash costs per ounce and higher sustaining capital at the Meadowbank Complex, as the Amaruq satellite deposit and Meliadine transitioned to commercial production in the second and third quarters of 2019, respectively.  A detailed description of the cost performance of each mine is set out below.

Strong Financial Results; Increased Cash Position at Year-End 2020

Cash and cash equivalents and short-term investments increased to $406.5 million at December 31, 2020, from the September 30, 2020 balance of $321.5 million, as the Company continues to generate strong cash flow from operations.  As of December 31, 2020, the outstanding balance on the Company’s unsecured revolving bank credit facility was nil, and available liquidity under this facility was $1.2 billion, not including the uncommitted $300 million accordion feature.

“In February 2021, Moody’s initiated their inaugural credit rating on Agnico Eagle and have assigned a Baa2 issuer rating with a Stable outlook.  We are delighted to have a third ratings agency assign a strong investment grade rating, joining Fitch and DBRS,” stated David Smith, Agnico Eagle’s Senior Vice President, Finance and Chief Financial Officer.  “Agnico Eagle has entered a period of strong free cash flow generation as demonstrated by the record results in 2020.  We remain committed to managing the business such that we maintain a proper balance of reinvestment in our mines and pipeline projects, having a strong balance sheet and returning capital to our shareholders,” added Mr. Smith.

Approximately 33% of the Company’s 2021 estimated Canadian dollar exposure is hedged at an average floor price above 1.33 C$/US$.  Approximately 34% of the Company’s 2021 estimated Mexican peso exposure is hedged at an average floor price above 21.00 MXP/US$.  Approximately 10% of the Company’s 2021 estimated Euro exposure is hedged at an average floor price of approximately 1.20 US$/EUR.  The Company’s full year 2021 cost guidance is based on assumed exchange rates of 1.30 C$/US$, 20.00 MXP/US$ and 1.20 US$/EUR.

Approximately 50% of the Company’s diesel exposure relating to its Nunavut operations for 2021 is hedged at prices better than the 2021 cost guidance assumption of C$0.50 per litre (excluding transportation costs).

The Company will continue to monitor market conditions and anticipates continuing to opportunistically add to its operating currency and diesel hedges to support its key input costs.  Going forward, the Company anticipates providing updates on its hedging position on an annual basis.

Capital Expenditures

Total capital expenditures (including sustaining capital) in the full year 2020 were $773 million, compared to the most recent guidance of $740 million.  The increase in capital expenditures compared to the previous guidance is primarily related to additional spending at the Kittila and Meliadine mines and the Amaruq satellite deposit and the buy-back of a royalty at the Hammond Reef project.  At the Kittila mine, approximately $20 million of additional capital expenditures resulted from the acceleration of costs in connection with the completion of the mill expansion, the construction of the NP4 tailings pond and the construction of the discharge waterline.  At the Meliadine mine, approximately $10 million of additional capital expenditures resulted from the higher-than-expected production rate which resulted in accelerated stripping of the Tiriganiaq pit.  At Amaruq, approximately $11 million of additional capital expenditures were incurred due to the acceleration of development at the IVR pit.  These increases in capital expenditures were partially offset by lower capital expenditures at the Canadian Malartic mine due to higher than expected pre-production credits from the Barnat pit, and lower capital expenditures at the Pinos Altos at La India mines related to the mandatory temporary suspension of operations in April and May 2020.

SOURCE Agnico Eagle Mines Limited

Original Article: https://www.prnewswire.com/news-releases/agnico-eagle-reports-fourth-quarter-and-full-year-2020-results-301227320.html