TORONTO, Feb. 14, 2019 /CNW/ – Agnico Eagle Mines Limited (NYSE: AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net loss of $393.7 million, or a loss of $1.68 per share, for the fourth quarter of 2018.  This result includes impairment losses of $389.7 million ($1.66 per share), non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments of $14.4 million ($0.06 per share), losses due to change of reclamation estimates relating to closed sites (net of tax) of $12.4 million ($0.05 per share), derivative losses on financial instruments, mark-to-market and other adjustments of $8.3 million ($0.04 per share) and non-cash foreign currency translation losses of $2.7 million ($0.01 per share).  Excluding these items would result in adjusted net income¹ of $33.8 million or $0.14 per share for the fourth quarter of 2018.  For the fourth quarter of 2017, the Company reported net income of $37.5 million or $0.16 per share.

The impairment losses of $389.7 million ($1.66 per share) include an impairment of goodwill relating to the Canadian Malartic mine of $250.0 million ($1.07 per share), an asset impairment relating to the El Barqueno project of $100.7 million ($0.43 per share) and an impairment of goodwill relating to the La India mine of $39.0 million ($0.16 per share).

Included in the fourth quarter of 2018 net income, and not adjusted above, is non-cash stock option expense of $3.9 million ($0.02 per share).

For the full year 2018, the Company reported net loss of $326.7 million, or a loss of $1.40 per share.  This compares with the full year 2017, when net income was $240.8 million, or $1.05 per share.

In the fourth quarter of 2018, cash provided by operating activities was $140.3 million ($150.4 millionbefore changes in non-cash components of working capital), as compared with the fourth quarter of 2017 when cash provided by operating activities was $166.9 million ($209.5 million before changes in non-cash components of working capital).

For the full year 2018, cash provided by operating activities was $605.7 million ($645.5 million before changes in non-cash components of working capital), as compared with the full year 2017 when cash provided by operating activities was $767.6 million ($839.4 million before changes in non-cash components of working capital).

The decrease in cash provided by operating activities during the fourth quarter of 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower realized gold prices, lower by-product revenue and expected higher costs at several operations, principally at LaRonde, Meadowbank and the Company’s Mexican operations.  Lower gold sales were mainly as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site.

The decrease in cash provided by operating activities for the full year 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower by-product revenue and expected higher costs at several operations, principally at Meadowbank, Kittila and the Company’s Mexican operations, partially offset by slightly higher realized gold prices.  Lower gold sales were largely as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as described above.

“From an operational standpoint, 2018 was another strong year as we exceeded production forecasts at lower than expected unit costs for a seventh consecutive year while growing gold reserves and successfully advancing our Nunavut development projects”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “With the start of new operations at both Meliadine and Amaruq this year, we anticipate record gold production in 2019 with further production growth in 2020 and beyond.  This growing production platform should result in increased cash flow allowing us to advance our project pipeline, reduce debt and increase dividends”, added Mr. Boyd.

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Fourth quarter of 2018 and full year 2018 highlights include:

• Strong quarterly operational performance; annual gold production and costs better than forecast for seventh consecutive year – Payable gold production² in the fourth quarter of 2018 was 410,712 ounces at production costs per ounce of $693, total cash costs per ounce³ of $608 and all-in sustaining costs per ounce⁴ (“AISC”) of $852. Payable gold production for the full year 2018 was 1,626,669 ounces at production costs per ounce of $713, with total cash costs per ounce of $637, compared to the most recent guidance of 1,600,000 ounces of gold at total cash costs per ounce of $650. AISC for the full year 2018 were $877, compared to the most recent guidance of $915 per ounce
• Increased gold production guidance in 2019 with further gold production growth forecast through 2021 – The gold production forecast for 2019 is now 1.75 million ounces, compared to the most recent guidance of 1.70 million ounces. The mid-point of gold production guidance for 2020 is unchanged at 2.0 million ounces, and the mid-point of gold production guidance for 2021 is 2.05 million ounces
• Unit costs expected to be stable to declining through 2021 as gold production increases – In 2019, total cash costs per ounce are forecast to be between $620 and $670 and AISC are forecast to be between $875 and $925 per ounce as the Nunavut business transitions from the Meadowbank deposit to Amaruq and Meliadine. With much higher gold production expected in 2020, total cash costs per ounce are forecast to decline to between $600 and $650, while AISC are forecast to decline to between $840 and $890 per ounce. The Company expects total cash costs per ounce and AISC to decline further in 2021
• Meliadine project ahead of schedule and under budget with commissioning of the mill now underway; Amaruq project remains on track for production start-up in the third quarter of 2019 – Commercial production at Meliadine is now expected to be achieved early in the second quarter of 2019 (compared to previous guidance of late in the second quarter of 2019). Development activities at Amaruq are progressing as planned. Open pit mining has commenced at the Whale Tail pit and commissioning of the long-haul truck fleet is underway
• Year over year increase in gold reserves and average grade – 2018 gold mineral reserves, net of 2018 gold production, increased by 7% to 22.0 million ounces of gold (254 million tonnes grading 2.70 grams per tonne (“g/t”) gold), while the gold reserve grade increased by approximately 8% from the previous year. A large portion of the increase comes from LaRonde 3, the Kittila shaft expansion, the acquisition of the remaining 50% interest in the Kirkland Lake assets and a new open pit mine plan at Amaruq. Gold contained in measured and indicated mineral resources and inferred mineral resources increased by 9% and 19%, respectively; however, the grades of these mineral resources decreased as high grade resources were transferred to mineral reserves in 2018
• Dividend increased by 14% – A quarterly dividend of $0.125 per share has been declared. The previous quarterly dividend was $0.11 per share.
• Exploration Continues to Focus on Organic Growth Opportunities
• Meliadine drilling extends Tiriganiaq mineralized zones – Drilling has encountered mineralization outside the known mineral resource areas. Highlights include: 29.1 g/t gold over 3.8 metres at 626 metres depth and 40.0 g/t gold over 2.8 metres at 748 metres depth. These new areas are expected to increase inferred mineral resources in 2019 with additional diamond drilling
• Amaruq drilling enhances open pit mineral reserves and underground potential – Drilling has resulted in the addition of 0.5 million ounces of gold reserves at open pit depths. Exploration also continued to demonstrate the extension of high-grade mineralization below the proposed open pits at both the Whale Tail and V Zone deposits. At Whale Tail, drilling intersected up to 11.3 g/t gold over 8.1 metres at 278 metres depth, while drilling at V Zone encountered up to 27.4 g/t gold over 6.4 metres at 613 metres depth. The Company continues to evaluate the potential for an underground operation at Amaruq, which could run partially concurrent with the open pit mine that is currently under development
• Initial mineral resources declared at Santa Gertrudis; exploration outlines high-grade mineralization and potential for growth – Drilling in 2018 outlined an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold). In addition, drilling outlined high-grade mineralization with values of up to 12.1 g/t gold over 5.1 metres at 99 metres depth and 9.7 g/t gold over 15.0 metres at 33 metres depth. Work in 2019 will focus on expanding the mineral resources, testing the extensions of the high-grade structures and evaluating the economic potential of the project

Fourth Quarter and Full Year 2018 Financial and Production Highlights

In the fourth quarter of 2018, strong operational performance continued at the Company’s mines, which led to payable gold production of 410,712 ounces, compared to 413,212 ounces in the fourth quarter of 2017.  For the full year 2018, payable gold production was 1,626,669 ounces, compared to 1,713,533 ounces in the prior-year period.

The lower level of gold production in the fourth quarter of 2018 and the full year 2018, when compared with the prior-year periods, was expected and primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site.  A detailed description of the production at each mine is set out below.

Production costs per ounce in the fourth quarter of 2018 were $693, compared to $697 in the prior-year period.  Total cash costs per ounce in the fourth quarter of 2018 were $608, compared to $592 in the prior-year period.

Production costs per ounce for the full year 2018 were $713, compared to $621 in the prior-year period.  Total cash costs per ounce for the full year 2018 were $637, compared to $558 in the prior-year period.

Production costs per ounce and total cash costs per ounce in the fourth quarter of 2018 and the full year 2018, when compared to the prior-year periods, were negatively affected by lower gold production levels at Meadowbank and higher costs at several mines, partially offset by the weakening of local currencies against the U.S. dollar.  In addition, total cash costs per ounce were negatively affected by lower by-product revenues.

AISC in the fourth quarter of 2018 were $852 per ounce, compared to $905 in the prior-year period.  The lower AISC when compared to the prior-year period is primarily due to lower sustaining costs, partially offset by expected lower gold production and higher total cash costs per ounce compared to the fourth quarter of 2017.

AISC for the full year 2018 were $877 per ounce, compared to $804 in the prior-year period.  The higher AISC when compared to the prior-year period is primarily due to expected lower gold production and higher total cash costs per ounce, partially offset by lower sustaining costs.  A detailed description of the cost performance of each mine is set out below.

In the fourth quarter of 2018, a total impairment loss of $389.7 million was incurred in connection with an impairment review performed under International Financial Reporting Standards (“IFRS”). After more than four years of strong operational performance at Canadian Malartic, an impairment loss relating to goodwill of $250.0 million was realized in the quarter as goodwill is not amortized over the life of mine under IFRS. The Company continues to see encouraging drill results at the East Malartic and Odyssey projects with drilling ongoing to extend and upgrade the mineral resources in these zones.

Although the El Barqueno project continues to have geological potential, an asset impairment of $100.7 million was realized in the quarter as current development studies indicate that the project does not meet the Company’s investment criteria. As a result, the carrying value of the property has been reduced while exploration activity continues in 2019.

The La India mine has been in operation since 2014 and as a result an impairment loss relating to goodwill of $39.0 million was realized in the quarter as goodwill is not amortized under IFRS.  Exploration is ongoing to discover and expand other satellite zones similar to El Cochi and El Realito(which each declared initial mineral reserves at December 31, 2018).

Liquidity and Hedges – Existing Cash and Undrawn Credit Facility Provide Financial Flexibility

The Company continues to maintain its investment grade balance sheet and has sufficient financial flexibility to finance currently planned capital requirements at its various mines and development projects from operating cash flow, cash and cash equivalents, short term investments and undrawn credit lines.

Cash and cash equivalents and short-term investments decreased to $307.9 million at December 31, 2018, from the September 30, 2018 balance of $533.4 million, as a result of capital spending primarily at the Company’s Nunavut projects.

The outstanding balance on the Company’s credit facility remained nil at December 31, 2018.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 millionaccordion feature.

On December 14, 2018, the Company amended its $1.2 billion credit facility to extend the maturity date from June 22, 2022 to June 22, 2023.

Approximately 40% of the Company’s 2019 Canadian dollar exposure is hedged at an average floor price of approximately 1.29 C$/US$.  Approximately 50% of the Company’s 2019 Mexican peso exposure is hedged at an average floor price of approximately 19.00 MXP/US$.  Approximately 15% of the Company’s 2019 Euro exposure is hedged at an average floor price of approximately 1.17 US$/EUR.  The Company’s full year 2019 cost guidance is based on assumed exchange rates of 1.28 C$/US$, 18.00 MXP/US$ and 1.18 US$/EUR.  The Company anticipates adding to its operating currency hedges, subject to market conditions.

Approximately 40% of the Company’s diesel exposure relating to its Nunavut operations for the July 2019 to July 2020 consumption period is hedged at prices better than the 2019 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 2018 were $1.07 billion, compared to guidance of $1.08 billion.  The following table sets out capital expenditures (including sustaining capital) in the fourth quarter and the full year 2018.

Quarterly Dividend Increased by 14%

Agnico Eagle’s Board of Directors has declared a quarterly cash dividend of $0.125 per common share, payable on March 15, 2019 to shareholders of record as of March 1, 2019.  Agnico Eagle has now declared a cash dividend every year since 1983.

Expected Dividend Record and Payment Dates for 2019

*Declared

Dividend Reinvestment Plan

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

Fourth Quarter 2018 Results Conference Call and Webcast Tomorrow

Agnico Eagle’s senior management will host a conference call on Friday, February 15, 2019 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 1796279.  The conference call replay will expire on Friday, March 15, 2019.

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

New Three-Year Guidance –  Forecast Shows Production Growth Through 2021

The Company is announcing its detailed production and cost guidance for 2019, and mine by mine production forecasts for 2019 through 2021.  Gold production in 2019 is now forecast to be 1.75 million ounces (the mid-point of the previous guidance was 1.7 million ounces).  Given the expected start up and expansions at several operations, the Company is providing a range of gold production guidance for 2020 and 2021.  Gold production in 2020 is now forecast to be between 1.96 million and 2.04 million ounces (mid-point of 2.0 million ounces), which compares to previous guidance of between 1.95 and 2.05 million ounces (mid-point of 2.0 million ounces).  Gold production guidance in 2021 is forecast to be between 2.01 million and 2.09 million ounces (mid-point of 2.05 million ounces).

The increased gold production guidance for 2019 is primarily due to advancing the expected start-up of commercial production at Meliadine to early in the second quarter of 2019 (previously the end of the second quarter of 2019), and a slight increase in gold production at Meadowbank (due to extended mining activities and the processing of stockpiles).

Total cash costs per ounce in 2019 are expected to be between $620 and $670 using a C$/US$ foreign exchange rate assumption of 1.28. Despite general industry cost pressures (primarily energy and labour), the Company expects a similar total cash cost per ounce for 2019 as compared to 2018. At all mine sites, the Company is focused on reducing costs and beating the inflation rate through productivity improvements and innovation initiatives. In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, total cash costs per ounce are forecast to decline to between $600 and $650, largely due to higher gold production volumes.  The Company expects total cash costs per ounce to decline further in 2021 based on the same foreign exchange rate assumption.

AISC for 2019 are expected to be between $875 and $925 per ounce.  In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, AISC are forecast to decline to between $840 and $890 per ounce, largely due to higher gold production.  The Company expects AISC to decline further in 2021 based on the same foreign exchange rate assumption.

In 2019, the Company expects to have four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex, which includes the Amaruq satellite deposit) each with annual production rates of approximately 250,000 to 400,000 ounces of gold.  In addition, at Kittila, with the ongoing expansion, annual gold production in 2021 and beyond is expected to increase by approximately 25-30% over current levels, to more than 250,000 ounces as new sources of ore are developed underground.

With the construction of the Meliadine and Amaruq projects, 2018 was a peak year for development capital spending.  With both of these projects expected to achieve commercial production in 2019, development capital spending is forecast to decline significantly.  At budget assumptions for the gold price and foreign exchange rates ($1,225 per ounce of gold, 1.28 C$/US$, 1.18 US$/EUR, 18.00 MXP/US$), the Company is forecasting a return to free cash flow generation in the second half of 2019.

Using the budget assumptions described above, total capital expenditures are forecast to be approximately $660 million in 2019. Annual sustaining capital expenditures (included in the above) for 2019 and beyond are expected to remain stable at approximately $300 to $325 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 2020 and 2021 could be in the range of $500to $700 million per year.

Near-Term Potential to Increase Life of Mine Production (2021 to 2023)

The Company is evaluating several potential opportunities (none of which has yet been approved for construction, with the exception of the construction of the new Kittila shaft) at a number of existing operations to build further value and enhance the gold production profile in 2021 and beyond.  These opportunities are set out in the table below with certain projects discussed in more detail below.

Drilling is ongoing at LaRonde 3, with a focus on mineral resource to mineral reserves conversion.  At year-end 2018, approximately 800,000 ounces of gold (3.2 million tonnes grading 7.9 g/t gold) were converted to mineral reserves at LaRonde 3.  The Company continues to evaluate a phased approach to development between level 311 (a depth of 3.1 kilometres) and level 340 (a depth of 3.4 kilometres).  The Company is also studying the best design approaches to LaRonde 3 and the current western pyramid with consideration of potential seismic risk and ventilation requirements in the deeper portion of the mine.

Work is underway at Amaruq to evaluate the potential for an underground operation, which could run partially concurrent with the open pit mine that is currently under development.  Preliminary evaluation work suggests the potential to selectively mine higher grade portions of the underground mineral resources (approximately 1.0 million ounces of gold) from 2022 through 2028.

There may also be potential to mine the bottom of the Whale Tail open pit from underground, which would provide quicker access to higher grades and reduce overall stripping costs.  Underground ramp development is ongoing and the permitting process for open pit mining activities at the V Zone and underground commenced on October 15, 2018, with issuance of the permit expected in late 2020.

At present, the Amaruq underground deposit contains indicated mineral resources of 676,000 ounces of gold (4.6 million tonnes grading 4.56 g/t gold) and inferred mineral resources of 1.95 million ounces of gold (11.7 million tonnes grading 5.19 g/t gold).  Drilling is ongoing to expand and upgrade these mineral resources.  A production decision for the Amaruq underground project is expected to be made later this year.

At Canadian Malartic, the Canadian Malartic General Partnership (the “Partnership”) is evaluating the potential for underground mining of the Odyssey and East Malartic deposits from surface to a depth of 600 metres.  These deposits could provide higher grade tonnes that could potentially supplement open pit production at Canadian Malartic.  On a 50% basis, Odyssey contains inferred mineral resources of 809,000 ounces of gold (11.5 million tonnes grading 2.19 g/t gold); and East Malartic has indicated mineral resources of 361,000 ounces gold (5.3 million tonnes grading 2.13 g/t gold) and inferred mineral resources of 1.4 million ounces of gold (22.0 million tonnes grading 1.98 g/t gold).  Drilling is ongoing to extend and upgrade the mineral resources in these zones.  The permit and Certificate of Authorization was received in December 2018, which allows for the development of an underground ramp at Odyssey .

At Goldex, the Company continues to evaluate the potential for the development of the Deep 2 Zone which hosts mineral reserves of 79,000 ounces of gold (1.4 million tonnes grading 1.7 g/t gold), indicated mineral resources of 159,000 ounces of gold (2.0 million tonnes grading 2.47 g/t gold) and inferred mineral resources of 303,000 ounces of gold (8.2 million tonnes grading 1.15 g/t gold).  In addition, mining activities have commenced in the South Zone, which contains mineral reserves of 10,000 ounces of gold (89,000 tonnes grading 3.38 g/t gold), indicated mineral resources of 73,000 ounces of gold (555,000 tonnes grading 4.09 g/t gold) and inferred mineral resources of 243,000 ounces of gold (1.4 million tonnes grading 5.41 g/t gold).  Future exploration is expected to focus on the conversion of portions of the above mineral resources into mineral reserves.

Development of the Akasaba West open pit has been postponed until 2021 based on the prioritization of development capital spending.  Akasaba West contains mineral reserves of 147,000 ounces of gold and 25,800 tonnes of copper (5.4 million tonnes grading 0.84 g/t gold and 0.48% copper) and is expected to contribute approximately 20,000 ounces of gold per year to the Goldex production profile once in production.

An expansion is underway at Kittila to increase throughput rate to 2.0 mtpa from the current rate of 1.6 mtpa.  This expansion includes the construction of a 1,044-metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades over a period from 2018 to 2021.

The expansion project is expected to result in a 50,000 to 70,000 ounce annual increase in gold production with reduced operating costs starting in 2021.  In addition, the shaft is expected to provide access to the mineral resources located below 1,150 metres depth, where recent exploration programs have shown promising results.

Development Pipeline Expected to Provide Further 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 presented in the following table with certain projects discussed in further detail below.

In the Kirkland Lake camp in Ontario, the Company is evaluating potential development strategies.  One scenario under evaluation is to develop the Upper Beaver deposit as a stand-alone operation, which could have potential synergies with the LaRonde operations given its copper content.  Upper Beaver has mineral reserves of 1.4 million ounces of gold and 20,000 tonnes of copper (8.0 million tonnes grading 5.43 g/t gold and 0.25% copper), indicated mineral resources of 403,000 ounces of gold and 5,000 tonnes of copper (3.6 million tonnes grading 3.45 g/t gold and 0.14% copper) and inferred mineral resources of 1.4 million ounces of gold and 17,000 tonnes of copper (8.7 million tonnes grading 5.07 g/t gold and 0.20% copper).

Another scenario under evaluation is to develop both the Upper Beaver and Upper Canada deposits using a central mill facility.  While the Company continues its evaluation, an initial review of this scenario shows the potential for consolidated annual gold production from these deposits of approximately 250,000 ounces of gold.  Upper Canada has open pit and underground inferred mineral resources of 1.8 million ounces of gold (12.1 million tonnes grading 4.50 g/t gold).

Additional drilling is planned in 2019 and the permitting process for both projects is expected to commence in the first quarter of 2019.  Production activities could commence as early as 2024.

At the Hammond Reef project in Ontario, agreements with local First Nations are in place and the Environmental Impact Assessment is nearing completion.  In 2019, the Company will be evaluating optimization opportunities to improve project economics.  Hammond Reef contains measured and indicated mineral resources of 4.5 million ounces of gold (208.0 million tonnes grading 0.67 g/t gold).

At the Santa Gertrudis project in Sonora State Mexico, the Company completed a total of 31,127 metres of drilling in 2018 leading to the estimation of an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold) at December 31, 2018.  This drilling confirmed the historical mineralization and outlined several high-grade feeder zones.

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.

Three-Year Guidance Plan Outlines a Growing Production Profile with Stable to Declining Unit Costs

Mine by mine production and cost guidance for 2019, and mine by mine production forecasts for 2020 and 2021 are set out below.  Evaluation of opportunities to further optimize and improve production and unit cost forecasts is ongoing.

Currency and commodity assumptions used for 2019 cost estimates and sensitivities are presented in the table below:

In 2020, the estimated mid-point production level is currently forecast to be approximately 2.0 million ounces of gold, which is unchanged from the February 2018 forecast.  In 2021, the estimated mid-point production level is currently forecast to be approximately 2.05 million ounces of gold. The Company is evaluating potential opportunities to further optimize and improve production levels in 2021 and beyond (see discussion below for additional details).

Depreciation Guidance

Agnico Eagle expects its 2019 depreciation and amortization expense to be between $580 and $630 million.

The Meliadine project is expected to achieve commercial production in the second quarter of 2019 and, as a result, the Company’s 2019 depreciation and amortization expense is expected to be higher than previous years.

General & Administrative Cost Guidance

Agnico Eagle expects 2019 general and administration expenses to be between $75 and $85 million, excluding share based compensation.  In 2019, share based compensation expense is expected to be between $30 and $40 million (including non-cash stock option expense of between $15 and $20 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 2019, 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 45% and 50% for the full year 2019.  This is a higher range than previous years as a result of the expectation of a higher percentage of total gold production coming from Canada.

Updated Three Year Guidance Plan

Since the prior three-year gold production guidance of February 14, 2018 (“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

At LaRonde, the lower gold production guidance for 2019 and 2020 (as compared to Previous Guidance) is primarily due to minor changes to the mining sequence related to merging the Eastern and Western pyramids and the planned development of LaRonde 3.

At LaRonde Zone 5, commercial production was achieved in June 2018 and designed mining rates were achieved within the first six months of operation with lower dilution, which has led to slightly improved anticipated production through 2021.

At Canadian Malartic (in which Agnico Eagle has 50% ownership), there is a slight increase in guidance for 2019 and 2020 compared to the Previous Guidance.  Gold production in 2020 and 2021 is expected to increase primarily due to the mining of higher grades in the Barnat pit.

At Goldex, guidance in 2019 is unchanged from Previous Guidance.  The slightly lower 2020 guidance reflects a change to the timing of the expected start-up of operations at the Akasaba West deposit.  However, the Company believes that there is potential to improve the currently expected production from for the Deep 1 and the South zones in 2020 and 2021.

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to create flexibility and synergies for the Company’s operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs.

NUNAVUT REGION

At Meadowbank, guidance for 2019 has increased over Previous Guidance due to a slight increase in the expected grade of the remaining Meadowbank stockpiles and the availability of extra tonnage from the Portage Pit.  Gold production at Meadowbank is expected to end late in the second quarter of 2019, and gold production is forecast to be higher in the first quarter of 2019.

At Amaruq, commercial production is currently expected to be achieved early in the third quarter of 2019. For the period of 2019 through 2021, the increase over Previous Guidance is largely due to a more robust mining plan, and the Company continues to investigate additional opportunities to optimize mining activities.

Increased pit sizes and improved modelling as well as delineation drilling in 2018 resulted in the addition of 0.5 million ounces of gold reserves at Amaruq at open pit depths.  These additional mineral reserves have added one year of mine life to the project with improved operating costs.  Additional details on the project (including updated operational parameters) are in the table below.  For details on the capital cost see the discussion on capital expenditures below.

Given the progress of construction and development activities in 2018, Meliadine is now expected to begin commercial production early in the second quarter of 2019.  This results in a significant increase to the 2019 gold production forecast compared to Previous Guidance.

Minesite costs at Meliadine are expected to decline as the mine reaches full production capacity.  Minesite costs per tonne over the life of mine were previously estimated at C$185.

FINLAND

At Kittila, guidance for 2019 is below the Previous Guidance due to a slightly longer scheduled mill shutdown than previously anticipated (now 60 days). The shutdown will occur in the second quarter of 2019 to allow for autoclave relining.

The new production guidance for 2021 reflects the positive impact of the shaft expansion project that was announced in 2018.

Southern Business

At Pinos Altos, guidance for 2019 is unchanged from the Previous Guidance.  The 2019 production guidance includes the first production from the lower grade Sinter satellite deposit.  Initial mineral reserves were declared at December 31, 2018 at Reyna de Plata at open pit depths, effectively extending the mine life at Pinos Altos.  Studies are ongoing to evaluate the potential to develop the Cubiro satellite zone.

At Creston Mascota, 2019 is expected to be the last year of mining activities.  Mining is expected to continue until early in the fourth quarter of 2019, with leaching activities expected to continue through 2020.  Costs are expected to decline once mining activities have ceased.

At La India, current guidance is essentially in line with the Previous Guidance.  Studies are ongoing to evaluate the potential to develop other satellite zones such as El Cochi and El Realito (which declared initial mineral reserves at December 31, 2018).

Capital Expenditures Expected to Decline Significantly After Startup of Nunavut Operations in 2019; Sustaining Capital Costs Stable through 2020

Based on the Company’s budget assumptions, the Company expects to fund its capital expenditures in 2019, which are estimated to total approximately $660.0 million, from operating cash flow and expected cash balances.

The estimated capital expenditures for 2019 include approximately $287.7 million of sustaining capital at the Company’s operating mines and $344.2 million on growth projects, as set out in the table below.  Additionally, approximately $28.1 million is estimated to be spent on capitalized exploration, approximately $66.4 million on expensed exploration and approximately $37.0 million on corporate development, project evaluations and technical services.

The construction of the Company’s new Nunavut mines, Amaruq and Meliadine, are expected to be below the combined capital forecast of $1.23 billion.

At Amaruq, total development capital is forecast to be approximately $350 million, which will depend in part on the timing of pre-production credits in advance of commercial production.  Previous guidance was $330 million as reported in the Company’s news release dated February 14, 2018.  The difference in Amaruq capital costs is primarily due to scope changes to the project related to the completion of detailed engineering work following the submission of the Meadowbank technical report dated February 14, 2018.  Capital costs for the Amaruq underground project are not included in the capital costs discussed above.

At Meliadine, total capital expenditures are expected to be below the 2018 forecast of $900 million, primarily due to strong project execution which has resulted in lower contingency costs and owners costs.

2019 Exploration Program and Budget – Main Focus on Amaruq, Canadian Malartic, Kittila, Goldex, Satellite Targets at La India and Santa Gertrudis

A large component of the 2019 exploration program will be focused on the Amaruq satellite deposit at Meadowbank, which is part of the Meadowbank Complex in Nunavut, the Canadian Malartic and Goldex mines in the Abitibi region of northwest Quebec, the Sisar Zone at the Kittila mine in Finland, satellite targets at the La India mine in Mexico and the Santa Gertrudis project in Sonora State, Mexico.  The goal of these exploration programs is to delineate mineral reserves and mineral resources that can supplement the Company’s existing production profile.

At the Amaruq satellite deposit at Meadowbank, the Company expects to spend $8.1 million for 32,800 metres of exploration drilling, in addition to $4.4 million for 20,300 metres of conversion drilling.  The goals of the exploration program are to:

• Test for westerly and easterly extensions of the Whale Tail deposit
• Extend the known mineral resources of the Whale Tail North structure toward the east to fill the gap with the V Zone
• Test for deep extensions of the V Zone
• Test new concepts regionally to potentially outline additional sources of open pit ore

At the Canadian Malartic mine, the Company expects to spend $2.3 million for 29,000 metres of exploration and conversion drilling focused on increasing the known mineralization.

At Kittila, the Company expects to spend $9.3 million for 42,400 metres of further deep drilling focused on the Main Zone in the Roura and Rimpi areas and 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.  Outside of the mining licence areas, the Company expects to spend $1.1 million for 4,000 metres of diamond drilling for exploration along the Suurikuusikko, Kapsa and Hanhimaa Trends.

At the Goldex mine, the Company expects to spend $4.8 million for a combination of 7,000 metres of surface and underground exploration drilling and 46,800 metres of conversion drilling. At the adjacent Joubi property, the Company expects to spend $0.9 million for 6,000 metres of exploration drilling. 

At La India, the Company expects to spend $2.8 million for 10,000 metres of regional drilling that will target mineral resource expansion at the Tarachi and Chipriona satellite targets. In addition, focused on El Realito and other targets, the Company expects to spend $2.4 million for 10,000 metres of mine-site exploration and $0.7 million for 2,000 metres of conversion drilling to extend the life of mine. 

At the Santa Gertrudis project in Sonora, Mexico, the Company expects to spend $8.2 million for approximately 29,000 metres of drilling that will be focused on expanding the mineral resource, testing the extensions of high-grade structures and exploring new targets to be outlined by a target-generation initiative.  The economic potential of Santa Gertrudis will also be evaluated.

2019 Global Exploration Program and Corporate Development Budget

Mineral Reserve Gold Ounces Increase by 7% at Higher Grade in 2018 Due to Drill Results, Acquisitions and Updated Mine Plans at Certain Projects

At December 31, 2018, the Company’s proven and probable mineral reserves (net of 2018 gold production) totalled 254 million tonnes of ore grading 2.70 g/t gold, containing approximately 22.0 million ounces of gold.  This is an increase of approximately 1.5 million ounces of gold (7%) compared with the prior year.  The ore extracted from mines in 2018 contained 1.8 million ounces of gold in-situ(30.4 million tonnes grading 1.86 g/t gold).  The Company’s overall mineral reserve gold grade improved 8% to 2.70 g/t from 2.49 g/t, largely due to increases in the mineral reserve at mines and projects with higher-than-average grades including Upper Beaver, Amaruq, LaRonde and Kittila as well as a decrease in mineral reserves at the Canadian Malartic mine (which has lower-than-average gold grade)  and the extraction of ore in 2018 grading lower than the Company’s average grade.  Agnico Eagle has one of the highest mineral reserve grades among its North American peers.

Highlights from the December 31, 2018 Mineral Reserve statement include:

• Increase of 0.5 million ounces of gold in mineral reserves at Amaruq, part of the Meadowbank complex, to 2.9 million ounces of gold (24.9 million tonnes grading 3.59 g/t gold) at open pit depth
• Increase of 0.4 million ounces of gold in mineral reserves at LaRonde (net of 2018 gold production) to 3.1 million ounces of gold (16.4 million tonnes grading 5.85 g/t gold, 18.2 g/t silver, 0.26% copper and 0.9% zinc) due to conversion of LaRonde 3 mineral resources below 3.1 kilometres depth
• Increase of 0.3 million ounces of gold in mineral reserves (net of 2018 gold production) at Kittila to 4.4 million ounces of gold (30.5 million tonnes grading 4.50 g/t gold) as a result of the shaft expansion project
• Increase of 0.7 million ounces of gold in mineral reserves at the Upper Beaver project in Kirkland Lake, doubling the mineral reserves to 1.4 million ounces of gold (8.0 million tonnes grading 5.43 g/t gold), as a result of acquiring the remaining 50% of the project in March 2018
• Initial mineral reserves in the Reyna de Plata Zone of the Pinos Altos mine complex and at El Realito at La India

The Company’s December 31, 2018 gold reserves are set out below, compared with the gold reserves a year earlier:

Amounts set out in the table and in this news release have been rounded to the nearest thousand.  See “Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2018)” at the end of this news release for more details.  Mineral reserves are in-situ, taking into account all mining recoveries, before mill or heap leach recoveries.

The economic parameters used to estimate mineral reserves and mineral resources for all properties remained unchanged from a year ago, and are set out in the table below. In prior years, the 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, 2018 mineral reserves estimate at all mines and advanced projects reported by the Company

The above metal price assumptions are below the three-year historic gold and silver price averages (from January 1, 2016 to December 31, 2018) of approximately $1,259 per ounce and $16.63 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 LaRonde, indicated mineral resources were converted to mineral reserves in LaRonde 3 (below 3.1 kilometres depth) resulting in the addition of approximately 800,000 ounces of gold (3.2 million tonnes grading 7.94 g/t gold).  This was offset by approximately 360,000 ounces of in-situ gold mined at LaRonde, resulting in a net increase of 434,000 ounces of gold in mineral reserves at LaRonde. 

At the adjacent LaRonde Zone 5 mine, there was an addition of 255,000 ounces of gold to mineral reserves (2.8 million tonnes grading 2.85 g/t gold) in levels 36 to 48 beneath the current workings; included in this amount are 140,000 ounces of gold in an area beneath the nearby Zone 11-3.  The combination of lowering the cut-off grade and mine dilution added approximately 42,000 ounces of gold, while 20,000 ounces of in-situ gold was mined in 2018, resulting in a net increase of 280,000 ounces of gold in mineral reserves at LaRonde Zone 5. 

The Kittila shaft expansion project has resulted in the addition of 515,000 ounces of gold to mineral reserves in the Roura and Suuri zones below 675 metres depth.  Conversion and exploration drilling added another 32,000 ounces of gold, while 223,000 ounces of in-situ gold were mined in 2018, resulting in a net increase of 324,000 ounces of gold in mineral reserves at Kittila.

The acquisition by the Company in March 2018 of the remaining 50% of the Kirkland Lake project led to a doubling of the mineral reserves at the Upper Beaver property, resulting in a net increase of 698,000 ounces of gold (4.0 million tonnes grading 5.43 g/t gold) in mineral reserves at Upper Beaver.

At the Amaruq satellite deposit at Meadowbank, mineral reserves increased by 516,000 ounces of gold due to a combination of factors. Increasing the Whale Tail and V Zone pit sizes in the mine plan added 240,000 ounces of gold, and improved 3D geological modelling methods added 197,000 ounces of gold, while delineation drilling added another 72,000 ounces of gold. However, at the nearby Meadowbank mine, 269,000 ounces of in-situ gold was mined in 2018 and there were other adjustments as the Meadowbank mine enters its last partial year of production. The result is a net increase of 269,000 ounces of gold in mineral reserves at the Meadowbank complex (including Amaruq).

At the Meliadine project, remodelling the underground zones coupled with the results of a conversion drill program resulted in a net increase of 75,000 ounces of gold in mineral reserves.

At the Canadian Malartic mine, the net decrease of 409,000 ounces of gold in mineral reserves (reflecting Agnico Eagle’s 50% interest) is largely due to the mining of 395,000 ounces of in-situ gold in 2018.

There are initial mineral reserves at the Reyna de Plata Zone of 72,000 ounces of gold (2.3 million tonnes grading 0.96 g/t gold and 29.3 g/t silver) at open pit depth, as part of the total Pinos Altos estimate.  The La India mine is reporting its first mineral reserves at the El Realito Zone of 84,000 ounces of gold and 418,000 ounces of silver (3.3 million tonnes grading 0.80 g/t gold and 3.96 g/t silver).

It is the Company’s goal to maintain its global mineral reserves at approximately 10 to 15 times its annual gold production rate.  The current mineral reserves are within this range when compared to the Company’s projected annual 2019 gold production guidance.

In addition to gold, Agnico Eagle’s proven and probable mineral reserves include by-product metals of approximately 44 million ounces of silver at the Pinos Altos, LaRonde, La India and Creston Mascota mines (59.4 million tonnes grading an average of 23.0 g/t silver), plus 140,000 tonnes of zinc and 43,000 tonnes of copper at the LaRonde mine (16.4 million tonnes grading 0.86% 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 a gold price of $1,250 per ounce (leaving all other assumptions unchanged), the Company estimates there would be an approximate 4.2% increase in the gold contained in proven and probable mineral reserves.  Conversely, using a gold price of $1,050 (leaving all other assumptions unchanged), the Company estimates there would be an approximate 6.0% decrease in the gold contained in proven and probable mineral reserves.  For the Canadian Malartic mine and Upper Beaver project only, the above sensitivity was calculated using a 10% variation in the assumed mineral reserve gold price of $1,200 per ounce.

Acquisitions and Conversion Drilling Increases Gold in Measured and Indicated Mineral Resources by 9% to 17.4 Million Ounces

Highlights from the December 31, 2018 Measured and Indicated Mineral Resource statement include:

• At the Hammond Reef project, the remaining 50% interest was purchased, adding 2.3 million ounces of gold in measured and indicated mineral resources
• The same transaction doubled the mineral resources at the Kirkland Lake assets, adding 495,000 ounces of gold in indicated mineral resources

The Company’s measured and indicated mineral resources now total 399 million tonnes grading 1.36 g/t gold, or 17.4 million ounces of gold.  This represents a 9% increase in ounces of gold, but a decrease in grade to 1.36 g/t gold compared with 1.60 g/t gold a year earlier (see the Company’s new release dated February 14, 2018 for details).

The main increases in measured and indicated mineral resources were the result of increasing ownership of Ontario properties in 2018.  The addition of the remaining 50% interest in the Hammond Reef property in March added 2.3 million ounces of gold in measured and indicated mineral resources to 208 million tonnes grading 0.67 g/t gold (4.5 million ounces of gold) at open pit depths.  The same transaction resulted in doubling of the mineral resources at the Kirkland Lake assets, adding 495,000 ounces of gold in indicated mineral resources at Upper Beaver, AK and Anoki-McBean, all at underground depths.  The low gold grade of the acquired mineral resources at Hammond Reef decreased the overall grade of the Company’s updated measured and indicated mineral resources.

Two other properties increased measured and indicated mineral resources.  East Malartic reported initial indicated mineral resources of 5.3 million tonnes grading 2.13 g/t gold (361,000 ounces of gold) at underground depths mainly due to: the conversion of inferred mineral resources as well as the assignment of the Barnat Deep area mineral resources to East Malartic.  At Amaruq, the underground indicated mineral resources, particularly at Whale Tail, expanded but this increase was largely offset by the conversion to mineral reserves in the expanded open pit plans; the net gain was 110,000 ounces of gold in indicated mineral resources at Amaruq.

The conversion of indicated mineral resources in LaRonde 3 to mineral reserves led to a depletion of 839,000 ounces of gold in indicated mineral resources at LaRonde.  Because of the shaft expansion project at Kittila, 515,000 ounces of gold in indicated mineral resources moved to mineral reserves.

Gold in Inferred Mineral Resources Increases 19% to 18.1 Million Ounces

Highlights from the December 31, 2018 Inferred Mineral Resource statement include:

• The 100%-owned Santa Gertrudis project declared initial inferred mineral resources of 962,000 ounces of gold
• Exploration added inferred mineral resources at Amaruq, leading to a net gain 325,000 ounces of gold

The Company’s inferred mineral resources now total 209 million tonnes grading 2.69 g/t gold, or approximately 18.1 million ounces of gold.  This represents an approximate 19% increase in ounces of gold, but a decrease in grade to 2.69 g/t gold compared with 2.87 g/t gold in the December 2017inferred mineral resources (see the Company’s news release dated February 14, 2018 for details).

As with measured and indicated mineral resources, the increase to inferred mineral resources was mainly due to increasing ownership of Ontario properties and discovery success, partially offset by conversion to indicated mineral resources.

The addition of the remaining 50% interest in the Kirkland Lake assets added 2.0 million ounces of gold in inferred mineral resources at Upper Beaver, Upper Canada, AK and Anoki-McBean.  Confirmation and exploration drilling at the 100%-owned Santa Gertrudis project in Sonora, Mexico, acquired in late 2017, led to initial inferred mineral resources of 962,000 ounces of gold (27 million tonnes grading 1.09 g/t gold).

Exploration drilling added inferred mineral resources at the Amaruq and Meliadine mine developments.  However, substantial amounts of these gains were offset by conversion to indicated mineral resources.  The net change at Amaruq was a gain of 325,000 ounces of gold in inferred mineral resources to 2.1 million ounces of gold (12.6 million tonnes grading 5.12 g/t gold), almost wholly at underground depths.

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, 2018)” below.

December 31, 2018 Mineral Resources*

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

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

LaRonde Mine – Conversion Drilling Results in Significant Mineral Reserve Additions at LaRonde 3

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

Production costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to slightly higher labour costs (due to an increase in the ratio of the Company’s employees compared to contractors), higher underground costs, lower tonnage and the timing of unsold concentrate inventory.  Production costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above and lower gold production.

Minesite costs per tonne in the fourth quarter of 2018 increased when compared to the prior-year period due to slightly higher labour costs as described above, higher underground costs and lower tonnage.  Total cash costs per ounce in the fourth quarter of 2018 increased when compared to the prior-year period due to the reasons described above, lower gold production and lower by-product metal revenues.

Gold production in the fourth quarter of 2018 decreased when compared to the prior-year period due to lower tonnage resulting from the mining sequence.

Production costs per tonne for the full year 2018 increased when compared to the prior-year period due to slightly higher labour costs, higher underground costs, lower tonnage and the timing of unsold concentrate inventory.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above and lower gold production.

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to slightly higher labour costs, higher underground costs and lower tonnage.  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

Gold production for the full year 2018 decreased when compared to the prior-year period due to lower tonnage, partially offset by higher grades resulting from the mining sequence.

Approximately 800,000 ounces of gold at LaRonde 3, between level 311 (a depth of 3.1 kilometres) and level 340 (a depth of 3.4 kilometres), was converted from mineral resources to mineral reserves as a result of conversion.  Development plans are underway to deepen the ramp while engineering and construction work for ventilation and cooling of the deeper portion of the mine are ongoing.

As the Company mines deeper at LaRonde, the risks of more frequent and larger seismic events increases. As a result, the Company is studying various design approaches to LaRonde 3. In addition, the Company continues to adjust the mining methods, ground support and protocols to address seismic activity in the deeper portions of the mine.

Following the successful deployment of the LTE network at LaRonde Zone 5, an LTE network was deployed at the LaRonde mine below level 269 in the fourth quarter of 2018.  Extension of the network in the ramp area from level 269 to surface and at LaRonde 3 will take place throughout 2019.  The LTE network will facilitate the integration of automation technologies currently being tested at LZ5 which are expected to allow the Company to maintain similar historical productivity levels at LaRonde 3.

After performing a geological and engineering review of Zone 11-3, which is at depth in the past producing Bousquet 2 mine, the Company has added approximately 140,000 ounces of gold into mineral reserves included with the LZ5 property at December 31, 2018.  The zone, comprised of 1.2 million tonnes grading 3.77 g/t gold, will provide production flexibility to the LaRonde Complex.

An exploration program is also underway at Zone 6 where drilling has encountered encouraging massive sulphide mineralization.  Zone 6 is located approximately 200 metres north of, and parallel to LaRonde 3.

LaRonde Zone 5 – Operations Reached Full Production Rates Within the First Year of Operation; Reviewing Opportunities to Further Enhance Productivity

The Company acquired the LaRonde Zone 5 project in 2003.  The property lies adjacent to and west of the LaRonde Complex and previous operators exploited the deposit by open pit.  In February 2017, LZ5 was approved by Agnico Eagle’s Board of Directors for development.  Commercial production was achieved on June 1, 2018.

In the fourth quarter of 2018, mining continued at LZ5 with ore primarily processed from October to November and ore stockpiled at surface in December as the mill processed ore from Lapa.

Production costs per tonne in the fourth quarter of 2018 were C$73.  Production costs per ounce in the fourth quarter of 2018 were $620.  Minesite costs per tonne in the fourth quarter of 2018 were C$75.  Total cash costs per ounce in the fourth quarter of 2018 were $641.  Gold production in the fourth quarter of 2018 was 10,196 ounces of gold.

Production costs per tonne for the full year 2018 were C$76.  Production costs per ounce for the full year 2018 were $698.  Minesite costs per tonne for the full year 2018 were C$80.  Total cash costs per ounce for the full year 2018 were $732.  Gold production for the full year 2018 was 18,620 ounces of gold.

In its first year of operation, the mine achieved its designed production rate of 1,975 tonnes per day with lower than expected dilution and slightly higher than expected mill recoveries.  The Company is currently evaluating opportunities to further enhance productivity.  Under the current LZ5 mine plan, a total of approximately 350,000 ounces of gold are expected to be mined through 2026.  The Company is evaluating scenarios to integrate the additional mineral reserves in the down plunge of the LZ5 deposit into the mine plan along with the potential to process additional tonnage through the LaRonde Complex.

The Company is also evaluating the potential to extend operations at depth and along strike onto the Ellison property, which adjoins LZ5 to the west.  Ellison hosts an indicated mineral resource of 68,000 ounces of gold (665,000 tonnes grading 3.19 g/t gold) as of December 31, 2018.

Integration and pilot testing of automated mining equipment (two trucks and one scoop tram) began in the fourth quarter of 2018 at LZ5 and will continue in 2019.

Canadian Malartic Mine – Record Annual Production Driven By Record Mill Throughput and Higher Grades

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 noted.

Production costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to the timing of inventory, partially offset by higher costs for contractors, fuel and tires and lower throughput levels.  Production costs per ounce in the fourth quarter of 2018 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 2018 were the same when compared to the prior-year period.  Total cash costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher grades.

Production costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

Minesite costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2018 decreased when compared to the prior-year period due to higher gold production, partially offset by higher contractor and fuel costs.

Gold production for the full year 2018 increased when compared to the prior-year period due to record annual mill throughput levels and higher grades.

Work on the Barnat extension project is proceeding on budget and on schedule.  Work is primarily focused on the highway 117 road deviation, overburden stripping and tailings expansion.  The highway deviation is expected to be completed in late 2019.  Production activities at Barnat are scheduled to begin in late 2019, following completion of the highway deviation.

Exploration programs are ongoing to evaluate several deposits to the east of the Canadian Malartic open pit, including the Odyssey, East Malartic, Sladen and Sheehan zones.  These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.  In the fourth quarter of 2018, 14 drill holes (5,460 metres) were completed at the Odyssey Zone and an additional 13 drill holes (17,416 metres) were completed at the East Malartic area.  Additional exploration will be carried out in 2019 to assess the potential of these zones.

The permit allowing for the development of an underground ramp at the Odyssey project was received in December 2018.

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

Lapa Mine – Operations Completed in December of 2018; Site Reclamation Now Underway

The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.

In the fourth quarter of 2018, the Lapa mill processed ore for 37 days as the mining operations were finally completed, therefore, the operating statistics in the above table are not meaningfully comparable to the prior-year period.

For the full year 2018, the Lapa mill processed ore for 172 days as the mining operations were finally completed, therefore, the operating statistics in the above table are not meaningfully comparable to the prior-year period.

Mining and processing operations at Lapa ended in December 2018 and, as a result, the Lapa mill circuit at LaRonde is now fully available to process LZ5 ore.  Closure activities for the underground infrastructure are currently underway with surface work expected to begin in the second quarter of 2019.

Goldex Mine – Annual Records Set for Gold Production and Tonnage Hoisted and Milled

The 100% owned Goldex mine in northwestern Quebec began production from the M and E zones in September 2013.  Commercial production from the Deep 1 Zone commenced on July 1, 2017.

Production costs per tonne in the fourth quarter of 2018 decreased when compared to the prior-year period due to lower trucking costs and increased Rail-Veyor productivity, the timing of inventory and higher throughput levels, partially offset by higher contractor and consumable costs.  Production costs per ounce in the fourth quarter of 2018 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 2018 decreased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the fourth quarter of 2018 decreased when compared to the prior-year period due to the reasons described above.

Gold production in the fourth quarter of 2018 increased when compared to the prior-year period due to higher throughput levels as a result of higher utilization of the Rail-Veyor system as the Deep 1 Zone continues to ramp up.

Production costs per tonne for the full year 2018 were essentially the same when compared to the prior-year period.  Production costs per ounce for the full year 2018 increased when compared to the prior-year period due to higher costs relating to contractors, maintenance and consumables, partially offset by higher gold production.

Minesite costs per tonne for the full year 2018 increased when compared to the prior-year period due to higher costs relating to contractors, maintenance and consumables, partially offset by higher throughput levels .  Total cash costs per ounce for the full year 2018 increased when compared to the prior-year period due to the reasons described above.

Gold production for the full year 2018 increased when compared to the prior-year period (after deducting pre-commercial ounces for the full year 2017) due to higher throughput levels.  As stope development in the higher grade Deep 1 Zone continues to mature through 2019, utilization of the Rail-Veyor system is expected to continue to increase and lead to a reduction in unit costs.

In 2018, the exploration ramp for the Deep 2 Zone was extended to below the 125 level.  Work on the exploration ramp for the Deep 2 Zone has now been put on hold to focus on further stope development at the Deep 1 Zone, and additional development in the South Zone, which is accessible from the Deep 1 Zone infrastructure.

The South Zone consists of quartz veins that have higher grades than those in the primary mineralized zones at Goldex.  The Company is evaluating the potential for the South Zone to provide incremental ore feed to the Goldex mill.  Additional development continued at level 106 as a result of better than expected grades, which allows for the potential to increase mining throughput from the South Zone.  A longitudinal test stope was mined in December.

Akasaba West

The Company acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit could create flexibility and synergies for the Company’s operations in the Abitibi region by using extra milling capacity at both Goldex and LaRonde, while reducing overall unit costs.

The Company continues to review the timeline for the integration of the Akasaba West project into the Goldex production profile.  Over a five-year mine life, total production is expected to be approximately 115,000 ounces of gold and 21,000 tonnes of copper at total cash costs per ounce of $550 to $600.

Kirkland Lake Project – 2018 Drilling Focused on the Upper Beaver and Upper Canada Deposits

The Kirkland Lake project in northeastern Ontario covers approximately 27,073 hectares, a large property measuring approximately 35 kilometres long by 17 kilometres wide, mostly on private lands held as either mining leases or patented claims.  The properties have been owned 100% by Agnico Eagle since March 28, 2018, when the Company completed the acquisition of Yamana’s indirect 50% interest in the Ontario exploration assets of Canadian Malartic Corporation that it did not previously own.  Mineral reserves and mineral resources have been outlined on the Upper Beaver property and mineral resources are estimated on several other deposits at the Kirkland Lake project, including Upper Canada, Anoki and McBean, and Amalgamated Kirkland. 

The land package that makes up the Kirkland Lake project was formerly owned by a succession of junior exploration companies.  The Kirkland Lake – Larder Lake district has produced almost 46 million ounces of gold from 61 mines between 1911 and 2017 and currently hosts two operating mines.

A $5.6-million exploration program on the Kirkland Lake project was carried out from July to December 2018.  In the fourth quarter of 2018, 15 holes (7,751 metres) were completed.  The total drilling in 2018 on this project was 37 holes (19,505 metres), of which 7,285 metres were to extend the Upper Beaver deposit at depth as well as explore for new, near-surface mineralization, and 12,220 metres tested satellite targets around the Upper Canada deposit.

In addition, the Company is completing a technical review of the exploration data for the Upper Beaver and Upper Canada deposits, and updating the geological models.  Environmental baseline studies continue at Upper Beaver.  The Company is investigating various opportunities and potential synergies in terms of engineering concepts for future development of the Upper Beaver and Upper Canadadeposits.

Selected recent intercepts from the Kirkland Lake project are set out in the table below.  The drill hole coordinates are set out in a table in the Appendix of this news release.  The drill hole collars are located on the Upper Beaver / Upper Canada local geology map.  All intercepts reported for the Kirkland Lakeproject 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.

Recent exploration drill results from the Upper Beaver (UB) deposit and Upper Canada (UC) deposits at the Kirkland Lake project