Agnico Eagle Mines Reports Q2 2017 Results

TORONTO, July 26, 2017 /CNW/ - Agnico Eagle Mines Limited (NYSE: AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $61.9 million, or $0.27 per share, for the second quarter of 2017.  This result includes non-cash foreign currency translation gains on deferred tax liabilities of $12.1 million ($0.05 per share), various mark-to-market and other adjustment losses of $10.3 million ($0.04 per share), unrealized gains on financial instruments of $7.9 million ($0.03 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 $54.9 million or $0.24 per share for the second quarter of 2017.  In the second quarter of 2016, the Company reported net income of $19.0 million or $0.09 per share.

Not included in the second quarter of 2017 adjusted net income above is non-cash stock option expense of $3.8 million ($0.02 per share).

For the first six months of 2017, the Company reported net income of $137.8 million, or $0.60 per share.  This compares with the first six months of 2016 when net income was $46.8 million, or $0.21 per share.  Financial results in the 2017 period were positively affected by higher gold sales volumes and realized prices (approximately 6% and 1% higher, respectively) and lower depreciation expense.

In the second quarter of 2017, cash provided by operating activities decreased to $184.0 million ($197.2 million before changes in non-cash components of working capital) compared with cash provided by operating activities of $229.5 million in the second quarter of 2016 ($192.7 million before changes in non-cash components of working capital).  The cash provided by operating activities before changes in working capital during the current period were essentially the same.

For the first six months of 2017, cash provided by operating activities was $406.6 million ($421.2 million before changes in non-cash components of working capital), as compared with the first six months of 2016 when cash provided by operating activities was $375.2 million ($360.2 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in working capital during the first six months of 2017 was mainly due to a combination of higher gold and by-product metals production and higher realized gold prices.

"As a result of continued strong production and cost performance at all of our mines, we have increased our gold production guidance to 1.62 million ounces from 1.57 million ounces and reduced our total cash cost guidance from $610 per ounce to $595 per ounce", said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "In addition to strong operating and financial results, we continue to make very good progress on the exploration and development front.  Our Nunavut projects are advancing on schedule and budget, and we are also generating positive exploration results at many of our minesites, which should support future growth initiatives", added Mr. Boyd.

Second Quarter 2017 highlights include:

• Operations continue to deliver strong performance – Payable gold production² in the second quarter of 2017 was 427,743 ounces of gold at production costs per ounce of $634, total cash costs³ per ounce of $556 and all-in sustaining costs per ounce⁴ ("AISC") of $785
• Full year production guidance increased and unit cost forecasts reduced – Given the strong first half operational performance, 2017 production is now expected to be 1.62 million ounces compared to previous guidance of 1.57 million ounces.  Total cash costs per ounce are now expected to be $580 to $610 (previously $595 to $625) and AISC are expected to be $830 to $880 per ounce (previously $850 to $900)
• Meliadine project continues to progress on schedule and budget – Underground development is ahead of plan and engineering was 80% complete at the end of June 2017.  Construction activities are progressing well with cranes and structural steel for the erection of surface buildings being moved to site from the Rankin Inlet laydown facility.  The first delivery of the shipping season arrived in Rankin Inlet on June 30, 2017.  Since then, three deliveries of construction materials have been received at Rankin Inlet.  Four additional deliveries of construction materials are expected over the next two months
• Amaruq exploration program continues to yield positive results – At Amaruq, infill drilling has been completed on the Whale Tail and V Zone deposits, and other target areas are now being explored.  Significant results include: 6.9 grams per tonne ("g/t") over 6 metres on the western extension of the planned Whale Tail pit and 20.4 g/t gold over 10.4 metres at the V Zone at 225 metres depth, beneath the planned pit outline
• Infill and exploration drilling expected to result in mineral resource additions and conversions at multiple properties – Significant results include: 7.1 g/t gold over 33.5 metres at the Rimpi deposit at Kittila, 23.7 g/t gold over 10.9 metres at LaRonde 3 and 1.6 g/t gold over 18.2 metres near surface at the Bravo deposit at Creston Mascota
• A quarterly dividend of $0.10 per share was declared

Second Quarter Financial and Production Highlights – Higher Gold Production, Lower Production Costs – 2017 Cost Forecasts Decrease

In the second quarter of 2017, strong operational performance continued at the Company's mines.  Payable gold production was 427,743 ounces, compared to 408,932 ounces in the second quarter of 2016.  The higher level of production in the 2017 period was primarily due to higher grades mined at Meadowbank and Canadian Malartic.  A detailed description of the production of each of the Company's mines is set out below.

In the first six months of 2017, payable gold production was 845,959 ounces, compared to 820,268 ounces in the 2016 period.  The higher level of production in the 2017 period was primarily due to higher grades mined at Meadowbank.  

Production costs per ounce for the second quarter of 2017 were $634, which was essentially the same as the $625 in the 2016 period.  Total cash costs per ounce for the second quarter of 2017 were $556 which was 6% lower compared to $592 per ounce for the second quarter 2016.  Total cash costs per ounce in the second quarter of 2017 were positively affected by higher production of gold at Meadowbank and Canadian Malartic.  A detailed description of the cost performance of each of the Company's mines is set out below.

Production costs per ounce for the first six months of 2017 were $606, which was slightly lower than the $609 in the 2016 period.  Production costs per ounce were positively affected by higher grades mined at Meadowbank and Canadian Malartic.  Total cash costs per ounce for the first six months of 2017 were $548 compared with $582 in the prior-year period.  Total cash costs per ounce in the first six months of 2017 were positively affected by higher production of gold at Meadowbank and Canadian Malartic.  The Company now forecasts a decrease in total cash costs per ounce for 2017 to $580 to $610 per ounce, which is down from previous guidance of $595 to $625 per ounce.

AISC for the second quarter of 2017 were 7% lower at $785 per ounce compared to $848 in the second quarter of 2016.  The lower AISC is primarily due to lower total cash costs per ounce and lower sustaining capital expenditures compared to the second quarter of 2016.  AISC in 2017 are now forecast to be $830 to $880 per ounce, lower than previous guidance of $850 to $900 per ounce.

AISC for the first six months of 2017 was $764 per ounce compared to $822 in the prior-year period.  The lower AISC is primarily due to lower total cash costs per ounce and lower sustaining capital expenditures compared to the prior-year period.

Cash Position Remains Strong

Cash and cash equivalents and short term investments increased to $952.4 million at June 30 2017, from the March 31, 2017 balance of $804.3 million.

On April 7, 2017, the Company repaid the first series of maturing guaranteed senior unsecured notes totalling $115 million.  On June 29, 2017, the Company issued, on a private placement basis, an aggregate of $300 million of guaranteed senior unsecured notes due 2025, 2027, 2029 and 2032 (the "Notes") with a weighted average maturity of 10.9 years and weighted average coupon of 4.67%.  Net proceeds from the sale of the Notes were used for general corporate purposes.  During the quarter, the Company's investment grade credit rating was re-confirmed by DBRS with a stable trend.

The outstanding balance on the Company's credit facility remained nil at June 30, 2017.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

Approximately 35% of the Company's remaining 2017 Canadian dollar exposure is hedged at a floor price of 1.30 US$/C$.  For remaining 2017 Euro exposure, approximately 11% is hedged at a floor price of 1.10 EURO$/US$ and for remaining 2017 Mexican Peso exposure, approximately 34% is hedged at 18.60 US$/MXP.

Capital Expenditures

Additional expenditures in 2017 for preliminary work on the road deviation at the Canadian Malartic extension project are expected to be between $16 to $22 million, reflecting the Company's 50% interest. These additional expenditures are expected to be offset by reduced capital expenditures at other projects such as Goldex and LaRonde Zone 5.  The forecast for 2017 capital expenditures remains unchanged at $859 million.  The following table sets out capital expenditures (including sustaining capital) in the second quarter and first six months of 2017.

Revised 2017 Guidance – Production Increased, Costs Lowered, Depreciation Decreased

Production for 2017 is now forecast to be 1.62 million ounces of gold (previously 1.57 million ounces) with total cash costs per ounce expected to be $580 to $610 (previously $595 to $625) and AISC expected to be approximately $830 to $880 per ounce (previously $850 to $900).

The Company expects depreciation and amortization expense to be approximately $550 million.  Previous guidance was $580 to $610 million.

Dividend Record and Payment Dates for the Third Quarter of 2017

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per common share, payable on September 15, 2017, to shareholders of record as of September 1, 2017.  Agnico Eagle has declared a cash dividend every year since 1983.

Other Expected Dividend and Record Dates for 2017

Dividend Reinvestment Plan

Please follow the link below for information on the Company's dividend reinvestment plan.  Dividend Reinvestment Plan

Second Quarter 2017 Results Conference Call and Webcast Tomorrow

The Company's senior management will host a conference call on Thursday, July 27, 2017 at 10:00 AM (E.D.T.) to discuss financial results and provide an update of the Company's operating activities.

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 ten 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 50955626. The conference call replay will expire on August 27, 2017.

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