Agnico Eagle Reports Second Quarter 2021 Results - Strong Operating Results …

28 July 2021

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

TORONTO, July 28, 2021 /CNW/ - Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $189.6 million, or net income of $0.78 per share, for the second quarter of 2021. This result includes non-cash mark-to-market gains on warrants of $15.9 million ($0.07 per share), foreign currency translation gains on deferred tax liabilities of $9.3 million ($0.04 per share), derivative gains on financial instruments of $1.8 million ($0.01 per share), non-cash foreign currency translation losses of $2.4 million ($0.01 per share) and various other adjustment losses of $2.7 million ($0.02 per share). Excluding these items would result in adjusted net income1of $167.7 million or $0.69 per share for the second quarter of 2021. For the second quarter of 2020, the Company reported net income of $105.3 million or net income of $0.44 per share.

Included in the second quarter of 2021 net income, and not adjusted above, are non-cash stock option expense of $3.9 million ($0.02 per share) and workforce costs of employees affected by the COVID-19 pandemic (primarily Nunavut-based) of $2.5 million ($0.01 per share).

In the first six months of 2021, the Company reported net income of $325.7 million, or net income of $1.34 per share. This compares with the first six months of 2020, when net income was $83.7 million, or net income of $0.35 per share.

The increase in net income in the second quarter of 2021, compared to the prior-year period, is primarily due to higher mine operating margins (from higher sales volumes and higher realized metal prices) and lower losses in non-cash items related to mark-to-market adjustments on financial instruments owned by the Company, partially offset by higher amortization of property, plant and mine development due to higher production volumes and the contribution of the Hope Bay mine, higher exploration expenses, and higher income and mining taxes driven by higher operating margins. In the second quarter of 2020, gold production and sales were negatively affected by COVID-19 related reductions in mining activities.

The increase in net income in the first six months of 2021, compared to the prior-year period, is primarily due to the reasons described above partially offset by higher general and administration costs related to a health care donation of $8.0 million spread over several years that was expensed in the first quarter of 2021.

In the second quarter of 2021, cash provided by operating activities was $406.9 million ($432.2 million before changes in non-cash components of working capital), compared to the second quarter of 2020 when cash provided by operating activities was $162.6 million ($185.2 million before changes in non-cash components of working capital). The cash provided by operating activities in the second quarter of 2021 resulted in another strong quarter of free cash-flow2generation.

In the first six months of 2021, cash provided by operating activities was $763.3 million ($847.4 million before changes in non-cash components of working capital), compared to the first six months of 2020 when cash provided by operating activities was $326.0 million ($389.9 million before changes in non-cash components of working capital).

The increase in cash provided by operating activities in the second quarter of 2021, compared to the prior-year period, is primarily due to an increase in mine operating margins, partially offset by higher cash taxes related to the higher mine operating margins. The higher mine operating margins were primarily a result of strong operating performance from the Company's key mines in the second quarter of 2021, and higher average realized metal prices. In the second quarter of 2020, gold production was negatively affected by COVID-19 related reductions in mining activities at seven of the Company's eight mines.

The increase in cash provided by operating activities in the first six months of 2021, compared to the prior-year period, is primarily due to an increase in mine operating margins due to the reasons described above, partially offset by higher cash taxes related to the higher mine operating margins and payments for deferred taxes related to the 2020 tax year in the first quarter of 2021.

"In the second quarter of 2021, the Company posted record safety performance with solid operational results which resulted in another strong quarter of cash flow generation. The Company remains on track to hit its production and cost guidance for 2021 and we expect to see growing gold output in the second half of the year, which should lead to continued strong cash flow generation in 2021," said Sean Boyd, Agnico Eagle's Chief Executive Officer. "Our sound operational platform and stable financial position has given us the flexibility to increase our exploration spending in 2021, and advance our pipeline of development projects, which is expected to provide additional shareholder value in the coming months and years," added Mr. Boyd.

Second quarter of 2021 highlights include:

Strong operating results and record safety performance in the second quarter of 2021 – Payable gold production3was 500,698 ounces (excluding 25,308 ounces of payable gold production at Hope Bay, and including 9,053 ounces and 348 ounces of pre-commercial production of gold at the Tiriganiaq open pit at Meliadine and Amaruq underground project, respectively) at production costs per ounce of $834, total cash costs per ounce4 of $739 and all-in sustaining costs ("AISC") per ounce5 of $1,021. Including Hope Bay, payable gold production in the second quarter of 2021 was 526,006 ounces at production costs per ounce of $827, total cash costs per ounce of $748 and AISC per ounce of $1,037. Production costs per ounce, total cash costs per ounce and AISC per ounce exclude the pre-commercial production of gold at Tiriganiaq and Amaruq underground
Operating results positively affected by better than expected maintenance performance and higher than forecast production at the LaRonde Complex and Meliadine mine – In the second quarter of 2021, scheduled maintenance programs were performed at LaRonde, Goldex, Meliadine, Amaruq and Kittila. In all instances, the maintenance programs went better than planned, allowing for a prompt resumption of operations at all five mines. In the second quarter of 2021, production was also positively affected by higher than forecast tonnage and grade at LaRonde, and an 8% increase in forecast grades at Meliadine. In May 2021, the Meliadine mine established new monthly records for mill throughput (5,178 tonnes-per-day ("tpd")) and gold production (35,810 ounces)
Reintegration of Nunavummiut workforce underway at Meliadine and Meadowbank mines – At the end of June 2021, the Company began the gradual reintegration of the local workforce at two of its Nunavut operations, following consultation with local government and health authorities. The Nunavummiut workforce is expected to be fully reintegrated by the end of the third quarter of 2021, which is expected to result in cost savings of approximately $4 million per quarter (before tax)
Production and cost guidance maintained for 2021 – Expected gold production in 2021 is unchanged at approximately 2,047,500 ounces, while total cash costs per ounce and AISC per ounce continue to be forecast in the range of $700 to $750 and $950 to $1,000, respectively. Estimated payable gold production and costs for 2021 exclude any contribution from Hope Bay. Quarterly production guidance for Hope Bay is unchanged at approximately 18,000 to 20,000 ounces of gold at total cash costs per ounce of $950 to $975 and AISC per ounce of $1,525 to $1,575
Capital expenditures for 2021 remain unchanged – Total capital expenditures for 2021 are still estimated to be approximately $803.0 million. Capital spending levels in the first half of 2021 were lower than forecast largely due to the timing of expenditures. Capital spending is expected to return to more normalized levels over the balance of the year
Cost inflation expected to be minimal in 2021 – With rising prices for many commodities, cost pressures are gradually being pushed downstream and are starting to be reflected in the prices for certain goods and services used by the Company. Despite the inflationary pressures faced year-to-date, the Company is expected to remain on track to achieve its 2021 cost guidance on the back of a number of collaborative efforts and initiatives. In addition, the Company does not anticipate any abnormal impact on labour costs as a result of wage inflation, other than contract exploration drilling and other select contractor groups at this time
Demonstrating Strong ESG Performance – In the second quarter of 2021, the Company registered its best quarterly safety performance in its 64-year history. In an effort to reduce its long-term carbon footprint, the Company signed a memorandum of understanding in July 2021 with the consortium of Tugliq Energy Corp. and Hiqiniq Energy Corporation (a wholly-owned subsidiary of Kitikmeot Corporation) to jointly work to develop a renewable energy plan for the Hope Bay project. For the second consecutive year, the Company received a Towards Sustainable Mining® award from the Mining Association of Canada to honour the Company's innovative community development work at Pinos Altos which helped 300 families in Mexico gain access to clean, sustainable drinking water
Positive exploration results at several minesites and projects in the first half of 2021 – Highlights include discovery of a new mineralized horizon 400 metres south of the East Gouldie deposit; additional high-grade gold-copper in the footwall zone at Upper Beaver in Kirkland Lake; exploration at Hope Bay confirmed the expansion potential of the Doris and Madrid deposits; and drilling at Kittila yielded the deepest ore grade intersection at the mine. For more information on the latest results see the Company's news release dated July 8, 2021
A quarterly dividend of $0.35 per share has been declared

Read the full release here.

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