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Agnico Eagle Reports Third Quarter 2019 Results; Record Quarterly Gold Production; Amaruq Declares Commercial Production; Free Cash Flow Generation Drives 40% Increase in Dividend; Exploration Drilling Continues to Advance Minesite and Pipeline Projects

Stock Symbol: AEM (NYSE and TSX)

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

TORONTO, Oct. 23, 2019 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $76.7 million, or $0.32 per share, for the third quarter of 2019.  This result includes non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments of $8.3 million ($0.04 per share), derivative losses on financial instruments, mark-to-market and other adjustments of $3.8 million ($0.02 per share) and non-cash foreign currency translation gains of $1.3 million ($0.01 per share).  Excluding these items would result in adjusted net income1 of $87.5 million or $0.37 per share for the third quarter of 2019.  In the third quarter of 2018, the Company reported net income of $17.1 million or $0.07 per share.

Included in the third quarter of 2019 net income, and not adjusted above, is non-cash stock option expense of $3.4 million ($0.01 per share).

In the first nine months of 2019, the Company reported net income of $141.5 million, or $0.60 per share.  This compares with the first nine months of 2018, when net income was $67.0 million, or $0.29 per share.

In the third quarter of 2019, cash provided by operating activities was a record $349.2 million ($275.3 million before changes in non-cash components of working capital), as compared to the third quarter of 2018 when cash provided by operating activities was $137.6 million ($155.0 million before changes in non-cash components of working capital).

In the first nine months of 2019, cash provided by operating activities was $624.2 million ($603.5 million before changes in non-cash components of working capital), as compared to the first nine months of 2018 when cash provided by operating activities was $465.4 million ($495.1 million before changes in non-cash components of working capital).

The increase in net income and in cash provided by operating activities during the third quarter of 2019 compared to the prior year period was mainly due to higher gold sales volumes and higher realized gold prices, partially offset by the contribution of production costs from Meliadine, which achieved commercial production in May 2019.  Higher gold sales were primarily driven by the contribution of a full quarter of commercial production from the Meliadine mine, partially offset by expected lower throughput levels at Meadowbank as the mine transitioned to the Amaruq satellite deposit.

The increase in net income and in cash provided by operating activities in the first nine months of 2019 compared to the prior year period was mainly due to higher realized gold prices, partially offset by slightly lower gold sales volume (excluding pre-commercial production ounces at Meliadine and Amaruq) and the contribution of production costs from Meliadine.  Lower gold sales were largely due to decreased production as a result of mill maintenance shutdowns at LaRonde and Kittila in the second quarter of 2019 and expected lower throughput levels at Meadowbank as described above.

"With record performance at several of our operations and the ongoing ramp up of our two new mines in Nunavut, we achieved record quarterly gold production in the third quarter of 2019.  As expected, this strong result, combined with the completion of the extensive construction spending program in Nunavut, resulted in the generation of substantial free cash flow in the quarter," said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "With the expectation of growing production and strong free cash flow generation, we are in a good position to continue to invest in our project pipeline, improve our financial flexibility and grow our dividend.  We are pleased to announce a 40 percent increase in our quarterly dividend," added Mr. Boyd.

___________________
1 Adjusted net income is a non-GAAP measure.  For a discussion regarding the Company's use of non-GAAP measures, please see "Note Regarding Certain Measures of Performance".

Third quarter of 2019 highlights include:

  • Record quarterly gold production – Payable gold production2 in the third quarter of 2019 was 476,937 ounces (including pre-commercial production ounces of 33,134 ounces at Amaruq) at production costs per ounce of $713, total cash costs per ounce3 of $653 and all-in sustaining costs per ounce4 of $903.  Production costs, total cash costs per ounce and AISC per ounce exclude the pre-commercial production ounces at Amaruq

  • A return to free cash flow generation in the third quarter of 2019 – In 2017, the Company embarked on the largest capital spending program in its history in order to build two new mines in Nunavut.  That construction program came to an end in the third quarter of 2019 with the declaration of commercial production at Amaruq.  This contributed to a substantial increase in free cash flow generation5

  • Amaruq declared commercial production on September 30, 2019Total pre-commercial ounces of gold produced were 35,281 (including 2,147 ounces in the second quarter of 2019). Total capital costs for the development of Amaruq were approximately $397 million, which is above the most recent forecast of $350 to $370 million primarily due to the timing of commercial production.  Operations are continuing to ramp up and production at the Meadowbank Complex for 2019 (including pre-commercial production) is expected to be approximately 200,000 ounces of gold

  • Production guidance increased for 2019 – Total production for 2019 is now expected to be 1.77 to 1.78 million ounces of gold (including pre-commercial production from Meliadine and Amaruq), which is a slight increase from the previous guidance of 1.75 million ounces of gold.  The Company anticipates that total cash costs per ounce and AISC per ounce for 2019 will continue to be in the range of $620 to $670 and $875 and $925, respectively

  • Dividend increased by 40% – A quarterly dividend of $0.175 per share has been declared. The previous quarterly dividend was $0.125 per share

  • Exploration drilling continues to advance minesite and pipeline projects


_______________________
2 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis.  For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".
4 All-in-sustaining costs ("AISC") per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis.  For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".
5 Free cash flow is a non-GAAP measure.  For a discussion regarding the Company's use of non-GAAP measures, please see "Note Regarding Certain Measures of Performance".

Third Quarter Financial and Production Highlights

In the third quarter of 2019, strong operational performance continued at the Company's mines, which led to record payable gold production of 476,937 ounces which includes the pre-commercial production ounces at Amaruq.  Excluding the pre-commercial production ounces at Amaruq, payable gold production was 443,803 ounces compared to 421,718 ounces produced in the third quarter of 2018.

In the first nine months of 2019, payable gold production was 1,287,469 ounces including the pre-commercial production ounces at Meliadine and Amaruq (excluding the pre-commercial ounces, payable gold production was 1,204,907 ounces), compared to 1,215,957 ounces in the prior-year period.

The higher level of gold production in the third quarter of 2019, when compared to the prior-year period, was primarily due to the contribution of a full quarter of commercial production from the Meliadine mine, partially offset by expected lower throughput levels at Meadowbank as the mine transitioned to the Amaruq satellite deposit.

The lower level of gold production in the first nine months of 2019 (excluding pre-commercial production ounces), when compared to the prior-year period, was primarily due to expected reduced throughput levels and grades at Meadowbank as the mine transitioned to the Amaruq satellite deposit and mill maintenance shutdowns at LaRonde and Kittila in the second quarter of 2019.  A detailed description of the production at each mine is set out below.

Production costs per ounce in the third quarter of 2019 were $713, compared to $657 in the prior-year period.  Total cash costs per ounce in the third quarter of 2019 were $653, compared to $637 in the prior-year period.

Production costs per ounce in the first nine months of 2019 were $724, compared to $720 in the prior-year period.  Total cash costs per ounce in the first nine months of 2019 were $643, compared to $647 in the prior-year period.

The higher production costs per ounce and total cash costs per ounce in the third quarter of 2019, when compared to the prior-year period, were primarily due to the contribution of production costs from Meliadine, partially offset by higher gold production (excluding pre-commercial production ounces) and, in the case of total cash costs per ounce, were also partially offset by higher by-product revenue.

The higher production costs per ounce in the first nine months of 2019, when compared to the prior-year period, were primarily due to the contribution of production costs from Meliadine and lower gold production (excluding pre-commercial production ounces).  The lower total cash costs per ounce in the first nine months of 2019, when compared to the prior-year period, were primarily due to higher by-product revenue, partially offset by higher costs mentioned above.

AISC per ounce in the third quarter of 2019 were $903, compared to $848 in the prior-year period.  AISC per ounce in the first nine months of 2019 were $898, compared to $885 in the prior-year period.

The higher AISC per ounce in the third quarter of 2019, when compared to the prior-year period, is primarily due to higher sustaining capital costs and higher total cash costs per ounce.

The higher AISC per ounce in the first nine months of 2019, when compared to the prior-year period, is primarily due to higher sustaining capital costs and lower gold production (excluding pre-commercial production ounces), partially offset by lower total cash costs.  A detailed description of the cost performance of each mine is set out below.

Cash Position Growing, Resulting in Improved Financial Flexibility

Cash and cash equivalents and short-term investments increased to $265.2 million at September 30, 2019, from the June 30, 2019 balance of $125.6 million as the Company returned to free cash flow generation in the third quarter of 2019.  As a result, the Company's net debt has decreased.

The outstanding balance on the Company's credit facility remained nil at September 30, 2019.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

The Company's $500 million short form base shelf prospectus will expire on January 22, 2020.  In order to maintain financial flexibility, the Company intends to file a new base shelf prospectus prior to the end of 2019, on substantially the same terms, qualifying up to $1.0 billion of debt securities, common shares and warrants.  The Company has no present intention to offer securities pursuant to the new base shelf prospectus.  While it has been the Company's practice to maintain a $500 million base shelf prospectus since 2002, as a result of the growth of the Company, the value of the base shelf prospectus is expected to be increased to $1.0 billion.  The notice set out in this paragraph does not constitute an offer of any securities for sale or an offer to sell or the solicitation of an offer to buy any securities.

Approximately 37% of the Company's remaining 2019 Canadian dollar exposure is hedged at an average floor price of approximately 1.30 C$/US$.  Approximately 43% of the Company's remaining 2019 Mexican peso exposure is hedged at an average floor price of approximately 19.00 MXP/US$.  Approximately 13% of the Company's remaining 2019 Euro exposure is hedged at an average floor price of approximately 1.17 US$/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 55% of the Company's diesel exposure relating to its Nunavut operations for the July 2019 to July 2020 consumption period is hedged ahead of the 2019 cost guidance assumption of C$0.85 per litre (excluding transportation costs).  The Company anticipates adding to its diesel hedge position, subject to market conditions.

Capital Expenditures

Total capital costs (including sustaining capital) for 2019 are now estimated at approximately$790 million (previous guidance was $750 million).  The increased capital costs primarily relate to the timing of commercial production at Amaruq,including accelerated stripping costs and higher owner's costs due to the impact of adverse weather on dewatering and mining activities during the second and third quarters of 2019 (approximately $18 million).  There was also an additional $9 million of expenditures related to water management at Amaruq.

In addition, given the ability of the Meliadine mill to operate in excess of the nameplate capacity of 3,750 tonnes per day ("tpd"), the Company is looking to accelerate the Phase 2 expansion at Meliadine by approximately two years.  As a result, the increased capital costs discussed above also include capital expenditures related to preparatory work for the Phase 2 expansion of approximately $9 million.  The Company anticipates the potential for additional capital expenditures in 2020 relating to the Phase 2 expansion (subject to the approval of the Company's Board of Directors).

Total project development capital expenditures related to the construction of the Company's new Nunavut mines, Amaruq and Meliadine, were in line with the combined capital expenditure forecast of $1.23 billion.  The total project development capital expenditures for Meliadine were approximately $830 million and for Amaruq were approximately $397 million.

The following table sets out capital expenditures (including sustaining capital) in the third quarter and the first nine months of 2019.

Capital Expenditures



(In thousands of US dollars)




Three Months Ended

Nine Months Ended


September 30, 2019

September 30, 2019

Sustaining Capital



LaRonde mine

$

17,404

$

53,371

LaRonde Zone 5 mine

1,645

4,067

Canadian Malartic mine

14,517

31,920

Goldex mine

5,315

14,916

Meadowbank mine

Meliadine mine

13,031

18,383

Kittila mine

17,099

60,692

Pinos Altos mine

6,621

18,587

Creston Mascota mine

La India mine

3,728

7,372

Total Sustaining Capital

$

79,360

$

209,308




Development Capital



LaRonde mine

$

2,687

$

9,530

LaRonde Zone 5 mine

2,770

Canadian Malartic mine

10,203

27,617

Goldex mine

5,234

17,167

Amaruq satellite deposit

52,878

157,346

Amaruq underground project

13,040

30,064

Meliadine mine

11,851

85,539

Kittila mine

26,731

64,574

Pinos Altos mine

3,212

11,216

Creston Mascota mine

La India mine

725

3,585

Other

1,129

2,043

Total Development Capital

$

127,690

$

411,451

Total Capital Expenditures

$

207,050

$

620,759

 

2019 and 2020 Production Guidance

Total production for 2019 is now expected to be 1.77 to 1.78 million ounces of gold (including pre-commercial production from Meliadine and Amaruq), which is a slight increase from the previous guidance of 1.75 million ounces of gold.  The Company anticipates that total cash costs per ounce and AISC per ounce for 2019 will continue to be in the range of $620 to $670 and $875 and $925, respectively.

Production in 2020 is now expected to be 1.90 to 2.0 million ounces of gold (previous guidance was 1.96 to 2.04 million ounces of gold).  The adjustment to guidance relates primarily to a slower than expected ramp up of production at Amaruq relating to adverse weather conditions in the second and third quarters of 2019, which has impacted development.  Full production and cost guidance will be updated with the results for the year-end and fourth quarter of 2019 in February 2020.

2019 Depreciation Guidance

The Company anticipates its depreciation and amortization expense for the full year 2019 to now be between $550 to $580 million (previous guidance was between $580 and $630 million).

Dividend Record and Payment Dates for the Fourth Quarter of 2019

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.175 per common share, payable on December 16, 2019, to shareholders of record as of November 29, 2019.  Agnico Eagle has declared a cash dividend every year since 1983.

Dividend Reinvestment Plan

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

Third Quarter 2019 Results Conference Call and Webcast Tomorrow

Agnico Eagle's senior management will host a conference call on Thursday, October 24, 2019 at 11:00 AM (E.D.T.) to discuss the Company's 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 1-647-427-7450or 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 9075217.  The conference call replay will expire on November 25, 2019.

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

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 – Higher Grades From the Western Area of the Mine Drive Strong Quarterly Performance; Automation Advancing with Successful Testing of Remote Mucking

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

LaRonde Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

543


555

Tonnes of ore milled per day

5,902


6,033

Gold grade (g/t)

5.50


5.18

Gold production (ounces)

91,664


88,353

Production costs per tonne (C$)

$

133


$

110

Minesite costs per tonne (C$)

$

120


$

120

Production costs per ounce of gold produced ($ per ounce)

$

594


$

527

Total cash costs per ounce of gold produced ($ per ounce)

$

454


$

514

 

Production costs per tonne in the third quarter of 2019 increased when compared to the prior-year period due to the timing of unsold concentrate inventory and lower throughput.  Production costs per ounce in the third quarter of 2019 increased when compared to the prior-year period due to the timing of unsold concentrate inventory, partially offset by higher gold production.

Minesite costs per tonne[6] in the third quarter of 2019 were the same when compared to the prior-year period.  Total cash costs per ounce in the third quarter of 2019 decreased when compared to the prior-year period due to higher gold production and by-product revenues.

Gold production in the third quarter of 2019 increased when compared to the prior-year period primarily due to higher grades, partially offset by slightly lower throughput.

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6 Minesite costs per tonne is a non-GAAP measure.  For a reconciliation of this measure to production costs as reported in the financial statements, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance" below.

LaRonde Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

1,552


1,593

Tonnes of ore milled per day

5,685


5,835

Gold grade (g/t)

5.17


5.37

Gold production (ounces)

245,684


262,664

Production costs per tonne (C$)

$

141


$

140

Minesite costs per tonne (C$)

$

125


$

120

Production costs per ounce of gold produced ($ per ounce)

$

672


$

664

Total cash costs per ounce of gold produced ($ per ounce)

$

481


$

446

 

Production costs per tonne in the first nine months of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the first nine months of 2019 increased when compared to the prior-year period due to lower gold production.

Minesite costs per tonne in the first nine months of 2019 increased when compared to the prior-year period due to lower throughput.  Total cash costs per ounce in the first nine months of 2019 increased when compared to the prior-year period due to lower gold production, partially offset by slightly higher by-product metal revenues.

Gold production in the first nine months of 2019 decreased when compared to the prior-year period primarily due to lower tonnage as a result of a nine-day mill maintenance shutdown during May 2019 and lower grades resulting from the mining sequence.

Drilling continued at LaRonde 3 (the portion of the mine located below a depth of 3.1 kilometres) during the third quarter of 2019 and continued to focus on conversion drilling between 3.4 and 3.5 kilometres depth.  In addition, infill definition drilling was carried out in the area of the mine where 2018 drilling successfully converted mineral resources to mineral reserves.  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 2018.  Extension of the network in the main sector from level 269 to surface and at LaRonde 3 will take place throughout 2019.  The LTE network facilitates the integration of automation technologies currently being tested at LaRonde Zone 5, which are expected to allow the Company to maintain similar productivity levels at LaRonde 3 as it historically achieved in the shallower portions of the mine.  During the third quarter of 2019, automation testing continued and during the month of September, LaRonde was able to successfully muck 10 percent of stopes from surface through an automated mucking system.

Engineering work on Zone 11-3, which is at depth in the past-producing Bousquet 2 mine, is ongoing.  This zone, containing approximately 140,000 ounces of gold in mineral reserves (1.2 million tonnes grading 3.77 g/t gold), is expected to provide production flexibility to the LaRonde Complex over the next few years.

LaRonde Zone 5 – Increased Mill Throughput Drives Strong Operational Performance; Reviewing Opportunity to Enhance Throughput at the LaRonde Complex

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

Production costs per tonne in the third quarter of 2019 were C$63.  Production costs per ounce in the third quarter of 2019 were $678.  Minesite costs per tonne in the third quarter of 2019 were C$60.  Total cash costs per ounce in the third quarter of 2019 were $653.  Gold production in the third quarter of 2019 was 15,438 ounces of gold with a total of approximately 221,000 tonnes of ore milled at 2.27 g/t gold.

Production costs per tonne in the first nine months of 2019 were C$59.  Production costs per ounce in the first nine months of 2019 were $637.  Minesite costs per tonne in the first nine months of 2019 were C$65.  Total cash costs per ounce in the first nine months of 2019 were $705.  Gold production in the first nine months of 2019 was 44,596 ounces of gold with a total of approximately 643,000 tonnes of ore milled at 2.29 g/t gold.

In the third quarter and the first nine months of 2018, LaRonde Zone 5 processed ore for 30 days and 61 days respectively, as the mine achieved commercial production in June 2018 and remaining Lapa ore was still being processed.  As a result, the operating results in the third quarter and the first nine months of 2019 are not comparable to the prior year periods.

In its first year of operation, the mine achieved its designed production rate of 1,975 tpd 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 LaRonde Zone 5 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 additional mineral reserves in the down-plunge extension of the LaRonde Zone 5 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 the LaRonde Zone 5 property 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.

During the third quarter of 2019, the Company continued to test semi-automated mining at LaRonde Zone 5 on weekend night shifts when underground activity is at reduced levels.  Testing continues to yield favourable results as greater than 10 percent of stopes were mined using automated methods controlled from surface during the third quarter of 2019.  Integration and pilot testing of automated mining equipment (two trucks and one scoop tram) began in the fourth quarter of 2018 at LaRonde Zone 5.  Given the success of the pilot testing, phase 2 testing with an additional truck and scoop tram began in the third quarter of 2019.  In addition, automated mucking of development ore and waste between shifts controlled from surface has been initiated.

Canadian Malartic Mine – New Quarterly Record Set for Total Tonnes Milled; Road Deviation Now Completed for the Barnat Extension; Significant New Discovery Reported at East Gouldie

In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired Osisko Mining Corporation and created the Canadian Malartic General Partnership (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 otherwise indicated.

Canadian Malartic Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes) (100%)

5,290


5,114

Tonnes of ore milled per day (100%)

57,500


55,587

Gold grade (g/t)

1.07


1.22

Gold production (ounces)

81,573


88,602

Production costs per tonne (C$)

$

27


$

26

Minesite costs per tonne (C$)

$

26


$

26

Production costs per ounce of gold produced ($ per ounce)

$

644


$

573

Total cash costs per ounce of gold produced ($ per ounce)

$

615


$

572

 

Production costs per tonne in the third quarter of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2019 increased when compared to the prior-year period primarily due to lower gold production.

Minesite costs per tonne in the third quarter of 2019 were the same when compared to the prior-year period.  Total cash costs per ounce in the third quarter of 2019 increased when compared to the prior-year period primarily due to lower gold production.

Gold production in the third quarter of 2019 decreased when compared to the prior-year period due to lower grades, partially offset by higher throughput and slightly higher recoveries.

Canadian Malartic Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes) (100%)

15,608


15,400

Tonnes of ore milled per day (100%)

57,172


56,410

Gold grade (g/t)

1.12


1.21

Gold production (ounces)

249,554


263,868

Production costs per tonne (C$)

$

26


$

25

Minesite costs per tonne (C$)

$

26


$

25

Production costs per ounce of gold produced ($ per ounce)

$

615


$

563

Total cash costs per ounce of gold produced ($ per ounce)

$

597


$

558

 

Production costs per tonne in the first nine months of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the first nine months of 2019 increased when compared to the prior-year period due to lower deferred capitalized stripping costs and lower gold production.

Minesite costs per tonne in the first nine months of 2019 were essentially the same when compared to the prior-year period.  Total cash costs per ounce in the first nine months of 2019 increased when compared to the prior-year period due to lower deferred capitalized stripping costs and lower gold production.

Gold production in the first nine months of 2019 decreased when compared to the prior-year period due to lower grades, partially offset by higher throughput and slightly higher recoveries.

Work on the Barnat extension project is proceeding on budget and on schedule.  The Highway 117 road deviation was completed in the third quarter of 2019 and the new road opened for traffic in early October.  As a result of the completion of the highway deviation, overburden stripping has been accelerated and drilling and blasting activities to access the first production bench is ongoing.

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

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

Discovery of East Gouldie Zone at the Canadian Malartic Mine

The Canadian Malartic property lies in the southern margin of the Archean-age Abitibi volcanic belt.  The Canadian Malartic property, together with the recently acquired adjacent Rand Malartic and Midway properties, cover in excess of 25 kilometres along the Cadillac-Larder Lake deformation zone.  The properties are underlain to the north by the Cadillac Group, in the centre by the Piché Group and in the south by the Pontiac Group.  The mineralized zones are mostly located in the northern part of the Pontiac Group and in the Piché Group in proximity to the Cadillac-Larder Lake deformation zone.

At the Odyssey project, the Partnership is evaluating the underground potential of several gold deposits close to the Canadian Malartic/Barnat open pit.  These include the East Malartic, Sladen, South Sladen, Sheehan, Odyssey North and Odyssey South zones, located under and immediately east of the pit, extending approximately 2.5 kilometres to the east.

The Company expects to spend $5.6 million (50% basis) for 77,000 metres of exploration and conversion drilling (100% basis) at the Canadian Malartic property in 2019, focused on increasing the known mineralization.

Deep drilling east of the open pit in late 2018 resulted in the discovery of a gold-mineralized zone, located south of the East Malartic and Odyssey zones.  Follow-up drilling in 2019 has outlined a substantial mineralized body named the East Gouldie Zone that has a strike length of 1,300 metres in an east-west direction, dips 60 degrees north, and extends from 700 metres to 1,900 metres depth below surface.  The new zone is a silicified and carbonatized mineralized envelope with fine disseminated pyrite developed in sheared greywacke units.

Ongoing exploration drilling from late 2018 through 2019 has also extended the South Sladen Zone at depth and extended the Odyssey Zone to the east.

These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.  Exploration drilling is ongoing by the Partnership to define, extend and upgrade the mineral resources in these existing zones and calculate an initial mineral resource for the East Gouldie Zone.

As of December 31, 2018, on a 50% basis, East Malartic had indicated mineral resources of 361,000 ounces of 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).  As of December 31, 2018, on a 50% basis, Odyssey had indicated mineral resources of 68,000 ounces of gold (1.0 million tonnes grading 2.11 g/t gold) and inferred mineral resources of 809,000 ounces of gold (11.5 million tonnes grading 2.19 g/t gold).

Selected recent drill intercepts from the East Gouldie Zone are set out in the table below.  The drill-hole collars are located on the Canadian Malartic and Odyssey - Local Geology Map, and the pierce points are shown on the Canadian Malartic and Odyssey - Composite Longitudinal Section.  The intercepts reported for East Gouldie 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.

Selected recent exploration drill results from the East Gouldie Zone at Canadian Malartic

Drill hole

Zone

From

(metres)

To

(metres)

Depth of

midpoint

below

surface

(metres)

Estimated

true width
(metres)

Gold grade

(g/t)

(uncapped)

Gold grade

(g/t)

(capped)*

MEX18-108AC

East Gouldie

1,267.0

1,416.0

1,274

18.1

5.5

5.4

MEX18-108AWE

undefined

2,125.0

2,176.0

1,946

51.0**

3.7

2.6

MEX18-121

East Gouldie

1,299.0

1,328.8

1,079

28.0

3.1

3.0

MEX18-127W

East Gouldie

1,244.0

1,274.0

1,091

26.6

8.1

7.6

MEX18-131

East Gouldie

908.0

919.0

771

10.4

2.4

2.4

MEX19-136W

East Gouldie

1,662.4

1,718.7

1,333

49.2

2.9

2.9

MEX19-139

East Gouldie

1,763.9

1,771.0

1,148

6.4

8.4

8.4

and

East Gouldie

1,789.0

1,817.0

1,175

25.2

5.1

5.1

MEX19-142

East Gouldie

1,557.4

1,562.0

1,105

4.4

3.6

3.6

MEX19-145

East Gouldie

1,897.0

1,932.6

1,745

28.2

1.4

1.4

MEX19-146WB

undefined

1,594.0

1,612.9

1,508

16.2

5.6

5.6

and

East Gouldie

1,925.0

1,930.1

1,777

4.4

2.5

2.5

MEX19-147A

East Gouldie

1,581.0

1,603.0

1,285

21.3

2.5

2.5

MEX19-148

East Gouldie

1,923.1

1,927.9

1,806

4.1

2.4

2.4

and

East Gouldie

1,948.0

1,959.0

1,828

9.5

3.0

3.0

and

East Gouldie

2,061.4

2,084.0

1,924

19.8

2.4

2.4

MEX19-149A

East Gouldie

1,877.0

1,893.8

1,759

13.8

1.3

1.3

and

East Gouldie

2,022.3

2,032.4

1,877

8.6

2.2

2.2

MEX19-150A

East Gouldie

1,449.8

1,454.6

915

4.8

2.6

2.6

MEX19-151

East Gouldie

1,709.0

1,770.0

1,523

56.0

5.0

4.9

MEX19-152

East Gouldie

1,638.4

1,665.0

1,244

25.3

4.7

4.5

ODY15-5013EXT

East Gouldie

1,661.0

1,673.0

1,033

11.7

2.6

2.6

ODY15-5021EXTA

East Gouldie

1,773.0

1,803.2

1,516

28.7

1.9

1.9

* Results from the East Gouldie Zone use a capping factor of 15 g/t gold.

** Core length; true width unknown.

 

[Canadian Malartic and Odyssey - Local Geology Map]

[Canadian Malartic and Odyssey - Composite Longitudinal Section]

The East Gouldie discovery hole, hole MEX18-108AC, was drilled northward from a collar approximately 750 metres south of the Sladen fault with the intention of intersecting the near-vertical Sladen and East Malartic zones at depth.  Before reaching these targets, the hole intersected at a low angle the north-dipping East Gouldie Zone, returning 5.4 g/t gold over 18.1 metres at 1,274 metres depth.  Ultimately the hole reached an undefined zone in proximity to the projection of the East Malartic zone, returning 2.6 g/t gold over 51.0 metres (not true width) at 1,946 metres depth.

Subsequent holes were drilled southward from collars farther north to intersect the East Gouldie structure at a more perpendicular angle, such as hole MEX18-121, which intersected 3.0 g/t gold over 28.0 metres at 1,079 metres depth.

Stepping out approximately 140 metres to the east from hole MEX18-121, hole MEX18-127W intersected mineralization in the East Gouldie Zone at 1,091 metres depth, returning 7.6 g/t gold over 26.6 metres.

Then, while targeting deeper mineralization along trend from the East Gouldie Zone, hole MEX19-146WB intersected 5.6 g/t gold over 16.2 metres at 1,508 metres depth in an undefined zone located 300 metres north of the East Gouldie Zone horizon.  This intersection suggests the potential for another zone towards the east in the larger East Gouldie structure.

Hole MEX19-148, which intersected 2.4 g/t gold over 19.8 metres at 1,924 metres depth, is the deepest drill intersection to date of the East Gouldie Zone.  The thickest intercept so far is seen in the lower central part of the East Gouldie Zone in hole MEX19-151, which intersected 4.9 g/t gold over 56.0 metres at 1,523 metres depth.

The recent drill results are expected to have a positive impact on the total mineral reserves and mineral resources at the Canadian Malartic property at year-end.  Studies are underway to evaluate potential mining scenarios for the various zones located under and east of the current open-pit operations.

In March 2019, the Partnership acquired a 100% interest in the Rand Malartic property, which extends 1.7 kilometres immediately eastward from the Odyssey project and provides an additional 262 hectares of prospective ground with the same favourable geological setting as the Odyssey zone.

The host porphyry intrusion seen at depth at Odyssey is exposed at surface on the Rand Malartic property, providing both shallow and deeper drill targets.  The Partnership has a$1.9 million (100% basis) exploration budget at Rand Malartic in 2019, with 14,800 metres of drilling already completed at the end of August 2019.

Goldex – Record Quarterly Gold Production Since Re-start of Operations in 2013

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.

Goldex Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

712


616

Tonnes of ore milled per day

7,739


6,696

Gold grade (g/t)

1.77


1.69

Gold production (ounces)

37,142


31,255

Production costs per tonne (C$)

$

38


$

41

Minesite costs per tonne (C$)

$

38


$

41

Production costs per ounce of gold produced ($ per ounce)

$

546


$

617

Total cash costs per ounce of gold produced ($ per ounce)

$

549


$

611

 

Production costs per tonne in the third quarter of 2019 decreased when compared to the prior-year period due to increased throughput levels resulting from higher utilization of the Rail-Veyor system.  Production costs per ounce in the third quarter of 2019 decreased when compared to the prior-year period due to the reasons described above and higher gold production.

Minesite costs per tonne in the third quarter of 2019 decreased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the third quarter of 2019 decreased when compared to the prior-year period due to the reasons described above.

Gold production in the third quarter of 2019 increased when compared to the prior-year period due to higher grades and higher throughput levels as a result of higher utilization of the Rail-Veyor system, which achieved its best quarterly performance of approximately 5,800 tpd.

Goldex Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

2,101


1,914

Tonnes of ore milled per day

7,696


7,011

Gold grade (g/t)

1.70


1.56

Gold production (ounces)

105,921


89,659

Production costs per tonne (C$)

$

38


$

40

Minesite costs per tonne (C$)

$

38


$

40

Production costs per ounce of gold produced ($ per ounce)

$

563


$

656

Total cash costs per ounce of gold produced ($ per ounce)

$

565


$

654

 

Production costs per tonne in the first nine months of 2019 decreased when compared to the prior-year period due to  increased throughput levels resulting from higher utilization of the Rail-Veyor system.  Production costs per ounce in the first nine months of 2019 decreased when compared to the prior-year period due to the reasons described above and higher gold production.

Minesite costs per tonne in the first nine months of 2019 decreased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the first nine months of 2019 decreased when compared to the prior-year period due to the reasons described above.

Gold production in the first nine months of 2019 increased when compared to the prior-year period due to higher grades and higher throughput levels as a result of higher utilization of the Rail-Veyor system as described above, partially offset by slightly lower recoveries.

Mining in the South Zone continued in the third quarter of 2019.  Stopes mined to date have shown better grades than anticipated and have confirmed dilution and recovery assumptions.  The South Zone consists of quartz veins that have higher grades than those in the primary mineralized zones at Goldex.  Approximately one stope per month from the South Zone will be mined for the remainder of 2019 (a total of 12 stopes are expected to be mined for the full year 2019).  The Company continues to evaluate the potential for the South Zone to provide additional incremental ore feed to the Goldex mill.

Drilling at the Deep 2 Zone continued in the third quarter of 2019 and continues to focus on areas below the current mineral reserve limit of Level 130.

Kirkland Lake Project – Drilling Focused on Converting and Expanding Mineral Resources at Upper Beaver

The Kirkland Lake project in northeastern Ontario covers approximately 27,073 hectares on a property measuring approximately 35 kilometres by 17 kilometres.  A portion of the Company's 2019 exploration drill program at Kirkland Lake is targeting the shallow portion of the Upper Beaver deposit.  During the second and third quarters of 2019,60 drill holes (22,044 metres) were completed at Upper Beaver.

Selected recent intercepts from shallow basalts in the Upper Beaver deposit are set out in the table below.  The drill collar coordinates are set out in a table in the Appendix to this news release.  The drill hole collars are located on the Kirkland Lake Project - Upper Beaver Local Geology Map.  All intercepts reported for the Kirkland Lake project 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.

Selected recent exploration drill results from shallow basalts in the Upper Beaver deposit at the Kirkland Lake project

Drill hole

From

(metres)

To

(metres)

Depth of

mid-point

below

surface

(metres)

Estimated

true width*

(metres)

Gold grade

(g/t)

(uncapped)

Gold grade

(g/t)

(capped)**

Copper grade

(%)

(uncapped)

KLUB19-496

149.0

154.0

106

3.5

22.5

7.3

0.00

and

197.9

204.0

139

4.3

14.7

9.2

0.02

and

213.0

221.0

150

5.6

6.4

6.4

0.04

KLUB19-504

155.5

181.0

120

20.4

3.5

3.5

0.17

KLUB19-510

144.0

174.2

115

21.2

7.9

2.4

0.36

KLUB19-513

63.0

69.5

55

5.2

9.9

9.0

0.45

KLUB19-528

374.2

383.9

291

7.3

5.5

5.5

0.04

and

389.5

396.1

300

5.1

9.8

9.8

0.04

KLUB19-533

48.0

74.0

44

21.0

3.8

3.8

0.56

and

206.0

214.9

148

7.1

21.5


16.8

0.01

KLUB19-535

274.5

288.0

181

10.8

8.0

6.6

0.07

and

394.7

399.4

249

4.1

18.5

17.2

0.05

* Estimated true width values are preliminary.

** Holes in the shallow basalts at the Upper Beaver deposit use a capping factor of 30 g/t gold.

 

[Kirkland Lake Project - Upper Beaver Local Geology Map]

The Upper Beaver deposit is atypical of the Kirkland Lake district.  Gold-copper mineralization is mainly hosted in the Upper Beaver alkalic intrusive complex and the surrounding basalts it intruded, and is associated with disseminated pyrite and chalcopyrite, and magnetite-sulphide veining associated with strong magmatic-hydrothermal alteration.  The mineralization occurs as elongated tabular bodies that strike northeast, dip steeply northwest and plunge 65 degrees to the northeast.  The mineralization has been defined along a 400-metre strike length from surface to a depth of 2,000 metres.  A probable mineral reserve of 8.0 million tonnes grading 5.43 g/t gold and 0.25% copper (1.4 million ounces of gold and 20,000 tonnes of copper) at underground depths has been outlined on the Upper Beaver property as of December 31, 2018, as well as substantial indicated and inferred mineral resources.

The ongoing exploration program at Upper Beaver continues to target the conversion and extension of mineral resources in the basalts near surface, where multiple stacked zones of quartz and quartz-carbonate veining contain variable proportions of the chalcopyrite and magnetite that host the gold and copper mineralization.

Recent results display high-grade, narrow intervals as well as broader zones of medium-grade mineralization.

Multiple drill holes intersected gold-copper mineralization in more than one mineralized zone, showing stacked mineralized structures in the shallow basalts, including hole KLUB19-496, which returned 7.3 g/t gold over 3.5 metres at 106 metres depth, 9.2 g/t gold and 0.02% copper over 4.3 metres at 139 metres depth and 6.4 g/t gold and 0.04% copper over 5.6 metres at 150 metres depth.

Other recent drill holes that have intersected high-grade, shallow intercepts included hole KLUB19-513 on the west side of the deposit (approximately 250 metres west-southwest of hole KLUB19-496), which returned 9.0 g/t gold and 0.45% copper over 5.2 metres at 55 metres depth.

More high-grade mineralization was intersected by hole KLUB19-533, which returned 16.8 g/t gold and 0.01% copper over 7.1 metres at 148 metres depth and by hole KLUB19-535, which returned 17.2 g/t gold and 0.05% copper over 4.1 metres at 249 metres depth.

Broad, shallow mineralization was intercepted by hole KLUB19-504, which returned 3.5 g/t gold and 0.17% copper over 20.4 metres at 120 metres depth and by hole KLUB19-510, which returned 2.4 g/t gold and 0.36% copper over 21.2 metres at 115 metres depth.

Recent results confirm the potential to convert inferred mineral resources to indicated mineral resources and to add inferred mineral resources in Upper Beaver's shallow basalts, as new assay results compare positively to historic holes.  An increase in the mineral resources in the shallow basalts may improve project economics and provide added flexibility for project development.

The Company is investigating various development options for the Upper Beaver and Upper Canada deposits.

Following the Company's March 28, 2018 acquisition of Yamana's indirect 50% interest in the Canadian exploration assets of Canadian Malartic Corporation, the Company had ownership of a 65% interest in the Lac McVittie property. The Lac McVittie property covers approximately 953 hectares and is located less than 500 metres from the mineral resources at Upper Beaver, as shown on the Kirkland Lake Project Upper Beaver Local Geology Map.

In order to consolidate the Company's property holding at the Kirkland Lake project, on October 11, 2019 the Company acquired the remaining 35% interest in the Lac McVittie property (such that the Company now owns 100% of the Lac McVittie property) from Barrick Gold Corporation ("Barrick").  In consideration for the purchase of the remaining 35% interest in the Lac McVittie property, the Company paid C$50,000 and granted Barrick a 2% net smelter return royalty on the property.

NUNAVUT REGION

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential.  With the Company's Meliadine and Meadowbank mines (including the Amaruq satellite deposit at Meadowbank) and other exploration projects, Nunavut has the potential to be a strategic operating platform with the ability to generate strong gold production and cash flows over several decades.

Meadowbank Complex – Amaruq Deposit Reaches Commercial Production; Operations Expected to Ramp Up Through 2019

The 100% owned Meadowbank Complex is located approximately 110 kilometres by road north of Baker Lake in the Kivalliq District of Nunavut, Canada.  The complex consists of the Meadowbank mine and mill, and the Amaruq satellite deposit, which is located 50 kilometres northwest of the Meadowbank mine.  The Meadowbank mine achieved commercial production in March 2010, and mining activities are expected to be completed in the fourth quarter of 2019.

Development of the Amaruq project was approved in February 2017 by the Company's Board of Directors as a satellite deposit to supply ore to the existing Meadowbank mill.  The Amaruq mining operation uses the existing infrastructure at the Meadowbank mine (mining equipment, mill, tailings, camp and airstrip).  Additional infrastructure has been built at the Amaruq site (truck shop/warehouse, fuel storage and an additional camp facility).  Amaruq ore is transported using long haul off-road type trucks to the mill at the Meadowbank site for processing.

Meadowbank Mine – Operating Statistics




All metrics exclude pre-production tonnes and ounces

Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

364


888

Tonnes of ore milled per day*

10,400


9,652

Gold grade (g/t)

1.50


2.56

Gold production (ounces)

15,736


68,259

Production costs per tonne (C$)

$

76


$

73

Minesite costs per tonne (C$)

$

62


$

73

Production costs per ounce of gold produced ($ per ounce)

$

1,306


$

716

Total cash costs per ounce of gold produced ($ per ounce)

$

1,035


$

694

* Milling occurred for 35 days during the third quarter of 2019.

 

Production costs per tonne in the third quarter of 2019 increased when compared to the prior-year period primarily due to the timing of unsold inventory and lower throughput, partially offset by lower open pit mining costs as a result of the reduced rate of mining activity at the Meadowbank site.  Production costs per ounce in the third quarter of 2019 increased when compared to the prior-year period as expected primarily due to lower gold production and the reasons described above.

Minesite costs per tonne in the third quarter of 2019 decreased when compared to the prior-year period primarily due to lower open pit mining costs as a result of the reduced rate of mining activity at the Meadowbank site, partially offset by lower throughput.  Total cash costs per ounce in the third quarter of 2019 increased when compared to the prior-year period as expected due to lower gold production.

Gold production in the third quarter of 2019 decreased when compared to the prior-year period as expected due to anticipated lower grades from the processing of marginal ore stockpiles and lower quarterly throughput as the mine transitioned through the last few months of mining at the Meadowbank site.

Meadowbank Mine – Operating Statistics




All metrics exclude pre-production tonnes and ounces

Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

1,672


2,562

Tonnes of ore milled per day

7,741


9,385

Gold grade (g/t)

1.92


2.50

Gold production (ounces)

96,548


189,333

Production costs per tonne (C$)

$

83


$

84

Minesite costs per tonne (C$)

$

79


$

82

Production costs per ounce of gold produced ($ per ounce)

$

1,079


$

881

Total cash costs per ounce of gold produced ($ per ounce)

$

991


$

839

 

Production costs per tonne in the first nine months of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the first nine months of 2019 increased when compared to the prior-year period as expected primarily due to higher re-handling costs and lower gold production.

Minesite costs per tonne in the first nine months of 2019 decreased when compared to the prior-year period primarily due to lower open pit mining costs as a result of the reduced rate of mining activity at the Meadowbank site, partially offset by higher re-handling costs and lower throughput.  Total cash costs per ounce in the first nine months of 2019 increased when compared to the prior-year period as expected primarily due to higher re-handling costs and lower gold production.

Gold production in the first nine months of 2019 decreased when compared to the prior-year period as expected due to anticipated lower grades from the processing of marginal ore stockpile as the mine transitioned through the last few months of mining at the Meadowbank site.

Mining and milling of ore from the Meadowbank site have been extended into October 2019, due to additional ore being sourced from the Portage pit and processing of the remaining stockpiles.

Amaruq Satellite Deposit

Amaruq ore processing commenced in August 2019 using low-grade stockpiles and commercial production was achieved on September 30, 2019.  Pre-commercial payable gold production at Amaruq totaled 35,281 ounces (including 2,147 ounces in the second quarter of 2019).  This compares to pre-commercial production guidance of 40,000 gold ounces.  Pre-commercial production gold sales totaled 32,042 ounces.

During the third quarter of 2019, approximately 276,000 tonnes of ore were mined from the Whale Tail deposit at Amaruq.  Mining activities continued to be affected by slower than expected dewatering activities (largely related to heavier than expected rainfall) during the quarter.  Dewatering is now substantially complete (approximately one month later than previously expected), and mining activities are expected to ramp up through year-end 2019 and in the first quarter of 2020.  Based on the current forecast, approximately 650,000 tonnes of ore are expected to be mined in the fourth quarter of 2019 and 620,000 tonnes in the first quarter of 2020.

Long haul truck ("LHT") performance has been in line with the Company's expectations, with each truck able to haul up to two loads of ore (approximately 300 tonnes) per 12-hour shift.  Four additional LHTs arrived at site in mid-October, bringing the total LHT fleet to 22 units.  In addition, three contractor trucks have been mobilized as a backup.

Given the slower than expected ramp up of mining activities, the Company took the opportunity to accelerate planned maintenance to the milling and crushing circuits, which was originally scheduled for 2020.  As a result, the mill was temporarily shut down in mid-September and was restarted in mid-October 2019.  During the shutdown, ore continued to be mined and trucked to the Meadowbank mill, where it was stockpiled for future processing.  At the end of the third quarter of 2019, the Meadowbank Complex stockpile totaled approximately 374,000 tonnes grading 2.75 g/t gold.

As mining activities at Amaruq continue to ramp up, production guidance at the Meadowbank Complex for 2019 (including pre-commercial production) is expected to be approximately 200,000 ounces of gold.  Operating costs for the Meadowbank Complex are expected to gradually decline through year-end 2019 as mining activities ramp up at Amaruq.

Total project development capital expenditures at Amaruq were approximately $397 million, compared to the previous guidance of $350 to $370 million.  The increased capital costs primarily relate to the timing of commercial production at Amaruq, including accelerated stripping costs and higher owner's costs due to the impact of adverse weather on dewatering and mining activities during the second and third quarters of 2019.

Total project development capital expenditures related to the construction of the Company's new Nunavut mines, Amaruq and Meliadine, were in line with the combined capital expenditure forecast of $1.23 billion (total project development capital expenditures for Meliadine were approximately $830 million).

Work is ongoing at Amaruq to evaluate the potential for an underground operation, which could run partially concurrent with the open pit mining operation.  At the end of the third quarter of 2019, the exploration ramp had reached a depth of 224 metres below surface and a ramp distance of 1,635 metres from the portal.  Additional details on the Amaruq underground project are expected to be included with the Company's fourth quarter results in February 2020.

Exploration drilling continues at depth at Amaruq in both the Whale Tail deposit and the V Zone, and conversion drilling of underground mineral resources is ongoing beneath the planned Whale Tail pit bottom and in the V Zone at depth.

The 2019 exploration program at Amaruq is budgeted at 32,800 metres of drilling at an estimated cost of $10.5 million, focused on developing new mineral resources around the deposits from surface to 600 metres depth.  An additional 20,300 metres of conversion drilling is budgeted at $4.4 million for 2019.

During the third quarter of 2019, up to eight drill rigs were in operation at Amaruq, including one rig that has been operating underground since late June from the exploration ramp.  Exploration drilling consisted of 16 holes (3,206 metres) and conversion drilling consisted of 54 holes (17,739 metres).

The permitting process to amend the Whale Tail project certificate and Type A Water Licence to include the Amaruq Phase 2 expansion is ongoing.  As part of this process, the Nunavut Impact Review Board (the "NIRB") held public hearings on the proposed expansion from August 26 to 29, 2019 in Baker Lake.  In a decision issued on October 18, the NIRB concluded that if conducted in accordance with the NIRB's recommendations, this proposed amendment to the Whale Tail Project could proceed to the Type A Water License amendment phase with the Nunavut Water Board (the "NWB").  The NWB water licence amendment process has commenced and public hearings are planned for the first quarter of 2020.  It is expected that the Amaruq Phase 2 permitting will be completed in late 2020.

Meliadine Mine – Evaluating Potential to Advance Phase 2 Expansion; Drilling Continues to Expand Mineralization at Depth

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010 and is Agnico Eagle's largest gold deposit in terms of mineral resources.  The Company owns 100% of the 111,358-hectare property.  In February 2017, the Company's Board of Directors approved the construction of the Meliadine project.  Commercial production was declared on May 14, 2019.

 

Meliadine Mine – Operating Statistics



Three Months Ended


September 30, 2019

Tonnes of ore milled (thousands of tonnes)

312

Tonnes of ore milled per day

3,391

Gold grade (g/t)

8.19

Gold production (ounces)

78,093

Production costs per tonne (C$)

$

234

Minesite costs per tonne (C$)

$

246

Production costs per ounce of gold produced ($ per ounce)

$

709

Total cash costs per ounce of gold produced ($ per ounce)

$

746

Production costs per tonne in the third quarter of 2019 were C$234.  Production costs per ounce in the third quarter of 2019 were $709.  Minesite costs per tonne in the third quarter of 2019 were C$246.  Total cash costs per ounce in the third quarter of 2019 were $746.  Cash costs are expected to trend lower in the fourth quarter of 2019 as the mine continues to ramp up production.  Gold production in the third quarter of 2019 was 78,093 ounces of gold.

Meliadine Mine – Operating Statistics


All metrics exclude pre-production tonnes and ounces

Nine Months Ended


September 30, 2019

Tonnes of ore milled (thousands of tonnes)

447

Tonnes of ore milled per day

3,216

Gold grade (g/t)

7.41

Gold production (ounces)

109,506

Production costs per tonne (C$)

$

246

Minesite costs per tonne (C$)

$

252

Production costs per ounce of gold produced ($ per ounce)

$

760

Total cash costs per ounce of gold produced ($ per ounce)

$

776

 

Production costs per tonne in the first nine months of 2019 were C$246.  Production costs per ounce in the first nine months of 2019 were $760.  Minesite costs per tonne in the first nine months of 2019 were C$252.  Total cash costs per ounce in the first nine months of 2019 were $776.  Gold production in the first nine months of 2019 was 109,506 ounces of gold excluding pre-commercial production.

The gold grade during the third quarter of 2019 was 8.19 g/t gold and improved in September to 8.77 g/t gold, which was slightly below the 2019 guidance of 8.88 g/t gold.  The grade was lower primarily due to a change in the mining sequence.  The lower grade was partially offset by the processing of higher tonnage.  Year-to-date, the block model has reconciled well with the milling results (within 3%).

Underground mining operations continue to ramp up, with 3,030 tpd mined in September and 3,260 tpd mined through mid-October.  A productivity improvement initiative has been put in place to further enhance the mining rate, and the Company expects measurable gains in the fourth quarter of 2019, with the mining rate forecast to be approximately 3,660 tpd.

During August and September 2019, the processing plant demonstrated the ability to exceed nameplate capacity (3,750 tpd) with average recoveries of approximately 95.5%.  In the third quarter of 2019, the mill operated for 20 days at over 4,500 tpd, and the maximum daily throughput was 4,950 tpd.  The strong mill performance was largely a result of modifications to the grinding size and better blending of ore types.

Given the ability to operate the mill in excess of the nameplate capacity, the Company is evaluating the potential to accelerate the Phase 2 expansion by approximately two years (first ore could be milled in 2021).  The expansion will involve development of two open pits and a phased increase in mill throughput to 6,000 tpd.  As a result, additional capital expenditures primarily related to preparatory work for the Phase 2 expansion of approximately $9 million is expected to be spent in 2019.  The Company anticipates the potential for additional capital expenditures in 2020 relating to the Phase 2 expansion (subject to the approval of the Company's Board of Directors).

Exploration at Meliadine Encounters Extension of Tiriganiaq Deposit at Depth

In the third quarter of 2019, exploration drilling at the Meliadine mine consisted of two holes (1,133 metres) and conversion drilling consisted of 24 holes (7,828 metres).  The initial budget for the full year included 10,000 metres of exploration drilling and 12,500 metres of conversion drilling.

Additional drilling was recently approved following positive exploration results at the Tiriganiaq deposit, increasing the 2019 budget to 12,500 metres of exploration drilling and 19,000 metres of conversion drilling.  Results from the exploration program at Meliadine were last reported in the Company's news release dated July 24, 2019.

Selected recent exploration drill intercepts from the Tiriganiaq deposit at the Meliadine mine are set out in the table below.  The drill hole collar coordinates are set out in a table in the Appendix to this news release.  The pierce points are shown on the Meliadine Mine Composite Longitudinal Section.  All intercepts reported for the Meliadine mine 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.

Selected recent exploration drill results from the Tiriganiaq deposit at the Meliadine mine

Drill hole

Lode

From

(metres)

To

(metres)

Depth of

midpoin

below

surface

(metres)

Estimated

true width

(metres)

Gold grade

(g/t)

(uncapped)

Gode grade

(g/t)

(capped)*

M19-2555-W1A

1370

662.7

666.2

593

2.9

5.3

5.3

and

1260

787.5

793.8

696

4.8

6.0

6.0

and

1025

861.1

865.6

750

3.1

15.8

15.8

and

1000

876.1

880.3

760

2.9

42.7

21.5

M19-2555-W2A

1252

772.5

777.6

682

3.8

52.6

12.6

and

1251

784.5

793.0

694

6.4

5.5

5.5

M19-2684A-W1

1000

893.5

898.2

790

3.2

10.1

10.1

M19-2684A-W3

1374

667.9

671.6

618

2.9

4.7

4.7

and

1370

677.6

681.9

626

3.4

6.9

3.3

and

1100

826.5

831.3

735

3.2

19.0

11.4

* Holes at the Tiriganiaq deposit's lodes 1000 and 1025 use a capping factor of 150 g/t gold; lode 1100 uses a capping factor of 100 g/t gold; lodes 1250 and 1260 use a capping factor of 80 g/t gold; and lodes in the 1300 series use a capping factor of 20 g/t gold.

 

[Meliadine Mine - Composite Longitudinal Section]

The Meliadine property includes seven gold deposits, six of which are part of the current mine plan.  Tiriganiaq is the largest of the deposits with a strike length of approximately 3.0 kilometres at surface and a known depth of 812 metres.  The current mineral reserves at the Meliadine project are mainly in the Tiriganiaq deposit and consist of 16.7 million tonnes grading 6.97 g/t gold (containing 3.8 million ounces of gold) at underground and open pit depths, as of December 31, 2018.  Please refer to the Company's news release dated February 14, 2019 for a detailed breakdown of mineral reserves.

Recent results from the 2019 exploration program are from the area at depth in the central portion of Tiriganiaq (in the area beneath Portal 2), demonstrating that Tiriganiaq continues to be extended and remains open at depth.  These lodes intersected at depth are interpreted to be the lateral and vertical extensions of lodes 1000 and 1025.

Significant gold grade values have also been intersected in the 1250s and 1370s series of lodes, which is a first at these depths in this area.  Located approximately 90 metres east of hole M18-2486-W2 drilled last year, hole M19-2555-W1A intersected high-grade gold in multiple lodes, including: 5.3 g/t gold over 2.9 metres at 593 metres depth in lode 1370; 6.0 g/t gold over 4.8 metres at 696 metres depth in lode 1260; 15.8 g/t gold over 3.1 metres at 750 metres depth in lode 1025; and 21.5 g/t gold over 2.9 metres at 760 metres depth in lode 1000.

Slightly west of hole M19-2555-W1A, hole M19-2555-W2A intersected 12.6 g/t gold over 3.8 metres at 682 metres depth in lode 1252 and 5.5 g/t gold over 6.4 metres at 694 metres depth in lode 1251.

Hole M19-2684A-W1 intersected the deepest gold mineralization to date in this area at 790 metres depth, returning 10.1 g/t gold over 3.2 metres in lode 1000.

Hole M19-2684A-W3, located approximatively 55 metres to the west of hole M19-2486-W1, intersected two zones in the 1370s series of lodes, returning 4.7 g/t over 2.9 metres at 618 metres depth in lode 1374 and 3.3 g/t gold over 3.4 metres at 626 metres depth in lode 1370, followed by 11.4 g/t gold over 3.2 metres at 735 metres depth in lode 1100.

The Company is continuing the conversion drilling program at the Tiriganiaq and Wesmeg deposits at Meliadine, and will continue to explore extensions of Tiriganiaq at depth in the areas discovered in 2018 and 2019.  These areas may provide increased inferred mineral resources for Tiriganiaq at the end of 2019, pending additional ongoing diamond drilling.

FINLAND AND SWEDEN

Agnico Eagle's Kittila mine in Finland is the largest primary gold producer in Europe and hosts the Company's largest mineral reserves.  Exploration activities continue to expand the mineral reserves and mineral resources and the Company has approved an expansion to add an underground shaft and increase expected mill throughput by 25 percent to 2.0 million tonnes per annum ("mtpa").  In Sweden, the Company has a 55 percent interest in the Barsele exploration project.

Kittila – Record Quarterly Mill Throughput and Gold Production in the Third Quarter of 2019; Drilling Continues to Expand Known Mineralized Zones

The 100% owned Kittila mine in northern Finland achieved commercial production in 2009.

Kittila Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

507


474

Tonnes of ore milled per day

5,511


5,152

Gold grade (g/t)

4.23


3.87

Gold production (ounces)

61,343


49,459

Production costs per tonne (EUR)

79


71

Minesite costs per tonne (EUR)

78


72

Production costs per ounce of gold produced ($ per ounce)

$

725


$

791

Total cash costs per ounce of gold produced ($ per ounce)

$

725


$

813

 

Production costs per tonne in the third quarter of 2019 increased when compared to the prior-year period primarily due to higher re-handling and contractor costs, partially offset by higher throughput.  Production costs per ounce in the third quarter of 2019 decreased when compared to the prior-year period due to higher gold production, partially offset by higher re-handling and contractor costs.

Minesite costs per tonne in the third quarter of 2019 increased when compared to the prior-year period due to the reasons described above.  Total cash costs per ounce in the third quarter of 2019 decreased when compared to the prior-year period due to the reasons described above.

Gold production in the third quarter of 2019 increased when compared to the prior-year period due to higher throughput with an all-time high for mill feed tonnes, higher grades from the Rimpi Zone and higher recoveries.

Kittila Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore milled (thousands of tonnes)

1,123


1,365

Tonnes of ore milled per day

4,114


5,000

Gold grade (g/t)

4.16


3.76

Gold production (ounces)

130,756


139,626

Production costs per tonne (EUR)

83


74

Minesite costs per tonne (EUR)

75


75

Production costs per ounce of gold produced ($ per ounce)

$

796


$

864

Total cash costs per ounce of gold produced ($ per ounce)

$

728


$

876

 

Production costs per tonne in the first nine months of 2019 increased when compared to the prior-year period primarily due to lower throughput levels as a result of the scheduled mill autoclave shutdown in the second quarter of 2019 and higher contractor costs.  Production costs per ounce in the first nine months of 2019 decreased when compared to the prior-year period primarily due to higher grades.

Minesite costs per tonne in the first nine months of 2019 were the same when compared to the prior-year period.  Total cash costs per ounce in the first nine months of 2019 decreased when compared to the prior-year period primarily due to higher grades.

Gold production in the first nine months of 2019 decreased when compared to the prior-year period primarily due to the scheduled 58-day mill shutdown in the second quarter of 2019.

In February 2018, the Company's Board of Directors approved an expansion to increase throughput rates at Kittila to 2.0 mtpa from the current rate of 1.6 mtpa.  Permitting is ongoing for the increase in throughput.  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 increase the efficiency of the mine and maintain or decrease current operating costs while providing access to the deeper mining horizons.  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.

The shaft and mill expansion are advancing as planned and on budget.  During the scheduled mill shutdown in the second quarter of 2019, preliminary tie-in work was completed. The Company anticipates that final tie-in work will occur during scheduled mill maintenance in the second half of 2020.

The shaft project is ongoing with raise boring of the ore silos completed in the third quarter of 2019 and construction of the head frame began in early October 2019.  The estimated capital costs for the shaft and mill expansion remain at 160 million euros.

Kittila – Drilling Continues to Extend Main and Sisar Zones

Exploration drilling at the Kittila mine in the third quarter of 2019 focused on extending the Main and Sisar zones northward, southward and at depth in the Roura and Rimpi areas to increase the mineral reserves in the large orebody.  Sisar is subparallel to and 50 to 300 metres east of the main Kittila mineralization.

The probable mineral reserve estimate for Kittila as of December 31, 2018 is 4.4 million ounces of gold (30.5 million tonnes grading 4.50 g/t gold), while the indicated mineral resources estimate is 1.4 million ounces of gold (17.0 million tonnes grading 2.65 g/t gold) and the inferred mineral resources estimate is 1.0 million ounces of gold (8.3 million tonnes grading 3.84 g/t gold).

The 2019 exploration program at Kittila is budgeted at $9.0 million and includes 34,000 metres of drilling.  Exploration drilling during the third quarter of 2019 totaled 12 holes (4,688 metres).  In addition, conversion drilling during the third quarter of 2019 totaled nine holes (2,516 metres).

Selected recent drill results are set out in the table below, and drill-hole collar coordinates are set out in a table in the Appendix.  Pierce points for all these holes are shown on the Kittila Composite Longitudinal Section.  All intercepts reported for the Kittila mine show uncapped gold grades over estimated true widths, based on a current geological interpretation that is being updated as new information becomes available with further drilling.

Selected recent exploration drill results from the Roura-Rimpi Main Zone and Sisar Zone at the Kittila mine

Drill hole   

Zone

From

(metres)

To

(metres)

Depth of

midpoint

below

surface

(metres)

Estimated

true width

(metres)

Gold grade

(g/t)

(uncapped)

RIE19-607

Sisar Top

172.8

182.0

965

9.1

5.2

RIE19-609

Sisar Top

212.8

218.0

1,069

5.2

6.1

and

Sisar Top

234.0

238.0

1,074

3.4

5.4

RIE19-610

Sisar Central

229.0

236.0

1,107

5.5

6.2

RIE19-611

Main-Rimpi

316.0

324.6

1,282

3.4

3.3

RIE19-700B

Sisar Deep

(Rimpi)

1148.5

1153.8

1,818

3.2

4.7

RUG19-510

Main Roura

198.0

205.0

827

4.1

7.6

and

Main Roura

300.0

316.0

887

10.1

4.4

RUG19-519

Sisar Top

235.0

238.0

718

3.0

4.5

 

[Kittila - Composite Longitudinal Section]

Recent intercepts from Roura and Rimpi have confirmed the Main Zone and the Sisar Zone mineral reserves and mineral resources between 720 and 1,280 metres depth.  Hole RUG19-510 intersected the Main Zone, yielding 7.6 g/t gold over 4.1 metres at 827 metres depth; the same hole intersected a second branch of the Main Zone approximately 80 metres farther to the east, yielding 4.4 g/t gold over 10.1 metres at 887 metres depth.  Approximately 600 metres to the north, hole RUG19-519 intersected the Sisar Zone, yielding 4.5 g/t gold over 3.0 metres at 718 metres depth.  This intercept confirms the mineralization in the Sisar Top Area.

Approximately 170 to 230 metres to the north of hole RUG19-519, three drill holes confirmed the Sisar Zone in the contact area between Roura and Rimpi: hole RIE19-607 intersected 5.2 g/t gold over 9.1 metres at 965 metres depth; hole RIE19-609 intersected 6.1 g/t gold over 5.2 metres at 1,069 metres depth and 5.4 g/t over 3.4 metres at 1,074 metres depth; and hole RIE19-610 intersected 6.2 g/t gold over 5.5 metres at 1,107 metres depth.  Another intercept, in hole RIE19-611, confirmed the Main Zone mineralization in the contact area between Roura and Rimpi, yielding 3.3 g/t gold over 3.4 metres at 1,282 metres depth.

Deep exploration drilling of the Rimpi area is ongoing with one high-capacity drill rig.  Deep exploration hole RIE19-700B, drilled from the ramp, intersected 4.7 g/t gold over 3.2 metres at 1,818 metres depth, approximately 300 metres east of the Main Zone.  This intercept may represent an approximately 600-metre northward extension of the Sisar Deep Zone to the east of the Rimpi area.

SOUTHERN BUSINESS REVIEW

Agnico Eagle's Southern Business operations are focused in Mexico.  These operations have been a solid source of precious metals production (gold and silver) with stable operating costs and strong free cash flow since 2009.

Pinos Altos – Grade Impacted by Revised Mining Sequence; Production Levels Expected to Improve in the Fourth Quarter of 2019; Reyna de Plata and Cubiro Drilling Extends Mineralization

The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.

Pinos Altos Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore processed (thousands of tonnes)

519


508

Tonnes of ore processed per day

5,641


5,522

Gold grade (g/t)

2.22


2.96

Gold production (ounces)

34,832


46,405

Production costs per tonne

$

67


$

66

Minesite costs per tonne

$

67


$

66

Production costs per ounce of gold produced ($ per ounce)

$

995


$

727

Total cash costs per ounce of gold produced ($ per ounce)

$

745


$

533

 

Production costs per tonne in the third quarter of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the third quarter of 2019 increased when compared to the prior-year period primarily due to lower gold production.

Minesite costs per tonne in the third quarter of 2019 were essentially the same when compared to the prior-year period.  Total cash costs per ounce in the third quarter of 2019 increased when compared to the prior-year period primarily due to lower gold production.

Gold production in the third quarter of 2019 decreased when compared to the prior-year period due to the processing of lower grades.

At the Cerro Colorado underground operations, recent mining activities have encountered an area with challenging ground conditions.  To address this, the Company adjusted the mining sequence, and as a result, the mining capacity at Cerro Colorado was reduced by 75% in the third quarter of 2019.  This had an adverse effect on third quarter production as this zone was expected to provide higher grade ore feed.

The Company is taking measures to mitigate the challenging ground conditions and increase the amount of ore extracted in the fourth quarter of 2019.  These measures include:

  • Decreasing the speed of the mining sequence
  • Reducing stope size by 25%
  • Increased ground support in development headings


Pinos Altos Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2019


September 30, 2018

Tonnes of ore processed (thousands of tonnes)

1,495


1,630

Tonnes of ore processed per day

5,476


5,971

Gold grade (g/t)

2.62


2.66

Gold production (ounces)

119,302


131,887

Production costs per tonne

$

64


$

63

Minesite costs per tonne

$

65


$

62

Production costs per ounce of gold produced ($ per ounce)

$

801


$

782

Total cash costs per ounce of gold produced ($ per ounce)

$

603


$

560

 

Production costs per tonne in the first nine months of 2019 were essentially the same when compared to the prior-year period.  Production costs per ounce in the first nine months of 2019 increased when compared to the prior-year period primarily due to higher costs associated with underground mining and lower gold production.

Minesite costs per tonne in the first nine months of 2019 increased when compared to the prior-year period due to higher costs associated with underground mining and lower throughput.  Total cash costs per ounce in the first nine months of 2019 increased when compared to the prior-year period due to the reasons described above and lower gold production.

Gold production in the first nine months of 2019 decreased when compared to the prior-year period due to lower tonnage driven by a decrease in tonnes stacked on the heap leach and slightly lower grades as a result of the change in mining sequence at Cerro Colorado described above.

In 2018, the Company completed the installation of an ore sorting pilot plant at Pinos Altos.  Samples will be processed from all of the ore bodies at Pinos Altos and La India in 2019 to determine the merits of implementing the technology at the Company's Mexican operations.  To-date, sorting of open pit ore from the Sinter deposit has yielded favourable preliminary results.  Similar ore sorting pilot testing is being considered at the Company's other operating regions.

Development of the Sinter and Cubiro satellite deposits at Pinos Altos continued to advance in the third quarter of 2019.  The Sinter deposit, located approximately 2.0 kilometres northwest of the Pinos Altos mine, will be mined from underground and a small open pit.  At Sinter, the development of the underground continued and delineation drilling began at level 20 in the third quarter of 2019.  Production from the Sinter underground is expected to begin in the fourth quartenull