First Quarter 2012 Results

Transcription

1 AGNICO-EAGLE MINES LIMITED First Quarter 2012 Results April 2012

2 Forward Looking Statements The information in this document has been prepared as at April 27, Certain statements contained in this document constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward looking information under the provisions of Canadian provincial securities laws. When used in this document, the words anticipate, expect, estimate, forecast, will, planned, and similar expressions are intended to identify forward-looking statements or information. Such statements include without limitation: statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future reserves, resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future internal rates of return, mining costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements and information as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs, and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of reserves and resources, and statements and information regarding anticipated future exploration; the anticipated timing of events with respect to the Company's mine sites and statements and information regarding the sufficiency of the Company's cash resources. Such statements and information reflect the Company's views as at the date of this document and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements and information. Many factors, known and unknown could cause the actual results to be materially different from those expressed or implied by such forward looking statements and information. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, capital expenditures, and other costs; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's byproduct metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company s ability to achieve the expectations set forth in the forward-looking statements contained in this document, see the Company's Annual Report on Form 20-F for the year ended December 31, 2011, as well as the Company's other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The Company does not intend, and does not assume any obligation, to update these forward-looking statements and information. Marc Legault, a Qualified Person and the Company s Senior Vice-President, Project Evaluations, reviewed the technical information disclosed herein. For a detailed breakdown of the Company s reserve and resource position see the February 15, 2012 press release on the Company s website. That press release also lists the Qualified Persons for each project. 2

3 Notes To Investors Note Regarding The Use Of Non-GAAP Financial Measures This document presents estimates of future "total cash cost per ounce" and "minesite cost per tonne" that are not recognized measures under United States generally accepted accounting principles ("US GAAP"). This data may not be comparable to data presented by other gold producers. These future estimates are based upon the total cash costs per ounce and minesite costs per tonne that the Company expects to incur to mine gold at the applicable projects and do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-gaap financial measures to the most comparable GAAP measure. A reconciliation of the Company's total cash cost per ounce and minesite cost per tonne to the most comparable financial measures calculated and presented in accordance with US GAAP for the Company's historical results of operations is set forth in the notes to the financial statements included in the Company's Annual Information Form and Annual Report on Form 20-F, for the year ended December 31, 2011, as well as the Company's other filings with the Canadian Securities Administrators and the SEC. Note Regarding Production Guidance The gold production guidance is based on the Company s mineral reserves but includes contingencies and assumes metal prices and foreign exchange rates that are different from those used in the reserve estimates. These factors and others mean that the gold production guidance presented in this disclosure does not reconcile exactly with the production models used to support these mineral reserves. 3

4 AEM Positioning Strong Cash Generation With Measured, Focused Growth and Attractive Dividend Yield Portfolio of quality, long-life mines that are performing well Measured production growth from existing assets Execution risk has declined significantly Exploration upside and reserve growth expected from existing assets Several 100%-owned, large, open orebodies Political risk profile expected to remain low Strong cash flow funds dividend, exploration, capital reinvestment programs and enhances financial position 4

5 Q Operating Highlights Record quarterly gold production from currently operating mines 254,955 oz 19% y/y production growth from currently operating mines Record gold production at Kittila 46,758 oz Record gold production from Mexico 57,016 oz Record throughput at Meadowbank 9,748 tpd Solid cash flow and earnings generation Cash provided by operating activities of $196M Dividend yield >2% 5

6 Operating Results Record production from currently operating mines Production (Gold oz) Q Q Forecast Total Cash Cost ($/oz) Production (Gold oz) Total Cash Cost ($/oz) Production (Gold koz) Total Cash Cost 2 ($/oz) LaRonde 43, ,893 (12) Kittila 46, , Lapa 28, , Pinos Altos 1 57, , Meadowbank 79,401 1,020 61, ,040 Goldex , Total 254, , Q Revenue By Metal Q Q Base Metals 5% Silver 9% Gold 86% Gold (000 s oz) Silver (000 s oz) 1,215 1,099 Zinc (t) 12,978 11,941 Copper (t) 1, Total cash costs ($/oz) $594 $ Pinos Altos figures include Creston Mascota assumptions include Ag $30/oz, Cu $7,000/tonne, Zn $1,800/tonne, C$/US$ 1.00, US$/Euro

7 Financial Results Strong earnings and cash flow Q Q Y/Y Change Gold (ounces in thousands) Revenues from mining operations (millions) Net income (millions) % $473 $412 15% $79 $45 74% Net income per share (basic) $0.46 $ % Cash provided by operating activities (millions) $196 $175 12% *All $ amounts are in US$ 7

8 Generating Higher Mine Profits Long life, quality mines performing well Operating margin increased 21% y/y with one less operating mine Strong, balanced contribution from all mines Two mines with cash costs less than $300/oz LaRonde, Pinos Altos Q Total Operating Margin - $258M Q Total Operating Margin - $214M Laronde 24% Lapa 11% Laronde 23% Lapa 9% Meadowbank 19% Pinos Altos 27% Kittila 19% Goldex 19% Meadowbank 14% Kittila 13% Pinos Altos 22% *All $ amounts are in US$ 8

9 Financial Position Net free cash flow expected to enhance balance sheet strength ALL AMOUNTS ARE IN US$, unless otherwise indicated Mar. 31, 2012 CASH AND CASH EQUIVALENTS (millions) $199 LONG TERM DEBT (millions) $830 AVAILABLE CREDIT FACILITIES (millions) $970 COMMON SHARES OUTSTANDING, BASIC (Weighted average, millions) COMMON SHARES OUTSTANDING, FULLY DILUTED (Weighted average, millions)

10 Generating Net Free Cash Flow Allows us to fund dividend and growth plans Capital Expenditures (USD $000's) $1,200,000 Approximate Average EBITDA* $1,000,000 $800,000 $600,000 Illustrative Ongoing Re-Investment $400,000 $200,000 $0 2007A 2008A 2009A 2010A 2011A 2012E Actual Estimate * Approximate average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) estimate for illustrative purposes using $1700/oz gold, $32/oz silver, $2000/t zinc, C$/US$ 1.00, 1.35USD/ 10

11 AEM Among Industry Leaders Returning capital to shareholders 30 consecutive years of dividends One Of The Highest Dividends Per Share In The Industry Annualized Dividends per Share $1.60 $1.40 $ E $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 NEM AEM ABX GG IAG KGC 11

12 Four Cornerstone Assets Production, reserves, free cash flow expected to grow from existing mines LARONDE KITTILA MEXICO MELIADINE 12

13 LaRonde Gold production expected to increase Q1 gold production of 43,281 oz at total cash costs of $216 per ounce Higher gold grades expected to drive gold production growth and profits Value of ore per tonne approximately 50% higher over life of mine versus 2011 at same metals prices P&P GOLD RESERVES (million oz) 4.7 AVERAGE GOLD RESERVE GRADE (g/t) 4.4 Indicated resource (million oz) 0.4 Inferred resource (million oz) 1.3 Estimated LOM (years) exploration budget (LaRonde & regional) $1M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 13

14 Kittila Large long-life gold deposit continues to grow Record production and recovery in Q1 of 46,758 oz and 88.5%, respectively Higher grades in 2012 expected to result in higher gold production at lower costs Initial 25% expansion study expected in late 2012 Good exploration results at Rimpi suggest potential for larger expansion P&P GOLD RESERVES (million oz) 5.2 AVERAGE GOLD RESERVE GRADE (g/t) 4.7 Indicated resource (million oz) 1.0 Inferred resource (million oz) 1.2 Estimated LOM (years) exploration budget $16M 2006 See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources Focus Area

15 Mexico Record production in Q1; Largest cash flow generator Record production in Q1 of 57,016 oz at total cash costs per ounce of $278 Underground expansion underway. Expected to offset lower grades in later years La India may add to production profile in 2014 Exploration potential at Tarachi and satellite zones P&P GOLD RESERVES (million oz) 3.1 AVERAGE GOLD RESERVE GRADE (g/t) 2.3 Indicated resource (million oz) 0.8 Inferred resource (million oz) 0.9 Estimated LOM (years) exploration budget $15M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 15

16 Meliadine Growing gold reserve and resource on 80 km trend Permitting and road construction underway Examining production scenarios from open pits and underground Updated feasibility study expected in late 2013 Drilling has expanded gold contained in reserves and resources by approximately 40% in 1.5 years Potential to accelerate underground development to test deposit at depth P&P GOLD RESERVES (million oz) 2.9 AVERAGE GOLD RESERVE GRADE (g/t) 7.2 Indicated resource (million oz) 1.7 Inferred resource (million oz) exploration budget $30M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Tiriganiaq Wolf Pump F Zone Wesmeg Discovery 16

17 17

18 Meadowbank Strong net free cash flow generator Record mill throughput of 9,748 tpd in Q1 Q1 gold production of 79,401 oz at total cash costs per ounce of $1,020 Optimized mine plan expected to be lower risk 36% fewer tonnes moved over life of mine more conservative estimates for gold grade P&P GOLD RESERVES (million oz) 2.2 AVERAGE GOLD RESERVE GRADE (g/t) 2.8 Indicated resource (million oz) 1.3 Inferred resource (million oz) 0.5 Est. LOM (years) exploration budget $7M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 18

19 Lapa Good tonnage and cost control Strong Q1 gold production of 28,499 oz at total cash costs per ounce of $664 Anticipated life of mine extended through 2015 Extending underground exploration drift to east Will provide access to drill targets that could extend mine life P&P GOLD RESERVES (million oz) 0.5 AVERAGE GOLD RESERVE GRADE (g/t) 6.5 Indicated resource (million oz) 0.3 Inferred resource (million oz) 0.1 Est. LOM (years) exploration budget $3M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 19

20 Goldex - Action Plan Focused on monitoring, investigation, remediation and exploration Mine operations suspended October 2011 Grouting and remediation programs in progress Assessment program includes rock and soil monitoring Exploration program focused on potential of satellite mineralized zones Update expected mid-year

21 Business Is Positioned To Deliver Moving Forward No change in strategy or focus AEM is among industry leaders in per share production, reserves, cash flows and dividends 24% production growth anticipated through 2014 from existing mines, with manageable, fully funded capex Solid, achievable production and cost guidance Expecting growth in reserves through exploration of existing assets Business generating strong cash flows in regions of low political risk Allocated to dividends, exploration and reinvesting in our core assets 21

22 Appendix 22

23 Operating Metrics 8,000tpd 7,500tpd 7,000tpd 6,500tpd 6,000tpd 5,500tpd 5,000tpd 4,500tpd 4,000tpd LaRonde LaRonde - Ore milled ('000 tonnes) LaRonde - Minesite costs per tonne (C$) Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $140/t $120/t $100/t $80/t $60/t $40/t $20/t $0/t 2,000tpd Lapa Lapa - Ore milled ('000 tonnes) Lapa - Minesite costs per tonne (C$) $170/t 1,800tpd 1,600tpd $150/t 1,400tpd 1,200tpd $130/t 1,000tpd $110/t 800tpd 600tpd $90/t 400tpd 200tpd $70/t 0tpd Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $50/t 23

24 Operating Metrics 3,500tpd 3,000tpd 2,500tpd 2,000tpd 1,500tpd 1,000tpd 500tpd 0tpd Kittila Kittila - Ore milled('000 tonnes) Kittila - Minesite costs per tonne (EUR) Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q /t 85/t 80/t 75/t 70/t 65/t 60/t 55/t 50/t 45/t 40/t 6,000tpd Pinos Altos $60/t 12,000tpd Meadowbank $180/t 5,000tpd $50/t 10,000tpd $160/t $140/t 4,000tpd $40/t 8,000tpd $120/t 3,000tpd $30/t 6,000tpd $100/t $80/t 2,000tpd $20/t 4,000tpd $60/t 1,000tpd $10/t 2,000tpd $40/t $20/t 0tpd $0/t 0tpd $0/t Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Pinos Altos - Ore milled ('000 tonnes) Pinos Altos - Minesite costs per tonne (USD$) Meadowbank - Ore milled ('000 tonnes) Meadowbank - Minesite costs per tonne (C$) 24

25 Gold and Silver Reserves and Resources December 31, 2011 Gold Tonnes (000 s) Gold (g/t) Gold (ounces) (000 s) Silver Tonnes (000 s) Silver (g/t) Silver (ounces) (000 s) Proven 11, Proven 7, ,670 Probable 146, ,757 Probable 72, ,319 Total Reserves 157, ,750 Total Reserves 80, ,989 Measured & Indicated 168, ,633 Measured & Indicated 27, ,344 Inferred 131, ,712 Inferred 34, ,082 See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources.

26 Copper, Zinc and Lead Reserves and Resources December 31, 2011 Copper Tonnes (000 s) Copper (%) Copper (tonnes) Zinc Tonnes (000 s) Zinc (%) Zinc (tonnes) Lead Tonnes (000 s) Lead (%) Lead (tonnes) Proven 5, ,025 Proven 5, ,626 Proven 5, ,391 Probable 27, ,160 Probable 27, ,522 Probable 27, ,441 Total Reserves 33, ,184 Total Reserves 33, ,149 Total Reserves 33, ,832 Indicated 7, ,629 Indicated 7, ,338 Indicated 7, ,127 Inferred 11, ,664 Inferred 11, ,745 Inferred 11, ,138 See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources 26

27 Notes to Investors Regarding the Use of Resources Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources This document uses the terms "measured resources" and "indicated resources". We advise investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Cautionary Note to Investors Concerning Estimates of Inferred Resources This document also uses the term "inferred resources". We advise investors that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. Scientific and Technical Data Agnico-Eagle Mines Limited is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification and reporting of resources and reserves. Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Agnico-Eagle uses certain terms in this press release, such as measured, indicated, and inferred, and resources that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 20-F, which may be obtained from us, or from the SEC s website at: A final or bankable feasibility study is required to meet the requirements to designate reserves under Industry Guide 7. Estimates for all properties were calculated using historic three-year average metals prices and foreign exchange rates in accordance with the SEC Industry Guide 7. Industry Guide 7 requires the use of prices that reflect current economic conditions at the time of reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices. The assumptions used for the mineral reserves and resources estimates reported by the Company on February 15, 2012 were based on three-year average prices for the period ending December 31, 2011 of $1,255 per ounce gold, $23.00 per ounce silver, $0.91 per pound zinc, $3.25 per pound copper, $0.95 per pound lead and C$/US$, US$/Euro and MXP/US$ exchange rates of 1.05, 1.37 and 12.86, respectively. The Canadian Securities Administrators National Instrument ( NI ) requires mining companies to disclose reserves and resources using the subcategories of proven reserves, probable reserves, measured resources, indicated resources and inferred resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. 27

28 Notes to Investors Regarding the Use of Resources A mineral reserve is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. A probable mineral reserve is the economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. A mineral resource is a concentration or occurrence of natural, solid, inorganic material, or natural solid fossilized organic material including base and precious metals in or on the Earth s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study. The effective date for all of the Company s mineral resource and reserve estimates in this document is December 31, Additional information about each of the mineral projects that is required by NI , sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be found in Technical Reports, which may be found at Other important operating information can be found in the Company s Form 20-F and its news release dated February 15, Marc Legault, a Qualified Person and the Company s Senior Vice-President, Project Evaluations, reviewed the technical information disclosed herein. 28

29 A solid financial position, low-cost structure, well-funded growth projects in regions of low political risk, and a focused, consistent strategy put Agnico-Eagle in a strong position to continue creating exceptional per share value. Sean Boyd President and Chief Executive Officer Ammar Al-Joundi SVP Finance and Chief Financial Officer David Smith SVP, Strategic Planning & Investor Relations Trading Symbol: AEM on TSX & NYSE Investor Relations: info@agnico-eagle.com Executive and Registered Office: 145 King Street East, Suite 400 Toronto, Ontario, Canada, M5C 2Y7 Tel: Toll-Free: Fax: agnico-eagle.com