Cobalt Consolidated Mining Company reorganizes and renames itself Agnico Mines Limited, forging its name from the chemical symbols for silver (Ag), nickel (Ni) and cobalt (Co).
Agnico Mines Limited merges with Eagle Gold Mines Limited to create Agnico Eagle Mines Limited.
Shares of the new company begin trading on the Toronto Stock Exchange under the ticker symbol AGE. Begins trading on the US NASDAQ under the symbol AEAGF.
Gold production begins at Dumagami mines with the first gold pour in June.
Mining activities cease at the Silver division in Cobalt due to low silver prices.
Agnico Eagle begins trading on the New York Stock Exchange with the trading symbol AEM.
Agnico Eagle acquires the high-grade Lapa gold deposit, located near LaRonde in northwestern Quebec.
Agnico Eagle acquires Riddarhyttan Resources AB, owner of the Suurikuusikko gold deposit in Finland.
Agnico Eagle changes its trading symbol on the Toronto Stock Exchange from AGE to AEM.
Agnico Eagle acquires the Pinos Altos project in Mexico.
Agnico Eagle acquires Cumberland Resources and the Meadowbank gold project in Nunavut, northern Canada.
Gold production begins at the Goldex mine in Canada, Kittila mine in Finland, the Lapa mine in Canada, the Pinos Altos mine in Mexico and the Meadowbank mine in Nunavut, northern Canada.
Agnico Eagle acquires Comaplex Minerals and the Meliadine gold project near Rankin Inlet, Nunavut.
Agnico Eagle acquires Grayd Resources and the La India and Tarachi properties in Sonora, northern Mexico.
For the first time ever, the Company produces more than one million ounces of gold in a single year.
We have consistently generated superior returns to our shareholders while remaining committed to our core values of trust, respect, equality, family and responsibility.
Agnico Eagle and Yamana Gold Inc. acquire Osisko Mining Corp., and create a 50:50 partnership that owns and operates the Canadian Malartic mine in Quebec.
Agnico Eagle acquires Cayden Resources Inc. for the advanced stage El Barqueño gold project in the Guachinango gold district in Jalisco State, Mexico.
In April, the LaRonde mine celebrates pouring its 5 millionth ounce of gold since its startup in 1988.
In February, Agnico Eagle approves the development of the Amaruq satellite deposit at Meadowbank and construction of the Meliadine project in Nunavut. Both projects are expected to start production in the third quarter of 2019.
Agnico Eagle celebrates its 60th Anniversary on October 25!
Annual Dividend Declared
Agnico Eagle has now declared a cash dividend every year since 1983.
*Assuming the Board of Directors continues to declare dividends of $0.10 per quarter.
Gold Price Remains Strong in Our Operating Currencies
|All dollar amounts in this report are in US$ unless otherwise indicated||2016||2015||2014|
|Payable gold production (ounces)||1,662,888||1,671,340||1,429,288|
|Total cash costs per ounce 1||$573||$567||$637|
|Average realized gold price per ounce||1,249||1,156||1,261|
|Financial (millions, except per share amounts)|
|Revenue from mining operations||$2,138.2||$1,985.4||$1,896.8|
|Net income for the year||158.8||24.6||83.0|
|Net income per share – basic||0.71||0.11||0.43|
|Annualized dividend declared per share||0.36||0.32||0.32|
1 Total cash costs per ounce is a Non-GAAP measure and unless otherwise specified is reported on a by-product basis. For further information see “Note Regarding Certain Measures of Performance”.
2017 is a year of both celebration and reflection for Agnico Eagle. It marks 60 years of profitable growth, global expansion and value creation for our company. Throughout our years in business, we have consistently generated superior returns for our shareholders, while enhancing the employee experience and making significant contributions to our communities.
2017 also marks the closing of one chapter in our journey and the start of another. After five years of planning and preparation, we are ready to embark on the next phase of growth for Agnico Eagle. That growth will be mainly self-funded and will enable us to achieve our goal of producing 2 million ounces of gold annually in 2020.
What has led to this level of success for Agnico Eagle for over 60 years?
The hallmarks of our success have been our discipline and our resiliency. Our discipline has helped us maintain a strong balance sheet, grow production per share and generate above average returns. It has allowed us to remain flexible and to take advantage of opportunities when they arise, as we prudently manage risk. Our resiliency also sets us apart from our peers. We are resilient because, over time, our Board of Directors has trusted us to build a stronger and better company and our employees have remained committed to us, always going the extra mile to ensure our success.
Over the past 20 years, with their support, Agnico Eagle has evolved from a company with revenues of $50 million, a share price of $5, EBITDA of $4 million and a market capitalization of $200 million; into a company that today has revenues of over $2 billion, a share price of $55, EBITDA of $956 million and a market capitalization of $12 billion.
We have also evolved from a regionally focused gold mining business into an internationally recognized and sophisticated business. Our goal has long been to build a great business – not just a great gold business – one that generates superior returns while remaining committed to our core values of trust, respect, equality, family and responsibility.
In just over seven years, we have expanded from one gold mine in Quebec with 350 employees to eight mines in Mexico, Canada and Finland, with over 8,300 employees. Our success in delivering sustainable and profitable growth was noted in the 2016 Harvard Business Review’s list of the world’s 100 best-performing companies – which ranked Agnico Eagle 55th based on results over time using both financial and ESG (environmental, social, governance) rankings – the highest of the four Canadian companies ranked and one of only four mining companies included on the list.
As we celebrate 60 years of success in business, I want to thank our employees and our Board of Directors for their guidance, commitment and support. Together, we are proud of our past and focused on our future.
Proud of Our Past
Since the completion of our last phase of growth in 2011, we have grown Agnico Eagle’s output by almost 60%, reduced our costs, increased our margins, and invested cash in the future of our business. Those investments have included buying assets, reducing our net debt, expanding our drill programs, grass roots exploration, advancing our key projects and investing in our people.
In 2016, we achieved our operating goals and key development milestones. For the fifth year in a row, our operations exceeded their production targets. In May, we received the necessary permitting to advance development of our Meliadine property in Nunavut and we continued to expand and upgrade the gold resources at our Amaruq deposit. Exploration work at Barsele, Sisar, El Barqueño and Canadian Malartic’s Odyssey properties yielded strong results. Financially, our operations performance was below guidance and we continued to lower our net debt.
Our strong performance between 2012 and 2016 has laid the groundwork for the next phase of growth at Agnico Eagle. Over the next three years, we plan to increase our output from roughly 1.6 million ounces of gold to 2 million ounces of gold annually.
We will achieve this growth by remaining focused on Agnico Eagle’s high quality, low risk growth strategy. Our growth will come from properties we own and from mines that are already producing, leveraging off the skills we already have and executed by people who are seasoned leaders in our business.
Taking centre stage in the next phase of growth will be Nunavut, which is an emerging high quality production platform for our company. With Agnico Eagle’s unique logistical advantages and expertise, we remain the dominant player in Canada’s north.
Focused on Our Future
What does the future hold for Agnico Eagle? While ongoing uncertainty in the world, whether financial or political, will make the markets difficult to predict over the next few years, we feel confident of the following:
– Our Nunavut footprint will continue to expand. In 2016 alone, Amaruq’s mineral resource grew by 29%, while the Meliadine deposit is expected to produce more than 5 million ounces of gold over an estimated 14 year mine life. In both cases, current plans contemplate mining approximately half of the known gold mineralization, so upside is possible. As we go forward, we anticipate Agnico Eagle will have additional operating bases and that we will be able to leverage our skills to find and develop new assets and generate superior returns for our shareholders.
– We will continue to build trust with our host communities by setting, and delivering on, high standards of community and sustainability performance. This is especially important in the sensitive Nunavut environment but holds true for all of our operations. We are committed to being a good neighbour and to receiving social acceptance from our stakeholder communities in order to advance our development projects.
– The key to our future will most certainly be our people. As we develop the next generation of leaders for our company, we remain committed to employing the best and the brightest who can bring the next generation of mines into being. Not only will it take innovation and skill, it will take leaders who can both manage the risk and see the opportunity in a new deposit or an emerging mining region. These are the people who will ultimately generate value for our company well into the future.
For 2017, we anticipate another year of solid production and the advancement of our key development projects. We will focus on executing our next phase of growth and keeping our project pipeline full, while simultaneously optimizing and innovating at our current asset base, in order to remain competitive.
In conclusion, I would like to recognize the contributions of Mr. Tim Haldane, Senior Vice-President, Operations – U.S.A and Latin America, who retired in February of this year. Under Tim’s leadership and guidance, Mexico has become a key strategic region for us, greatly contributing to the Company’s excellent operating performance. On behalf of everyone at Agnico Eagle, we thank Tim for his leadership, commitment and, above all, his friendship.
Over the past 60 years, we have created a world-class business for our shareholders. And with our new growth plans, we are excited about the opportunity to build on that success for you in the future while continuing to build shareholder value over the long term.
Vice-Chairman and Chief Executive Officer
March 13, 2017
|2016 TARGETS||WHAT WE DELIVERED||2017 TARGETS|
|1,525,000 ounces of gold production. (Guidance upgraded twice during 2016)||
Annual gold production of 1,662,888 ounces.
|1,555,000 ounces of gold production.|
|Maintain gold reserves at approximately 10 to 15 times annual gold production rate.||
Gold reserves increased by 5% to 19.9 million ounces, which remains in the range of approximately 10 to 15 times annual gold production.
|Maintain gold reserves at approximately 10 to 15 times annual gold production rate.|
|Total cash costs per ounce of gold produced of $590 to $630.||
Total cash costs per ounce of gold produced of $573 per ounce.
|Total cash costs per ounce of gold produced of $595 to $625.|
|All-in sustaining costs per ounce of gold produced of $850 to $890.||
All-in-sustaining costs per ounce of gold produced of $824 per ounce.
|All-in sustaining costs per ounce of gold produced of $850 to $900.|
|Increase operating cash flow per share.||
Annual cash flow from operations of $3.50 per share as compared to $2.85 per share in 2015.
|Increase operating cash flow per share.|
|Search out acquisition opportunities in low-risk regions that are well matched to our skills and abilities.||
We made investments in Cartier Resources Inc., G4G Capital Corp., Pershimco/Orla, and Belo Sun.
|Search out acquisition opportunities in low-risk regions that are well matched to our skills and abilities.|
|Combined accident frequency (lost time and restricted work) below a rate of 1.40 for Agnico Eagle workforce; shifting to aspirational Zero Harm safety targets and leading performance indicators.||
1.04 combined accident frequency, a 15% reduction from our performance in 2015.
|Combined accident frequency below a rate of 1.25 for Agnico Eagle workforce; shifting to aspirational Zero Harm safety targets and leading performance indicators.|
|No fines or penalties for environmental failures.||Not Achieved.1||No fines or penalties for environmental failures.|
|Zero category 3, 4 or 5 environmental incidents.||Not Achieved.2||Zero category 3, 4 or 5 environmental incidents.|
1. The LaRonde mine received an infraction notice from the Quebec Ministry of Sustainable Development, Environment and the Fight against Climate Change for failing to report an incident within 24 hours. The incident occurred on the Saturday night of the Labour Day long weekend and was not reported until the following Tuesday.
2. Two category 3 events occurred during the year: 1) Approximately 1,190 litres of fuel spilled at the Meliadine project site in Nunavut when a contractor operator was filling a fuel truck holding tank. Due to the winter conditions, the operator took shelter briefly inside the truck cabin leaving the filling operation unattended which led to the overflow. Immediate action was taken to stop the fuel pump and contain the spill. All contaminated material and soil was collected and transferred to Meliadine’s licensed land farm. The incident was reported to the authorities and refresher training on the procedure was given to the employee. 2) A contractor’s tractor-trailer hauling containers to the Meadowbank mine slid off the road while trying to climb a hill and encountered slow traffic ahead. The tractor rolled on its side resulting in about 300 litres of diesel fuel that spilled, causing a small amount of ammonium nitrate bags in the containers to open and spill on to the frozen ground. Immediate action was taken to contain the fuel. All contaminated material was collected and removed to the Meadowbank mine for proper management and disposal. An investigation was conducted and the root cause identified as a problem in the preventive maintenance of the tractor trailer which was revised as a result. The incident was declared to the authorities.
Agnico Eagle’s mission is to build a high-quality, easy to understand business — one that generates superior long-term returns for our shareholders, creates a great place to work for our employees, and contributes positively to the communities in which we operate.
Our operations exceeded their production targets in 2016, with better than expected costs, allowing us to increase our guidance to the market for the fifth year in a row.
In 2016, payable gold production totaled 1,662,888 ounces of gold, with total cash costs per ounce of $573. In 2017, payable gold production is expected to be approximately 1,555,000 ounces, while total cash costs per ounce are expected to be between $595 and $625.
Agnico Eagle operates eight mines located in Canada, Mexico, and Finland.
(000S OZ GOLD)
|1. LaRonde||Between Rouyn-Noranda & Val-d’Or, Quebec||Underground||305,788||3,053||501||8 years|
|2. Goldex||Val-d’Or, Quebec||Underground||120,704||886||532||9 years|
|3. Lapa||Abitibi Region, Quebec||Underground||73,930||38||732||1 year|
|4. Canadian Malartic (50%)||Malartic, Quebec||Open Pit||292,514||3,548||606||10 years|
|5. Meadowbank||Kivalliq Region, Nunavut||Open Pit||312,214||711||715||8 years**|
|6. Kittila||Kittila, Finland||Underground||202,508||4,479||699||18 years|
|7. Pinos Altos and Creston Mascota Complex||Chihuahua State, Northern Mexico||Underground
& Open Pit
|8. La India||Sonora, Mexico||Open Pit||115,162||1,020||395||6 years|
*Based on current Life of Mine plans.
**Includes production from Amaruq’s Whale Tail pit.
LaRonde Mines Higher Grades, Delivers Strong Production and Cost Performance
In 2016, LaRonde produced 305,788 ounces of gold with total cash costs per ounce of $501. This compares to 267,921 ounces of gold produced at total cash costs per ounce of $590 in 2015. Total cash costs per ounce decreased due to higher gold production from the higher gold grades found in the lower areas of the mine and higher by-product metal revenues.
Canadian Malartic Achieves Record Production and Mill Throughput
Canadian Malartic continued to set new production records in 2016. Agnico Eagle’s share of production was 292,514 ounces of gold at total cash costs per ounce of $606. This compares to 285,809 ounces of gold produced at total cash costs of $596 in 2015. Total cash costs per ounce increased due to higher throughput levels and unplanned maintenance on the leach tank, ball mill and crusher components in the process plant, along with higher contracting costs and increased royalty costs as a result of the higher production levels.
Lapa Extends Production into 2017
Production was expected to show a gradual decline moving into the fourth quarter of 2016 but continued through the year end. Lapa produced 73,930 ounces of gold in 2016 at total cash costs per ounce of $732. This compares to 90,967 ounces of gold produced at total cash costs per ounce of $590 in 2015. Total cash costs per ounce increased due to lower production and higher development costs associated with new mining zones as the mine winds down.
Lapa is currently expected to operate until the end of the first quarter of 2017, with production coming from the Zone Deep East and Zone 7 Deep areas. Evaluations are underway on opportunities to continue production into the second quarter of 2017.
Goldex Boosts Production, Deep 1 Development Remains on Track
Goldex produced 120,704 ounces of gold in 2016 at total cash costs per ounce of $532. This compares to 115,426 ounces of gold produced at total cash costs per ounce of $538 in 2015. Total cash costs per ounce were reduced due to higher production.
Commissioning of the Deep 1 project remains on budget and on schedule for early 2018. Underground excavation for the Rail-Veyor is nearing completion and installation is progressing as planned. Underground development of the sub-levels for mining is continuing and surface infrastructure has been installed.
Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014. Located less than 30 kilometres from Goldex, the Akasaba West deposit could create flexibility and synergies for the Company’s operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs. The project is currently going through a provincial and federal environmental review process and permitting activities are expected to continue until 2018. The Company expects to begin sourcing open pit ore in 2019.
Meadowbank Evaluates Options to Extend Production through 2018
Meadowbank produced 312,214 ounces of gold at total cash costs per ounce of $715. This compares to 381,804 ounces of gold produced at total cash costs per ounce of $613 in 2015. Total cash costs per ounce increased due to lower production and throughput as the mine approaches depletion. Opportunities are being investigated to potentially extend production at the Vault pit through year-end 2018. In addition, production from the new Whale Tail pit is expected to begin in 2019.
Kittila Posts Record Production and Mill Throughput
Kittila’s strong mine and mill performance continued, mainly a result of increased development leading to improved ore access and strong mining productivity. In 2016, Kittila produced 202,508 ounces of gold at total cash costs per ounce of $699. This compares to 177,374 ounces of gold produced at total cash costs per ounce of $709 in 2015. Total cash costs per ounce decreased due to higher year-over-year production at the mine.
Pinos Altos Delivers Record Silver Production
Strong performance was driven by higher gold and record silver production during the year. Pinos Altos produced 192,772 ounces of gold at total cash costs per ounces of $356 in 2016. This compares to 192,974 ounces of gold produced at total cash costs per ounce of $387 in 2015. Total cash costs per ounce decreased cash costs due to higher gold and silver production, along with favourable foreign exchange rates.
The Pinos Altos shaft project was completed and commissioned in mid-June, with ramp up to design capacity of 6,000 tonnes per day achieved in July, allowing for better matching of the mine and mill capacities. Work also began on developing Phase III of the heap leach pad.
Creston Mascota Could Potentially Extend Mine Life
Creston Mascota produced 47,296 ounces of gold in 2016 at total cash costs per ounce of $516. This compares to 54,703 ounces of gold at total cash costs per ounce of $430 in 2015. Total cash costs per ounce increased primarily due to lower production.
Work on the Phase IV leach pad was completed in late 2016 and stacking of material is expected to begin in early 2017. Additionally, exploration drilling yielded favourable results from the Bravo, Madrono and Cubiro Zones, which has the potential to extend the life of the Creston Mascota heap leach facility and provide additional feed to the Pinos Altos mill.
La India Increases Mineral Reserves and Mineral Resources
La India posted strong performance during the year, producing 115,162 ounces of gold at total cash costs per ounce of $395. This compares to 104,362 ounces of gold produced at total cash costs per ounce of $436 in 2015. Total cash costs per ounce decreased due to higher gold and silver production from the site.
We were challenged during the year by the fatality of an employee of a local contractor at our Kittila mine. Despite this tragedy, our operations posted record safety performance with the fewest lost-time accidents since we began compiling global statistics 10 years ago and with three of our operations (Creston Mascota, La India and Lapa) achieving triple zero performance – no lost-time accidents, no light-duty assignments and no fatalities.
Our combined lost-time accident (LTA) and restricted work frequency rate was 1.04 – a 15% reduction from our performance in 2015 and below our target rate of 1.40. This is the sixth year in a row we have posted our lowest ever combined LTA rate.
Agnico Eagle’s overall greenhouse gas (GHG) emissions totaled 400,410 tonnes of CO2 equivalent in 2016, a 2% decrease from 2015 (407,471 tonnes of CO2 equivalent), mainly due to a reduction of diesel use at La India as they completed two construction projects (a new road and heap leach expansion) in 2015. Our average overall GHG intensity decreased by 6% to 0.0189 (2015=0.0200) CO2 equivalent per tonne of ore processed, which is also related to the diesel use reductions at La India.
In 2016, we undertook an internal audit of Agnico Eagle’s Responsible Mining Management System (RMMS) and the implementation of each of its 17 elements.
The audit findings indicated a major improvement in the implementation of RMMS across all sites. In total, there were about 168 findings and the mine sites have begun implementing corrective actions related to the observations identified. Best practices and innovations were shared between all sites during these audits.
The Amaruq and Meliadine projects in Nunavut, northern Canada are expected to add significant production starting in 2019.
|LOCATION||STAGE MINERAL||PROPERTY TYPE||OWNERSHIP||POTENTIAL
(000S OZ GOLD)
(000S OZ GOLD)
|1. Amaruq||Kivalliq District, Nunavut Territory||Newly approved for development||116,717 ha||100%||Open Pit
|2. Meliadine||Kivalliq District, Nunavut Territory||Newly approved for development||111,757 ha||100%||Underground||14.5 million tonnes grading 7.32 g/t gold (3.4 million oz)||
Amaruq’s Gold Resources Continue to Expand
Amaruq has been approved for development, pending the receipt of the required permits, and will be a main contributor to this next phase of growth for our Company.
As a satellite deposit to the Meadowbank mine, Amaruq will use the existing mine infrastructure – including mining equipment, mill, tailings, camp and airstrip – to begin open pit mining on the Whale Tail deposit, which is forecast for the third quarter of 2019.
The initial mine plan calls for the production of approximately 2 million ounces of gold between 2019 and 2024. This represents less than 50% of Amaruq’s currently known mineral resource base.
In 2016, construction on the 64 km all-weather exploration road began and reached the planned 27.5 km mark. In 2017, approximately $73 million will be spent to complete the all-weather exploration road, conduct additional technical studies and to procure materials and equipment for the 2018 construction season.
Gold resources at Amaruq continue to expand, which supports the extension of Meadowbank’s mine life and allows us additional time to develop and implement an exploration strategy to expand Amaruq and to evaluate additional opportunities on the property.
Meliadine’s First Production Expected One Year Ahead of Schedule
The Meliadine project has been approved for development and is expected to begin operations in the third quarter of 2019, which is approximately one year ahead of the previous schedule.
We anticipate that over an estimated 14 year mine life, Meliadine will produce approximately 5.3 million ounces of gold. This represents approximately 50% of Meliadine’s currently known mineral reserve and mineral resource base.
Throughout 2016, activities focused on advancing underground development at the site, along with detailed engineering and procurement, construction of essential surface infrastructure, and the acquisition of a used camp facility.
In 2017, approximately $360 million will be spent to further advance underground development, construct a second ramp portal, complete construction of the camp complex, install underground heating and ventilation, complete development of the fuel farm in Rankin Inlet, and complete development on the process and power plant buildings onsite.
Abitibi Region Continues to Unlock Value
At our Goldex property, we continued to study options to increase throughput from the Deep 1 Zone and the potential to mine a portion of the Deep 2 Zone, both of which could enhance production levels or extend the current mine life at Goldex and reduce operating costs.
At the Odyssey property (50% owned), which adjoins the Canadian Malartic mine, an initial inferred mineral resource was declared and estimated at 0.7 million ounces of gold (10.3 million tonnes grading 2.15g/t gold). Further mineral resource growth is expected in 2017.
Kittila Evaluates Potential to Expand Production, Barsele Declares Initial Inferred Mineral Resource
Kittila has the potential to expand its production to 2 million tonnes per year – from the current rate of 1.6 million tonnes. Studies are currently evaluating the economics of increasing the ore throughput rate, which could be further supported by development of the Rimpi and Sisar Zones. Drilling is ongoing to further evaluate the Sisar Zone, where mineralization has now been outlined to a depth of 2.0 kms below surface.
At the Barsele project in Sweden (55% owned with potential to earn up to 70%), total inferred mineral resources (on a 100% basis) are estimated to be 1.2 million ounces. (21.7 million tonnes grading 1.72 g/t gold). The deposit appears to have bulk tonnage and underground potential and is being evaluated as a potential future production opportunity, with further mineral resource growth is expected in 2017.
Mexico Renews Focus on Minesite Exploration
Exploration work in Mexico continues to focus on advancing economic satellite opportunities at Pinos Altos and Creston Mascota, discovering new zones of mineralization at La India and advancing the El Barqueño project. At Pinos Altos, exploration at the Cerro Colorado Zone outlined additional mineralization and further drilling will be carried out in 2017. At La India, exploration drilling increased mineral reserves by 18% and mineral resources by 5% and studies are now underway to look at the mine’s potential expansion options.
At the El Barqueño project, conversion drilling led to an initial indicated mineral resource estimate of 301,000 ounces of gold and 1.2 million ounces of silver (8.5 million tonnes grading 1.11 g/t gold and 4.35 g/t silver). Different options are being studied to optimize the project’s potential processing costs and gold recovery.
Health, Safety, Environmental & Regulatory Matters
We anticipate receiving the required permits for Amaruq’s development during the second quarter of 2018.
We are currently working closely with the Nunavut Impact Review Board (NIRB) and the Nunavut Water Board (NWB) on the Whale Tail pit joint permitting process, which is progressing along the schedule and process outlined by the NIRB in November 2016. On January 27, 2017, the NIRB and NWB announced the start of the project technical review, which will lead to the start of public hearings at the end of the third quarter 2017. Approval for the project certificate and water license (Phase 1 – Whale Tail pit) is expected in the third quarter of 2018.
On April 15, 2016, the NWB approved the Meliadine Project Type A Water License, which was issued on May 19, 2016. This was the final permit needed to begin construction activities at Meliadine.
The LaRonde mine and processing complex has produced more than 5 million ounces of gold since it first opened in 1988. New drilling results at the LaRonde 3 deposit – the portion of the mine below 3.1 kilometres – and Zone 5, suggests the mine will be adding valuable gold production for many years to come.
LaRonde Zone 5 – formerly known as Bousquet Zone 5 – has now been approved for development as an underground satellite mine operation, subject to permitting approval. Mining is expected to begin in mid-2018, with average annual production expected to be 45,000 ounces per year through 2026. The total capital cost to bring LaRonde Zone 5 into production is estimated at approximately $80 million.
In 2016, drilling in the eastern portion of the LaRonde 3 deposit led to the addition of 200,000 ounces of gold in reserves (1.2 million tonnes grading 5.15 g/t gold) – the first mineral reserves declared below Level 311. Meanwhile, drilling on the western portion of LaRonde 3 encountered higher-grade gold mineralization. Additional drilling is planned for 2017.
The key to Agnico Eagle’s continued success is most certainly our people. Not only will it take innovation and skill, it will take leaders who can both manage the risk and see the opportunity in a new deposit or an emerging mining region. These are the people who will ultimately generate value for our company well into the future.
Preparing for Growth
As we embark on this next phase of growth, we have focused on establishing solid succession plans to secure our business for the long-term. Growth will create opportunities for our future leaders to develop and be ready to step up, when the time comes.
To prepare for growth, we are linking our workforce planning activities to our life-of-mine planning process. We are also committed to maintaining a lean workforce, which will help us remain efficient by ensuring that any volatility in the size of our workforce is kept to a minimum during swings in the gold price. A lean structure is also necessary to ensure that our people are exposed to new experiences and new opportunities as they grow and develop within Agnico Eagle.
Addressing Future Challenges in the Mining Industry
Our broad mining and processing expertise provides us with strong skills in multiple functional areas, and many career opportunities across our existing portfolio of assets and future projects. In 2016, we launched an Individual Development Plan (IDP) process to provide ongoing training and development activities. For senior executives, we have added one-on-one communication coaching, mentoring and external coach assignments. In 2017, we will begin a business acumen training program to provide our people with a wider business perspective and equip them with tools to address future challenges in the mining industry.
Over the next several years our workforce will expand considerably, with more than 1,000 skilled workers expected to be added in Nunavut alone. Both our Nunavut and Abitibi teams are preparing a coordinated workforce plan to direct recruiting, selection, training, and internal transfer activities.
Promoting Our Corporate Values
The anticipated influx of new people into our workforce will challenge Agnico Eagle to promote and protect our long-standing values and culture. We have developed a clear, well-defined set of Guiding Principles to ensure we reinforce our management approach and cultural identity across the Company – a set of principles which have contributed to Agnico Eagle’s success for 60 years.
“The biggest thing I am really proud of is to be able to go to Meliadine or Meadowbank and to see people that didn’t have opportunities in the past, but now they are working at the camp or at the mine. And these are really well paying jobs which has been a boost in our communities.
Just in Rankin, we had 30 (high school) graduates this past year and each community has more graduates each year. So now what we need to do is start going after post-secondary students that are furthering their education to go into different professions.
The trades being an example.
Just this past year we had three apprentices who became journeymen within the Company, which we are really proud of and they are Inuit from our communities.
So now, how can we further that? How can we find students that are going to become engineers, biologists, trainers, nurses – all of these different positions that are available within the Company. It’s just something amazing to see because that’s what employment does. Employment provides the independence that people want. They want to be able to provide for themselves and their families. So Agnico Eagle has been a huge boost for us.”
Anchored in Our Values
Including open and transparent communications; safe production; the highest standards of honesty, responsibility and performance; the highest levels of employee engagement; sharing and developing employees’ skills and expertise; and, maintaining our entrepreneurial skills and innovative spirit.
Based on Collaboration
Encouraging respectful open debates and healthy discussions; and, recognizing success resulting from both exceptional contributions and teamwork.
Clear and Simple
Valuing practices that remain simple and are based on common sense; being as clear as possible on people’s roles and contributions; and, ensuring employees and management alike understand and are aligned with our business priorities.
In 2016, mineral reserves grew by 0.9 million ounces of gold. Agnico Eagle continues to have one of the highest mineral reserve grades amongst our North American peers and we are currently mining below the average reserve grade of our mines.
Several of our properties successfully converted measured and indicated mineral resources to mineral reserves during the year: at LaRonde Zone 5, mineral reserves of 423,000 ounces of gold were added while at LaRonde, 200,000 ounces of gold in mineral reserves were declared below Level 311; conversion drilling at Kittila’s Sisar and Rimpi zones added 338,000 ounces of gold in mineral reserves; conversion drilling in Deep 1 Zone at Goldex increased mineral reserves by 33%, or 218,000 ounces of gold; successful conversion at La India’s Main Zone extension increased mineral reserves by 18%, or 153,000 ounces of gold; while initial mineral reserves at Upper Beaver containing 698,000 ounces of gold (50% basis) were converted from indicated mineral resources.
Our proven and probable mineral reserves, net of 2016 production, totalled 268 million tonnes of ore grading 2.31 g/t gold, containing approximately 19.9 million ounces of gold. This increase of 5%, largely reflects the results of new internal economic studies at several operations, the successful conversions noted above, partially offset by the 1,662,888 ounces of payable gold production in 2016 (1,874,000 ounces of in-situ gold mined). Our overall mineral reserve gold grade is essentially unchanged at 2.31 g/t from 2.37 g/t, despite slightly lower cut-off grades at each operation which was the result of reduced costs at several operations and a small increase in the assumed gold price as well as changes to foreign exchange rate assumptions used for the estimates.
Our goal is to maintain gold reserves at approximately 10 to 15 times Agnico Eagle’s annual gold production rate and we are currently within this range.
|OPERATIONS/PROEJCTS As of December 31, 2016||PROVEN||PROBABLE||PROVEN & PROBABLE|
|GOLD||Ownership||000 tonnes||g/t||000 oz Au||000 tonnes||g/t||000 oz Au||000 tonnes||g/t||000 oz Au|
|LaRonde Zone 5 (underground)||100%||2,836||2.12||194||3,429||2.08||230||6,265||2.10||423|
|Canadian Malartic (open pit)||50%||25,560||0.95||785||76,274||1.13||2,764||101,834||1.08||3,548|
|Akasaba West (open pit)||100%||-||-||-||4,942||0.89||142||4,942||0.89||142|
|Meadowbank (open pit)||100%||1,704||1.75||96||6,515||2.94||615||8,219||2.69||711|
|Meliadine (open pit)||34||7.31||8||4,001||5.00||644||4,035||5.02||652|
|Upper Beaver (underground)||50%||-||-||-||3,996||5.43||698||3,996||5.43||698|
|Pinos Altos (open pit)||180||0.85||5||2,525||2.07||168||2,705||1.99||173|
|Pinos Altos (underground)||3,331||2.79||299||11,364||2.61||953||14,696||2.65||1,251|
|Pinos Altos Total||100%||3,512||2.69||304||13,889||2.51||1,120||17,401||2.55||1,424|
|Creston Mascota (open pit)||100%||65||0.94||2||2,426||1.29||100||2,491||1.28||102|
|La India (open pit)||100%||213||0.61||4||43,756||0.72||1,016||43,969||0.72||1,020|
|SILVER||Ownership||000 tonnes||g/t||000 oz Ag||000 tonnes||g/t||000 oz Ag||000 tonnes||g/t||000 oz Ag|
|Pinos Altos (open pit)||180||67.77||393||2,525||59.81||4,856||2,705||60.34||5,249|
|Pinos Altos (underground)||3,331||75.26||8,061||11,364||67.92||24,817||14,696||69.59||32,878|
|Pinos Altos Total||100%||3,512||74.88||8,454||13,889||66.45||29,673||17,401||68.15||38,127|
|Creston Mascota (open pit)||100%||65||8.07||17||2,426||11.44||892||2,491||11.35||909|
|La India (open pit)||100%||213||14.67||100||43,756||2.57||3,615||43,969||2.63||3,716|
|COPPER||Ownership||000 tonnes||%||tonnes Cu||000 tonnes||%||tonnes Cu||000 tonnes||%||tonnes Cu|
|Akasaba West (open pit)||100%||-||-||-||4,942||0.50||24,851||4,942||0.50||24,851|
|Upper Beaver (underground)||50%||-||-||-||3,996||0.25||9,990|
|ZINC||Ownership||000 tonnes||%||tonnes Zn||000 tonnes||%||tonnes Zn||000 tonnes||%||tonnes Zn|
In 2016, Agnico Eagle’s measured and indicated mineral resources grew by 9% or 1.3 million ounces of gold and now total approximately 333 million tonnes grading 1.53 g/t gold, or 16.4 million ounces of gold, with essentially no change in grade year-over-year.
Many of the additions in the measured and indicated mineral resources category were from our development and advanced exploration projects and include: initial indicated mineral resources at the Amaruq satellite deposit at Meadowbank of 2.1 million ounces (16.9 million tonnes grading 3.88 g/t gold) were reported at open pit depths, almost all in the Whale Tail deposit; initial inferred mineral resources at the Odyssey property of 714,000 ounces of gold (reflecting Agnico Eagle’s 50% interest); initial inferred mineral resources at the Barsele project in Sweden of 661,000 ounces of gold (reflecting Agnico Eagle’s 55% interest); and, conversion drilling at the El Barqueño project led to an initial indicated mineral resource estimate of 301,000 ounces of gold and 1.2 million ounces of silver (8.5 million tonnes grading 1.11 g/t gold and 4.35 g/t silver).
Agnico Eagle’s inferred mineral resources now total 221 million tonnes grading 2.23 g/t, or approximately 15.9 million ounces of gold. This represents an approximate 4% decrease in ounces of gold (0.7 million ounces), largely due to conversion to higher confidence categories.
|OPERATIONS/PROEJCTS As of December 31, 2016||MEASURED||INDICATED||MEASURED & INDICATED||INFERRED|
|GOLD||Ownership||000 tonnes||g/t||000 oz Au||000 tonnes||g/t||000 oz Au||000 tonnes||g/t||000 oz Au||000 tonnes||g/t||000 oz Au|
|LaRonde Zone 5 (underground)||100%||-||-||-||8,897||2.49||712||8,897||2.49||712||2,873||5.28||488|
|Canadian Malartic (open pit)||50%||2,001||1.34||86||11,121||1.56||559||13,122||1.53||644||4,599||1.46||216|
|Akasaba West (open pit)||100%||-||-||-||2,484||0.66||53||2,484||0.66||53||-||-||-|
|Zulapa (open pit)||100%||-||-||-||-||-||-||-||-||-||391||3.14||39|
|Swanson (open pit)||100%||-||-||-||504||1.93||31||504||1.93||31||-||-||-|
|Meadowbank (open pit)||100%||587||1||19||3,099||2.28||227||3,686||2.07||246||1,142||3.13||115|
|Amaruq (open pit)||-||-||-||16,925||3.88||2,109||16,925||3.88||2,109||4,931||4.81||763|
|Meliadine (open pit)||-||-||-||7,867||4.24||1,072||7,867||4.24||1,072||1,054||5.35||181|
|Hammond Reef (open pit)||50%||82,831||0.70||1,862||21,377||0.57||389||104,208||0.67||2,251||251||0.74||6|
|Upper Beaver (underground)||50%||-||-||-||1,818||3.45||202||1,818||3.45||202||4,344||5.07||708|
|Kittila (open pit)||-||-||-||229||3.41||25||229||3.41||25||373||3.89||47|
|Kuotko, Finland (open pit)||100%||-||-||-||-||-||-||-||-||-||396||2.88||37|
|Kylmäkangas, Finland (underground)||100%||-||-||-||-||-||-||-||-||-||1,896||4.11||250|
|Barsele, Sweden (open pit)||-||-||-||-||-||-||-||-||-||4,057||1.02||133|
|Barsele, Sweden (underground)||-||-||-||-||-||-||-||-||-||7,887||2.08||528|
|Pinos Altos (open pit)||-||-||-||236||1.07||8||236||1.07||8||5,984||0.61||117|
|Pinos Altos (underground)||-||-||-||13,751||1.63||721||13,751||1.63||721||3,241||2.52||262|
|Pinos Altos Total||100%||-||-||-||13,988||1.62||730||13,988||1.62||730||9,225||1.28||380|
|Creston Mascota (open pit)||100%||-||-||-||4,292||1.01||139||4,292||1.01||139||1332||0.72||31|
|La India (open pit)||100%||11,127||0.24||85||63,081||0.39||783||74,208||0.36||869||92,631||0.38||1,132|
|El Barqueño (open pit)||100%||-||-||-||8,469||1.11||301||8,469||1.11||301||7,210||1.56||362|
|SILVER||Ownership||000 tonnes||g/t||000 oz Ag||000 tonnes||g/t||000 oz Ag||000 tonnes||g/t||000 oz Ag||000 tonnes||g/t||000 oz Ag|
|Kylmäkangas, Finland (underground)||100%||-||-||-||-||-||-||-||-||-||1,896||31.11||1,896|
|Pinos Altos (open pit)||-||-||-||236||20.4||155||236||20.4||155||5,984||20.94||4,029|
|Pinos Altos (underground)||-||-||-||13,751||40.57||17,935||13,751||40.57||17,935||3,241||41.87||4,363|
|Pinos Altos Total||100%||-||-||-||13,988||40.22||18,090||13,988||40.22||18,090||9,225||28.3||8,392|
|Creston Mascota (open pit)||100%||-||-||-||4,292||16.98||2,343||4,292||16.98||2,343||1,332||11.54||494|
|La India (open pit)||100%||11,127||2.37||847||63,081||0.70||1,421||74,208||0.95||2,267||92,631||0.39||1,153|
|El Barqueño (open pit)||100%||-||-||-||8,469||4.35||1,183||8,469||4.35||1,183||7,210||4.50||1,043|
|COPPER||Ownership||000 tonnes||%||tonnes Cu||000 tonnes||%||tonnes Cu||000 tonnes||%||tonnes Cu||000 tonnes||%||tonnes Cu|
|Akasaba West (open pit)||100%||-||-||-||2,484||0.40||9,941||2,484||0.40||9,941||-||-||-|
|Upper Beaver (underground)||50%||-||-||-||1,818||0.14||2,567||1,818||0.14||2,567||4,344||0.20||8,642|
|ZINC||Ownership||000 tonnes||%||tonnes Zn||000 tonnes||%||tonnes Zn||000 tonnes||%||tonnes Zn||000 tonnes||%||tonnes Zn|