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    AEM
    Earnings call· Mar 2025(Q1 FY25)

    AGNICO EAGLE MINES LTD AEM

    Apr 25, 2025 Source

    Executive summary

    Agnico Eagle Mines Limited Q1 FY25 — Strong Production, Cost Control, and Record Financials

    Agnico Eagle delivered a strong Q1 FY25, marked by robust gold production and exceptional cost control, enabling the company to fully capitalize on rising gold prices and achieve record financial results. The company is actively advancing its key growth projects and deleveraging its balance sheet, while also committing to increased shareholder returns through buybacks. Management emphasizes disciplined capital allocation and leveraging regional expertise for sustainable long-term value creation.

    Highlights

    5

    • Gold production of 874,000 ounces and cash cost of $903 per ounce were identical to Q1 last year, delivering full benefit of rising gold prices.

    • Achieved record revenue of $2.5 billion, record adjusted earnings of $770 million ($1.53 per share), and record adjusted EBITDA of $1.6 billion.

    • Returned $0.25 billion to owners through dividends and share buybacks this quarter, representing 42% of free cash flow.

    • Ended the quarter with close to zero net debt, significantly deleveraging from $1.5 billion at the start of 2024.

    • Made excellent progress on key growth projects including Hope Bay, Malartic, Detour, and Upper Beaver, with strong exploration results.

    Concerns

    3

    • Royalty costs are increasing with higher gold prices, with every $100 increase in gold price adding approximately $5 per ounce to royalty costs.

    • Safety performance in 2024 was not as good as 2023, which was the best year for safety in the company's history.

    • Weather challenges at Detour in Q1 led to mining less high-grade open pit material and processing lower-grade stockpile.

    Guidance & targets

    9
    CategoryTargetConfidence
    Cash costs
    $915 to $965 per ounce
    high materiality
    High
    All-in sustaining costs (AISC)
    $1,250 to $1,300 per ounce
    high materiality
    High
    Hope Bay detailed engineering completion
    approximately 50% completion
    medium materiality
    High
    Meadowbank expansion primary funding decision
    primary funding by the end of this year
    medium materiality
    Medium
    Malartic second shaft production start
    early 2030s
    high materiality
    Medium
    Malartic projects (second shaft, Marban, Wasamac) greenlight
    early 2027
    high materiality
    Medium
    San Nicolás project approval
    towards the end of this year
    medium materiality
    Medium
    Share buyback authorization increase
    increase the limit to $1 billion over a 12-month period
    high materiality
    High
    Net cash position target
    north of $1 billion
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Meliadine
    Achieved a new tonnage record in Q1 following last year's mill expansion.
    Tonnage: 6,200 tonnes per day
    		————
    Kittila
    Seeing positive results from initiatives focused on sharp utilization and systematic productivity and cost efficiency improvement.
    Cost per tonne: 5% below target
    		————
    Detour
    Achieved highest Q1 mill throughput and lowest turnover despite challenging weather conditions, which led to processing lower-grade stockpile.
    Q1 mill throughput: HighestTurnover: Lowest since open pit operations began
    		————
    Macassa
    Hit several records, including lowest turnover in a highly competitive labor market, and had a strong Q1 production due to overperforming stopes.
    Safety: Records hitLateral development: Records hitOunces produced: Records hitTurnover: Lowest in history
    		————

    Operational metrics

    21
    Adjusted net income
    $770 millionrecord
    Q1 FY25

    Achieved record adjusted net income in the first quarter.

    Adjusted net income per share
    $1.53record
    Q1 FY25

    Achieved record adjusted net income on a per share basis.

    Adjusted EBITDA
    $1.6 billionrecord
    Q1 FY25

    Achieved record adjusted EBITDA in the first quarter.

    Net debt
    close to $0vs. $1.5 billion at start of 2024
    end of Q1 FY25

    Significantly deleveraged the balance sheet over the past 15 months.

    Working capital outflows (tax installments and payments)
    over $500 million
    Q1 FY25

    Free cash flow was net of these significant outflows.

    Returns to shareholders (total)
    $2.2 billion
    FY24

    Shareholders benefited directly and indirectly through dividends, share repurchases, and net debt reduction.

    GHG intensity
    0.38well below industry average
    FY24

    Remains amongst industry leaders in GHG intensity.

    Canadian dollar average FX rate
    $1.44
    Q1 FY25

    Benefited from weakness in the Canadian dollar.

    Realized FX rate
    $1.42vs. budgeted $1.38
    Q1 FY25

    Better than budgeted assumption due to hedges in place.

    Royalty cost increase sensitivity
    $5
    per $100 gold price increase

    In a rising gold price environment, the burden of royalty costs is expected to continue to increase.

    Total drilling completed
    300 kilometers
    Q1 FY25

    Completed on all sites with a focus on advancing key value driver projects.

    Total drill rigs
    112
    Q1 FY25

    Working on all sites of the company.

    Hope Bay drilling
    almost 30 kilometersbetter than budgeted
    Q1 FY25

    Drilling from high-space drilling and exploration gravel track enhanced site performance.

    Malartic Odyssey Phase 1 target production
    550,000
    future

    This is the foundation for transforming the site into the largest underground gold mine in Canada.

    Malartic second shaft potential production
    220,000
    future

    Could contribute to the 1 million ounce vision by mining the East Gouldie ore body in parallel to the first shaft.

    Marban pit potential production
    130,000
    future

    Marban was added through the acquisition of O3 and is located 13 kilometers from the Malartic mill.

    Wasamac potential production
    100,000
    future

    A 3,000 tonne per day underground operation to be trucked to Malartic, located 100 kilometers away.

    Meadowbank potential production
    150,000 to 200,000
    future

    Objective to transition Meadowbank into an underground mine only after pits are depleted.

    Hope Bay potential production
    400,000
    2030

    Hope Bay is one of the largest opportunities in the portfolio.

    Tariff impact on cost
    3% to 4%
    future

    Estimated increase in costs due to tariffs, likely offset by Canadian dollar weakness; applies to 40% of costs (consumables).

    Gold price increase
    over $1,000
    past year

    The company delivered the full benefit of this increase to owners.

    Industry KPIs

    6
    MetricValueDetails
    Safety2023 was the best year
    Unit cash cost$903per ounce
    All in sustaining cost$1,183per ounce
    Reserve life new supplybeyond 2028
    Ore grade recovery drilling by deposit20 gram over 4.2 meters; 24 gram over 9.5 meters; 5.3 gram over 27 meters; 6.6 gram over 17 meters; 3.7 gram over 59.7 meters; 8 gram over 78 meters; 3 gram over 44.5 meters
    Production sales volume by metal and by mine874,000ounces

    Deals & partnerships

    2
    O3 MiningAcquisition of Marban pit

    Marban pit was successfully added to the portfolio through the acquisition of O3.

    Teck ResourcesSan Nicolás copper project

    The company is working on the feasibility study for the San Nicolás project through a JV.

    Capital programs

    4
    Detour underground developmentunderway
    Spent to date: overburden excavation completed, surface preparation completed
    Start: Q2 FY25

    Received permit to take water; ramp development expected to commence in Q2.

    Upper Beaver shaft and ramp developmentunderway
    Spent to date: steel installation of head frame and hoist room started; box cut completed for exploration ramp
    Start: Q4 FY25

    Head frame and hoist room expected to be completed/commissioned in early Q4, with shaft sinking soon after. Exploration ramp development expected in Q4 or sooner.

    Hope Bay detailed engineering and site preparationunderway
    Spent to date: contracts finalized with engineering firm; CAM facility upgrading; airstrip extending; mill dismantling; early earth work

    Benefit: 50% detailed engineering completion

    Goal is to advance detailed engineering to approximately 50% completion by Q1 '26. Site preparation is ongoing to advance the project.

    Malartic Odyssey Phase 1underway
    Spent to date: ramp on target; shaft sinking on target; temporary loading station at Level 64 commissioned

    Benefit: efficient transportation of rock and personnel via service hoist

    Project is progressing well, transforming the site into Canada's largest underground gold mine.

    Risks & headwinds

    4
    Increasing royalty costsongoing

    $5 per ounce for every $100 increase in gold price

    Mitigation: Management is evaluating opportunities to buy back royalties if it makes financial sense for shareholders, leveraging internal knowledge of expanding ore bodies.

    Safety performance declineQ1 FY25

    2024 not as good as 2023 (best year for safety)

    Mitigation: All sites are focused on reducing harm, emphasizing visible felt leadership and identifying/mitigating risks.

    Weather-related operational disruptionsQ1 FY25

    Abnormal winter at Detour led to mining less high-grade open pit material and processing lower-grade stockpile.

    Mitigation: Weather delays are factored into plans, but this winter was abnormal. No specific mitigation stated beyond existing planning.

    Tariff impact on cost structurefuture

    Potential 3-4% increase in consumable costs (40% of total costs)

    Mitigation: Expected to be offset by an equivalent or roughly equivalent weakness in the Canadian dollar; strong local supply chains reduce exposure.

    What to watch in Q2 FY25

    5

    Detour ramp development commencement

    Q2 FY25
    CurrentOverburden excavation and surface preparation completed; permit to take water received.
    TargetCommencement of ramp development

    Why it matters

    This marks a key step in the Detour underground project, which is a major driver for future production growth.

    We're expecting to commence the ramp development in Q2.

    Q&A highlights

    6

    How will Eclipse exploration results impact the medium-term mine planning and positioning of the second shaft at Malartic, given its proximity to existing infrastructure?

    Eclipse is considered a mid-to-long-term opportunity, but its positive results, along with other internal zones, are shaping the decision for the second shaft. The second shaft will target the massive East Gouldie ore body.

    “Eclipse is going to be more, let's say, in the more mid long-term thing because it's more deep. But this is really a zone which is going to help for the second shaft.”

    asked by Ralph Profiti · answered by Dominique Girard

    3 min read7 chapters

    Detailed Narrative

    01

    Sustainability and Safety Performance

    Agnico Eagle published its 16th annual sustainability report, highlighting its global approach and regional focus. While 2023 was the best year for safety, 2024 has not performed as well, prompting continued focus on reducing harm. The company maintains a GHG intensity of 0.38 tonnes of CO2 equivalent per ounce, well below the industry average of 0.79, and is committed to reconciliation through its 7 Pillars Action Plan.

    02

    Malartic 1 Million Ounce Vision

    The company outlined a four-block strategy to achieve 1 million ounces per year production at Malartic. The current Odyssey Phase 1 project targets 550,000 ounces per year. A second shaft for the East Gouldie ore body could add 220,000 ounces per year. The Marban pit, acquired through O3, could contribute 130,000 ounces per year, and Wasamac, a 3,000 tonne per day underground operation, could add another 100,000 ounces per year. The focus for the next 5-6 years is on studies, permitting, and construction, aiming for integration into the Malartic mill in the 2030s.

    03

    Hope Bay Project Advancement

    Hope Bay is identified as a significant opportunity to add 400,000 ounces per year by 2030. The company has finalized contracts with engineering firms and aims to complete 50% of detailed engineering by Q1 2026. On-site preparation work is underway, including upgrading the CAM facility, extending the airstrip, dismantling the old mill, and completing early earthwork, to enable a rapid start once greenlighted.

    04

    Detour and Upper Beaver Growth Projects

    Detour is on a pathway to become a 1 million ounce per year producer for over 14 years. Overburden excavation and surface preparation are complete, and ramp development is expected to commence in Q2. Upper Beaver is another low-risk growth opportunity, with steel installation for the head frame and hoist room expected to be completed in early Q4, followed by shaft sinking. Exploration ramp development is also anticipated in Q4 or sooner.

    05

    Exploration Highlights

    The company completed 300 kilometers of drilling across all sites in Q1, with 112 drill rigs operating. Significant results include Hope Bay's Patch 7 (20g over 4.2m) and the gap between Suluk and Patch (24g over 9.5m). At Malartic's Odyssey, exciting results were found in Upper East East Gouldie, Lower Eastern extension (5.3g over 27m, 6.6g over 17m), and Eclipse parallel zone (3.7g over 59.7m). Detour infill drilling yielded high-grade intercepts (8g over 78m, 3g over 44.5m).

    06

    Capital Allocation and Shareholder Returns

    Agnico Eagle's capital allocation plan prioritizes strengthening the balance sheet, increasing shareholder returns, and reinvesting in high-return internal growth projects. The company returned $2.2 billion to shareholders in 2024 (43% of FCF) and 42% of FCF in Q1 2025. With net debt near zero, the company plans to increase share buyback activity and aims for a net cash position north of $1 billion, while remaining disciplined in capital deployment.

    07

    Tariff and Labor Impact Assessment

    The company anticipates no tariff impact🌐 on revenue, labor, or energy costs. For other consumables (40% of costs), a potential 3-4% cost increase from reciprocal tariffs is estimated, but this is expected to be offset by a weaker Canadian dollar. Labor relations are stable, with no significant issues or negotiations expected to impact operations or costs in 2025.

    AI-generated summary of the company’s earnings call. Not investment advice.