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    AEM
    Earnings call· Dec 2024(Q4 FY24)

    AGNICO EAGLE MINES Q4 FY24 earnings call AEM

    Feb 14, 2025 Source

    Executive summary

    Agnico Eagle Mines Q4 FY24 — Record Performance and Ambitious Growth Pipeline

    Agnico Eagle Mines delivered a record-breaking 2024, driven by strong operational performance, effective cost control, and higher gold prices. The company is now in its strongest position ever, boasting a robust balance sheet and an enviable project pipeline. Management is focused on disciplined capital allocation, aiming for continued per-share growth and increased shareholder returns, while navigating potential market volatility and geopolitical risks.

    Highlights

    5

    • Record annual gold production of 3.49 million ounces, exceeding midpoint of guidance.

    • Record adjusted earnings of $632 million or $1.26 per share in Q4 FY24.

    • Record operating cash flow of over $1.1 billion or $2.26 per share in Q4 FY24.

    • Record free cash flow of approximately $2.1 billion for full-year 2024.

    • Net debt reduced significantly from $1.5 billion to $217 million at year-end 2024.

    Concerns

    2

    • Production guidance for 2025-2026 is down marginally by 2.9% from previous guidance due to ground conditions at Pinos Altos and minor deferral of low-grade stockpiles at Malartic.

    • Uncertainty regarding proposed constitutional changes related to open pit mining in Mexico, potentially impacting the San Nicolás project.

    Guidance & targets

    20
    CategoryTargetConfidence
    Annual Gold Production
    3.49 million ounces
    high materiality
    High
    Total Cash Cost
    $903 per ounce
    high materiality
    High
    All-in Sustaining Costs (AISC)
    $1,239 per ounce
    high materiality
    High
    Gold Production
    Strong and steady production
    high materiality
    High
    Cost Profile
    Best cost profile of our peers
    high materiality
    High
    Net Debt
    Potentially no net debt very shortly
    high materiality
    High
    Hope Bay Project Detail
    More details in H1 2026
    medium materiality
    High
    Malartic Second Shaft Information
    More information by end of 2026
    medium materiality
    High
    Marban Project Information
    More detail in 2026
    medium materiality
    High
    Malartic Production Target
    1 million ounces per year
    high materiality
    High
    Macassa Mill Throughput
    Debottlenecking the mill
    low materiality
    High
    Fosterville Annual Production
    Approximately 175,000 ounces
    medium materiality
    Medium
    San Nicolás Project Approval
    Expected to follow permit receipt and study results
    medium materiality
    Medium
    Ontario Operations Gold Production Growth
    Grow by 50%
    high materiality
    High
    Detour Underground Ramp Development
    Commence upon receipt of permit to take water
    low materiality
    High
    Upper Beaver Exploration Shaft and Ramp Development
    Expected to commence in Q4 2025
    low materiality
    High
    Minimum Cash Balance
    Around $1 billion
    medium materiality
    High
    Canadian Dollar Foreign Exchange Assumption
    $1.38
    low materiality
    High
    Gold Price Assumption for Budget
    $2,500
    low materiality
    High
    Cost Inflation Rate
    About 5%
    low materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Nunavut Platform
    Achieved record operating margin in 2024 due to outperformance at Meliadine and Meadowbank, combined with higher gold prices and excellent cost control.
    Record throughput at MeliadineRecord gold production at MeadowBank: over 500,000 ounces
    		———$1.3 billion

    Operational metrics

    28
    Term Loan Facility Repayment
    $325 million
    Q4 FY24

    Repaid the remaining balance of the term loan facility ahead of April maturity.

    Gold Price Assumption for Mineral Reserve/Resource
    $1,45050% of spot gold price
    FY24

    One of the most conservative gold price assumptions in the industry.

    Meliadine Production Potential
    350 million - 400 million
    Future

    Part of the Nunavut platform's potential to reach 1 million ounces.

    Royalty Savings Potential
    $150
    Ongoing

    Potential savings on ounces discovered outside the 5% royalty area at Malartic, given current gold prices near $3,000/ounce.

    Net Debt
    $217 milliondown from $1.5 billion at start of 2024
    FY24

    Significant reduction in net debt over the year.

    Cash Balance
    $926 million
    FY24

    Cash balance at year-end 2024.

    Canadian Dollar FX Rate (Realized)
    $1.37
    FY24

    Realized foreign exchange rate in 2024.

    Canadian Dollar FX Rate (Assumption)
    $1.38
    FY25

    Assumption used for 2025 cost guidance.

    Royalty Expense Sensitivity to Gold Price
    $3per $100 gold price move
    Ongoing

    Every $100 change in gold price impacts royalty expense by $3/ounce.

    Cost Structure Insulated from Tariffs
    2/3
    Ongoing

    Approximately two-thirds of the cost structure is not expected to be impacted by tariffs.

    Capitalized Exploration
    $200 million
    FY24

    Associated with building infrastructure for exploration, such as underground development and drill platforms.

    Drilling Spend for Conversion
    $110 million
    FY24

    Cost to convert resources to reserves.

    Drilling Spend for New Discovery
    $160 million
    FY24

    Cost to add new resources from scratch to inferred category.

    Total Drilling Spend
    $270 million
    FY24

    Total amount spent on drilling activities in 2024.

    Debt Maturities
    $90 million
    FY25

    Total debt maturities expected to be paid as due in 2025.

    Dividends Paid
    $800 million
    FY24

    Part of direct shareholder returns.

    Share Repurchases
    $120 million
    FY24

    Part of direct shareholder returns.

    Direct Shareholder Returns
    $920 millionapproximately 40% of free cash flow
    FY24

    Total direct returns to shareholders through dividends and buybacks.

    Net Debt Reduction
    $1.3 billion
    FY24

    Indirect return to shareholders through balance sheet strengthening.

    Total Shareholder Benefit
    $2.2 billion
    FY24

    Total direct and indirect benefit to shareholders.

    Exploration Drilling Meters
    1.2 million
    FY24

    Total core diamond drilling completed in 2024.

    Malartic Drilling Meters
    200,000
    FY24

    Drilling focused on infilling and testing lateral extensions.

    Detour Drilling Meters
    220,000
    FY24

    Aggressive surface exploration program.

    Odyssey Drilling Meters
    118,000
    FY24

    Drilling focused on the newly discovered Patch 7 zone.

    Malartic Mill Capacity
    60,000
    Ongoing

    Total capacity of the Malartic mill.

    Malartic Mill Available Capacity
    10,000 - 15,000
    Ongoing

    Remaining mill capacity after planned projects (Odyssey Phase I, second shaft, Marban, Wasamac) are integrated.

    Wasamac Distance to Malartic
    100
    Ongoing

    Distance for trucking ore from Wasamac to the Malartic mill.

    Q1 Catch-up Payment
    $400 million
    Q1 FY25

    Expected payment in the first quarter, likely a tax payment.

    Industry KPIs

    5
    MetricValueDetails
    SafetyRecord low
    Unit cash cost$923USD/ounce
    All in sustaining cost$1,316USD/ounce
    Ore grade recovery drilling by deposit6.6gram per tonne
    Production sales volume by metal and by mine847,000ounces

    Deals & partnerships

    1
    O3 MiningAcquisition of Marban property

    Recent transaction to acquire the Marban property, located about 15 kilometers from Canadian Malartic, to potentially feed the Malartic mill.

    Capital programs

    7
    Odyssey Underground Projectunderway

    Benefit: 550,000 ounces per year

    Transitioning Canadian Malartic to the biggest underground gold mine in Canada, with this production forecast upon completion.

    Hope Bay Projectunderway

    Benefit: Over 400,000 ounces per year

    Evaluating a production plan incorporating Patch 7 resources. Aiming for 40% engineering by end of 2025 to derisk project execution.

    Odyssey Second Shaftunderway

    Benefit: Around 200,000 ounces per year

    Expanding underground zones at Odyssey, with potential for a second shaft to add significant ounces to Malartic's production.

    Marban Property Integrationunderway

    Benefit: Additional 130,000 ounces per year

    Integrating the Marban property to feed the Malartic mill, following a recent transaction with O3.

    Wasamac Projectunderway

    Benefit: Additional 100,000 ounces per year

    Advancing technical evaluation, permitting, and community engagement to contribute ounces to the Malartic mill.

    Detour Underground Exploration Ramp and Bulk Sampleunderway

    Approved to further derisk the project. Site preparation is complete, awaiting permit to take water for ramp development.

    Upper Beaver Exploration Ramp and Shaftunderway

    Advancing site preparation, including road access, earthworks, temporary infrastructure, power line energization, shaft collar excavation, and head frame foundations. Exploration shaft and ramp development expected to commence in Q4 2025.

    Risks & headwinds

    5
    Ground conditions at Pinos AltosFY25-FY26

    Contributed to 2.9% marginal decrease in 2025-2026 production guidance.

    Mitigation: Accommodating difficult ground conditions and reassessing productivity rates for 2025 with a focus on cost control.

    Deferral of low-grade stockpiles at MalarticFY25-FY26

    Contributed to 2.9% marginal decrease in 2025-2026 production guidance.

    Mitigation: Minor deferral of processing low-grade stockpiles as part of mine sequencing adjustments.

    Uncertainty of Mexican constitutional changes on open pit miningOngoing

    Impact on San Nicolás project is unclear.

    Mitigation: Monitoring regulatory developments; project approval is contingent on permit receipt and study results.

    Market volatility and geopolitical risksFY25

    Gold market volatility expected to be skewed to the upside.

    Mitigation: Focus on strong production, best-in-class cost control, and operating in safe jurisdictions.

    Tariff impacts on cost structureOngoing

    Approximately one-third of cost structure could be impacted; 2/3 is insulated.

    Mitigation: Evaluating exact impact as tariffs are imposed; 2/3 of costs (labor, energy, royalties) are not expected to be impacted.

    What to watch in Q1 FY25

    5

    Hope Bay Project Engineering Progress

    End of 2025
    Target40% engineering done

    Why it matters

    Achieving 40% engineering by year-end is a key derisking milestone for the Hope Bay project, which is expected to be a significant future production platform.

    Our target is to reach over 40% engineering by the end of this year to derisk and secure the project execution before potentially greenlighting the project.

    Q&A highlights

    8

    What is the timeline for Hope Bay's delivery and when will it start offsetting production?

    The focus for 2025 is to freeze the project scope, incorporate Patch 7 resources, and achieve 40% engineering by year-end. More details are expected in the first half of 2026, with the project likely starting in the early next decade.

    “So this year focus is really to freeze the scope of the project. As now we're including the patch resources, we still need to reach our fall and to look to the mine plan and to be at 40% engineering done by the end of the year. It is the same approach we did at Meliadine, if you recall, where before announcing a project, especially in Nunavut, we need to have to derisk it. And we're going to be there early next year. So in the first half of 2026, we're expecting to give more detail about the project.”

    asked by Anita Soni · answered by Dominique Girard

    2 min read5 chapters

    Detailed Narrative

    01

    Record-Breaking 2024 Performance

    Agnico Eagle achieved record annual gold production of 3.49 million ounces, surpassing the midpoint of its guidance. This strong operational performance, coupled with effective cost control and a higher gold price environment, led to record adjusted earnings of $632 million ($1.26/share), record operating cash flow of over $1.1 billion ($2.26/share), and record free cash flow of approximately $2.1 billion for the full year 2024. The company also significantly reduced its net debt from $1.5 billion to $217 million.

    02

    Strategic Vision for Malartic and Detour

    The company outlined an 'extraordinary' vision to potentially increase gold production at Malartic to over 1 million ounces per year in the early 2030s, transitioning from Canada's largest open pit to its largest underground gold mine. This plan involves a second shaft at Odyssey, integrating the Marban property (potentially adding 130,000 oz/year), and advancing the Wasamac project (potentially adding 100,000 oz/year). Similarly, Detour has the potential to become a 1 million-ounce producer annually for over 14 years, starting as early as 2030.

    03

    Nunavut and Ontario Platform Growth

    In Nunavut, the Hope Bay project, with new Patch 7 results, is being evaluated for a production plan exceeding 400,000 ounces per year for many years, with detailed information expected in H1 2026. The Meadowbank mine is also exploring life-of-mine extensions beyond 2028, potentially adding 150,000 ounces per year through underground operations until 2035. The Ontario platform, including Detour Underground and Upper Beaver, is projected to grow gold production by 50% starting as early as 2030.

    04

    Exploration Success and Resource Growth

    Agnico Eagle invested over $459 million in exploration in 2024, drilling over 1.2 million meters of core. This led to a growth in mineral reserves and resources, notably at Malartic (East Gouldie deposit) and Detour. The newly discovered Patch 7 zone at Hope Bay's Madrid deposit area added over 900,000 indicated ounces at 6.6 g/t and 800,000 inferred ounces, significantly increasing total resources for future project development.

    05

    Capital Allocation and Shareholder Returns

    In 2024, the company returned $920 million to shareholders through $800 million in dividends and $120 million in share repurchases, representing approximately 40% of free cash flow. The remaining $1.3 billion was allocated to net debt reduction. Management plans to continue strong shareholder returns, strengthen the balance sheet, and reinvest in high-return internal growth projects, aiming for a net cash position and maintaining a minimum cash balance around $1 billion.

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