Agnico Eagle Reports Third Quarter 2021 Results - Meliadine and Laronde Mines Drive Record Quarterly Gold Production; 2021 Guidance Maintained; Reintegration of Nunavummiut Workforce at Meliadine and Meadowbank Completed; Development and Exploration Activities Progressing as Planned at Odyssey; Proposed Merger of Equals Announced With Kirkland Lake Gold

·64 min read

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

Stock Symbol: AEM (NYSE and TSX)

TORONTO, Oct. 27, 2021 /CNW/ - Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $114.5 million, or net income of $0.47 per share, for the third quarter of 2021. This result includes non-cash mark-to-market losses on warrants of $15.6 million ($0.06 per share), derivative losses on financial instruments of $10.7 million ($0.05 per share), foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments of $8.8 million ($0.04 per share), non-cash foreign currency translation gains of $6.5 million ($0.03 per share) and various other adjustment losses of $2.3 million ($0.01 per share). Excluding these items would result in adjusted net income1 of $145.4 million or $0.60 per share for the third quarter of 2021. For the third quarter of 2020, the Company reported net income of $222.7 million or net income of $0.92 per share.

Included in the third quarter of 2021 net income, and not adjusted above, is a non-cash stock option expense of $3.9 million ($0.02 per share).

In the first nine months of 2021, the Company reported net income of $440.2 million, or net income of $1.81 per share. This compares with the first nine months of 2020, when net income was $306.4 million, or net income of $1.27 per share.

______________________

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

The decrease in net income in the third quarter of 2021, compared to the prior-year period, is primarily due to lower operating margins2 (lower average realized metal prices and higher production costs, partially offset by higher sales volumes), unrealized losses for non-cash items related to mark-to-market adjustments on financial instruments, higher amortization of property, plant and mine development from higher production volumes and the contribution of the Hope Bay mine and higher exploration expenses, partially offset by foreign exchange gains.

The increase in net income in the first nine months of 2021, compared to the prior-year period, is primarily due to higher operating margins (from higher sales volumes and higher average realized metal prices), partially offset by unrealized losses for non-cash items related to mark-to-market adjustments on financial instruments owned by the Company, higher amortization of property, plant and mine development from higher production volumes and the contribution of the Hope Bay mine, higher exploration expenses and higher income and mining taxes driven by higher operating margins.

In the third quarter of 2021, cash provided by operating activities was $291.0 million ($413.6 million before changes in non-cash components of working capital), compared to the third quarter of 2020 when cash provided by operating activities was $462.5 million ($434.4 million before changes in non-cash components of working capital).

In the first nine months of 2021, cash provided by operating activities was $1,054.3 million ($1,261.0 million before changes in non-cash components of working capital), compared to the first nine months of 2020 when cash provided by operating activities was $788.5 million ($824.3 million before changes in non-cash components of working capital).

The decrease in cash provided by operating activities (before changes in non-cash components of working capital) in the third quarter of 2021, compared to the prior-year period, is primarily due to a decrease in mine operating margins that resulted from the reasons described above.

The increase in cash provided by operating activities in the first nine months of 2021, compared to the prior-year period, is primarily due to an increase in operating margins that resulted from the reasons described above, partially offset by higher cash taxes related to the higher mine operating margins and payments for taxes related to the 2020 tax year in the first quarter of 2021.

______________________

2 Operating margin is a non-GAAP measure. For a discussion regarding the Company's use of non-GAAP measures, please see "Note Regarding Certain Measures of Performance".

"Another strong quarterly operating performance, including record gold production, continues to demonstrate our ability to optimize our assets and steadily grow output over the next several years. During the quarter, the Abitibi and Meliadine mines continued to be key drivers to the Company's ongoing operational success," said Sean Boyd, Agnico Eagle's Chief Executive Officer. "These strong production platforms will be integral components in the proposed merger of equals with Kirkland Lake Gold, which was announced late in the quarter. The combination is expected to unlock additional value through the realization of significant operational synergies while creating a low risk global gold mining leader with growing production and gold reserves, increased operating cash flow and the financial resources and long-life assets to maintain a high-quality sustainable business while increasing capital distributions to shareholders," added Mr. Boyd.

Third quarter of 2021 highlights include:

  • Record quarterly gold production – Payable gold production3 was 523,706 ounces (excluding 17,957 ounces of payable gold production at Hope Bay and including pre-commercial gold production of 6,881 ounces at the Tiriganiaq open pit at Meliadine) at production costs per ounce of $832, total cash costs per ounce4 of $765 and all-in sustaining costs ("AISC") per ounce5 of $1,011. Including Hope Bay, payable gold production in the third quarter of 2021 was new record of 541,663 ounces at production costs per ounce of $845, total cash costs per ounce of $784 and AISC per ounce of $1,059. Production costs per ounce, total cash costs per ounce and AISC per ounce exclude the pre-commercial production of gold at Tiriganiaq

  • Abitibi and Meliadine mines drive solid operating performance – In the third quarter of 2021, the LaRonde Complex, Goldex and Canadian Malartic mines (50%) in the Abitibi region of Quebec collectively produced 222,373 ounces of gold at production costs per ounce of $716 and total cash costs per ounce of $594. In Nunavut, the Meliadine mine had a record quarter producing 97,024 ounces of gold (including pre-commercial gold production of 6,881 ounces) at production costs per ounce of $585 and total cash costs per ounce of $634. In the third quarter of 2021, these four mines collectively represent approximately 59% and 68% of the Company's gold production and operating margin, respectively. Each of these operations have mine lives in excess of 10 years, and exploration efforts are ongoing to further expand their known mineral reserves and mineral resources

  • Production, cost and capital expenditure guidance confirmed for 2021 – Expected gold production in 2021 is unchanged at approximately 2,047,500 ounces, while total cash costs per ounce and AISC per ounce continue to be forecast in the range of $700 to $750 and $950 to $1,000, respectively. Estimated payable gold production and costs for 2021 exclude any contribution from Hope Bay. In 2021, gold production at the La India and Meadowbank mines is expected to be below forecast due to a variety of operational challenges. Any shortfall in production at these operations is expected to be offset by stronger than expected performance at the Meliadine and LaRonde mines. Total capital expenditures guidance for 2021 remains unchanged at approximately $803.0 million

  • Proposed merger of equals with Kirkland Lake Gold announced on September 28, 2021The transaction will create a best-in-class gold mining company operating in one of the world's leading gold regions, the Abitibi-Greenstone Belt of northeastern Ontario and northwestern Quebec, with superior financial and operating metrics. Canadian Competition Act approval was received on October 4, 2021. The Information Circular is expected to be mailed on November 3, 2021, and the shareholder votes for both companies are scheduled for November 26, 2021. The transaction is expected to be completed in December 2021 or the first quarter of 2022

  • Development and exploration activities progressing on schedule and on budget at the Odyssey Underground Project – Underground activities are focused on extending the main ramp and developing the first production levels and an exploration drift at Odyssey South. Construction of the concrete headframe began in late September and is expected to be completed in October. Shaft sinking is scheduled to begin in October 2022. All surface construction activities and the purchase of long lead items remain on target. Underground exploration began at the Odyssey South and Internal Zones in July and a second drill will be added in the fourth quarter of 2021. At East Gouldie, 12 surface drills are currently active (see results below)

________________

"Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".

  • Drilling continues to yield positive results in the third quarter of 2021 – The Company's exploration focus remains on pipeline projects and near mine opportunities. Detailed exploration results are expected to be reported in a news release on November 2, 2021. Recent exploration highlights include:

  • A quarterly dividend of $0.35 per share has been declared

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3 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.

4 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".

5 AISC per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".

Third Quarter 2021 Financial and Production Highlights

In the third quarter of 2021, the Company's payable gold production was 523,706 ounces (excluding 17,957 ounces of payable gold production at Hope Bay, and including 6,881 ounces of pre-commercial production of gold at the Tiriganiaq open pit at Meliadine). This compares to quarterly payable gold production of 492,693 ounces in the prior-year period (which included 13,305 ounces of pre-commercial production of gold at the Barnat deposit at Canadian Malartic and 1,982 ounces of pre-commercial gold production at the Tiriganiaq open pit at Meliadine). Including the Hope Bay mine, the Company's quarterly gold production was a record of 541,663 ounces in the third quarter of 2021.

In the first nine months of 2021, the Company's payable gold production was 1,528,949 ounces (excluding 55,524 ounces of payable gold production at Hope Bay, and including 24,057 ounces and 348 ounces of pre-commercial production of gold at the Tiriganiaq open pit at Meliadine and Amaruq underground project, respectively). This compares to payable gold production of 1,235,123 ounces in the prior-year period (which included 18,930 ounces of pre-commercial production of gold at the Barnat deposit at Canadian Malartic and 1,982 ounces of pre-commercial gold production at the Tiriganiaq open pit at Meliadine). Including the Hope Bay mine, the Company's payable gold production was also a record of 1,584,473 ounces for the first nine months of 2021.

The higher gold production in the third quarter of 2021, when compared to the prior-year period, was primarily due to strong performance at the Company's mines, including higher gold grades and tonnage at the Meadowbank Complex, higher tonnage at the Meliadine, Canadian Malartic and Kittila mines, and higher gold grades at the LaRonde Complex. This was partially offset by lower production at La India related to lower ore tonnage stacked due to high clay content and at Creston Mascota where only residual leaching remains.

The higher gold production in the first nine months of 2021, when compared to the prior-year period, was primarily due to strong performance at the Company's mines, including higher gold grades and tonnage at the LaRonde and Meadowbank Complexes and the Canadian Malartic and Meliadine mines. This was partially offset by lower production at the La India mine related mostly to water conservation efforts and at Creston Mascota, where only residual leaching remains. In the first nine months of 2020, gold production was negatively affected by COVID-19 related reductions in mining activities which affected seven of the Company's then eight operations. A detailed description of the production at each mine is set out below.

Production costs per ounce in the third quarter of 2021 were $832 (excluding the Hope Bay mine), compared to $865 in the prior-year period. Total cash costs per ounce in the third quarter of 2021 were $765 (excluding the Hope Bay mine), compared to $764 in the prior-year period. Including the Hope Bay mine, production costs per ounce were $845 and total cash costs per ounce were $784 in the third quarter of 2021.

Production costs per ounce in the first nine months of 2021 were $816 (excluding the Hope Bay mine), compared to $864 in the prior-year period. Total cash costs per ounce in the first nine months of 2021 were $745 (excluding the Hope Bay mine), compared to $805 in the prior-year period. Including the Hope Bay mine, production costs per ounce were $828 and total cash costs per ounce were $755 in the first nine months of 2021.

In the third quarter and first nine months of 2021, production costs per ounce decreased when compared to the prior-year periods primarily due to higher gold production, partially offset by the strengthening of the Canadian dollar against the U.S. dollar. For the first nine months of 2021, total cash costs per ounce (excluding the Hope Bay mine) decreased when compared to the prior-year periods primarily due to higher gold production, higher by-product revenues from higher realized metal prices and higher sales volumes, partially offset by the strengthening of the Canadian dollar against the U.S. dollar. Total cash costs per ounce (excluding the Hope Bay mine) in the third quarter of 2021 were essentially the same when compared to the prior year period.

AISC per ounce in the third quarter of 2021 were $1,011 (excluding the Hope Bay mine), compared to $1,016 in the prior-year period. Including the Hope Bay mine, AISC per ounce were $1,059 in the third quarter of 2021. AISC per ounce in the first nine months of 2021 were $1,010 (excluding the Hope Bay mine), compared to $1,078 in the prior-year period. Including the Hope Bay mine, AISC per ounce were $1,035 in the first nine months of 2021.

AISC per ounce (excluding the Hope Bay mine) in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower total cash costs per ounce and lower sustaining capital expenditures primarily at the Meadowbank Complex. AISC per ounce (excluding the Hope Bay mine) in the first nine months of 2021 decreased when compared to the prior-year period primarily due to lower total cash costs per ounce, partially offset by higher sustaining capital expenditures at the Canadian Malartic and Goldex mines related to the temporary suspension of activities due to COVID-19 in the prior-year periods.

Cash Position – Strong Financial Flexibility

Cash and cash equivalents and short-term investments decreased to $243.6 million at September 30, 2021, from the June 30, 2021 balance of $280.9 million, primarily due to the increase of working capital (mainly supplies and fuel inventory) for the Company's Nunavut operations during the 2021 sealift season. The Company also accelerated the purchase of certain reagents and consumables in order to help offset inflationary trends. As of September 30, 2021, the outstanding balance on the Company's unsecured revolving bank credit facility was nil, and available liquidity under this facility was approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

Approximately 54% of the Company's remaining 2021 estimated Canadian dollar exposure is hedged at an average floor price above 1.27 C$/US$. Approximately 48% of the Company's remaining 2021 estimated Mexican peso exposure is hedged at an average floor price above 20.75 MXP/US$. Approximately 10% of the Company's remaining 2021 estimated Euro exposure is hedged at an average floor price of approximately 1.23 US$/EUR. The Company's full year 2021 cost guidance is based on assumed exchange rates of 1.30 C$/US$, 20.00 MXP/US$ and 1.20 US$/EUR.

During the third quarter of 2021, the Company completed the purchase of diesel relating to its Nunavut operations for the balance of 2021 to mid-year of 2022. The diesel was delivered to the Nunavut sites on the 2021 sealifts. The purchase price, including the impact of fuel hedges, was in line with the 2021 cost guidance assumptions.

The Company will continue to monitor market conditions and anticipates continuing to opportunistically add to its operating currency and diesel hedges to strategically support its key input costs.

Capital Expenditures

Total capital expenditures (including sustaining capital) in the third quarter of 2021 were $223.3 million (excluding Hope Bay). Including Hope Bay, the total capital expenditures in third quarter of 2021 were $246.4 million. The total capital expenditures (including sustaining capital) in 2021 remain forecast to be approximately $803.0 million, excluding the Hope Bay mine.

The following table sets out capital expenditures (including sustaining capital) in the third quarter of 2021 and the first nine months of 2021.

Capital Expenditures




(In thousands of U.S. dollars)





Three Months Ended


Nine Months Ended


September 30, 2021


September 30, 2021

Sustaining Capital




LaRonde Complex

$

26,224



$

75,755


Canadian Malartic mine

13,458



53,771


Meadowbank Complex

11,901



37,188


Meliadine mine

13,679



36,774


Kittila mine

9,564



27,488


Goldex mine

6,844



23,228


Pinos Altos mine

5,827



13,821


La India mine

2,675



5,880


Total Sustaining Capital

$

90,172



$

273,905






Development Capital




LaRonde Complex

$

16,795



$

39,284


Canadian Malartic mine

14,355



33,406


Meadowbank Complex

205



8,711


Amaruq underground project

40,516



76,590


Meliadine mine

24,761



53,970


Kittila mine

20,320



55,903


Goldex mine

5,419



13,912


Pinos Altos mine

7,238



15,155


La India mine

2,519



6,164


Other

1,023



10,490


Total Development Capital

$

133,151



$

313,585


Total Capital Expenditures - excluding Hope Bay

$

223,323



$

587,490






Hope Bay mine Sustaining Capital

$

18,316



$

34,713


Hope Bay mine Development Capital

4,736



7,498


Total Capital Expenditures - including Hope Bay

$

246,375



$

629,701


2021 Production and Cost Guidance Unchanged

Production guidance for 2021 remains unchanged at approximately 2,047,500 ounces of gold (including approximately 24,057 ounces and 2,100 ounces of pre-commercial gold production from the Tiriganiaq open pit at Meliadine and Amaruq underground project, respectively). Commercial production at the Tiriganiaq open pit was declared on August 15, 2021. Estimated payable gold production and costs for 2021 exclude any contribution from Hope Bay. In 2021, gold production at the La India and Meadowbank mines is expected to be below forecast due to a variety of operational challenges. Any shortfall in production at these operations is expected to be offset by stronger than expected performance at the Meliadine and LaRonde mines.

The Company anticipates that total cash costs per ounce and AISC per ounce for 2021 will continue to be in the range of $700 to $750 and $950 to $1,000, respectively. Estimated payable gold production and costs for 2021 exclude any contribution from Hope Bay.

Cost Inflation Update

In the second quarter of 2021, the Company noted that, given rising prices for many commodities and disruptions to global supply-chains, the resulting cost pressures were gradually being pushed downstream and were starting to be reflected in the prices for a number of goods and services used by the Company. Since then, these inflationary pressures have accelerated (e.g., diesel prices have increased by approximately 20% since August 1, 2021), and while the company continues to implement numerous initiatives to offset this, we anticipate upward cost pressure throughout the industry, including at the Company's operations.

While difficult to predict, the Company expects that these price pressures will extend into 2022, depending on when inflation conditions and global supply-chains normalize. As a result, the Company currently expects to see an approximate 5% to 7% increase in reagents and consumables prices in 2022, and a related impact on production costs next year. Given the uncertain nature of the inflationary pressures, the Company will continue to actively monitor and identify opportunities to manage and mitigate input cost increases.

Although there are signs of tightness in certain labour categories, at this time the Company does not anticipate any abnormal impact on projected costs as a result of wage inflation or workforce costs in 2022, other than certain high demand contracting (including related to exploration). The Company's strategy to contain the risk of workforce cost increases includes initiatives such as implementing organizational workforce cost management projects to improve productivity, as well as career development plans to fill specific technical roles with internal candidates where possible. In the Abitibi, given the increased labour market competition, the Company is looking to convert certain contractor groups into permanent employees to reduce turnover.

Demonstrating strong ESG performance

In March 2020, the Company decided to send the Nunavut-based workforce home and isolate its mines from the local communities while continuing to pay 75% of base salary to these employees. A gradual return of the Nunavut-based workforce began at the end of June 2021 after the reintegration plan was approved by the Chief Public Health Officer of Nunavut. Reintegration of the Nunavummiut workforce at Meliadine and the Meadowbank Complex was completed in October 2021.

During the third quarter of 2021, Agnico Eagle's outstanding ESG practices and contributions to the local communities continued to be recognized by several organizations. The following awards were received by the Company's operations during the third quarter of 2021:

  • LaRonde – "Resilience" award at the 2021 gala of the Central Abitibi Chamber of Commerce and Industry for the management of the COVID-19 pandemic

  • Canadian Malartic – "Economic Development Contribution" award at the 41st Gala of the Chamber of Commerce of Val-d'Or, which confirms that Canadian Malartic is a leading local and regional economic driver

  • Creston Mascota – "Silver Helmet" award by the Mexican Chamber of Mines as the 2020 safest mine in Mexico

  • La India – Distinction of Socially Responsible Company (ESR® 2021) for the sixth consecutive year and the 2021 "Ethics and Values" award by the Confederation of Industrial Chambers of Mexico (CONCAMIN) in recognition of the developed policies and ongoing progress relating to corporate social responsibility and sustainable development

Agnico Eagle has committed to support the recommendations of the Task Force on Climate Related Financial Disclosures ("TCFD"). The recommendations provide a useful framework to increase transparency on climate-related risks and opportunities. In 2020, the Company began aligning disclosures with TCFD. In addition, in 2021, the Company committed to Net-Zero Carbon by 2050, reported initial Scope 3 emissions, adopted a governance structure for managing climate change and commenced climate specific risk and opportunity assessments. Agnico Eagle is committed to continuing to implement the TCFD recommendations.

In the third quarter of 2021, the Company had an increase in positive cases of COVID-19 in Mexico and in Nunavut, while the Company's other operating regions remained at levels similar to the second quarter of 2021 (263 total positive cases in the third quarter of 2021, compared to 115 total positive cases in the second quarter of 2021). The Company remains engaged in managing risks related to COVID-19 and continues to apply the measures implemented to help protect the health and safety of its employees and the communities in which it operates.

In Mexico, positive cases increased during the third quarter of 2021, when compared to the second quarter of 2021, due the growing number of cases in the surrounding communities at Pinos Altos. To mitigate the further spread of COVID-19, the Company continues to promote and support the vaccination campaign by the health authorities in Mexico. By the end of the third quarter of 2021, 92% of the total employees at Pinos Altos have had at least one dose and 61% of employees have been fully vaccinated.

The increase in positive cases in Nunavut was a result of a significant COVID-19 outbreak at the Hope Bay Project at the end of September. Due to this recent outbreak, and the fact that COVID-19 cases are continuing to increase in Alberta, the main hub for the Hope Bay Project, the Company decided to idle its operations at the Hope Bay Project. This was done in an orderly fashion while ensuring the safety of employees and the sustainability of Agnico Eagle's infrastructure. Since Nunavummiut workers have not yet returned to the Hope Bay Project, no Nunavummiut were in contact with the positive cases or close contacts. The Company believes the risk of contamination for the surrounding communities and for other Nunavut mines remains very low. The no-contact protocol between the mine site and the communities is still in effect and remains a priority in order to continue protecting the communities. An operational update on the Hope Bay project is set out below.

The table below sets out additional information on COVID-19 cases identified in the third quarter of 2021; a significant majority of which were detected by the Company's screening and testing protocols.

Region

Total Positive
Cases

Detected
Offsite

Detected by the
Company's
Protocols

Recovered
Cases*

Finland

2

2

2

Nunavut

46

15

31

32

Abitibi

8

8

8

Mexico

186

4

182

184

Exploration

21

6

15

21

Toronto

Sub-Total

263

27

236

247

*Recovered cases in the third quarter of 2021 include employees that were positive and had not yet recovered at the end of the second quarter of 2021.

Agnico Eagle and Kirkland Lake Gold Merger of Equals

On September 28, 2021, Agnico Eagle and Kirkland Lake Gold Ltd. (TSX:KL, NYSE:KL, ASX:KLA) ("Kirkland Lake Gold") announced that they entered into an agreement (the "Merger Agreement") pursuant to which Agnico Eagle will acquire all of the common shares of Kirkland Lake Gold in a merger of equals (the "Merger"), with the combined company to continue under the name "Agnico Eagle Mines Limited".

The Merger will establish the new Agnico Eagle as a high-quality senior producer with the lowest all-in sustaining costs, highest EBITDA margin6 and lowest-risk portfolio7 of operating mines among its Senior Gold Peers8, together with industry-leading best practices in key areas of ESG.

Pursuant to the Merger Agreement, Kirkland Lake Gold shareholders will receive 0.7935 of an Agnico Eagle common share for each Kirkland Lake Gold common share held. Upon closing, existing Agnico Eagle and Kirkland Lake Gold shareholders will own approximately 54% and 46% of the combined company, respectively.

Canadian Competition Act approval was received on October 4, 2021. Additionally, Agnico Eagle and Kirkland Lake Gold have received relief from the Australian Securities and Investments Commission from compliance with the prospectus and secondary sale requirements of Part 6D.2 and Part 6D.3 of the Australian Corporations Act.

The joint management information circular is expected to be mailed on November 3, 2021 and meetings of Agnico Eagle shareholders and Kirkland Lake Gold shareholders have each been scheduled for November 26, 2021. The Merger is expected to close in December 2021 or in the first quarter of 2022, subject to satisfaction of the conditions under the Merger Agreement. For additional details on the Merger, see Agnico Eagle's and Kirkland Lake Gold's joint news release dated September 28, 2021 and Agnico Eagle's material change report filed on SEDAR.

Unless otherwise stated in this News Release, the forward looking information contained herein, including forward looking information regarding the Company's production and costs does not include the effect of the Merger with Kirkland Lake Gold.

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6 Lowest all-in sustaining cost and highest EBITDA margin are non-GAAP financial performance measures and are based on data from Bloomberg, equity research reports or public disclosure of the Senior Gold Peers. These measures have no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Financial comparisons between new Agnico Eagle and its Senior Gold Peers are made on the basis of the data presented by Bloomberg, equity research reports or public disclosure which may not be calculated in the same manner as Agnico calculates comparable measures.

7 Lowest-risk portfolio is an assessment of risk based data from The Fraser Institute's "Survey of Mining Companies 2020" (the "Fraser Report") and historical production data for calendar year 2020 included in the public disclosure of the Senior Gold Peers. The risk assessment is determined for the new Agnico Eagle and each Senior Gold Peer by using the Fraser Report scores for mining jurisdictions across the world and weighting such scores based on each entity's 2020 production in each applicable jurisdiction.

8 "Senior Gold Peers" means Barrick Gold Corporation, Kinross Gold Corporation, Newcrest Mining Limited and Newmont Corporation

Dividend Record and Payment Dates for the Fourth Quarter of 2021

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.35 per common share, payable on December 15, 2021 to shareholders of record as of December 1, 2021. Agnico Eagle has declared a cash dividend every year since 1983.

Expected Dividend Record and Payment Dates for the 2021 Fiscal Year

Record Date

Payment Date

December 1, 2021*

December 15, 2021*

*Declared

Dividend Reinvestment Plan

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

Third Quarter 2021 Results Conference Call and Webcast Tomorrow

Agnico Eagle's senior management will host a conference call on Thursday, October 28, 2021 at 11:00 AM (E.D.T.) to discuss the Company's third quarter financial and operating results.

Via Webcast:

A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com.

Via Telephone:

For those preferring to listen by telephone, please dial 416-764-8659 or toll-free 1-888-664-6392. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

Replay Archive:

Please dial 416-764-8677 or toll-free 1-888-390-0541, access code 57168607. The conference call replay will expire on November 28, 2021.

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

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in the LaRonde Complex (which includes the LaRonde and LaRonde Zone 5 ("LZ5") mines) and the Goldex mine and a 50% interest in the Canadian Malartic mine. These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.

LaRonde Complex – Higher Grades Drive Strong Operational Performance; New Quarterly Tonnage Record Set at LZ5; Drilling Continues to Expand 20N South Zinc Zone at Depth

The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988. The LZ5 property lies adjacent to and west of the LaRonde mine and previous operators exploited the zone by open pit mining. The LZ5 mine achieved commercial production in June 2018.

LaRonde Complex – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)

737


769

Tonnes of ore milled per day

8,011


8,359

Gold grade (g/t)

4.71


4.27

Gold production (ounces)

106,747


100,180

Production costs per tonne (C$)

$

126


$

137

Minesite costs per tonne (C$)

$

108


$

99

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

$

691


$

775

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

$

458


$

476

Gold production in the third quarter of 2021 increased when compared to the prior-year period primarily as a result of higher gold grades, partially offset by lower throughput levels. A higher proportion of the ore milled was sourced from the West mine leading to higher gold grades in the quarter. Throughput levels were affected by delays in the mining sequence primarily related to issues with the pastefill network.

Production costs per tonne in the third quarter of 2021 decreased when compared to the prior-year period primarily as a result of the timing of unsold concentrate inventory, partially offset by lower throughput levels. Production costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period primarily as a result of higher gold grades and lower production costs per tonne, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne9 in the third quarter of 2021 increased when compared to the prior-year period primarily due to lower throughput levels. Total cash costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period primarily as a result of higher gold grades and higher by-product revenues due to higher average realized by-product metal prices, partially offset by the strengthening of the Canadian dollar against the U.S. dollar and higher minesite costs per tonne.

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

LaRonde Complex – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)

2,222


1,935

Tonnes of ore milled per day

8,139


7,062

Gold grade (g/t)

4.38


4.13

Gold production (ounces)

297,348


244,184

Production costs per tonne (C$)

$

119


$

111

Minesite costs per tonne (C$)

$

110


$

104

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

$

712


$

658

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

$

499


$

552

Gold production in the first nine months of 2021 increased when compared to the prior-year period primarily as a result of higher throughput and higher gold grades. In the first nine months of 2021, the LaRonde Complex operated at or above planned levels and milled a higher proportion of higher grade ore from the West mine area. In the prior-year period, access to the West mine area was delayed in the first quarter as additional ground support was being completed and the operations were suspended from March 23, 2020 to April 29, 2020 as ordered by the Government of Quebec in response to COVID-19 (the "Quebec Order").

Production costs per tonne in the first nine months of 2021 increased when compared to the prior-year period primarily due to the timing of unsold concentrate inventory, higher development activity and higher underground maintenance costs. Production costs per ounce in the first nine months of 2021 increased when compared to the prior-year period due to the reasons described above and the strengthening of the Canadian dollar against the U.S. dollar, partially offset by higher gold grades.

Minesite costs per tonne in the first nine months of 2021 increased when compared to the prior-year period primarily due to higher development activity and higher underground maintenance costs. Total cash costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period due to higher gold grades and higher by-product revenues due to higher average realized by-product metal prices, partially offset by the strengthening of the Canadian dollar against the U.S. dollar and higher minesite costs per tonne.

Operational Highlights

  • The LaRonde Complex had another strong quarter with higher than anticipated production at 106,747 ounces of gold primarily due to higher gold grades. Ore production was affected by a delay in the mining sequence related to a blockage in the pastefill network, equipment availability and issues with the 194 booster fan limiting access to some levels in the LaRonde mine. The shortfall in production from the East mine area was partially offset by increased production from the West mine area and record quarterly production from the LZ5 mine

  • The LZ5 mine set a second consecutive quarterly record with a mining rate averaging approximately 3,290 tonnes per day ("tpd"), above the targeted mining rate of 3,020 tpd. The continuous improvement in mining rate demonstrates the realized upside potential from automated equipment. The Company is targeting to maintain this mining rate in the fourth quarter of 2021

  • In the third quarter of 2021, the mining rate in the West mine area averaged 1,280 tpd compared to a target of 1,250 tpd, which resulted in over 31% of the gold produced by the LaRonde Complex being sourced from the West mine. In the fourth quarter of 2021, approximately 25-27% of the gold is expected to be sourced from the West mine area

  • Production from automated equipment continued to track well above target both at LaRonde and LZ5. At the LaRonde mine, 26% of the production mucking was done in automated mode with operators based on surface. At the LZ5 mine, 16% of the production mucking and hauling was done in automated mode with operators based on surface

  • In the fourth quarter of 2021, booster fan 194 at the LaRonde mine will be stopped for two weeks for scheduled maintenance. During that period, development activities will be reduced while production activities will be maintained at normal operating levels. Also in the fourth quarter of 2021, maintenance will be carried out at the mill over a 30-day period to repair and improve the 5,000 tonne ore silo. During this period, the mill is expected to operate as planned and will be fed using a buggy bin

  • As part of ongoing stakeholder engagement, the Company is in advanced discussions with First Nations groups concerning a collaboration agreement with respect to operations at the LaRonde Complex and the agreement is expected to be finalized in November 2021

Project Highlights

  • At Zone LR11-3 (which is at the past producing Bousquet 2 mine), the dewatering of the old workings continued according to plan in the third quarter of 2021 and is expected to be completed in the first half of 2022. The development access from level 146 of the LaRonde mine towards Zone LR11-3 advanced by 434 metres and reached the main ramp. Production activities in Zone LR11-3 are expected to begin in late 2022

  • The construction of the drystack tailings facilities is progressing on schedule. The overall engineering level is now 96% complete. The thickener construction is completed. The filtration plant building and north cell pumping station foundations are under construction. The drystack tailings facility is expected to be operational by the end of 2022

Exploration

  • The Company expects to spend $14.1 million in 2021 to drill 39,800 metres and also to develop, extend or rehabilitate three exploration drifts (track drifts 9.0 and 215 and exploration drift 291 west) from the LaRonde 3 infrastructure towards the west below the LZ5 mine workings. During the third quarter of 2021, the Company delivered the third drill station on track drift 9.0 and initial exploration drilling started from the first drill station. The enlargement of track drift 215 progressed by 394 metres and the exploration drift 291 west advanced by 102 metres

  • Exploration is focused on extensions to LZ5, Zone 6, Zone 20N, and mineralization at the past producing Bousquet mine, as well as extensions to the recently discovered 20N Zinc South Zone located below 3,100 metes depth near the East mine

  • Highlights from recent exploration drilling in the 20N Zinc South Zone include: hole LR317-04, which returned 9.3 g/t gold, 113.7 g/t silver, 0.9% copper and 2.6% zinc over 4.6 metres at 3,464 metres depth approximately 80 metres beneath the mineral resource defined at the end of 2020, and hole LR284-01, which returned 0.5 g/t gold, 41.4 g/t silver and 11.9% zinc over 2.8 metres at 3,126 metres depth approximately 80 metres east of the mineral resource

Exploration results for the LaRonde Complex are expected to be reported in a Company News Release on November 2, 2021.

Canadian Malartic – New Quarterly Record for Tonnage Mined and Tonnage Milled; Odyssey Development Project on Schedule and Budget; East Gouldie Drilling Continues to Infill and Expand Mineralization

In June 2014, Agnico Eagle and Yamana Gold Inc. ("Yamana") acquired Osisko Mining Corporation (now Canadian Malartic Corporation) and created Canadian Malartic GP (the "Partnership"). The Partnership owns the Canadian Malartic mine in northwestern Quebec and operates it through a joint management committee. Each of Agnico Eagle and Yamana has a direct and indirect 50% ownership interest in the Partnership. All volume data in this section reflect the Company's 50% interest in the Canadian Malartic mine, except as otherwise indicated. The Odyssey underground project was approved for construction in February 2021.

Canadian Malartic Mine – Operating Statistics*




All metrics exclude pre-commercial production tonnes and ounces

Three Months Ended


Three Months Ended


September 30, 2021


September 30, 2020

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

5,828


4,502

Tonnes of ore milled per day (100%)**

63,348


59,150

Gold grade (g/t)

1.03


1.00

Gold production (ounces)

86,803


63,093

Production costs per tonne (C$)

$

27


$

31

Minesite costs per tonne (C$)

$

27


$

29

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

$

719


$

819

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

$

705


$

772


*In the third quarter of 2020, the Barnat open pit had 13,305 ounces of pre-commercial gold production.

**Excluding tonnes milled on a pre-commercial production basis, the mill operated for an equivalent of 76 days in the third quarter of 2020.

Gold production in the third quarter of 2021 increased when compared to the prior-year period primarily due to higher throughput levels and higher gold grades. The higher throughput primarily resulted from strong operational performance, with a record quarterly production excavated from the pits (18.9 million tonnes) and a record quarterly ore milled (5.83 million tonnes or 63,348 tpd). The higher gold grade primarily resulted from increased sourcing of ore from the higher grade Barnat pit in the third quarter of 2021.

Production costs per tonne in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower mill production costs resulting from higher throughput levels and the timing of unsold inventory. Production costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period primarily due to higher gold grades and lower production costs per tonne, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower mill production costs resulting from higher throughput levels. Total cash costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower minesite costs per tonne and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Canadian Malartic Mine – Operating Statistics*




All metrics exclude pre-commercial production tonnes and ounces

Nine Months Ended


Nine Months Ended


September 30, 2021


September 30, 2020

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

16,730


13,600

Tonnes of ore milled per day (100%)**

61,282


54,973

Gold grade (g/t)

1.11


0.94

Gold production (ounces)

268,459


179,016

Production costs per tonne (C$)

$

27


$

27

Minesite costs per tonne (C$)

$

28


$

27

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

$

675


$

769

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

$

659


$

756


*In the first nine months of 2020, the Barnat open pit had 18,930 ounces of pre-commercial gold production.

**Excluding tonnes milled on a pre-commercial production basis, the mill operated for an equivalent of 247 days in the first nine months of 2020.

Gold production in the first nine months of 2021 increased when compared to the prior-year period primarily due to higher throughput and higher gold grades. The higher throughput primarily resulted from strong operational performance and continuous operation through the first nine months of 2021 while, in the prior-year period, the operations were suspended from March 23, 2020 to April 17, 2020 due to the Quebec Order. The higher gold grade primarily resulted from increased sourcing of ore from the higher grade Barnat pit in the first nine months of 2021 while, in the prior-year period, lower grade stockpiles were processed during the ramp-up of operations following the Quebec Order.

Production costs per tonne in the first nine months of 2021 were the same when compared to the prior-year period primarily due to higher open pit production costs resulting from a higher stripping ratio at the Barnat pit, offset by higher throughput and higher deferred stripping adjustment. Production costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period primarily due to higher gold production, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne in the first nine months of 2021 were essentially the same when compared to the prior-year period primarily due to higher open pit production costs resulting from a higher stripping ratio at the Barnat pit, mostly offset by higher throughput and higher deferred stripping adjustment. Total cash costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period primarily due to higher gold production, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Operational Highlights

  • The mine had another strong quarter, achieving a second consecutive quarterly record for tonnes mined at 18.9 million tonnes. The Canadian Malartic pit production was lower than planned due to limited mining flexibility from a reduced footprint at the bottom of the pit combined with a higher density of underground openings. The lower performance from the Canadian Malartic pit was more than offset by a strong performance at the Barnat pit primarily due to low truck cycle time and softer rock conditions

  • The mill set a new quarterly record for tonnage milled, processing 5,829,200 tonnes (63,348 tpd on a 100% basis) in the third quarter of 2021, helped by the softer ground conditions at Barnat

Project Highlights

Canadian Malartic:

  • Tailings disposal is expected to transition to in-pit deposition in 2024 following the completion of mining in the Canadian Malartic pit in 2023. To add flexibility for tailings disposal prior to the transition, construction to increase current cell capacity is expected to start in the fourth quarter of 2021

Odyssey Project:

  • In the third quarter of 2021, underground development was slightly below plan as a result of lower equipment and personnel availability. The ramp development, with 1,118 metres completed in 2021, remains ahead of schedule and below budget from lower development unit costs than anticipated. The excavation of the first ventilation raise was started and advanced by 25 metres. In the fourth quarter of 2021, the focus will remain on the development of the main ramp, the exploration drift and the production levels 16 and 21

  • Automation technology was successfully tested with the operation of a development scoop from surface

  • In the third quarter of 2021, the contracts for production equipment and service equipment were awarded, with equipment delivery expected to start in 2022. Production equipment will have electric and diesel engines, while the service equipment will be battery powered

  • The contract for the shaft sinking is expected to be awarded in the fourth quarter of 2021. The sinking infrastructure procurement is on schedule and on budget. The shaft sinking is expected to start in the fourth quarter of 2022

  • The concrete headframe slipform pour started on September 29, 2021 and was completed in October 2021. The structural steel installation is expected to start in the fourth quarter of 2021. The headframe construction is on schedule and on budget

  • The concrete foundation for the maintenance garage was completed in the third quarter of 2021. The surface facilities of the maintenance garage are expected to be completed by the second quarter of 2022

Exploration

  • Highlights from infill drilling at the East Gouldie deposit during the third quarter of 2021 include: hole MEX21-208, which was drilled into the shallower, western portion of the deposit and intersected 6.8 g/t gold over 41.4 metres at 1,069 metres depth, including 10.4 g/t gold over 20.6 metres at 1,064 metres depth; and hole MEX21-203R, which was drilled into the central core of the deposit and intersected 8.0 g/t gold over 25.5 metres at 1,496 metres depth, including 14.5 g/t gold over 10.6 metres at 1,497 metres depth

  • On the adjacent Rand Malartic property, hole RD21-4678 returned 6.3 g/t gold over 4.8 metres at 1,989 metres depth, extending the East Gouldie deposit 1.5 kilometres east of the current mineral resources outline, further demonstrating the excellent potential to significantly grow the size of the East Gouldie deposit

  • At Canadian Malartic in 2021, the Company expects to spend $11.9 million (50% basis) for 141,400 metres (100% basis) of exploration and conversion drilling focused on continued development of the East Gouldie deposit. The regional exploration budget was increased from $3.2 million (50% basis) to $4.4 million (50% basis) to add additional pierce points into the newly defined eastern extension of the East Gouldie deposit

Exploration results for the Canadian Malartic mine are expected to be reported in a Company News Release on November 2, 2021.

Goldex – Steady Cost Performance Continues; Akasaba Project Under Review For Potential Start-Up

The 100% owned Goldex mine in northwestern Quebec began production from the M and E zones in September 2013. Commercial production from the Deep 1 Zone commenced on July 1, 2017.

Goldex Mine – Operating Statistics





Three Months Ended


Three Months Ended


September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)

695


709

Tonnes of ore milled per day

7,554


7,707

Gold grade (g/t)

1.40


1.50

Gold production (ounces)

28,823


31,008

Production costs per tonne (C$)

$

42


$

41

Minesite costs per tonne (C$)

$

41


$

42

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

$

806


$

703

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

$

762


$

702

Gold production in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower gold grades and lower throughput levels, partially offset by higher gold recovery at the mill. Adjustments to the mining sequence to manage a blockage in the pastefill network resulted in lower than expected ore tonnes from the higher grade South zone.

Production costs per tonne in the third quarter of 2021 were essentially the same when compared to the prior-year period. Production costs per ounce in the third quarter of 2021 increased when compared to the prior-year period primarily due to the strengthening of the Canadian dollar against the U.S. dollar and the lower gold grades.

Minesite costs per tonne in the third quarter of 2021 were essentially the same when compared to the prior-year period. Total cash costs per ounce in the third quarter of 2021 increased when compared to the prior-year period due to the strengthening of the Canadian dollar against the U.S. dollar and the lower gold grades.

Goldex Mine – Operating Statistics





Nine Months Ended


Nine Months Ended


September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)

2,145


1,899

Tonnes of ore milled per day

7,857


6,931

Gold grade (g/t)

1.57


1.58

Gold production (ounces)

98,132


88,033

Production costs per tonne (C$)

$

41


$

41

Minesite costs per tonne (C$)

$

41


$

41

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

$

723


$

659

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

$

686


$

653

Gold production in the first nine months of 2021 increased when compared to the prior-year period primarily due to higher mill throughput levels. The higher throughput primarily resulted from continuous operation through the period while, in the prior-year period, the operations were suspended from March 23, 2020 to April 24, 2020 due to the Quebec Order.

Production costs per tonne in the first nine months of 2021 were the same when compared to the prior-year period. Production costs per ounce in the first nine months of 2021 increased when compared to the prior-year period primarily due to the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne in the first nine months of 2021 were the same when compared to the prior-year period. Total cash costs per ounce in the first nine months of 2021 increased when compared to the prior-year period due to the strengthening of the Canadian dollar against the U.S. dollar.

Operational Highlights

  • In the third quarter of 2021, production included higher production from the lower-grade M&E zones due to temporary issues with the pastefill network which resulted in an adjustment of the mining sequence and affected production from the higher grade South zone and the Deep 1 zone.

  • In the fourth quarter of 2021, with the pastefill network back to full operation, Goldex expects to return to production levels seen in the first and second quarters of 2021

  • The extraction of the first six stopes from the South zone indicate that gold grade is better than predicted by the block model and that performance on dilution is better than expected

Project Highlights

  • The Company is revisiting the Akasaba West project with the intention to integrate it into the Goldex production profile. An internal technical evaluation is being updated to reflect current financial parameters and to optimize the production rate

  • The Company acquired the Akasaba West gold-copper deposit in January 2014. All the necessary permits were received in 2018. In February 2019, the Company decided to postpone the development of the Akasaba West open pit based on the prioritization of development capital spending

  • Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to create flexibility and synergies for the Company's operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde. Akasaba West contains probable mineral reserves of 147,000 ounces of gold and 25,900 tonnes of copper (5.4 million tonnes grading 0.85 g/t gold and 0.48% copper)

Kirkland Lake Project – Drilling Continues to Encounter a Broad Zone of High Grade Gold-Copper Mineralization Outside of the Known Mineral Resource Outline at Upper Beaver Project; Exploration Testing New Targets at Upper Canada Gold Deposit

The 100% owned Kirkland Lake project in northeastern Ontario covers approximately 25,506 hectares (approximately 35 kilometres long by 17 kilometres wide) in the prolific Kirkland Lake mining district.

At the Upper Beaver gold-copper deposit in the north-east area of the Company's Kirkland Lake property, drilling in the Footwall zone continues to return a broad zone of high-grade gold and copper outside of the current mineral resources and investigation continues upward from depth towards surface to extend mineralization and connect it with the Footwall zone at depth.

Conversion drilling below 1,400 metres depth has returned a thick high-grade intersection of the East Porphyry zone, with hole KLUB21-307W13 returning 8.7 g/t gold and 0.81% copper over 18.2 metres at 1,435 metres depth.

These recent results are expected to have a positive impact on the mineral reserves and mineral resources. An updated internal evaluation on Upper Beaver project is expected to be completed in 2022.

Approximately 57,000 metres of drilling have been completed during the first nine months of 2021 at the Kirkland Lake project, with the shallow and deep resource conversion programs at Upper Beaver remaining the focus. Regional exploration is also ongoing over different areas of the large land package owned by Agnico Eagle in the Kirkland Lake district including the Upper Canada, Munro, Skead and Bidgood properties.

Exploration results for the Kirkland Lake project are expected to be reported in a Company News Release on November 2, 2021.

NUNAVUT REGION

Agnico Eagle considers Nunavut a politically attractive and stable jurisdiction with enormous geological potential. With the Company's Meliadine mine and Meadowbank Complex (including the Amaruq satellite deposit), together with the recently acquired Hope Bay mine and other exploration projects, Nunavut has the potential to be a strategic operating platform for the Company with the ability to generate strong gold production and cash flows over several decades.

Meliadine Mine – Record Quarterly Gold Production; Nunavummiut Workforce Successfully Reintegrated in the Third Quarter of 2021

Located near Rankin Inlet in the Kivalliq District of Nunavut, Canada, the Meliadine project was acquired in July 2010. The Company owns 100% of the 111,358-hectare property. In February 2017, the Company's Board of Directors approved the construction of the Meliadine project and commercial production was declared on May 14, 2019.

Meliadine Mine – Operating Statistics*





All metrics exclude pre-commercial production tonnes and ounces


Three Months Ended


Three Months Ended



September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)


377


368

Tonnes of ore milled per day**


4,572


4,000

Gold grade (g/t)


7.58


8.16

Gold production (ounces)


90,143


94,775

Production costs per tonne (C$)


$

175


$

244

Minesite costs per tonne (C$)


$

202


$

240

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


$

585


$

706

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


$

634


$

695


*In the third quarter of 2021, the Tiriganiaq open pit had 6,881 ounces of pre-commercial gold production. In the third quarter of 2020, the Tiriganiaq open pit had 1,982 ounces of pre-commercial gold production.

**Excluding tonnes milled on a pre-commercial production basis, the mill operated for an equivalent of 82 days in the third quarter of 2021

Gold production (excluding pre-commercial gold production) in the third quarter of 2021 decreased when compared to the prior-year period primarily due to lower gold grades as per the mining sequence and increased tonnage from the lower grade open pit ore, partially offset by higher throughput levels.

Production costs per tonne in the third quarter of 2021 decreased when compared to the prior-year period due to higher throughput levels and the timing of unsold inventory, partially offset by higher site services costs, and the inclusion of open pit costs following the commencement of commercial production at Tiriganiaq. Production costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period due to lower production costs per tonne and the timing of unsold inventory, partially offset by the strengthening of the Canadian dollar against the U.S. dollar and the lower gold grades.

Minesite costs per tonne in the third quarter of 2021 decreased when compared to the prior-year period primarily due to higher throughput levels, partially offset by higher site services costs, and the inclusion of open pit costs following the commencement of commercial production at Tiriganiaq. Total cash costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period due to lower minesite costs per tonne, partially offset by the lower gold grades.

Meliadine Mine – Operating Statistics*





All metrics exclude pre-commercial production tonnes and ounces


Nine Months Ended


Nine Months Ended



September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)


1,039


1,012

Tonnes of ore milled per day**


4,590


3,693

Gold grade (g/t)


7.51


7.08

Gold production (ounces)


265,787


224,125

Production costs per tonne (C$)


$

203


$

243

Minesite costs per tonne (C$)


$

214


$

243

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


$

630


$

814

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


$

626


$

822


*In the first nine months of 2021, the Tiriganiaq open pit had 24,057 ounces of pre-commercial gold production. In the first nine months of 2020, the Tiriganiaq open pit had 1,982 ounces of pre-commercial gold production.

**Excluding tonnes milled on a pre-commercial production basis, the mill operated for an equivalent of 224 days in the first nine months of 2021.

Gold production in the first nine months of 2021 increased when compared to the prior-year period primarily due to higher gold grades as expected based on the mining sequence and higher throughput levels. In the prior-year period, the Meliadine processing plant was affected by a failure of the crusher apron feeder resulting in lower throughput levels in the first quarter of 2020 and by reduced operating rates related to measures taken to reduce the spread of COVID-19 in the second quarter of 2020.

Production costs per tonne in the first nine months of 2021 decreased when compared to the prior-year period due to higher throughput and the timing of unsold inventory. Production costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period due to lower production costs per tonne and higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne in the first nine months of 2021 decreased when compared to the prior-year period primarily due to higher throughput. Total cash costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period due to lower minesite costs per tonne and higher gold grades.

Operational Highlights

  • The gradual reintegration of the Nunavummiut workforce was completed in the third quarter of 2021

  • Meliadine delivered another strong quarter of operational performance with a record quarterly gold production of 97,024 ounces (including 6,881 gold ounces of pre-commercial production from the Tiriganiaq open pit)

  • Commercial production at the Tiriganiaq open pit was declared on August 15, 2021, 15 days ahead of schedule

  • The saline water discharge to sea season started on August 14, 2021 and was almost completed at the end of the quarter

  • Phase 2 expansion work is progressing as planned, with environmental fieldwork, engineering studies and consultations ongoing

  • Sealift activities for the 2021 season are progressing as planned and are expected to be completed in the fourth quarter of 2021

Water Management Update

  • Waterline Activities – The Nunavut Impact Review Board reviewed the permit application and issued a positive recommendation on the waterline project. The decision from the federal minister of Northern Affairs was delayed due to the Federal election and is now expected to be received in the fourth quarter of 2021. The delay is not expected to have any significant impact on the saline water storage capacity

Exploration - Mine Site Conversion Drilling Update

During delineation drilling at the Tiriganiaq deposit, hole M425-156-F1 intersected 27.4 metres grading 20.3 g/t gold (capped at 50 g/t gold) at a depth of 380 metres, with mineralization appearing to be associated with the veining. The intersection is in an interlode area where no stope had been planned and below a stope where mining is occurring. The grade is much higher than expected by the current block model and the results demonstrate why production at Tiriganiaq is exceeding the contained ounces in mineral reserve estimate as infill drilling and mining of the deposit progresses.

At Meliadine in 2021, the Company expects to spend $8.3 million for 44,000 metres of capitalized drilling with a focus on conversion at the Tiriganiaq, Normeg and Wesmeg deposits, as well as exploration drilling of the Tiriganiaq, Wesmeg, Pump, F-Zone and Wolf deposits.

In regional exploration, drilling is continuing to test targets around the Discovery deposit including the Aquarius target located 12 kilometres southeast of the mine, which is characterized by a mineralized iron formation similar to the Discovery and Tiriganiaq deposits. The Company expects to spend an additional $1.5 million for 7,000 metres of regional exploration drilling on the wider Meliadine property in 2021.

Exploration results from the Meliadine property will be presented in the Company's News Release dated November 2, 2021.

Meadowbank Complex – Record Quarterly Gold Production; Optimization and Cost Reduction Initiatives Continue; Step-Out Drilling Intercepts Significant Mineralization in the Mammoth Area

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

The Amaruq mining operation uses the existing infrastructure at the Meadowbank minesite. Additional infrastructure has also been built at the Amaruq site. Amaruq ore is transported using long haul off-road type trucks to the mill at the Meadowbank site for processing. The Amaruq satellite deposit achieved commercial production on September 30, 2019.

Meadowbank Complex – Operating Statistics





All metrics exclude pre-commercial production tonnes and ounces


Three Months Ended


Three Months Ended



September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)


971


907

Tonnes of ore milled per day


10,554


9,859

Gold grade (g/t)


3.13


2.79

Gold production (ounces)


89,706


74,921

Production costs per tonne (C$)


$

143


$

138

Minesite costs per tonne (C$)


$

144


$

139

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


$

1,242


$

1,231

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


$

1,214


$

1,260

In the third quarter of 2021, gold production increased when compared to the prior-year period primarily due to the higher mining rate and mill throughput, and higher gold grades with the deepening of the pit and the contribution from the IVR open pit. The higher throughput in the third quarter of 2021 resulted from solid mill performance and good ore grinding properties.

Production costs per tonne in the third quarter of 2021 increased when compared to the prior-year period primarily due to higher use of aggregates, higher labour rates related to higher contractor ratio, higher sealift costs from increased material transportation and lower capitalized deferred stripping adjustments, partially offset by the timing of inventory sales. Production costs per ounce in the third quarter of 2021 increased when compared to the prior-year period due to the strengthening of th...

Minesite costs per tonne in the third quarter of 2021 increased when compared to the prior-year period primarily due to the reasons described above. Total cash costs per ounce in the third quarter of 2021 decreased when compared to the prior-year period primarily due to higher gold grades, partially offset by the strengthening of the Canadian dollar against the U.S. dollar and the higher minesite costs per tonne.

Meadowbank Complex – Operating Statistics*





All metrics exclude pre-commercial production tonnes and ounces


Nine Months Ended


Nine Months Ended



September 30, 2021


September 30, 2020

Tonnes of ore milled (thousands of tonnes)


2,774


1,798

Tonnes of ore milled per day


10,168


6,562

Gold grade (g/t)


3.12


2.64

Gold production (ounces)


255,222


140,679

Production costs per tonne (C$)


$

134


$

157

Minesite costs per tonne (C$)


$

137


$

155

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


$

1,155


$

1,494

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


$

1,139


$

1,511


*In the first nine months of 2021, the Amaruq underground project had 348 ounces of pre-commercial gold production.

In the first nine months of 2021, gold production increased when compared to the prior-year period primarily due to higher throughput resulting from improved operational performance, optimization of processing facility throughput and higher gold grades with deepening of the pit and the contribution from the IVR open pit. In the prior-year period, production activities at the Complex were reduced and the mill was put on care and maintenance from March 19, 2020 to May 28, 2020 related to the implementation of measures to reduce the spread of COVID-19.

Production costs per tonne in the first nine months of 2021 decreased when compared to the prior-year period primarily due to higher mill throughput, partially offset by lower deferred stripping adjustment. Production costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period due to higher gold production and lower production costs per tonne, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Minesite costs per tonne in the first nine months of 2021 decreased when compared to the prior-year period primarily due to higher mill throughput, partially offset by lower deferred stripping adjustment. Total cash costs per ounce in the first nine months of 2021 decreased when compared to the prior-year period due to higher gold production and lower minesite costs per tonne, partially offset by the strengthening of the Canadian dollar against the U.S. dollar.

Operational Highlights

  • At the end of June 2021, the Company began a gradual reintegration of the Nunavummiut workforce. This reintegration was completed in October 2021

  • In the third quarter of 2021, the Meadowbank Complex continued to optimize its operations and achieved a record quarterly production of 89,706 ounces of gold despite challenges related to heavy rainfalls and their impact on production drilling

  • Gold grades to the mill were lower than forecast as a result of the changes in the mining sequence as reported in the Company's news release dated July 28, 2021, higher than expected dilution and production delays related to the above average rainfall in July and August of 2021

  • In the third quarter of 2021, as a result of the above events and a higher stripping ratio, operating costs were higher than expected. The Company continues to work on optimization and cost reduction initiatives, which, so far, have resulted in improved fleet performance

  • The long haul truck fleet demonstrated another quarter of strong performance as a result of good mechanical availability, improved productivity and no delays from the caribou migration. An additional four long haul trucks are expected to be received in October 2021, adding to the fleet capacity

  • The Company had planned to complete a five-day mill shutdown in the third quarter of 2021 to tie-in the High Pressure Grinding Rolls. This shutdown was delayed until the first week of October 2021 and was extended to seven days to permit the completion of additional mill maintenance

  • The sealift activities for the 2021 season were successfully completed in October 2021

  • In 2021, gold production has been averaging approximately 85,000 ounces per quarter. The recent changes in mining sequence and production delays have introduced some variability in the production plan for the remainder of 2021 and gold production in the fourth quarter of 2021 is now expected to be below the 2021 quarterly average. The shortfall in yearly gold output at the Meadowbank Complex is expected to be offset by better than forecast gold production at Meliadine

Underground Project Highlights

  • Underground development continues to progress ahead of schedule with 723 metres completed in the third quarter of 2021. The Alimak raise as well as the emergency egress were completed during the quarter

  • For the fourth quarter of 2021, the focus is shifting to operational readiness

  • The engineering and procurement activities for the underground infrastructure, including the main ventilation system, the underground maintenance shop and the cemented rockfill plant, are on target to be ready for production which is expected in the first half of 2022

Exploration

  • In 2021 at the Meadowbank Complex, $7.0 million is budgeted for 34,900 metres of drilling, including 23,900 metres of conversion drilling and 11,000 metres of exploration drilling focused on testing extensions of the IVR deposit and the Whale Tail deposit in the Mammoth Lake area, and on regional exploration targets

  • In the Mammoth area, approximately 600 metres to the west of the Whale Tail pit, drilling has encountered significant intercepts such as 4.7 g/t gold over 18.8 metres at 254 metres depth and 5.1 g/t gold over 4.7 metres at 179 metres depth. Additional holes are planned to test for extensions to these zones

  • Exploration results for the Meadowbank Complex are expected to be reported in a Company News Release on November 2, 2021.

Hope Bay Mine – Operations Temporarily Idled in September 2021 due to a COVID-19 Outbreak; Operations, Including Exploration, Expected to Gradually Resume in November 2021; Exploration Drilling Confirms Extension of West Valley Zone

Located in the Kitikmeot District of Nunavut, Canada, approximately 125 kilometres southwest of Cambridge Bay, the Hope Bay mine was acquired in February 2021. The Company owns 100% of the 205,171-hectare property which includes the Hope Bay and Elu greenstone belts. The 80-kilometre long Hope Bay greenstone belt hosts three gold deposits (Doris, Madrid and Boston) with historical mineral reserves and mineral resources and over 90 regional exploration targets. At the time the Hope Bay mine was acquired, construction at the Doris deposit was complete and commercial production had been achieved in the second quarter of 2017. The Company has initiated a property wide exploration program and is evaluating the Madrid and Boston deposits for future production.

Hope Bay Mine – Operating Statistics







Three Months Ended


Nine Months Ended



September 30, 2021


September 30, 2021*

Tonnes of ore milled (thousands of tonnes)


87


221

Tonnes of ore milled per day


946


917

Gold grade (g/t)


7.20


8.58

Gold production (ounces)


17,957


55,524

Production costs per tonne (C$)


$

323


$

362

Minesite costs per tonne (C$)


$

347


$

329

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


$

1,242


$

1,152

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


$

1,333


$

1,053


*All metrics are for the period from February 2, 2021 to September 30, 2021.

Gold production in the third quarter of 2021 at Hope Bay was 17,957 ounces, with production costs per tonne of C$323, production costs per ounce of $1,242, minesite costs per tonne of C$347 and total cash costs per ounce of $1,333. The increase in total cash costs per ounce when compared to the second quarter of 2021 and guidance is primarily a result of lower gold grades as per the mining sequence, lower recoveries related to lower gold grades and the timing of inventory.

Gold production in the first nine months of 2021 at Hope Bay was 55,524 ounces, with production costs per tonne of C$362, production costs per ounce of $1,152, minesite costs per tonne of C$329 and total cash costs per ounce of $1,053. All metrics for the first nine months of 2021 are from ...

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