Agnico Eagle Mines Limited

At this time, I would like to welcome everyone to the Agnico Eagle Second Quarter Results 2022 conference call. All lines of being placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star and then the two key. Thank you. Mr. Amara Aljindi, You may begin your conference.

Thank you, and good morning, everyone, and welcome to the Agnico Eagle Mines second quarter conference call. I'd like to start this call by thanking all of our employees for a strong quarter. When we have a strong quarter, and this is a strong quarter, persons like myself and my colleagues, the executives here, we have the pleasure to get to speak about it, but we are well aware that that there's a lot of hard work that goes into this by the thousands of employees at the mines, at the communities, at the support positions, at the rock face, who are really working hard day in, day out as a team to deliver these results. So we wanted to acknowledge that and thank everyone. On page five, first I'll say there are some forward-looking statements that we should acknowledge and everyone should acknowledge. With that said, as I move to page five, we talk about the key takeaways this quarter. And the obvious headline key takeaway is the very strong operating results. Record quarterly production, excellent cost control, especially important in this inflationary environment, which naturally will lead to strong earnings and, in this case, record cash flows. And we'll talk about the operating results and what the team has been able to do and importantly do it perhaps most importantly in a safe manner and an environmentally friendly and responsible manner. But I think the real message of today, the real story of the past quarter and I think the real story for Agnico Eagle over the next several years is the exciting and significant progress on our development projects and our exploration results. And I say that because while we are performing on all cylinders on the operations, our development projects and exploration results really reflect the future of the company, the next five years, the next 10 years. And I might say in the case of Detour, out past the next 30 years, which is quite impressive. Detour Lake, we provided a technical update. We'll get into that. That'll be a key part of today's discussion. But at 38% in mineral reserves, and extending the mine life by 10 years. Odyssey Underground, the two largest gold mines in Canada, Detour Lake and Odyssey, both continuing good development, good exploration. At Odyssey, production and development on schedule, on budget, and some initial production as early as the first quarter of 2023. The Kirkland Lake region, progress made there. Shaft number four expected to be completed towards the end of the year. Very good progress on the amalgamated Kirkland evaluation. We are about two-thirds of the way through the exploration drift, which will become part of the development. But it's not just those projects. And we'll talk about the shaft at Keetala coming close to completion. Amarok Underground starting this quarter to bring in production. Goldex, we've just approved the Akasaba satellite project, which will support both Goldex and Laurent, and continued success and development across a number of our assets. On the exploration side, and again, we'll get into more detail, but excellent results and importantly, really exciting results at both, well, At Detour, with a two-kilometer step-out hole suggesting continuity two kilometers west of where the existing or the current mine plan pit shell is. At Odyssey Underground, extension about 225 meters to the west, possible extension hole out at 1.7 kilometers to the east, again showing you the potential of these massive ore bodies for continued development with existing infrastructure, existing teams in good jurisdictions. But also some really good news on some of our other sites. At Hope Bay, some exciting exploration results. At Meliuddin, exciting exploration results. At Kitala, exciting exploration results. We will be giving a more detailed exploration release in August, and I would encourage everyone to look forward to that. And then finally a little bit on the mergers. We want to talk about the merger synergies on this call because we promised that we would but also synergies while always important are extremely important and even more important in this current inflationary environment and we are hoping and expecting that some of these operational synergies will act as a partial buffer to the cost pressures that we're seeing. Next page please. So on the operating highlights uh 858,000 ounces of production at cash costs of $726 and all in sustaining of $1,026 again uh over 850,000 ounces at $726 cash costs excellent results and and we will get questions and we have had questions about um how it is we've been able to to manage our costs in this environment We've taken a lot of proactive steps towards that. We talked about it at the previous call, and we talked about it at the call before that. We did have a view that inflation was going to be an issue in 2022. I remember Sean Boyd saying early on, this is not going to be transitory, and we looked at it that way. So we took some actions in advance. But at the end of the day, the best way to control costs is to have efficient operations, and that's what the team did. has done. In particular, we're proud across the board, but Ontario and Nunavut had superb results which really drove the rest of the company. Gold production was better than expected, grades better than expected, and throughput better than expected, with some notable call-outs to Amarok, Detour Lake, and Macassar. And again, we'll get into those through this discussion. It does remain, we do continue to see inflationary pressure We've managed it well in the in the first half of the year. We're working hard to manage it well in the second half of the year and into the future years. That said we're not immune to it and so we are maintaining production guidance we're maintaining cost guidance but we expect based on what we see that the costs are going to trend towards the upper end of the range. Some strong balance sheet. Dave Smith will talk a little bit about what we've done. But we're pleased to say that we paid down $125 million of debt as it came due in the quarter. And we've paid another $100 million since in line with what we promised. The right combination of capital to our shareholders, capital in the business, while at the same time being able to strengthen our balance sheet. And of course, continuing with the $0.40 dividend through the quarter. Next slide, please. I'll hit a few highlights on detour, and then I'll ask Natasha and Eric to talk a little bit about some of the progress on the mill expansion and on the exploration results. But hitting the highlights, I think most of you have seen them, but frankly, we're so pleased with them, I'm going to say them again. 38% increase in gold reserves. At detour, that's 5.6 million ounces. So we're at 20.4 million ounces, and I will say going to continue to grow. We've increased the mine life by 10 years. Recovered gold increased the same 38% as reserves. Importantly, a little over 400,000 ounces added in the 2028-2031 period and the reason I say importantly is because that's where we have a little bit of a dip in production. We've identified at the last call that we're working hard to offset some of that dip and roughly 100,000 ounces a year for those years is it moves a good direction in that in what we're trying to achieve. 1.8 million ounces added between 2032 to 2042 and then 3 million ounces added at the end of the mine life. And I want to talk about that a little bit later. Importantly and impressively, higher grade and lower costs for the next 20 years. That's pretty good considering this technical update incorporates some of the inflationary pressures we've seen recently versus the previous mine life. So to be able to increase grade and lower costs for 20 years on one of the best gold mines in the world I think frankly is fantastic. Our vision, and we've said this before, our vision for detour is to get to a million ounces a year. That would be through a combination of increasing mill throughput and potentially underground mining. It's our vision. We're working to get there and we expect to be able to give some clarity on that towards the end of next year. It's a lot of work, but the potential is absolutely there. to increase production, but also to increase mine life. And the final point here, again, very exciting, and Eric will talk about this, some excellent exploration results, including a step-out hole two kilometers west of the pit outline. And with that, maybe, Natasha, I'll turn it over to you.

Perfect. Thank you, Amara, and good morning, everyone. So slide eight provides an update of the status of a few critical projects required to increase the mill throughput to 28 million tons per year. The graph on this slide shows the six main projects and the contribution in tonnage of each. So the first four projects, the ones that are in blue, are completed. So this includes the introduction of drill and blast optimization, targeting mill throughput maximization, in addition to choke feeding our primary crusher. The second bar is the replacement of the 75,000 ton per day limit with the annual permit for 32.8 million tons a year. So back in 2020, when the 75,000 ton per day limit was in effect, there were at least 70 days where we achieved that daily limit and had to pull back the mill. So having that 75,000 ton a day limit removed has had a significant impact on the throughput. We also converted our pulp lifters to a curved configuration from a radial configuration, and this switch has helped us increase our tons per operating hour, but also our overall throughput. The 610 conveyor refeed initiative has successfully been completed this year, Q1 actually, to gain an additional 750,000 tons a year. So basically every time maintenance is performed on the crushing circuit, our throughput is impacted. The goal of this refeed system is simply to top up the feed going into the sag mills during the crusher downtime events. This has proven to be successful. We commissioned it in Q1. We're operating it in Q2, and the system is operating as per design. A main contributor to the 28 million tons per year increase is the installation of the screens on the secondary crusher. This specific project will add about 2.25 million tons per year. Basically, the secondary cone crusher is most efficient when the fines smaller than the desired crushing product, are removed from the feed. So by installing the screen, we're able to filter out the fines, and it will make the crusher much more efficient. So we have begun the installation of the first set of screens in Q3, and we expect to have both commissioned by Q4 this year, so stay tuned. Finally, next year, we expect to add another 750,000 tons per year due to planned runtime improvements. The plan here is to improve how we analyze our downtime drivers, how we complete root cause analysis on breakdown events, and make adjustments to resourcing, planning, and scheduling. So to summarize, all is going well, and we are on track to achieving our 28 million tons per year in 2025. And with that, I'll pass the call over to Eric Calio, our EVP of Exploration Strategy and Growth.