Agnico Eagle Mines Limited

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle second quarter results 2023 conference call. All lines have been 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, you may press the pound key. And now I will turn the call over to Mr. Amar Al-Jundi. You may begin.

Thank you very much, and good morning, everyone. Before we jump in, I would like to point out that we will be talking about some forward-looking concepts and statements, and there's some documents at the beginning of the package that you might want to go through. We have our team with us today. We're going to be in a very good position to talk about the quarter and a very good position to answer questions afterwards. But really, today there are only three key takeaways that we'll go through. One, we had a very strong operating quarter, consistent performance by the team across all the sites, and I'm proud to say now for several quarters in a row. Two, excellent progress. on our Abitibi optimization programs. As many of you know, we have a very ambitious program to consolidate and optimize our Abitibi platform. We believe we have the potential to add several hundred thousand ounces of additional production potentially, and we've made some good progress on that, and we'll talk about that and where we are. And the third point is we've had some excellent exploration results. Guy will talk about that. But excellent results across many of the operations and I would say that all of these results are in places we already operate. We have infrastructure, we have teams and we have the capacity to utilize and leverage off existing infrastructure. These are not exploration results. at the top of a mountain range in the middle of nowhere. These are in our backyard, and they will make a big difference. Guy will talk about it. In fact, we're so confident that we've increased his exploration budget, putting us over $300 million this year, demonstrating, again, the confidence we have in the business. When we talk about strong operations, just hitting some highlights, record quarterly production, costs, $840 cash costs at the bottom of our guidance range, all with another quarter of exceptional safety performance. I'm proud to say that we have now had the safest first half of the year ever in the 66-year history of the company. There is nothing more important than the safety of our people and our communities. And I've said it before, I'll say it again, you cannot have that kind of safety performance without excellent operating capabilities, and you can't have the kind of operating results we've had without that type of safety performance. That's all led to, impressively, record quarterly cash flow, and Jamie Porter will be talking about our financials later on. So hitting some highlights, payable gold production of 873,000 ounces, good quality. cost control, all in sustaining costs of $11.50 an ounce, cash costs of $840 an ounce at the bottom end of our guidance, generating almost a billion dollars of operating cash flow this quarter. Just getting into a few more, just frankly, I'm quite proud of this, so I'm going to hit a few points. Malardic produced its 7 millionth ounce since we've had it in 2011. We've updated the Odyssey project. Dominic is going to talk about that, but just some highlights. An additional 1.7 million ounces, additional three years out to 2042. And most importantly, still open at depth, still getting some very good exploration results in geologic upside. I mentioned on a call this morning, Malartic was discovered by the Goldie brothers in 1923. So that mine has been around for 100 years. It's produced with us and previously over 12 million ounces. It's got a mine life out another 20 years. It's still open. It is just a great example of putting yourself in the best places in the world based on geologic potential and political stability. 100 years and plus. Detour. Natasha is going to talk about some of the great progress the team has made there. to build that mine, but from an operating perspective, proudly record quarterly mill throughput at Detour. At Goldex, record quarterly mill throughput since the restart. At Macasa, record quarterly mill throughput, record skip tons, record underground development. The team there has really, frankly, delivered on that mine. Great ore body, great operating team. Meliodine, record monthly mill throughput in May, and Meadowbank record production for the first six months of the year, again with one of the safest quarters in the company's history. I'll address the question now because we'll get it later, I'm sure. With the very strong start of the year, we are already being asked, are we going to update and improve guidance? What I would say is it's very early. We've only had the first two quarters. But I will say we are clearly off to a very strong start. We are clearly tracking production that would be above the midpoint of our guidance, and we are clearly tracking costs very well relative to our guidance. So an excellent start of the year. We're very confident, and we're confident going forward. Next slide. Actually, keep it on this slide here. So if we do the update on the key drivers again, Natasha and Dominic are going to talk about it. I'll just hit a few points. As I mentioned, Canadian Malartic, we updated the internal study in June. We talked about the additional ounces, the additional years, the potential there. But really what's exciting more than anything is the significant geologic upside that we continue to see there. That is a fantastic asset. At Detour Lake, Natasha is going to talk about it. The great progress we've made, but also Guy is going to talk about some of the exploration results to bring in potentially underground ore. Remember, our objective at Detour, our vision, is to try to get that to a million ounces a year. This is a mine that's already out to 2052 that is still going to be increasing And to get it to a million ounces a year, it's going to be a combination of increasing the mill throughput and bringing in higher grade ore from the underground. And we're working on that. And we'll be looking to give some updates in the first half of next year. On optimizing some of the other assets, good progress looking at the potential at Macasa, the upper zones in Amalgamated Kirkland. We're doing our work on Upper Beaver. We're doing our work at Wassamak. As I remind everyone, the opportunities there are not just the base case standalone for those projects, but really what we're excited about and what we're working hard on is can we develop those assets without having to build additional mill capacity and utilize existing infrastructure, mill infrastructure and tailings infrastructure at either Mallardic or at La Ronde. As a reminder, the Upper Beaver and Wassamak each have a potential for between 150,000 to 200,000 ounces a year. Amalgamated Kirkland and the Upper Zones at Makassar, 20,000 to 40,000 ounces a year, and that's progressing well. So just between those projects, we have the potential for an additional 350,000 to 450,000 ounces a year using existing infrastructure, which reduces our permitting risk, which reduces our environmental footprint, and materially increases our return on capital. That's something we're very focused on. And that doesn't include other projects, for example, at CAMFLO, for example, potentially at Second Shaft at some point at Mallardic. Now, before I turn it over, we're also getting questions on how are these studies going Frankly, they're going well. There are no delays whatsoever. We expect to start to come out with some guidance in the first or second quarter of next year. But understand something as simple as, you know, the underground at Mallardic, it just takes a lot of drilling. These things just take a little bit of time. And frankly, I'm very impressed with the way the team is working and the progress made. And again... we expect to be able to start giving some guidance in the first or second quarter next year. You know, not everything is probably going to work, but things are looking pretty well so far. So with that introduction, I will turn it over to Dominic to talk first about Odyssey.

Thank you, Amar. Odyssey project, if we put it in perspective, the first hole where we discovered the East Goldie Zone in 2018. In 2021, we released the first study and we just updated that one last June. Very good improvement where production profile increased by three years. So we have now in front of us a 20 years life of mine with 8.5 million ounces on the production plan. And this is just the beginning. As Ammar said, This is, there's still full of potential to just increase those zones and eventually maybe also on the regional aspect too. Maybe one important point about that updated study and where we are today is we de-risked the project with now, in 2020, we had 5% of the quality, the answers which were under indicated resources, now we're up to 53%. which is a good news, and the grade is still there. There's no discrepancy. The team are happy about that. And also, we have now 60% of the surface construction completed in the last two years and a half, which was not the easiest year to do that, but I need to say the fact that we were in a B2B, the fact that also we had... good guys, good leaders with experience to deliver that. This has been done, very well done in those years. And I have in the room here Serge Blais and Daniel Paré, which are two leaders, key guys, which have worked on that. We are now going to reduce the pace of the construction. The workers outside are going to decrease from 400 to 150, so it's going to be easier paced. And now we're getting into the next phase, which is sinking the shaft. But overall, at the current gold price, the value of the project is $2.5 billion with a 33% return on the investment. An update on the ramp, how it's going. Odyssey South ramp up going on track. So the team did over one kilometer drilling last month. In May, it was a record. So we are now at 600 meters below the surfaces. And we start the production from the Odyssey South Zone, which is the first one we're going to mine there for the next three, four, five years at approximately 80,000 ounces per year. We are on track with that. Maybe a good news on the reconciliation so far, we talked to you about the internal zone, which was something difficult to see from the surfaces or to understand from the surfaces. Now we're touching it, and we see that there is upside through those zones. And that could potentially add more ounces from 2024 to 2027, but it is still early. We're defining the infill drilling program right now to better understand those zones. The first dope was supposed to be 30 tons at 2.6. It ends up to be 45 tons at 2.9. So this is a great bonus that we had. The next important phase also is all the shaft sinking. So to access the east Gaudi zone, which you could see on the bottom left of the figure, there's two things. We need to bring the ramp and to build all the infrastructure and to start to develop the first pyramids. We also need to sink the shaft. So it's a 1.8-kilometer shaft. Today we're at the 76-meter done, and we need – We are also in the step that is now back to the, or we're just initiating the full cycle to sink the shaft. So we took the first four-meter bench last week, and the next one is coming in the coming weeks, and we start to installing the seal. So that's a good news. That was an important step, and all the construction done behind in the past year was to achieve that. So everything is on track on that side. We had up to... 16 drills uh on the property in the in the second quarter so as you could see we're still drilling intensively in the past year we've put emphasis on to doing conversion again to de-risk that study but now we're turning back to do more exploration and potentially add resources and on top of that we need to recall that the mill have a 40 000 ton per day capacity still available in the one of the best place in the world so we have homework to do to bring some answers through that meal So on that, I would pass the microphone to Natesha.

Thank you, Dom, and good morning, everyone. I'm on slide nine. The slide highlights the evolution of Detour and the journey that it has been on to make operational improvements on all fronts, actually, from the mine to the mill and on the maintenance front as well. The culture of Detour has always been one that's focused on safety. and on minimizing our footprint, but also one that focuses on cost control and value generation by just going back to basics on how we operate, by assessing innovative approaches, by constantly pursuing efficiencies, and most importantly of all, by empowering our people. As you see here, there are some initiatives that the site has successfully achieved, and what we've shown here just scratches the surface. The bottom line is that you can see that we have a track record of delivering improvements, and these improvement initiatives is an ongoing process. And so we continue the transformation of Detour into one of the world's largest and most profitable gold mines by assessing the potential, like Omar said, to achieve the 1 million ounces annually. As you know, this comes in the form of two main projects, increasing the mill capacity and assessing the underground potential. As Amara mentioned, both are currently ongoing. But from a mill tonnage perspective, as shown on the graph, we have steadily been delivering year over year and growing mill capacity by 5% on an annual basis. This past year, we have completed the installation of the screens on the secondary crusher, and we believe that we can add an additional 1.4 million tons to the throughput from 2022 to get us to an annual throughput of about 27 million tons. And as mentioned before, we're also advancing several projects to improve the runtime and sustained throughput of 28 million tons by 2025 or even sooner. And as a result of our ongoing efforts, this quarter, the tons per operating hour improved significantly. And combined with the high mill availability, the mill recorded its best quarterly mill throughput and close to what we need to achieve the 28 million tons a year. Now we are looking at sustaining it, and so we're looking at small, small modifications in different areas. We're looking to improve the efficiencies of the sag discharge screens. We're looking at small changes to extend liner life. We're tweaking the refeed system so that it operates better and more efficiently in the winter. We're relocating some of the pipelines in the mill to maximize efficiency of pipe replacement during our shutdowns. And in parallel, we're also assessing a few projects to potentially exceed the mill throughput beyond 28 million tons a year. And we're going to be trialing the ore sorting, and we're going to be working on an expert system like we have at some of our other mills. And then in terms of the underground study, we're continuing to advance this based on a revised mineral resource that factors in additional drilling that was completed earlier this year. And as Ammar mentioned, we expect the report and the results of the study to be shared with you sometime in the first half of 2024. But in parallel, the exploration team is continuing to carry out an aggressive drilling program at Detour, and Guy will be expanding on this and some other exploration programs next. But before I end, I just want to commend the sites on an incredible quarter and a year so far. So on behalf of Dom and myself, thank you for all your hard work, your passion to continually look at ways of improving and optimizing our business, not just at Detour, but at all our sites, and for making our jobs a little bit easier. So with that, I'll turn the call over to Guy.

Thank you, Natasha, and good morning, everybody. So to continue at Detour on page 10 of the slide deck, we continue to see excellent results below the west bit and the extension, so Now the focus is really to get to an underground researchers model, reduce the drill spacing over that large area. You know, we look at the scale where we continue to get good results up to two kilometers away from the pit. So based on those good results we've been getting year to date, and I'm not going to go through the long list we've seen in the press release, but those are the kind of grade and width that, you know, mix it at first sight for an underground scenario. So the focus is really to continue to advance. We're currently ahead of schedule with the drilling. We see unit costs that are better than expected with good productivity on our drill over there, on our drilling program. So we're planning to add, as part of what Amar mentioned, an overall addition of $32 million, a portion of that. $5 million is to carry on drilling at the same pace with those 10-roll rigs. and in order to be in a better position by year-end to provide sort of a first overview of what could be underground resources for the tour around which we're going to be building our business case for the underground project. At a larger scale, I would say if we go to next slide, 12, and the overall, the rest of the portfolio, we've seen overall very good results on several assets. For example, at Milliardine during Q1 and Q2, We've seen results in Thuriganyac, at Depp, you know, at some of the deepest drill holes ever drilled, at Milyadin. That support, you know, what we believe, that the deposit remains open, has significant upside. It's one of those that we see a very good potential for reserve replacement. So we want to be a bit more aggressive. So with that, again, that stage gate approach, you know, we want to add to the budget that was approved, adding another 25 kilometres of drilling and also extending that drill platform to the east so that we have a better understanding of how much we can continue to grow Milyadin. Moving to Ketela, we've seen again some very good results close to the Rimpe Rura infrastructure. Those are very near-term opportunities where we can quickly bring additional resources, bring them to reserve very close from existing infrastructure. And in parallel, while conducting some geotechnical drilling closer to the surface, we've encountered Some of that parallel C-SAR zone in an area that was previously maybe not understood properly. We started to understand the C-SAR zone about six or seven years ago at a certain depth. And now we realize that some of those roads closer to surface were potentially stopped a bit short. So now we are reassessing when we have left. any of those potential parallel structure in the upper part of the mine, which could be very appealing because we already have all of those infrastructure over there, which could provide additional flexibility for the team over there at Ketela. Moving to Makassar, continue to get a good result in the extension, both of the main break and the salt mine complex. But more importantly, now that we have an old shaft number four in place and a much much better you know capacity about with the uh the ventilation access and everything so now we are starting to put some long-term thinking and extra establishing long-term exploration platform like we did back in the days at laurent so uh establishing long-term exploration drift to the east to the west of shaft four because we know that the deposit remains open at depth and uh all of those zones so it opened up uh with shaft number four infrastructure a very good playground to think long-term at MACASA. And maybe to wrap up on a little bit on Monartic that Dominique covered in the beginning of the presentation, again, another site where we want to continue to add additional drilling in the second half based on the good results that have been delivered. We see, again, milliading the opportunity to, you know, continue to grow. We just took about 9 million ounces out of the total 16 million ounces. So we see the opportunity to continue to convert the remaining resources that are currently not in a plan and bring them into a further update of the project while we continue to grow the footprint of the deposit that continue to be open laterally. Moving to next page quickly, Obey, this is another one where we took sort of a state gate approach. We were basically starting with a budget for the first six months, but based on the very good results we've seen both at Doris and more recently at Madrid, and I think this is why we see maybe a change in the dynamic. We always knew that Madrid was open at depth and laterally. Now we are seeing, you know, excellent grades with good thicknesses at depth that shows that, you know, The structure seems to be maybe better defined, higher grade with visible gold and with large step out that we've conducted like that Draho 105, which is 500 meters step out below. So we see excellent potential to significantly grow. So it's going to continue to take time to bring it to resources. But now we see, you know, what we believe when we did the acquisition that we can significantly grow the deposit and identify a higher-grade source of ore. So those things are unraveling, and we're pleased with the results so far, which convinced us to add another $14.5 million for the second half of the year. And on that, I will be handing over to Jamie, I think.

Great. Thank you, Guy. Yeah, just some brief comments on the financial results for the quarter. Overall, as Damar summarized up front, just a phenomenal performance from an operating and a safety perspective, leading to phenomenal financial results, resulted in a number of new records. From a gold production perspective, we hit a new record of 873,000 ounces, and that reflected 100% of Canadian malartic for the second quarter. In terms of operating margin, again, close to a billion dollars of operating margin with very strong contributions from our two biggest mines, which happen to be the two biggest mines in Canada, Detour and Canadian Malartic, and also a strong contribution from Fosterville. From a cash cost and all-sustaining cost performance, we're in great shape relative to guidance. We came in at $840 per ounce total cash cost, which is $25 below the midpoint of our guidance. and $11.50 in terms of all-in sustaining costs, $15 below the midpoint of our guidance. So our costs did benefit from Canadian dollar weakness in the quarter relative to what we'd guided, but also the strong operating performance really helped to ensure that we had a strong cost performance. You can see in the table at the bottom right that we've been successful in managing our costs, keeping a lid on our costs over the past three quarters. where they've actually been fairly stable or in decline. We move over to the next slide, just some financial highlights here on slide 14. We'll walk through our overall, the records that I mentioned. We had record revenues for the quarter. We sold 859,000 ounces. We're benefiting from the strong gold price environment at a realized price of $1,975 per ounce. So again, record revenues. Very strong earnings, our adjusted earnings per share were $0.65 in the quarter, again reflecting the strong operating performance. If we look at our capital spending for the second quarter, we came in, if we include capitalized exploration, at $416 million, which is in line with our guidance. So great results overall, Q2. My last slide just summarizes our balance sheet position, the current strength and financial flexibility that we have. We were active in terms of debt repayment in the quarter. You'll recall that at the end of the first quarter, we drew $1 billion on our credit facility as part of the acquisition of the other 50% of Canadian Malartic. We repaid $900 million of that in the second quarter, $600 million via the term credit facility, and $300 million from cash on hand. So we ended the quarter with $433 million in cash. down about $300 million from where we were at the end of the first quarter. But overall, very strong financial position to be in. We actually improved our net debt position to $1.5 billion in the quarter and increased our overall liquidity to $2.1 billion. So we're in great financial shape. And with that, I'll turn it back to Ammar.

Thank you, Jamie. I would like to, on this first call for Jamie, formally welcome him to the company. You know, we have a great leadership team, and we're also very protective of our culture. And I think with Jamie, we got a super smart guy with a lot of experience, but also a nice guy who fits in very well. So welcome, Jamie, and congratulations for already delivering the highest quality cash flow record ever for the company. We know that was mostly you. So just finishing off before we jump into questions, look, this is the same strategy we've had for 66 years, which is we want to build a high-quality, reliable, consistent gold company with superior leverage to gold. But not only superior leverage to gold, but importantly, superior leverage to gold on a per share basis and on a risk-adjusted basis. And we're going to do that by building profitable, high-quality, low-risk business based on two key factors, well, a few key factors. One, a leading position in what we strongly believe are the best mining jurisdictions in the world based on two criteria – One, obviously the geologic potential, but it has to have the geologic potential for multiple mines over multiple decades. And two, associated with that, the political stability to actually operate multiple mines in multiple decades. You know, when you look at Malartic around since 1923, when you look at Detour originally as an underground mine going to Canada's largest open pit mine, going back potentially to an underground mine, When you look at all of the things that Guy talked about, all of those exploration results, they're tremendous, but they're in established camps where we've been for a long time. This strategy works. It's worked for years, and we think it's even more important given the geopolitical issues going on in the world today. We have built this business largely on demonstrated technical skills. All of these projects we're working on... are tough, but we're going to make them happen, or we're confident we're going to make them happen. You know, we've had Jean Robitaille and his team talk about some of the things they're working on. We have an excellent technical team. We delivered these results. Let me step back. The team delivered these results not in an easy quarter. We had the fires in Ontario and Quebec. We had the earliest and longest caribou migration season in that we've experienced in Nunavut. That's a good thing. It shows the health of the herds up there. But the team delivered record results with those challenges. We're going to continue our emphasis on per share metrics. We're going to continue to understand that if you want to be in a region for 50 years or 60 years or 100 years, you can't just be good at ESG. You can't just be... accepted in the community, you have to be part of the community. And that's what we've always done and we're going to continue to do. We're going to continue to focus on creating value through the drill bit. We are going to continue disciplined capital investments based on knowledge and diligence. And we're going to continue to return capital to shareholders, building on our 39 years of consecutive dividends. You know, we... Sometimes people at meetings mention that Agnico Eagle is the sleep well at night gold stock. And I would say that I hope that even with the challenges, what we've been able to deliver in this quarter demonstrates that we are, in fact, the sleep well at night gold stock. And so with that, operator, I'd like to turn it over to questions.

Thank you. Ladies and gentlemen, we'll now conduct the question and answer session. If you have a question, please press the star key followed by the number one on your touchtone phone. You will hear a one-tone prompt acknowledging your request. If you would like to withdraw your question, please press the pound key. Also, ensure you lift the handset if you're using a speakerphone before pressing any keys.

One moment while we stand by for questions. First question in the queue comes from Ralph Profetti with 8 Capital.

Your line is open. Please proceed.

Great. Thanks, operator. Good morning, everyone. Ammar, two questions from me. Firstly, there was some discussion about the challenges in defining some of the internal zones at Odyssey. And, you know, when we think about potentially adding production 2024 to 2027, is that dependent on sort of a successful surface exploration drilling program or Will we need to move more towards an underground drilling strategy to better define those resources?

I'm going to take that one. The internal zones were originally recognized from surface drilling, but they are a bit different in nature than the Odyssey South and Odyssey North that sits at the contact of the porphyry. Now, as we are getting closer, we're having a lot more access, a lot more drilling as we are infilling and bringing the Odyssey South into production. And now we get to better understand the shape of those. So we took a conservative approach so far, you know, not putting any of that into the mine plan. And now they are showing up as an incremental done. And we see more of that that will show up as, you know, production will take place and we're going to get a better understanding because they are not as well defined in the south zone. So it takes more drilling, takes more development, and you're going to see them showing up progressively along with in the life of mine.

And one thing, and maybe Dominic, you can mention on this, the team, and it's a good question, and the team has already changed the ramp positioning so that when we're down there we're much better able to exploit the additional ounces to the extent that they're there. Dominic, I don't know if you want to... I guess I've explained it well enough.

No, that's fine.

Okay, great, great. Yeah, that's quite helpful. Maybe a question for Detour and Natasha. On first onset, does the nature of the mineralization show favorability to ore sorting, and is this simply sort of a low-density, unmineralized versus high-density mineralization? And would ore sorting sort of be more amenable in the underground scenario versus the open pit or both?

Hi, Ralph. I'll start and then I'll let Jean add to this. So with respect to the ore sorting, we haven't started the phase two trial, but we are looking at about one and a half million tons of material that we plan on trialing this year, majority of which is all of it is actually at the pit Jean, do you want to?

Yeah, I will step in. Listen, the proposal is to use marginal ore on stockpile mainly and just do an upgrade with the ore sorting. So it's ongoing, 1.5 million tons. We anticipate to complete the study in the next, let's say, 12 months, and we'll see from there. Okay. Thanks very much. Thank you.

Your next question in the queue comes from Anita Soni with CIBC. Please proceed.

Hi. Good morning, everyone, and congratulations on a strong result. My question is with respect to the drill results at Hope Bay. Could you just give us some context in what, you know, that means to the mine plan and when you expect to restart Hope Bay and the timeframe on that project?

Hi, Anita. I'm going to put some colour maybe on that. We were obviously, you know, in order for OBE to work, we see the need for the mine to be much larger, like we are doing at Medellin, something that will be between 300,000 ounces to 400,000 ounces of gold per year. Therefore, we were needing either to find additional mining area to be able to ramp up the tonnage or find better grade. And I think what we are demonstrating with that new drilling at Madrid is that we have potentially identified and other mining area with good grade, better grade. So it shows that, you know, we can not only potentially grow the critical mass of resources, but get better grade. And that will eventually be incorporated as we're going to get more drilling into updated study. So it just means that we know we were right, that there are a lot more gold over there. Locally, it seems that it's even better grade, and we're going to continue to need more time for drilling. But we now recognize that it's not just wishful thinking. You know, it's there, and those drill holes are demonstrating that it works to carry on drilling on it.

Thank you. And secondly, on Fosterville, so you received your permits to resume mining and processing at your prior rate. And I think you didn't upgrade the guidance because you're catching up on development work. But would that have an impact to 2024? I think my understanding was it was about 30, in the order of 40,000 ounces, give or take 10,000 for next year that could have a potential positive impact.

Hi, Anita. So right now we're currently working on updating the mining sequence based on the mid-year models and getting ready for the budget season and looking at the production profile for the remainder of, of 2023 and going into 2024 onwards. So I would say for now, we've decided to focus in on the capital development in an effort to get ahead of the critical areas of the mine, and we'll have an update on the rest of the life of mine towards the end of this year.

Okay. Thank you. I'll leave it there. Thank you.

And ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. The next question in the queue comes from Mike Parkin with the National Bank. Please proceed.

Hi, guys. Congrats on the good quarter. And Jamie, welcome aboard officially.

A couple just kind of housekeeping items. With Canadian Malartic, the depreciation per ounce, reported for Q2. Is that fair to kind of assume a similar rate going forward, or is the book value still not quite set in stone, and therefore depreciation grounds could be a little bit volatile at that asset?

Yes. Thanks, Mike. It's the latter. The way the accounting works for that is you have really 12 months from the time of acquisition to do the the purchase price allocation, but I'd say what we recorded in the second quarter is the best estimate for Q3, Q4, and if there's an update, it would be towards the end of the year.

Okay. Sorry about that. Second, where are you in terms of being cash taxable in Detour Lake? Are you paying taxes? Are you still consuming tax pools?

Yeah, so I think our forecasts have us actually paying cash taxes. I mean, obviously we're paying Ontario mining taxes, but cash taxes starting next year. But that's all dependent, of course, on the plans with respect to underground development, which would defer the payment of cash taxes to subsequent years.

Right. Okay. Good point. And then also on detour, I remember in the past From past owners, they've negotiated discounted power costs. Is that something that's behind you now, and you're paying kind of average grid prices, or do you still have those rolling contracts with discounted rates applied?

Hi, Mike. We still have the contract in place until the end of this year, and we're working on a new program starting next year, hopefully.

And is the discount... I remember it was pretty significant. Is it still kind of that similar scale where it's meaningful savings for you guys?

Correct, until the end of this year, yes. Okay.

Okay, that's it for me. Thanks very much. Thank you.

And the next question in the queue comes from Tanya Jakuskronik. Your line is open. Please proceed.

Great. Good morning, everyone. Congrats on a good quarter, and thank you so much for taking my questions. I think I'm going to start with Guy first, just on the expiration results. Guy, I know I asked this question on the Q1 call as well, and you've had more drilling done to date. And I know we talked about reserve replacement. With what you're seeing today, is that still on track to replace your reserves this year?

Overall, yeah, with what we foresee with the addition of East Goldie on the top of the ongoing replacement at each of the sites, we expect the overall reserve to be at least replaced, if not growing, by Iran.

One asset that you didn't talk about on these exploration results, and I apologize, the press release was long, and maybe I missed it, but you didn't talk about Fosterville, right? You know, has anything changed there with respect to what you think you see on the exploration side or the exploration upside?

No, we continue to drill in specifically two areas. We continue to infill in the Robinsville area where we are getting kind of a mixed bag of results, but I think it is kind of in line with the known part of Robinsville above the decline so far. And at the bottom of the Phoenix, you know, in what we call the Cardinal's Plague, We continue to see some interesting results, some time-wide average grade within it with some smaller-scale vein with VG. Obviously, nothing like this one zone yet, but we see, again, good potential in the down-plunge extension of the Phoenix.

Okay. Okay, thank you for that. My second question is just a little bit to talk about the inflationary pressures, and maybe that's over to Amara. You mentioned in the press release that you are seeing some relief. I know I ask in what areas are you seeing the relief. I'm just trying to understand because different companies with different assets are seeing different things. So I'm just interested in where you're seeing relief versus your guidance that included the 2022 pricing. Thanks, Tanya.

So, one, we had some tailwinds with the currency, which helped, which continues to, but certainly we have seen relief on some of the consumables. Energy is a big one. As I think you can see on the press release, you know, we've been able to hedge a good portion of our diesel. I think it's at 65 cents, if I recall, versus 93 cents in our budget. So, the team did a pretty spectacular job in my view of waiting out the peak and coming in when the markets were more advantageous. We're seeing relief on steel grinding material, a number of consumables. We're also starting to see, and often exploration is a leading indicator, we're starting to see better drillers available, higher quality, more numbers, better performance. The biggest challenge probably remains with respect to cost pressure is people. We are still working very hard to make sure we get the people and the highest quality people. Now I'll repeat what I've said before as difficult as it is for us when you are the number one employer and you've been there for 60 years and you have the best projects you always get the best teams available. While it's difficult, I would say our strategy leaves us in a competitive advantage even in that area.

And just on the same thing with explosives and cyanide, you're seeing some relief there as well?

Yes.

Okay, that's good. And I know that most of, and maybe just for myself, you would have very low inventories on site given your location, except your isolated mine, but Your other mines would have very low inventory on site, so you'd be pretty much buying on spot markets now. Would that be a fair statement?

That's right. I mean, as you correctly stated, it's a different story up in Nunavut because you have the barge season. But, yes, where we operate in the Abitibi in particular – It's a very substantial mining district, and we can operate with lower inventory. So, yeah, much more spot pricing.

And if I could ask just one final question, and Amar, I know you talked about the guidance and sort of, you know, you're not changing the guidance, but we're above the midpoint on production. Maybe you can just guide us to, you know, because the whole sector, I would say majority of the sector is second-half weighted mining. with a strong Q4. Can we just review with you how your second half looks like? Is it evenly distributed, and are any mines taking a lower production profile in the second half that we should be aware of?

I think what I would suggest is the third quarter, at least by my forecasts, and I caveat with I've been in this business for 25 years, and you never know what's going to happen, but The third quarter should be very similar to the second quarter, should be. The fourth quarter, the variability, Tanya, as you know, is going to be at Keetala, whether we get the SAC approval or not. But what I would say is our guidance is assuming we don't get it, and if we do get the approval to continue to operate at 2 million tonnes a year, then I would... you know, that's 30,000 roughly extra ounces. So without changing the guidance, I would expect the third quarter to be similar to the second and the fourth quarter to be less if we don't get the SAC, but that's in our guidance. And if we do, then it would be similar again to the second quarter.

Okay, that's perfect. And then just a clarification, I think Anita asked on the Fosterville. From memory, I had about 30,000 ounces. Maybe Natasha can confirm that if we were to go back to the additional throughput, what the permit allows you, it would be an additional 30,000. Is that fair?

I think, I mean, we're still working on our budget for next year. What I would say is it allows us to operate those six hours at night that we weren't able to operate. So that's going to have an impact on ounces. We are catching up a little bit on development. You know, the guys, frankly, did a stellar job in the first half of the year dealing with that restriction. But also, and this is important, very important, in the scheme of things, it's not a huge number, but it also makes the work environment a lot better for our employees. It was a tough work environment. It was hot. We don't like to do that to anybody. And so... I just want to make sure we emphasize that it's not just the ounces, it's also, importantly, the work environment for our employees.

No, no, yeah, for sure. Okay, thank you. I'll let someone else ask questions.

And your next question in the queue comes from John Tomazos from John Tomazos Very Independent Research.

Thank you. With the $28 million drop in first half exploration expense from a year ago, could you explain how much of that is more being capitalized due to success versus any stream linings versus more or less meters being drilled?

Hi, John. So it's mostly, I would say, a reprioritization of the asset. So we are doing less on other projects. Let's say in Mexico, for example, we've basically stopped drilling over there, reassessing the potential. We've also reduced activity, for example, in Colombia. But I would say the budget on key value driver or the number of meters hasn't changed. So it was easy to say we, in a lower gold price environment, like we were facing during the budget period, we thought that less money should be allocated to grassroot projects, and we should focus on operating assets and key value drivers.

When you drill in the Abitibi, sort of in your backyard, are the costs lower than when you're operating in Sonora or Columbia or other places? grassroots places?

It's very variable depending on the location, to be honest, John. If you have no water, if it's more labor-intensive. But I think all in all, we are drilling at similar costs in Mexico. It also depends on the size of the project. So when we have a similar scope of work, similar kind of drill program, We can achieve good costs. The costs are just not dispatched the same way you have to transport water or if you're in the ABTB where you can find water a little bit everywhere.

Thank you. Thank you. And the next question in the queue comes from Anita Soni from CIBC. Please proceed.

Hello. So it was just a follow-up to Tanya's question about the cadence of Q3 and Q4. The downtrend, all else being equal and Ketela not getting its permit, is because you would have to throttle back Ketela in the fourth quarter. And I think the second half of the year, La Ronde will have sort of periodic shutdowns to deal with that, I guess, tie-in of the new system there. Is that correct?

Yes, broadly correct, Anita.

Okay. All right. Thank you very much.

Thank you.

There are no further questions at this time. Speakers, do you have any closing remarks?

Well, we just want to thank everyone. We know it's a busy day. And then finally, I hope all of you get a little bit of time off in the next couple of weeks with your families. Summers in Canada are short. So thank you, everyone, for joining us, and have a good day.

Thank you, ladies and gentlemen. This will conclude your conference. Please disconnect your lines.