AEM Corporate Update Presentation

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  • 1. AGNICO-EAGLE MINES LIMITEDFirst Quarter 2012 ResultsApril 2012
  • 2. Forward Looking StatementsThe information in this document has been prepared as at April 27, 2012. Certain statements contained in this document constitute“forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forwardlooking information under the provisions of Canadian provincial securities laws. When used in this document, the words “anticipate”,“expect”, “estimate”, “forecast”, “will”, “planned”, and similar expressions are intended to identify forward-looking statements orinformation.Such statements include without limitation: statements regarding timing and amounts of capital expenditures and other assumptions;estimates of future reserves, resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of futureinternal rates of return, mining costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and othercash needs, and expectations as to the funding thereof; statements and information as to the projected development of certain oredeposits, including estimates of exploration, development and production and other capital costs, and estimates of the timing of suchexploration, development and production or decisions with respect to such exploration, development and production; estimates ofreserves and resources, and statements and information regarding anticipated future exploration; the anticipated timing of events withrespect to the Companys mine sites and statements and information regarding the sufficiency of the Companys cash resources. Suchstatements and information reflect the Companys views as at the date of this document and are subject to certain risks, uncertaintiesand assumptions, and undue reliance should not be placed on such statements and information. Many factors, known and unknowncould cause the actual results to be materially different from those expressed or implied by such forward looking statements andinformation. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves,mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, capital expenditures, and othercosts; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks;community protests; risks associated with foreign operations; governmental and environmental regulation; the volatility of the Companysstock price; and risks associated with the Companys byproduct metal derivative strategies. For a more detailed discussion of such risksand other factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements containedin this document, see the Companys Annual Report on Form 20-F for the year ended December 31, 2011, as well as the Companysother filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The Company does notintend, and does not assume any obligation, to update these forward-looking statements and information. Marc Legault, a QualifiedPerson and the Company’s Senior Vice-President, Project Evaluations, reviewed the technical information disclosed herein. For adetailed breakdown of the Company’s reserve and resource position see the February 15, 2012 press release on the Company’swebsite. That press release also lists the Qualified Persons for each project. 2
  • 3. Notes To InvestorsNote Regarding The Use Of Non-GAAP Financial MeasuresThis document presents estimates of future "total cash cost per ounce" and "minesite cost per tonne" that are not recognized measuresunder United States generally accepted accounting principles ("US GAAP"). This data may not be comparable to data presented byother gold producers. These future estimates are based upon the total cash costs per ounce and minesite costs per tonne that theCompany expects to incur to mine gold at the applicable projects and do not include production costs attributable to accretion expenseand other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable toreconcile these forward-looking non-GAAP financial measures to the most comparable GAAP measure. A reconciliation of theCompanys total cash cost per ounce and minesite cost per tonne to the most comparable financial measures calculated and presentedin accordance with US GAAP for the Companys historical results of operations is set forth in the notes to the financial statementsincluded in the Companys Annual Information Form and Annual Report on Form 20-F, for the year ended December 31, 2011, as wellas the Companys other filings with the Canadian Securities Administrators and the SEC.Note Regarding Production GuidanceThe gold production guidance is based on the Company’s mineral reserves but includes contingencies and assumes metal prices andforeign exchange rates that are different from those used in the reserve estimates. These factors and others mean that the goldproduction guidance presented in this disclosure does not reconcile exactly with the production models used to support these mineralreserves. 3
  • 4. AEM PositioningStrong Cash Generation With Measured, Focused Growth andAttractive Dividend Yield Portfolio of quality, long-life mines that are performing well Measured production growth from existing assets  Execution risk has declined significantly Exploration upside and reserve growth expected from existing assets  Several 100%-owned, large, open orebodies Political risk profile expected to remain low Strong cash flow funds dividend, exploration, capital reinvestment programs and enhances financial position 4
  • 5. Q1 2012 Operating Highlights Record quarterly gold production from currently operating mines – 254,955 oz  19% y/y production growth from currently operating mines  Record gold production at Kittila – 46,758 oz  Record gold production from Mexico – 57,016 oz  Record throughput at Meadowbank – 9,748 tpd Solid cash flow and earnings generation  Cash provided by operating activities of $196M  Dividend yield >2% 5
  • 6. Operating Results Record production from currently operating mines Q1 2012 Q1 2011 2012 Forecast Production Total Cash Production Total Cash Production Total Cash Cost2 (Gold oz) Cost ($/oz) (Gold oz) Cost ($/oz) (Gold koz) ($/oz) LaRonde 43,281 216 36,893 (12) 150 – 165 570 Kittila 46,758 565 40,317 687 150 – 160 650 Lapa 28,499 664 26,914 630 95 – 105 750 Pinos Altos1 57,016 278 48,001 312 200 – 210 415 Meadowbank 79,401 1,020 61,737 943 280 – 310 1,040 Goldex - - 38,500 431 Total 254,955 594 252,362 531 875 – 950 720 Q1 2012 Revenue By Metal Q1 2012 Q1 2011 Gold (000’s oz) 255 252 Silver (000’s oz) 1,215 1,099 Base Metals Gold 5% 86% Zinc (t) 12,978 11,941 Silver Copper (t) 1,326 817 9% Total cash costs ($/oz) $594 $5311. Pinos Altos figures include Creston Mascota 2. 2012 assumptions include Ag $30/oz, Cu $7,000/tonne, Zn $1,800/tonne, C$/US$ 1.00, US$/Euro 1.35 6
  • 7. Financial Results Strong earnings and cash flow Q1 2012 Q1 2011 Y/Y Change Gold 255 252 1% (ounces in thousands) Revenues from mining operations $473 $412 15% (millions) Net income $79 $45 74% (millions) Net income per share $0.46 $0.27 70% (basic) Cash provided by operating activities $196 $175 12% (millions)*All $ amounts are in US$ 7
  • 8. Generating Higher Mine Profits Long life, quality mines performing well  Operating margin increased 21% y/y with one less operating mine  Strong, balanced contribution from all mines  Two mines with cash costs less than $300/oz – LaRonde, Pinos Altos Q1 2012 Total Operating Margin - $258M Q1 2011 Total Operating Margin - $214M Laronde Laronde Lapa 24% Lapa 11% 23% 9% Kittila 13% Kittila 19% Meadowbank Goldex 19% 19% Pinos Altos 22% Pinos Altos Meadowbank 27% 14%*All $ amounts are in US$ 8
  • 9. Financial PositionNet free cash flow expected to enhance balance sheet strengthALL AMOUNTS ARE IN US$,unless otherwise indicated Mar. 31, 2012CASH AND CASH EQUIVALENTS (millions) $199LONG TERM DEBT (millions) $830AVAILABLE CREDIT FACILITIES (millions) $970COMMON SHARES OUTSTANDING, BASIC (Weighted average, millions) 170.8COMMON SHARES OUTSTANDING, FULLY DILUTED (Weighted average, millions) 171.0 9
  • 10. Generating Net Free Cash Flow Allows us to fund dividend and growth plans Capital Expenditures (USD $000s) $1,200,000 Approximate Average EBITDA* $1,000,000 $800,000 Illustrative Ongoing $600,000 Re-Investment $400,000 $200,000 $0 2007A 2008A 2009A 2010A 2011A 2012E 2013 2014 Actual Estimate* Approximate average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) estimate for illustrative purposes using $1700/oz gold, $32/oz silver, $2000/t zinc, C$/US$ 1.00, 1.35USD/€ 10
  • 11. AEM Among Industry LeadersReturning capital to shareholders – 30 consecutive years of dividends One Of The Highest Dividends Per Share In The Industry Annualized Dividends per Share $1.60 2009 $1.40 2010 2011 2012E $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 NEM AEM ABX GG IAG KGC 11
  • 12. Four Cornerstone AssetsProduction, reserves, free cash flow expected to grow from existing mines LARONDE KITTILA MEXICO MELIADINE 12
  • 13. LaRonde Gold production expected to increase Q1 gold production of 43,281 oz at P&P GOLD RESERVES (million oz) 4.7 total cash costs of $216 per ounce AVERAGE GOLD RESERVE GRADE (g/t) 4.4 Higher gold grades expected to drive gold production growth and profits Indicated resource (million oz) 0.4 Value of ore per tonne approximately 50% higher over life of mine versus Inferred resource (million oz) 1.3 2011 at same metals prices Estimated LOM (years) 15 2012 exploration budget $1M (LaRonde & regional) See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 13
  • 14. Kittila Large long-life gold deposit continues to grow Record production and recovery in Q1 P&P GOLD RESERVES (million oz) 5.2 of 46,758 oz and 88.5%, respectively Higher grades in 2012 expected to AVERAGE GOLD RESERVE GRADE (g/t) 4.7 result in higher gold production at lower costs Indicated resource (million oz) 1.0 Initial 25% expansion study expected in late 2012 Inferred resource (million oz) 1.2 Good exploration results at Rimpi suggest potential for larger expansion Estimated LOM (years) 32 2012 exploration budget $16M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 20062007 – 2008 2012 Focus Area 2011 2009 – 2010 14
  • 15. Mexico Record production in Q1; Largest cash flow generator Record production in Q1 of 57,016 oz at P&P GOLD RESERVES (million oz) 3.1 total cash costs per ounce of $278 Underground expansion underway. AVERAGE GOLD RESERVE GRADE (g/t) 2.3 Expected to offset lower grades in later years Indicated resource (million oz) 0.8 La India may add to production profile in 2014 Inferred resource (million oz) 0.9 Exploration potential at Tarachi and satellite zones Estimated LOM (years) 18 2012 exploration budget $15M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 15
  • 16. Meliadine Growing gold reserve and resource on 80 km trend Permitting and road construction underway P&P GOLD RESERVES (million oz) 2.9 Examining production scenarios from AVERAGE GOLD RESERVE GRADE (g/t) 7.2 open pits and underground Updated feasibility study expected in Indicated resource (million oz) 1.7 late 2013 Drilling has expanded gold contained Inferred resource (million oz) 2.4 in reserves and resources by approximately 40% in 1.5 years 2012 exploration budget $30M Potential to accelerate underground development to test deposit at depth See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Tiriganiaq Wolf Wesmeg Pump F Zone Discovery 16
  • 17. 17
  • 18. Meadowbank Strong net free cash flow generator Record mill throughput of 9,748 tpd in Q1 P&P GOLD RESERVES (million oz) 2.2 Q1 gold production of 79,401 oz at total cash costs per ounce of $1,020 AVERAGE GOLD RESERVE GRADE (g/t) 2.8 Optimized mine plan expected to be lower risk Indicated resource (million oz) 1.3  36% fewer tonnes moved over life of mine Inferred resource (million oz) 0.5  more conservative estimates for gold grade Est. LOM (years) 6 2012 exploration budget $7M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 18
  • 19. Lapa Good tonnage and cost control Strong Q1 gold production of 28,499 oz P&P GOLD RESERVES (million oz) 0.5 at total cash costs per ounce of $664 Anticipated life of mine extended through AVERAGE GOLD RESERVE GRADE (g/t) 6.5 2015 Extending underground exploration drift Indicated resource (million oz) 0.3 to east Inferred resource (million oz) 0.1  Will provide access to drill targets that could extend mine life Est. LOM (years) 4 2012 exploration budget $3M See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. 19
  • 20. Goldex - Action PlanFocused on monitoring, investigation, remediation and exploration Mine operations suspended October 2011 Grouting and remediation programs in progress Assessment program includes rock and soil monitoring Exploration program focused on potential of satellite mineralized zones Update expected mid-year 2012 20
  • 21. Business Is Positioned To Deliver Moving Forward No change in strategy or focus AEM is among industry leaders in per share production, reserves, cash flows and dividends 24% production growth anticipated through 2014 from existing mines, with manageable, fully funded capex Solid, achievable production and cost guidance Expecting growth in reserves through exploration of existing assets Business generating strong cash flows in regions of low political risk  Allocated to dividends, exploration and reinvesting in our core assets 21
  • 22. Appendix 22
  • 23. Operating Metrics LaRonde - Ore milled (000 tonnes) LaRonde LaRonde - Minesite costs per tonne (C$)8,000tpd $140/t7,500tpd $120/t7,000tpd $100/t6,500tpd $80/t6,000tpd $60/t5,500tpd $40/t5,000tpd4,500tpd $20/t4,000tpd $0/t Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Lapa - Ore milled (000 tonnes) Lapa Lapa - Minesite costs per tonne (C$)2,000tpd $170/t1,800tpd $150/t1,600tpd1,400tpd $130/t1,200tpd1,000tpd $110/t 800tpd $90/t 600tpd 400tpd $70/t 200tpd 0tpd $50/t Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 23
  • 24. Operating Metrics Kittila - Ore milled(000 tonnes) Kittila Kittila - Minesite costs per tonne (EUR)3,500tpd €90/t €85/t3,000tpd €80/t2,500tpd €75/t2,000tpd €70/t €65/t1,500tpd €60/t1,000tpd €55/t €50/t 500tpd €45/t 0tpd €40/t Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Pinos Altos Meadowbank6,000tpd $60/t 12,000tpd $180/t $160/t5,000tpd $50/t 10,000tpd $140/t4,000tpd $40/t 8,000tpd $120/t $100/t3,000tpd $30/t 6,000tpd $80/t2,000tpd $20/t 4,000tpd $60/t $40/t1,000tpd $10/t 2,000tpd $20/t 0tpd $0/t 0tpd $0/t Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Pinos Altos - Ore milled (000 tonnes) Meadowbank - Ore milled (000 tonnes) Pinos Altos - Minesite costs per tonne (USD$) Meadowbank - Minesite costs per tonne (C$) 24
  • 25. Gold and Silver Reserves and Resources December 31, 2011 Tonnes Gold Gold Tonnes Silver SilverGold (000’s) (g/t) (ounces) Silver (000’s) (g/t) (ounces) (000’s) (000’s)Proven 11,029 2.80 994 Proven 7,318 45.35 10,670Probable 146,057 3.78 17,757 Probable 72,693 45.06 105,319Total Total 157,086 3.71 18,750 80,011 45.09 115,989Reserves ReservesMeasured & Measured & 168,336 1.78 9,633 27,801 27.24 24,344Indicated IndicatedInferred 131,216 2.30 9,712 Inferred 34,513 19.00 21,082See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources.
  • 26. Copper, Zinc and Lead Reserves and Resources December 31, 2011 Tonnes Copper Copper Tonnes Zinc Zinc Tonnes Lead Lead Copper Zinc Lead (000’s) (%) (tonnes) (000’s) (%) (tonnes) (000’s) (%) (tonnes) Proven 5,331 0.28 15,025 Proven 5,331 2.04 108,626 Proven 5,331 0.23 12,391 Probable 27,901 0.27 76,160 Probable 27,901 0.77 215,522 Probable 27,901 0.05 13,441 Total Total Total 33,232 0.27 91,184 33,232 0.98 324,149 33,232 0.08 25,832 Reserves Reserves Reserves Indicated 7,225 0.12 8,629 Indicated 7,225 1.49 107,338 Indicated 7,225 0.15 11,127 Inferred 11,400 0.26 29,664 Inferred 11,400 0.44 49,745 Inferred 11,400 0.05 5,138See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources 26
  • 27. Notes to Investors Regarding the Use of ResourcesCautionary Note to Investors Concerning Estimates of Measured and Indicated ResourcesThis document uses the terms "measured resources" and "indicated resources". We advise investors that while those terms are recognized and requiredby Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in thesecategories will ever be converted into reserves.Cautionary Note to Investors Concerning Estimates of Inferred ResourcesThis document also uses the term "inferred resources". We advise investors that while this term is recognized and required by Canadian regulations, theSEC does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic andlegal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules,estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not toassume that part or all of an inferred resource exists, or is economically or legally mineable.Scientific and Technical DataAgnico-Eagle Mines Limited is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification andreporting of resources and reserves.Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that acompany can economically and legally extract or produce. Agnico-Eagle uses certain terms in this press release, such as “measured”, “indicated”, and“inferred”, and “resources” that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors areurged to consider closely the disclosure in our Form 20-F, which may be obtained from us, or from the SEC’s website at: http://sec.gov/edgar.shtml. A“final” or “bankable” feasibility study is required to meet the requirements to designate reserves under Industry Guide 7.Estimates for all properties were calculated using historic three-year average metals prices and foreign exchange rates in accordance with the SECIndustry Guide 7. Industry Guide 7 requires the use of prices that reflect current economic conditions at the time of reserve determination, which the Staffof the SEC has interpreted to mean historic three-year average prices. The assumptions used for the mineral reserves and resources estimates reportedby the Company on February 15, 2012 were based on three-year average prices for the period ending December 31, 2011 of $1,255 per ounce gold,$23.00 per ounce silver, $0.91 per pound zinc, $3.25 per pound copper, $0.95 per pound lead and C$/US$, US$/Euro and MXP/US$ exchange rates of1.05, 1.37 and 12.86, respectively.The Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”) requires mining companies to disclose reserves and resources using thesubcategories of “proven” reserves, “probable” reserves, “measured” resources, “indicated” resources and “inferred” resources. Mineral resources that arenot mineral reserves do not have demonstrated economic viability. 27
  • 28. Notes to Investors Regarding the Use of ResourcesA mineral reserve is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study.This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time ofreporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material ismined. A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study.A probable mineral reserve is the economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated byat least a preliminary feasibility study.A mineral resource is a concentration or occurrence of natural, solid, inorganic material, or natural solid fossilized organic material including base andprecious metals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geologicalevidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physicalcharacteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economicparameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliableexploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource forwhich quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriateapplication of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is basedon detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An inferred mineral resource is thatpart of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling andreasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered throughappropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral resources which are not mineral reserves do nothave demonstrated economic viability.Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriatelydetailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmentalconsiderations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time ofreporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by aproponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of aPre-Feasibility Study.The effective date for all of the Company’s mineral resource and reserve estimates in this document is December 31, 2011. Additional information abouteach of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be found in Technical Reports,which may be found at www.sedar.com. Other important operating information can be found in the Company’s Form 20-F and its news release datedFebruary 15, 2012.Marc Legault, a Qualified Person and the Company’s Senior Vice-President, Project Evaluations, reviewed the technical information disclosed herein. 28
  • 29. A solid financial position, low-cost structure, well-funded growth projects in regionsof low political risk, and a focused, consistent strategy put Agnico-Eagle in a strongposition to continue creating exceptional per share value.Sean Boyd Executive and Registered Office:President and 145 King Street East, Suite 400Chief Executive Officer Toronto, Ontario, Canada, M5C 2Y7Ammar Al-Joundi Tel: 416-947-1212SVP Finance and Toll-Free: 888-822-6714Chief Financial Officer Fax: 416-367-4681David SmithSVP, Strategic Planning & InvestorRelationsTrading Symbol:AEM on TSX & NYSEInvestor Relations:416-947-1212info@agnico-eagle.comagnico-eagle.com