Agnico Eagle update
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Agnico Eagle update



Mining On Top: Stockholm 2013

Mining On Top: Stockholm 2013
26-27 Nov 2013

Agnico Eagle update – Ingmar Haga, Agnico Eagle;
Vice President, Europe



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    Agnico Eagle update Agnico Eagle update Presentation Transcript

    • Agnico Eagle Update Mining on Top: Stockholm November 27, 2013 Ingmar Haga
    • FORWARD LOOKING STATEMENTS The information in this document has been prepared as at November 21, 2013. 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 forward looking 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 or information. 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 future internal rates of return, mining costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements and information as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs, and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of reserves and resources, and statements and information regarding anticipated future exploration; the anticipated timing of events with respect to the Company’s mine sites and statements and information regarding the sufficiency of the Company’s cash resources. Such statements and information reflect the Company’s views as at the date of this document and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements and information. Many factors, known and unknown could cause the actual results to be materially different from those expressed or implied by such forward looking statements and information. 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 other costs; 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 Company’s stock price; and risks associated with the Company’s byproduct metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this document, see the Company’s Annual Report on Form 20-F for the year ended December 31, 2012, as well as the Company’s other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The Company does not intend, and does not assume any obligation, to update these forward-looking statements and information. Alain Blackburn, a Qualified Person and the Company’s Senior Vice-President, Exploration, reviewed the technical information disclosed herein. For a detailed breakdown of the Company’s reserve and resource position see the February 13, 2013 press release on the Company’s website. That press release also lists the Qualified Persons for each project. 2
    • NOTES TO INVESTORS Note Regarding the Use of Non-GAAP Financial Measures This document presents estimates of future “total cash cost per ounce”, “minesite cost per tonne”, and “all-in sustaining cost per ounce of gold produced” that are not recognized measures under United States generally accepted accounting principles (“US GAAP”). This data may not be comparable to data presented by other gold producers. These future estimates are based upon the total cash costs per ounce and minesite costs per tonne that the Company expects to incur to mine gold at the applicable sites and do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable GAAP measure. A reconciliation of the Company’s total cash cost per ounce and minesite cost per tonne to the most comparable financial measures calculated and presented in accordance with US GAAP for the Company’s historical results of operations is set forth in the notes to the financial statements included in the Company’s Annual Information Form and Annual Report on Form 20-F, for the year ended December 31, 2012, as well as the Company’s other filings with the Canadian Securities Administrators and the SEC. Note Regarding Production Guidance The gold production guidance is based on the Company’s mineral reserves but includes contingencies and assumes metal prices and foreign exchange rates that are different from those used in the reserve estimates. These factors and others mean that the gold production guidance presented in this disclosure does not reconcile exactly with the production models used to support these mineral reserves. 3
    • Agnico Eagle Mines Limited Milestones • 56 years of operating history, dating back to 1957 - Agnico Mines • 1972, Agnico Mines merged with gold exploration company Eagle Gold Mines Limited to form today’s AEM • 1994, AEM listed on the New York Stock Exchange • 2000, LaRonde’s Penna Shaft, the deepest single-lift shaft in the Western Hemisphere • 2005-2006, acquires the Suurikuusikko gold deposit in Finland and the Pinos Altos property in Mexico For many years, we have adhered to a consistent, low-risk strategy for strengthening our gold mining business and creating shareholder value. • 2009 -10 Meadowbank mine and Meliadine project in Nunavut • 2012 La India property in Mexico 4
    • Agnico Eagle Strategy Deliver meaningful per share growth in operating and financial metrics Grow gold reserves and production in mining friendly regions Be a low-cost leader • Goal is to move back into the industry’s lowest cost quartile Acquire small, think big • Buy early, add value through exploration and mine building Maintain a solid financial position • $1.05 B of available bank lines • Only 173 M shares outstanding after 56 years of operating history 5
    • Agnico Eagle Today >Million ounce gold producer Focused on delivering total shareholder return Lower risk • • • • Mature operations Low political risk jurisdictions Measured production growth Free cash flow generator Committed to dividends - 30 consecutive years 6
    • Agnico Eagle Today • Seven mines in three countries • Mineral exploration in Canada, USA, Mexico and Scandinavia LaRonde (Canada) 1988–2023 Goldex (Canada) 2008–(2017) Kittilä (Finland) 2009–2037 Lapa (Canada) 2009–2015 Pinos Altos (Mexico) 2009–2028 La India 2013 Meadowbank (Canada) 2010–2019
    • AGNICO EAGLE – DELIVERING RESULTS IN A CHALLENGING ENVIRONMENT ► Record quarterly gold production (Q3’13) of 315,828 oz at a total cash cost of $591/oz ► 2013 Production guidance increased to approximately 1,060,000 oz of gold ► 2013 Total cash cost guidance reduced to approximately $690/oz ► 2013 all-in sustaining cost estimate is reduced to $1,025/oz (from $1,100/oz) ► Goldex and La India contributing to ~20% production growth through 2015 8
    • AGNICO EAGLE – MANAGEABLE, SOLID BUSINESS Full year 2013 production revised higher to 1,060,000 moz gold EXPECTED PRODUCTION1 YTD 2013 Total Production Cash Cost (Gold oz) ($/oz) LaRonde 2014 (Gold oz) 2015 (Gold oz) 130,445 $801 215,000 250,000 1,505 N/A 49,000 85,000 Kittila 104,711 $564 165,000 160,000 Lapa 74,407 $687 96,000 65,000 Meadowbank 307,180 $828 367,000 350,000 Northern Business 618,248 $760 892,000 910,000 Pinos Altos 135,283 $402 136,000 161,000 23,361 $511 52,000 55,000 40,000 81,000 228,000 297,000 $692 1,120,000 Agnico Eagle 2015E Production Profile By Country 1,207,000 Goldex Creston Mascota La India Southern Business AEM Total 55,043 776,892 $428 FINLAND 13% CANADA 62% MEXICO 25% 1.As per Feb 14, 2013 press release. 9
    • IMPROVEMENTS IN CASH FLOW GENERATION Adjusting the business to the current gold price environment 2013 Reduction in capital and operating costs (announced Q2/13) Reduction in exploration spending (announced Q2/13) $50 million $20 million Estimated positive net impact on cash flow $70 million 2014 Reduction in capital costs (announced Q2/13) Reduction in exploration spending (announced Q2/13) Reduction in Labour and G&A costs (announced October 23, 2013) $200 million $50 million $40 million Estimated positive net impact on cash flow $290 million 10
    • PROJECTED CAPITAL SPENDING Capital Expenditures (US$ 000’s) $1 200 000 $1 000 000 $800 000 $600 000 $400 000 $200 000 $0 2008A 2009A 2010A Actual 2011A 2012A 2013E 2014E Estimate 11
    • FINANCIAL POSITION Adequate cash balance with financial flexibility Sep. 30, 2013 ALL AMOUNTS ARE IN US$, (unless otherwise indicated) CASH AND CASH EQUIVALENTS (millions) $142 LONG TERM DEBT (millions) $950 AVAILABLE CREDIT FACILITIES $1.05 Billion COMMON SHARES OUTSTANDING, BASIC (Q3’13 Weighted average, millions) 173.1 COMMON SHARES OUTSTANDING, FULLY DILUTED (Q3’13 Weighted average, millions) 173.5 Long-Term Debt Maturities 2017 Notes Outstanding (millions) Coupon 2020 2022 2024 $115 $360 $225 $100 6.13% 6.67% 5.93% 5.02% 12
    • KITTILÄ MINE – Finland Production positively impacted by high-grade pit pillar  Record quarterly gold production on increased throughput, and recoveries  Good SAG mill performance and simplified autoclave operation following the Q2 2013 relining  750 tpd mill expansion remains on budget and schedule  Remains Agnico Eagle’s largest reserve asset, with significant exploration and expansion potential P&P GOLD RESERVES (million oz) 4.8 AVERAGE GOLD RESERVE GRADE (g/t) 4.5 Indicated resource (million oz) (7.8 M tonnes @ 2.65 g/t) 0.7 Inferred resource (million oz) (19.0 M tonnes @ 3.88 g/t) 2.4 Estimated LOM (years) 25 See AEM Feb 13, 2013 press release for detailed breakdown of reserves and resources. 14
    • Kittilä Mine Agnico Eagle Finland All amounts are in Euros, unless otherwise indicated Full year 2012 Full year 2011 Revenues (millions) 184 163 Operating profit (millions) 96 57 Gold production (ounces) 176,000 144,000 Ore production (tons) 1,220,000 1,030,000 Exploration drilling (kilometers) 66 76 Other drilling (kilometers) 33 46 Key numbers
    • Kittilä Mine Location - Infrastrucure • • • • 55 km north of Kittilä 900 km north of Helsinki Excellent infrastructure: roads, airports, communication Mining license 857 ha
    • KITTILÄ MINE History 1986 First gold finding by the Geological Survey of Finland (GTK) 1998 Exploration by Swedish Riddarhyttan Recources AB 2002 Environmental permit for mining 2003 Mining license 2005 Agnico-Eagle Mines Limited became the sole owner of Riddarhyttan 2006 Completion of final feasibility study and decision to build the Mine 2008 Ore production started in May, milling in September 2009 The first gold pour in January 2010 Stable production 2012 Open pit mining ended, solely underground mining >
    • Areal view of the Kittilä mine
    • From exploration to gold bullion
    • Kittilä – Focused Exploration Builds Long Term Value Ore reserves and resources As December 31, 2012 Au (g/t) Tonnage (000’s t) Au (000’s oz) Proven/Probable Reserve 4.49 33,123 4,782 Indicated Reserve 2.65 7,854 700 Inferred Resource 3.88 18,966 2,366
    • Mine Development
    • Underground Mine Design
    • Underground Development 5.5 m 5,268 m in 2006–2008 4,232 m in 2009 5,045 m in 2010 6,439 m in 2011 7,518 m in 2012 Gradient 1:7 5.3 m Typical ramp profile
    • Underground Main Level 350 M Ventilation Raise (Intake) Fuel Bay Maintenance Shop Warehouse Washing Bay Cafeteria Emergency Exit Electrical Station
    • Underground Main Level 350 M
    • Milling Crushing – Grinding – Flotation – Pressure oxidation – Leaching – Electrowinning
    • Mill Process Flow Sheet Cyclones Crushing Carbon Flotation Sulphur Flotation Grinding Surge Bin Sulphur Carbon Concentrate Concentrat e SAG Mill Flotation Tailings Thickener Concentrate Thickener Column Mill Water Tank Sulphur Flotation Tailings Process Water Oxygen Plant Storage Tank Acid Water Autoclave Teed Tank UNDERGROUND MINE Paste Paste Backfill Plant Autoclave Flash Tank Neutralization Process Water Tank CCD Circuit CCD Feed Tank (CIL) Leaching Acid Wash & Carbon Stripping Smelting Flotation Tailings Disposal Cyanide Destruction Electrowinning Cell Doré Bars Carbon Reactivation Kiln CIL Tailings Disposal INFILTRATION FIELD
    • Kittilä Mine – Leader in Environmental Protection • Human and financial resources • Good cooperation with Municipality, tourist industry, authorities, local people and associations - “Social License” to operate • In full compliance with environmental legislation and permits • Water treatment – maintaining the ecological state of the Seurujoki river • Process water - closed circuit - cyanide destruction 31
    • TAILINGS FACILITY Tailings Area • Total area ~110 ha • All ponds are lined with waterproof bitumen liners.
    • Kittilä Mine Expansion Expansion project • Expanding production from current rate of 3,000 ore tons per day to 3,750 ore tons per day • Construction in 2013–2014 • Increased production start-up 2015 • Investment approximately EUR 80 million over three years Feasibility study underway on underground ore hoisting via shaft • Objective: ore hoisting start-up in 2017-18
    • KITTILÄ 2013
    • Kittilä Mine – Workforce The Mine employs directly close to 600 professionals • 420 are Agnico Eagle own employees • • over 55% from Kittilä and 90% from Finnish Lapland Construction; 160 contractor employees • 15% from Kittilä and 41% from Lapland • Average age 39.3 years • 11.7% of the workforce are women 36
    • KITTILÄ MINE - SUMMARY • Kittilä Mine steady state operations • Running at, or above designed capacity • Recoveries above planned • Dilution better than planned • Cost control measures successful • Aggressive Regional and Mine Site exploration programs • Mine Expansion is ongoing • FS on shaft for ore hoisting 37
    • Kittilä Mine Development Cash Flows 2006 - 2012 Gold Sales AEM Financing 239 M€ 516 M€ Foreign Suppliers 98 M€ AGNICO-EAGLE FINLAND 755 M€ 101 M€ Taxes 32 M€ 526 M€ 63 M€ State/Society Employees Taxes ? Domestic Suppliers
    • AGNICO EAGLE – Sustainable Development Policy Our Commitment Four fundamental values of our Sustainable Development Policy: operate safely, protect the environment, and treat our employees and communities with respect.  Respect for our Employees We aim to maintain a safe and healthy workplace that is based on mutual respect, fairness and integrity.  Protect the Environment We aim to minimize the effects of our operations on the environment and maintain its viability and its diversity  Operate Safely We believe that all loss due to accidents/incidents is preventable. We aim to operate a safe and healthy work place that is injury and fatality free. We believe that if we all work together, we can achieve zero accidents in the work place and enhance the well-being of employees, contractors and communities.  Respect for our Communities We aim to contribute to the social and economic development of sustainable communities associated with our operations 40
    • AGNICO EAGLE – Responsible Mining PROMOTING A CULTURE OF ACCOUNTABILITY AND LEADERSHIP  Implementing a formal Health, Safety, Environment and Social Acceptability Management System – a fully integrated management system, the Responsible Mining Management System (RMMS).  Aim to further promote a culture of accountability and leadership encouraging our employees to continuously improve their skills as well as our sustainability performance.  System to be consistent with the ISO 14001 Environmental Management System and the OHSAS 18001 Health and Safety Management System.  Will also integrate other industry standards such as the Mining Association of Canada TSM Initiative and the Cyanide Management Code. Application of the E3Plus Principles for Responsible Exploration 41
    • AGNICO EAGLE – 2012 Making a Different with our Employees 81% OF OUR EMPLOYEES COME FROM THE REGION SURROUNDING THE MINE Training and development Opportunities • Ensure employees have the tools and skills they need to perform their jobs efficiently and safely and to achieve their full potential by providing training that enhances employees’ personal and career development opportunities. • Place a particular emphasis on health and safety training Maximizing local employment Goal to hire 100% of the workforce, including our management teams, directly from the local region in which the operation is located. • Mexico, 99.9% of the Pinos Altos workforce is from Mexico. • Finland, 99.9% from Finland • Northern Canada, focus on creation of sustainable jobs and careers in mining for the Inuit population. Ongoing IIBA (Inuit Impact and Benefit Agreement) negotiations for the Meliadine project. Approximately 32% of the local mine workforce is from Inuit of the Kivalliq region of Nunavut. 42
    • AGNICO EAGLE – 2012 Making a Different in Our Communities PAID $243 MILLION IN TAXES TO ALL LEVELS OF GOVERNMENT, INVESTED $4.9 MILLION IN THE COMMUNITIES IN WHICH WE OPERATE AND PROVIDED OVER $363 MILLION IN WAGES AND BENEFITS TO OUR GLOBAL WORKFORCE Generating Employment and Economic Benefits $363 million in global employee compensation, up from $308.8 million in 2011. Through wages and benefits contributed:  $162 million to the economy of the Abitibi region of Quebec, Canada  $33 million to the economy of Finland  $91 million to the economy of Nunavut, Canada  $31 million to the economy of Chihuahua State in Mexico. Taxes and royalty payments Direct and indirect economic impact of employee wage spending on local goods and services is an important factor in overall contribution to host economies. Various payments in taxes and royalties to governments at all levels totaling US$243 million:  $87 million was paid in taxes and royalties in Quebec, Canada  $44 million in taxes and royalties to the economy of Nunavut, Canada  $42 million in taxes and royalties to the economy of Finland  $70 in taxes and royalties to the economy of Mexico. Tax contributions 13% of total revenue . Buying locally to support communities, stimulating the local economy and minimizing environmental impact of transporting materials from distant locations to sites. Continue to increase overall level of local spending at minesites. Making a difference in our communities Goal is to provide both Agnico Eagle and host communities with maximum returns on our investments in strategic health, education and capacity-building initiatives. 43