Wesdome Gold Mines Ltd.

Oct 28, 2020

TORONTO, Oct. 28, 2020 /CNW/ - Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $222.7 million, or net income of $0.92 per share, for the third quarter of 2020. This result includes non-cash mark-to-market gains on warrants of $20.9 million ($0.09 per share), foreign currency translation gains on deferred tax liabilities of $14.3 million ($0.06 per share), derivative gains on financial instruments of $5.1 million ($0.02 per share), non-cash foreign currency translation losses of $4.3 million ($0.02 per share) and various other adjustments losses of $2.5 million ($0.01 per share). Excluding these items would result in adjusted net income1 of $189.2 million or $0.78 per share for the third quarter of 2020. For the third quarter of 2019, the Company reported net income of $76.7 million or $0.32 per share.

Included in the third quarter of 2020 net income, and not adjusted above, are a non-cash stock option expense of $3.1 million ($0.01 per share) and workforce costs of employees affected by the COVID-19 pandemic (primarily Nunavut-based) of $2.2 million ($0.01 per share).

In the first nine months of 2020, the Company reported net income of $306.4 million, or $1.27 per share. This compares with the first nine months of 2019, when net income was $141.5 million, or $0.60 per share.

In the third quarter of 2020, cash provided by operating activities was $462.5 million ($434.4 million before changes in non-cash components of working capital), compared to the third quarter of 2019 when cash provided by operating activities was $349.2 million ($275.3 million before changes in non-cash components of working capital). The cash provided by operating activities in the third quarter of 2020 sets a quarterly record for the Company and resulted in strong quarterly free cash-flow2 generation.

In the first nine months of 2020, cash provided by operating activities was $788.5 million ($824.3 million before changes in non-cash components of working capital), compared to the first nine months of 2019 when cash provided by operating activities was $624.2 million ($603.5 million before changes in non-cash components of working capital).

The increase in cash provided by operating activities in the third quarter of 2020, compared to the prior-year period, was mainly due to an increase in revenues from mining operations resulting from higher average realized gold and silver prices, and higher gold sales volume, offset by higher production costs from the Meadowbank Complex, the LaRonde Complex and the Meliadine mine as a result of higher throughput levels, and higher income and mining taxes related to higher operating margins in the quarter. The increase in net income in the third quarter of 2020, compared to the prior-year period, is primarily due to the reasons described above as well as to non-cash movements related to mark-to-market gains on warrants and on financial instruments owned by the Company, partially offset by higher amortization costs from the Meliadine mine and the Meadowbank Complex. The higher gold sales volume was primarily driven by strong operational performances in the quarter from the LaRonde Complex, the Meadowbank Complex, the Meliadine mine and the Kittila mine.

The increase in cash provided by operating activities in the first nine months of 2020, compared to the prior-year period, was mainly due to an increase in revenues from mining operations resulting from higher average realized gold prices, partially offset by lower gold sales volume, the contribution of nine months of production costs from Meliadine, higher production costs from the Meadowbank Complex as mining transitioned to the Amaruq satellite deposit, temporary suspension costs related to the COVID-19 pandemic and higher income and mining taxes related to higher operating margins. The increase in net income in the first nine months of 2020, compared to the prior-year period, is primarily due to the reasons described above as well as non-cash movements related to mark-to-market gains on warrants and on financial instruments, partially offset by higher amortization costs from the Meliadine mine and the Meadowbank Complex. The lower gold sales volume was primarily driven by the suspension of seven of the Company's eight mines in the second quarter of 2020 in response to the COVID-19 pandemic.

"Despite ongoing challenges related to the COVID-19 pandemic, Agnico Eagle's operations had strong performance in the third quarter of 2020. Many of our operations set monthly or quarterly production records, which is a testament to the hard work of our employees and the continued support of our local communities in these difficult times", said Sean Boyd, Agnico Eagle's Chief Executive Officer. "This solid operational performance, coupled with a record realized gold price, resulted in strong quarterly free cash flow generation. With similar production levels expected in the fourth quarter of 2020, we remain confident in our business and its ability to generate significant free cash flow on a go-forward basis. Strong cash-flow generation, together with recent exploration success in several of our long-life mining camps, gives us confidence that we have a sustainable, long-term, self-funding business. With our business on a strong operational and financial footing, we have further increased our quarterly dividend by 75%", added Mr. Boyd.

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

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

Third quarter of 2020 highlights include:

Gold production returns to near-record levels seen in the fourth quarter of 2019 – Payable gold production3 in the third quarter of 2020 was 492,693 ounces (including 13,305 ounces of pre-commercial gold production from the Barnat deposit at Canadian Malartic and 1,982 ounces of pre-commercial gold production at the Tiriganiaq open pit at Meliadine) at production costs per ounce of $865, total cash costs per ounce4 of $764 and all-in sustaining costs per ounce5 ("AISC") of $1,016. Production costs, total cash costs per ounce and AISC per ounce exclude the pre-commercial production ounces from Barnat and Tiriganiaq
Operations have rebounded strongly post second quarter 2020 COVID-19 interruptions – In the third quarter of 2020, new operational records were established at several of the Company's mines. At Canadian Malartic, record monthly tonnage was milled in August, while daily record tonnage was milled at Goldex in September. Record quarterly gold production was achieved at Meliadine, and record monthly gold production was achieved at LaRonde Zone 5 ("LZ5") at the LaRonde Complex in August. At Meadowbank, the operation has showed consistent performance since July, and Kittila continued to have strong underground production in the quarter and the mill expansion is progressing ahead of schedule
Production and cost guidance maintained for 2020; no change to longer-term production guidance – Expected gold production in 2020 is unchanged at 1.68 to 1.73 million ounces, while expected total cash costs per ounce and AISC per ounce continue to be forecast in the range of $740 to $790 and $1,025 to $1,075, respectively. Gold production guidance for 2021 and 2022 remains unchanged with a mid-point of 2.05 million and 2.10 million ounces, respectively
Slight increase to 2020 capital expenditures reflect accelerated development spending – Capital expenditures in 2020 are expected to be approximately $720 to $740 million (compared to previous guidance of $690 million). The increased capital spending primarily relates to accelerated development programs at Kittila (mill, water and tailings management) and Amaruq (restart of underground development and accelerated waste stripping), and the advanced procurement of pipe for the waterline at Meliadine
Strong quarterly free cash flow drives 75% increase in dividend – On the back of record quarterly results, a quarterly dividend of $0.35 per share has been declared. The previous quarterly dividend was $0.20 per share
COVID-19 update – COVID-19 protocols (not including compensation paid to Nunavut-based employees) added $2.8 million (approximately $6 per ounce) to the Company's operating costs in the third quarter of 2020. To-date, the Company has seen limited impact on operational productivity as a result of COVID-19, and it is continuing to strengthen and enhance COVID-19 protocols. In the third quarter of 2020, the Nunavut-based workforce remained at home due to current COVID-19 health guidelines issued by the Government of Nunavut and the Company continued to pay for 75% of the base salaries for these employees (a total of $3.7 million pre-tax, $2.2 million net of tax, included in Other Expenses)
Exploration – The Company's exploration focus remains on pipeline projects, near mine opportunities and mineral reserve and mineral resource replacement. Based on ongoing exploration success and strong operational performance, the Company anticipates an increase in exploration spending in 2021.

Key exploration highlights include:

Kittila – Drilling in the Sisar Zone continues to show potential to significantly expand the zone's footprint laterally and at depth. Recent intercepts, such as 7.3 grams per tonne ("g/t") gold over 4.4 metres at 1,626 metres depth, further indicate the Sisar Zone's potential to be developed into a new mining horizon alongside the Main Zone
Canadian Malartic Underground – The expanded drilling campaign at the East Gouldie Zone completed 77,500 metres (100% basis) of conversion and expansion drilling in the first nine months of 2020, resulting in highlights such as 6.3 g/t gold over 39.3 metres at 1,472 metres depth in the deposit's core. The ongoing success of the drilling program is expected to lead to a significant increase in East Gouldie's mineral resource estimate at year-end 2020, which will be integrated into a preliminary economic assessment which is expected to be completed in early 2021
LaRonde – Exploration drilling in LaRonde 3's East mine area is confirming and expanding the high grade 20N Zinc South Zone discovery, with highlights such as 8.4 g/t gold, 101 g/t silver, 0.57% copper and 13.3% zinc over 2.8 metres at 3,393 metres depth. The latest results also suggest that gold grades are increasing with depth in the zone, which remains open to the east, at depth and at shallower levels
Kirkland Lake Project – The conversion drilling program at depth at Upper Beaver in the third quarter of 2020 returned highlight intercepts such as 11.6 g/t gold and 0.48% copper over 5.6 metres at 1,227 metres depth. Results from the 2020 exploration program will be incorporated into an updated mineral reserve and mineral resource estimate at year-end and an updated technical study to be completed in 2021
Pinos Altos – Underground exploration drilling of the Cubiro deposit is extending and validating the lateral continuity of wide, high-grade gold and silver intercepts, with highlights such as 8.1 g/t gold and 119 g/t silver over 3.4 metres at 77 metres depth. The latest results from Cubiro will be incorporated into an initial mineral reserve estimate for Cubiro at year-end that, combined with other developments on the property, are expected to replace ore mined at Pinos Altos in 2020

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

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

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

Third Quarter Financial and Production Highlights

All of the Company's eight mines started the third quarter of 2020 operating at full capacity following a successful ramp-up of operations in May and June 2020. Despite the new hygiene and safety protocols implemented in response to COVID-19, several of the Company's mines, including the LaRonde Complex, the Meadowbank Complex, Meliadine and Kittila, delivered strong quarterly performance and resulted in quarterly gold production at near-record levels.

In the third quarter of 2020, payable gold production was 492,693 ounces (including 13,305 ounces of pre-commercial gold production from the Barnat deposit at Canadian Malartic and 1,982 ounces of pre-commercial gold production at the Tiriganiaq open pit at Meliadine), compared to 476,937 ounces in the prior-year period (which included 33,134 ounces of pre-commercial gold production at Amaruq).

The higher gold production in the third quarter of 2020 when compared to the prior-year period was primarily due to the strong performance of the Nunavut operations which achieved their targeted operating rates, partially offset by lower production from Goldex, Canadian Malartic and Pinos Altos due to lower grades than planned as a result of adjustments to the mining sequences and lower production from Kittila due to a planned shutdown at the end of the quarter.

In the first nine months of 2020, payable gold production was 1,235,123 ounces (including 18,930 ounces of pre-commercial gold production from the Barnat deposit at Canadian Malartic and 1,982 ounces of pre-commercial gold production at the Tiriganiaq open pit at Meliadine), compared to 1,287,469 ounces in the prior-year period (including an aggregate of 82,562 ounces of pre-commercial production at Meliadine and Amaruq).

The lower gold production in the first nine months of 2020, when compared to the prior-year period, was primarily due to lower production at four of the Company's eight mines as a result of temporary shutdowns or reduction in activities in the second quarter of 2020 related to government mandated COVID-19 restrictions, partially offset by the contribution of nine months of production from Meliadine which achieved commercial production in May 2019 and strong performance at Kittila. A detailed description of the production at each mine is set out below.

Production costs per ounce in the third quarter of 2020 were $865, compared to $713 in the prior-year period. Total cash costs per ounce in the third quarter of 2020 were $764, compared to $653 in the prior-year period.

Production costs per ounce and total cash costs per ounce in the third quarter of 2020 increased when compared to the prior-year period primarily due to higher production costs at the Meadowbank Complex as mining transitioned to the Amaruq satellite deposit, higher costs per ounce at Goldex and Canadian Malartic, mostly related to lower gold production, and higher production costs at Kittila resulting from contractor cost pressures, partially offset by lower costs per ounce at Meliadine from higher gold production and, for total cash costs per ounce, higher by-product revenues at the LaRonde Complex and the Mexican operations.

Production costs per ounce in the first nine months of 2020 were $864, compared to $724 in the prior-year period. Total cash costs per ounce in the first nine months of 2020 were $805, compared to $643 in the prior-year period.

Production costs per ounce and total cash costs per ounce in the first nine months of 2020 increased when compared to the prior-year period primarily due to lower gold production related to temporary shutdowns or reduction in activities in the second quarter of 2020, higher production costs at the Meadowbank Complex as mining transitioned to the Amaruq satellite deposit, higher production costs at Kittila as a result of contractor cost pressures and higher costs per ounce at Goldex and Canadian Malartic, mostly related to lower gold production.

AISC in the third quarter of 2020 was $1,016 per ounce, compared to $903 in the prior-year period. AISC in the third quarter of 2020 increased when compared to the prior-year period primarily due to higher total cash costs per ounce and higher sustaining capital at the Meadowbank Complex as the Amaruq satellite deposit transitioned to commercial production, partially offset by lower general and administrative expenses in the period.

AISC in the first nine months of 2020 was $1,078 per ounce, compared to $898 in the prior-year period. AISC in the first nine months of 2020 increased when compared to the prior-year period primarily due to higher total cash costs per ounce and higher sustaining capital at the Meadowbank Complex, as the Amaruq satellite deposit and Meliadine transitioned to commercial production in the second and third quarters of 2019, respectively. A detailed description of the cost performance of each mine is set out below.

Strong Financial Results; Bank Credit Facility Fully Repaid; Dividend Increased by 75%

Record quarterly cash provided by operating activities resulted in strong free cash flow generation in the third quarter of 2020. With the forecast of record gold production in each of the next two years, combined with strong margins expected to be supported by the positive outlook for the price of gold, Agnico Eagle has increased its dividend by a further 75% to $0.35 per share or an annualized rate of $1.40 per share.

Cash and cash equivalents and short-term investments decreased slightly to $321.5 million at September 30, 2020, from the June 30, 2020 balance of $336.4 million, primarily due to the July repayment of the $250 million which was drawn on the Company's unsecured revolving bank credit facility, largely offset by the strong cash flow generation in the quarter. The outstanding balance on the Company's unsecured revolving bank credit facility is now nil, and available liquidity under this facility is $1.2 billion, not including the uncommitted $300 million accordion feature.

As of September 30, 2020, approximately 50% of the Company's remaining 2020 estimated Canadian dollar exposure is hedged at an average floor price above 1.34 C$/US$ and approximately 20% of the Company's 2021 estimated Canadian dollar exposure is hedged at an average floor price of approximately 1.37 C$/US$.

As of September 30, 2020, approximately 42% of the Company's remaining 2020 estimated Mexican peso exposure is hedged at an average floor price above 20.00 MXP/US$ and approximately 25% of the Company's 2021 estimated Mexican peso exposure is hedged at an average floor price above 21.00 MXP/US$. As of September 30, 2020, approximately 8% of the Company's remaining 2020 estimated Euro exposure is hedged at an average floor price of approximately 1.13 US$/EUR.

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

Capital Expenditures

The total capital expenditure forecast (including sustaining capital) for the full year 2020 is now expected to be in the range of $720 million to $740 million (previous guidance was $690 million). With a strong rebound of the operations in the third quarter of 2020, the Company accelerated development programs at several sites to increase production flexibility in 2021 and beyond. The increased capital spending primarily relates to:

Kittila – An addition of approximately $15 million in development capital expenditures to accelerate the completion of the mill expansion, the construction of the NP4 tailings pond and the construction of the discharge pipeline following the receipt of the environmental permits in May 2020, which will increase the processing volume to 2.0 million tonnes per annum

Meliadine – An addition of approximately $13 million in development capital expenditures to purchase pipe for the proposed waterline in order to execute the project quickly once permitting is complete

Amaruq – An addition of approximately $12 million in development capital expenditures; $7 million related to the restart of the Amaruq underground project and $5 million to accelerate the stripping of the IVR pit to enhance production flexibility in 2021

Total pre-commercial production gold sales from the Barnat deposit at Canadian Malartic and anticipated pre-commercial production and gold sales from the Tiriganiaq open pit at Meliadine and from the IVR pit at Amaruq are incorporated in, and netted against, the total 2020 capital expenditure forecast. As a result, some variability is likely, depending on the timing of the achievement of commercial production at these projects, prevailing gold prices and foreign exchange rates.

2020 Gold Production and Cost Guidance Unchanged

Gold production guidance for 2020 is unchanged at 1.68 to 1.73 million ounces (including pre-commercial production of gold ounces from the Barnat deposit at Canadian Malartic, the Tiriganiaq open pit at Meliadine and the IVR pit at Amaruq). The Company anticipates that total cash costs per ounce and AISC per ounce for 2020 will continue to be in the range of $740 to $790 and $1,025 and $1,075, respectively.

Previous gold production guidance for 2021 and 2022 remains unchanged with a mid-point of 2.05 million and 2.10 million ounces, respectively. Full production and cost guidance will be updated with the results for the year-end and fourth quarter of 2020 in February 2021.

Taxes

For the fourth quarter of 2020, the Company anticipates the overall effective tax rate to be at the higher end of the range of approximately 40% to 45%, considering current margins. As previously announced, the Company anticipates the overall full year effective tax rate for 2020 to be approximately 40% to 45%.

About Agnico Eagle

Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its operating mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States, Sweden and Colombia. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.

Source: https://www.agnicoeagle.com/English/investor-relations/news-and-events/news-releases/news-release-details/2020/Agnico-Eagle-Reports-Third-Quarter-2020-Results---Strong-Operational-Performance-and-Record-Realized-Gold-Prices-Drive-Strong-Quarterly-Free-Cash-Flow-Dividend-Increased-by-75-Ongoing-Exploration-Success-Reported-at-Existing-Operations-and-Pipeline-P/default.aspx

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Wesdome Gold Mines Ltd.