Agnico Eagle Mines Limited (AEM) Earnings Call Transcript & Summary

Good morning, everyone. Nice to have people here in person. Welcome to the Annual and Special Meeting of Shareholders of Agnico Eagle Mines. And my name is Sean Boyd. I'm the Executive Chair of the Board of Agnico. A couple of things before we give welcoming greetings in the languages where we operate is that this building is actually a special building in the history of Agnico. This building was the home of Agnico for many, many years. And I recall first walking into this building in 1983 as an auditor, working on the audit of Agnico on the 16th floor. So we'll get into Paul Penna and the history shortly in this meeting to honor Paul, but this was Paul's home for many, many years. So we're standing in an important building. But I'm standing in some important shoes. I'm standing in the shoes of Jim Nasso, who was our Chairman for, I don't know exactly, around 20 years or so. And that's an honor for me to be standing here as Chairman of the Board of Agnico because we wouldn't be here and have the success that we've had over many, many years without Jim's friendship, Jim's guidance and his wisdom and his contribution to Agnico and his advice to me and his guidance to me as well. So we want to thank Jim. He was hoping to be here, but he was not able to be here. So thank you, Jim. So I'd like to call on, first, Leona Aglukkaq to welcome everybody in Inuktitut. Leona?

[Foreign Language]

Thanks, Leona. Dominique?

[Foreign Language]

Thank you, Dominique. [ Yvon ]?

[Foreign Language]

Thank you, [ Yvon ]. And [ Jussi ]?

[Foreign Language]

Thank you, [ Jussi ]. And again, welcome, everyone. It's great to be here. As we reported or announced in our Management Information Circular, we're conducting a hybrid meeting to allow those shareholders that are not comfortable to participate in the meeting. I think for those joining us in person, we thank you for complying to the COVID protocols. That's so important. That was requested by our host here at the Arcadian Court. So it's a little after 11 a.m. That's when the meeting was called, so I'd ask the meeting to come to order. I'd like to take a moment to introduce our head table and introduce the directors of the corporation at the head table. With me today is Ammar Al-Joundi, our President and Chief Executive Officer and a director of the corporation; David Smith, Executive Vice President, Finance and our Chief Financial Officer; and Chris Vollmershausen, Executive Vice President, Legal, General Counsel and Corporate Secretary. Seated here in front of us are our directors and our Board. When your name is called, if you can please acknowledge and let the people attending know who you are: Jeffrey Parr, our Vice Chairman of the Board; Jamie Sokalsky, our Lead Director; the Honorable Leona Aglukkaq, Martine Celej, Rob Gemmell, Jon Gill, Peter Grosskopf, Elizabeth Lewis-Gray, Deborah McCombe and Merfyn Roberts. Thank you to our Board of Directors. So in accordance with the bylaws of the corporation, I'll preside as the Chair of the meeting. Chris Vollmershausen will act as Secretary of the meeting. And with the consent of the meeting, Shirley Tom and Amanda Castellano of Computershare Trust, who have also done these meetings for years and years and years, it's good to see them again, the corporation's registrar and transfer agent, will act as scrutineers for the meeting. After the formal business, I'll provide a brief market update on gold, and Ammar will present a corporate update of Agnico Eagle following the conference call to investors this morning and following the release of our numbers last night. And then we'll open it up for a question-and-answer period. So in order to move things along today, Mr. Vollmershausen will move all the motions. Mr. Al-Joundi will second all the motions with respect to the business of the meeting. And because this meeting is being held in person and virtually, what we'd like to do is just outline a few procedures just to ensure the orderly conduct of the business here at the meeting. I'll turn it over to Chris Vollmershausen to go over these procedures.

Thank you, Mr. Chair. As mentioned, I will now outline the procedures for the orderly conduct today. Questions with respect to motions. For those participating online, questions in respect of a motion can be submitted by any registered shareholder or duly appointed proxyholder using the instant messaging service of the virtual meeting interface by accessing the Q&A tab. Please note, there might be a slight delay in the publication of the communications. Questions that relate to a specific motion must indicate which motion they relate to at the start of the question and must be submitted prior to voting on the motion so they can be addressed. If questions do not indicate which motion they relate to or are received after voting on the motion, they may be addressed during the general Q&A session at the end of the meeting. For those here in person today, you will be given the opportunity to ask questions in respect of each motion. When given that opportunity, please raise your hand to indicate you have a question. Once acknowledged, please clearly state your name and identify yourself as a shareholder or proxyholder prior to asking your question. Questions at the end during the Q&A session. For those participating online, questions for the Q&A session may be submitted by any registered shareholder or duly appointed proxyholder using the instant messaging service by accessing the Q&A tab. Questions for that session will appear shortly after they are submitted but will only be addressed during the Q&A session at the end. Again, for those participating in person, you'll be given the opportunity to ask questions during that session. Please raise your hand to indicate you have a question. Once acknowledged, please clearly state your name and identify yourself as a shareholder or proxyholder prior to asking your question. We will try our best to answer as many questions as we can that are submitted through the meeting portal and asked here in person. If, for any reason, we are unable to answer all questions during that session, we will endeavor to respond to you after the meeting. Voting. For those participating online, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxyholders who have not previously voted or who wish to change their votes will be asked to vote on each business item through the virtual meeting interface by accessing the Vote tab. To vote, select your voting direction from the options shown. Your vote has been cast when a checkmark appears. You'll only have a limited amount of time to vote while the polls are open. A virtual meeting user guide, including instructions on how to vote, was distributed to shareholders and is available under the corporation's profile on the SEDAR website. If you have submitted your vote prior to this meeting, there is nothing for you to do unless you wish to change your vote. For those participating in person here, we will conduct a vote on all matters by ballot. All registered shareholders and proxyholders have been provided with color-specific ballots for each resolution. You should record your vote in respect of each resolution on the applicable ballot when so directed. The scrutineers will collect all of the completed ballots towards the end of the meeting.

Thank you, Chris. And Notice of Meeting, I confirm that I've received a sworn affidavit of an officer of Computershare Trust Company of Canada stating that the Notice of the Meeting, the Management Information Circular and a form of proxy have been sent or made available to each shareholder, each director and the auditors of Agnico Eagle. The affidavit as to such mailing has been signed by Computershare, and I direct the Secretary of the meeting to keep a copy of the affidavit with the minutes of the meeting. With the consent of the meeting, I will dispense with the reading of the notice. On quorum, the scrutineers have advised me that prior to the meeting, proxies were received from holders of a sufficient number of shares to constitute a quorum. I therefore declare the meeting to be regularly called and properly constituted for the transaction of business. I direct that the formal report of the scrutineers be annexed to the minutes of this meeting as a schedule. The first item of formal business is the presentation of the audited financial statements of Agnico Eagle for the year ended December 31, 2021, and the auditors' report on these financial statements, both of which have been previously sent or made available to the shareholders of the corporation. If anybody would like a copy of these financial statements, additional copies are available here. I now place before the meeting such financial statements and the auditors' report. Questions regarding these statements will be entertained at the end of the meeting during the Q&A session. The next item of formal business is the election of directors of the corporation. The Articles of the Corporation provide for a minimum of 15 and -- or a minimum of 5 and a maximum of 15. The Board of Directors has been determined that the total number of directors to be elected at this meeting would be 12. I now declare the meeting open for nominations. May I have nominations, please?

Mr. Chair, I nominate as directors of Agnico Eagle Mines Limited, the Honorable Leona Aglukkaq, Ammar Al-Joundi, Sean Boyd, Martine Celej, Robert Gemmell, Jonathan Gill, Peter Grosskopf, Elizabeth Lewis-Gray, Deborah McCombe, Jeffrey Parr, Merfyn Roberts and Jamie Sokalsky, all as named in the Management Information Circular and move that they be elected directors of the corporation to hold office until the next Annual Shareholders Meeting following this meeting or until their respective successors are elected or appointed.

Thanks, Chris. May I have a second to the motion?

I second the motion.

Thank you, Ammar. Under the bylaws of the corporation, any additional director nominations for today's meeting were required to have been received by no later than the close of business on March 30, 2022. As no such nominations were received by the corporation prior to that date, there are no further nominees eligible to stand for election today. Accordingly, I now declare the nominations closed. You've heard the motion, which has been seconded. Is there any discussion on that? If there's no further discussion, I will ask the meeting to vote on the motion. For those participating online, you may now vote through the virtual meeting interface by accessing the Vote tab and selecting your voting direction from the options shown. If you have submitted your vote prior to this meeting, there's nothing for you to do unless you wish to change your vote. For those joining us in person here today, you may now vote on the motion by ballot. All registered shareholders and proxyholders have been provided with a ballot for the election of directors. You should record your vote in respect of the election of directors by marking an X in the box entitled For or Withhold, as the case may be, in respect of each of the proposed nominees on the ballot and by signing and printing your name in the spaces indicated on the ballot. The scrutineers will collect your ballot later in the meeting. The appointment of auditors is the next item of formal business. It is proposed that Ernst & Young LLP Chartered Accountants be reappointed as the auditors of the corporation to hold office until the next annual meeting of shareholders of the corporation or until their successors are appointed and that the auditor's remuneration be fixed by the Board of Directors of the corporation. May I have an appropriate motion?

I so move.

Thanks, Chris. May I have a second to the motion?

I second the motion.

Thank you, Ammar. You've heard the motion, which has been seconded. Is there any discussion? If there's no discussion, I will ask the meeting to vote on the motion. So again, for those participating online, you may now vote through the virtual meeting interface by using the Vote tab and selecting your voting direction from those options that are there. Again, if you've submitted your vote prior to this meeting, there's nothing to do -- for you to do unless you're looking to change that vote. Again, for those in person, you can now vote on the motion on the ballot. So all registered shareholders and proxyholders, you've received a yellow ballot for the appointment of auditors. So you should record your vote in respect of the appointment of the auditors by marking an X in the box entitled For or Withhold or whatever the case may be on the yellow ballot. The scrutineers will collect your ballot later in the meeting. Next item is the amendment to the corporation's incentive share purchase plan, as more fully described on Page 33, in Appendix B of the Management Information Circular. May I have an appropriate motion?

I move that the resolution approving the amendment to the corporation's incentive share purchase plan, as set out in Appendix B to the Management Information Circular dated March 21, 2022, be approved.

Thank you, Chris. May I have a second to the motion?

I second the motion.

Thank you, Ammar. You've heard the motion, which has been seconded. Is there any further discussion on the incentive share purchase plan amendment? If there's no further discussion, I will ask the meeting to vote on the motion. Again, for those online, you can go through the virtual meeting interface on the Vote tab. There's your options there. Again, if you wish to change your vote, then you can do that on the virtual meeting interface. For those in person, the ballot is a pink ballot for this amendment. You should record your vote by marking an X For or Against, as the case may be, on the pink ballot and by signing your name and printing your name in the spaces indicated. And the scrutineer will collect your ballot on this amendment later in the meeting. The next item of formal business to consider is a nonbinding advisory resolution on the corporation's approach to executive compensation, as more fully described on Page 34 and in Appendix D of the Management Information Circular. Before we proceed to this vote, I'd like to take a moment to discuss this item. We've had numerous conversations and discussions with certain shareholders. And what we'd like to do is just give you a sense of what we're hearing in terms of feedback and how we're receiving the feedback because we understand there's some questions on this matter. And I think it's important to understand the background to this. There were significant changes made to the structure of the company's compensation approach for the executives going back to 2012. And the decision was made to build a compensation template which more closely aligned the senior management to the shareholders of the corporation. And that template, in terms of the quantum of long-term incentives by number of shares, has not changed since 2012. There has been some minor tweaks to the long-term incentive component of compensation, and it was actually around putting additional performance measures into half of those shares that were issued there. So in effect, no change in terms of the total number of quantum, and the long-term incentive component is 60% of the total compensation. So in years when the stock does very well, the compensation is higher. In years when the stock does not do well, the compensation is lower by design. That's how it was structured back in 2012, and that is how it continues to function. The one issue that we have is around reporting. There is a 2- to 3-week lag between when the long-term incentive is approved by the Compensation Committee and the Board in mid-December roughly of each year. The way the plan functions is that the grant of those long-term incentive share units, which vest over 3 years, is granted in early January. So there is a disconnect in terms of the performance of the shares and how it gets reported, and I think that is what's causing some of the confusion. So what we've done is we've had discussions and conversations, and what we will endeavor to do is try to realign when the compensation is issued to closely match the year and when it was approved. And we feel that -- we're not sure exactly how we do that. We will endeavor to work on that. But that will better match what's in the compensation table to the share price performance of that year. If you look at the compensation that's reported in the table now, it would actually be in reverse of what it actually is reported because what's reported in the compensation table now are the shares that were approved to be issued late in 2020. They were issued in early 2021 when the shares were $92, and that's why you've got that increment. So if you look at base pay, it has not changed in 3 years other than foreign exchange. If you look at short-term incentive, it's roughly around the average for 3 years. The change has generally been almost principally in the long-term incentive, which, as we said, fluctuates with the share price. So I think it was important to try to provide that clarity to the annual meeting. We do it in private conversations we have with our shareholders who have reached out to us and we've reached out to them. But I think 2 points. That's how it functions and works. It's actually extremely well aligned, better aligned than a lot of other plans out there. And I think the other point that we'll take away is that we're focused on trying to fix that disconnect between the timing on approval and when the amounts are actually granted. So with all that being said, may I please have an appropriate motion for the advisory resolution on approach to executive compensation?

I move that the resolution approving, on an advisory basis, the corporation's approach to executive compensation as set out in Appendix D to the Management Information Circular dated March 21, 2022, be approved.

Thank you, Chris. May I have a second to the motion?

I second the motion.

Thank you, Ammar. You've heard the motion, which has been seconded. Is there any discussion? No discussion? I will ask that the meeting vote on the motion. Again, for those online, you're now voting through the voting tab and selecting your voting direction from those options that are shown on the voting tab. Again, if you've already voted, you don't have to vote unless you wish to change your vote. Those in person, you can vote on the motion. The registered shareholders and proxyholders have been provided with a green ballot for the purposes of voting on this resolution, on an advisory basis, the approach to compensation. So you should record your vote, again, with an X on the box entitled For or Against, as the case may be, on the green ballot. Sign it and print your name on the spaces indicated. As that concludes the voting on each of the motions today, for those of you here in person, would you kindly hold up your completed ballots in the air? The scrutineers will then collect those ballots. For those participating online, please ensure that you've entered your vote through the virtual meeting interface by accessing the Vote tab and selecting your voting direction from those options. So while the scrutineers are collecting the ballots, what we'll do is, while they'll tabulate the ballots, we'll adjourn the formal part of the business. We'll announce the results of the votes when we reconvene. And in this little break in the meeting, what we'd like to do is we made reference to Paul Penna. We'd like to take time to, in this short adjournment, to present the Paul Penna Award. So this is the 14th year of presenting the Paul Penna Award for Community Service. As we've said, Mr. Penna was the founder of Agnico, well known for his philanthropy, but really well known for his personal touch around philanthropy and the well-being of employees and the betterment of the communities in which we operate. As we made reference yesterday at a dinner with the combined new management team, this was an area -- this was our home. Paul used to park his 10-year-old Chevrolet Caprice a couple of blocks away at the southeast corner of Victoria and Richmond. He knew in this area there were, unfortunately, people that don't have a place to sleep and they would sleep on the street. As I said, when I started here back in 1985 as a full-time employee of Agnico, one of my jobs was to actually run errands for Paul. And one of the errands that he asked me to run -- and Virginia is here, who worked with Paul for many, many years, would remember a lot of these stories. There was a phone call. Paul left the meeting. Paul came in and said, "Sean, I need you to do me a favor. Here's the keys to my car. I need you to go into my trunk. There's a jacket -- winter jacket there. There's a box of food and here's $20. You're going to go to the northeast corner of Victoria and Richmond, and you're going to see a gentleman there whose name is John. And please give him the jacket and the food and the $20." And so as we like to say, not only did Paul know the homeless people's name around our office, he knew their jacket size. And I think that is the history of Agnico. And that's why we're always proud to honor those employees of the company that make major contributions to the communities in which they live and in which we operate to try to make a difference in people's lives. So I think there's another slide of Paul. Paul used to -- this was his favorite day of the year, the annual meeting. And at one point, Agnico Eagle had 40,000 retail shareholders. And so we would print 40,000 annual reports, and Virginia remembers, and we would -- Paul would spend every morning, he'd get in early and he'd have Virginia organize calls for him. He'd speak to about 40 shareholders a day. So this was a big event, and we would basically have multiple generations of shareholders joining us at these events. So a lot of good history here. So I'm pleased to announce that the winner of the Paul Penna Award is Mélanie Marcil. She is here today with her husband, Pierre. She's from our support and development center. We call it the CSD group in the Abitibi region of Quebec. And what we'd like to do is honor and recognize Mélanie's generous spirit, thank her for the ways that she's volunteering in her community. So congratulations, Mélanie. For many years, Mélanie has been a member of the first responder team in Preissac, which is a small community near where we're on. So it's a volunteer basis. And being part of that community, it's important to have volunteers that are willing and able and equipped with the knowledge to be able to respond to emergencies. As we unfortunately know, being Agnico Eagle, we've lost several employees along that highway in automobile accidents. So it's important to have volunteers like Mélanie that, as we say, are able and willing to respond to those emergencies. Mélanie has been with Agnico since 2005. She's currently an HR adviser. She started as a programmer with us, and later, she took on roles in HR and as a payroll systems analyst. She went back to university to obtain her certificate in human resource management. She's also involved in volunteering to clean up along the local highways and roads. She donates art that helps as well in the community. So she's involved in a lot of impressive ways in the community. So we'd like to thank Mélanie for her generosity, her time, her energy to ensure that when there is a crisis or there is an emergency, that people can get taken care of. So as part of the award, Agnico makes a charitable donation in Mélanie's name. The charity of her choice is -- that Mélanie has selected is Besoin d'aide 24/7. That's an organization that aims to save lives through awareness and prevention and intervention to reduce suicides and crisis situation. So Agnico is proud to donate $10,000 to this initiative to help build the first center in the Abitibi-Témiscamingue region for this organization. So this is an important initiative. And so I'd like to invite Mélanie to say a few words.

What a great company I'm working for. Thank you, Agnico, [ for continuing ] Paul Penna's philosophy. I'm pretty sure that [ Besoin d'aide 24/7 ] will take care of that $10,000 donation. [Foreign Language] Thank you.

We also -- every year, we get many, many nominations for this award. So there's a process that we go through and select among a number of great candidates. So we just wanted to recognize the regional finalists. We also make donations to their causes. So regional finalists. Erold Wastman, for his generosity and always lending a helping hand in his community. At Pinos Altos, they call themselves the Bermuda Friday Team. That's the security department there. So they volunteer their Fridays to environmental cleaning initiatives and helping local [ schools ] and community centers. And Rami El Hachem, for championing the zero waste movement by cycling as his primary mode of transportation while encouraging colleagues to cycle more and for his volunteer work at the local nonprofit bike shop. So congratulations to all of those that have contributed in the communities. We'll now reconvene the formal part of the meeting to proceed with the remaining business. The Secretary has advised me that the scrutineers have tabulated the results of the ballots conducted earlier, both online and in person. And with respect to the election of directors, the scrutineers report that each of the proposed nominees for director has received a majority of the votes cast for. Accordingly, I declare that, that motion is carried. With respect to the appointment of the auditors, the scrutineers report that the motion received a majority of the votes cast for. Accordingly, I declare that motion carried. With respect to the amendments of the corporation's incentive share purchase plan, the scrutineers report that the motion received a majority of the votes cast for. Accordingly, I declare that motion carried. With respect to the resolution approving, on an advisory basis, the corporation's approach to executive compensation, the scrutineers report that, that motion did not receive a majority of the votes cast for. Accordingly, I declare that motion defeated. If any shareholder is interested in the exact number of votes cast in a ballot for or withheld or against with respect to each of these motions, he or she may obtain particulars after the meeting by contacting the Secretary. The corporation will also issue a press release and file on SEDAR a report of the voting results at this meeting. And that press release usually goes out -- later today? So that will go out later today. As there is no further business that may be properly brought before the meeting, I will now ask that someone move to and someone second a motion that the meeting is now terminated.

I so move.

May I have a second to the motion?

I second the motion.

I declare that the formal portion of this meeting is now terminated. What we'd like to do now is we'll proceed to a presentation of the business, and I'll start with the gold price. But first, I'll start with a safe harbor statement. So we'd like to caution you, both Ammar and I, as we go through a short presentation here that the presentation may include certain forward-looking statements. So we provide the disclaimers and the disclosure here on the slide deck in these several slides. So I'd like to start and just talk a little bit about the gold price. And it's our sense that as we've seen the gold price move up and down within a band of about $200, it's actually -- when you reflect back over the last year or so, it's actually done fairly well. When you think we are in an environment where the stock market was hitting record numbers, the gold price was in that sort of range of $1,750 to $1,950, approaching $2,000. So it's actually done very well. We've been consistent in our view, as we thought about inflation, that it was not transitory. We were saying that from the start because we're starting to see things we hadn't seen any time over the past 20 years where you had some sense that maybe inflation was going to become an issue. You had some sense that it was going to start to get built into expectations around wages. And we saw that a couple of times late last year. In the U.S., big industrial companies announcing increases in wage packages. We also saw early last year in a lot of the Q1 conference calls where CEOs were basically saying, yes, we're seeing price pressure and we're going to start passing that input price pressure on to consumers in terms of end products. So I think everybody can conclude now we're in an inflationary environment. But even though you can conclude that now, our sense is we think there's still a lot of complacency around inflation, a lot of complacency. And I think that the way we look at it now is if you're in an inflationary environment, generally, your real interest rates are low. The challenge that the central bankers have is that how do they cool things down from an inflationary perspective without hurting the economy. That's extremely tricky to do. But from an investing perspective, things have changed dramatically, dramatically. Because if you step back and think about the last 20 years, we were in an environment that for almost all asset classes, everything was moving up. What did we have? We had stimulus. We had low interest rates. We had low inflation. We had steady economic growth. A lot of that was supported by globalization. A lot of that was supported by respect for world order. We're at an inflection point. This is likely going to be totally different in the next 10 years because what we have is we have rising interest rates. We have inflation. We no longer, in certain parts of the world, have respect for world order. This is going to be a very, very challenging environment for investors. Those are the periods when gold does extremely well. So I think it's a mistake to sort of say gold hasn't done much. It hasn't done what it should be doing. The landscape has definitely changed. And I think when you think about that, where the game has changed likely and it's likely, for the next 10 years, going to be totally unlike the last 20 years, there's a strong argument for gold. But there's even a stronger argument for gold shares. That argument is much stronger. You saw our results that came out yesterday, very strong cash flow generation. All this chart shows is there's a disconnect, a current disconnect, between where the gold price is trading and where the gold equities are trading. And this is suggesting that, that disconnect is about 14%. That disconnect is way bigger than that, and we will use Agnico Eagle as an example. The current price of gold, to get to an all-time high from where it is today, would have to go up 8% to get to the price that was hit around $2,075 in August of 2020. For Agnico Eagle to hit an all-time high, which it hit, in Canadian dollars, $117 back when gold was at an all-time high, so an 8% move to get to an all-time high in gold, Agnico Eagle will have to go up 63%. So there's the leverage. So we're not that far off an all-time high, but the gold equities have suffered from indifference. So this is the opportunity that you don't see often in the gold space where you have a total disconnect. So what that's suggesting is these businesses are actually pretty good at $1,900 given the cash flows being generated, given the strength of the balance sheet, given the fact that most of the high-quality gold miners have derisked their business. So the other thing is I would point out that Agnico Eagle is a much stronger business than it was when it hit the all-time high of $117. It's much stronger. You could see it in the announcement. You could see it with the combination and the merger with Kirkland Lake in terms of the strength of the asset base, the strength of the people, the combination of the management team. So this is where you need to be particularly, as we said, in an environment where there's a lot of uncertainty going forward. You want to be in gold, but you want to be in gold in those high-quality names that have a strong business, that have experience in terms of the Board, in terms of the management team, because that's where you get the best leverage. So now I'll turn it over to Ammar and he can tell us how great Agnico is. But before he comes up, I think we're fortunate. It's actually a great example of a couple of things, how when people join Agnico, most of us tend to stay for a long time. As I said, I became an employee in this building, up on the 16th floor, 37 years ago. Ammar took a bit of a different path. He still got a few years to go, but he came once and then we got a call from Jamie Sokalsky that Ammar was coming back to Barrick. And so Jamie was kind enough, the swap was Ammar goes back to Barrick and I think Jamie sent me 2 dozen golf balls, Barrick golf balls. But Ammar came back, and he came back and he went back to Barrick to be the CFO. So he's got a tremendous amount of experience. He knows the business inside out. He's honest. He's a hard worker. He's focused on value creation. So we're fortunate to have him in the CEO position. And on that, I'll turn it over to Ammar.

Thank you, Sean, for that. Those are very nice words. And so I've got some slides. There are 4 slides. We'll go through them quickly. They're slides I'm comfortable with, we've gone through before. But before I do that, I want to make some ad hoc comments, and I know that's risky for a new CEO and his first AGM as CEO, but I think it's important. And I wanted to reflect on what Sean said. When he started his comments, he said, and I'm paraphrasing, Sean's up and he's standing in the shoes of Jim Nasso and how honored he was and how seriously he takes that responsibility. And I thought, "Well, am I now standing in the shoes of Sean Boyd?" And the answer is those are pretty impossible shoes to fill. Sean has been leading this company for decades. He's devoted 37 years of his life to this company. He is one of the most respected CEOs in the gold space globally and frankly, one of the most respected CEOs globally in any industry by the Harvard Business Review. There are a lot of people, men and women, who devoted their careers and created a lot of value at Agnico, and many of them are here and many of them are listening in. But I think all of us would agree that no one individual has contributed as much as Sean not just in the economics and the value that under his leadership this company has generated, but extremely importantly, with the culture, the culture that Paul Penna started, that Jim Nasso nurtured and really that Sean Boyd has continued to build upon and enforce in his 37 years in the company. So what I thought I'd like to do is maybe -- because I don't know if we've done it, but maybe we'd all give a round of applause to Sean for his contribution. And just before I get into the presentation, and I mean this sincerely, Sean, we are delighted that you are our Executive Chairman. And I can tell everybody here unabashedly, in the, I think, it's 65 days I've had this job, I've had probably 65 days of good advice from Sean. So thank you for that. So we'll jump into the next slide. As Sean mentioned, 2021, by any measure, was a strong year for Agnico, and it should have been. And it was because the gold price went up and was doing well, and our operations were doing well. Record annual gold production of 2.03 million ounces at a cash cost of $761, all-in sustaining costs of $1,038. Record operating cash flow. So not just production growth but strong operating performance, generating record operating cash flow. Record mineral reserves. With the TMAC acquisition, record mineral reserves, 25.7 million ounces of gold at the end of 2021. Another strong year of shareholder returns, 38 consecutive years of dividend payments. I don't think there's another gold -- I could be wrong, but I don't think there's another gold company in the world that has done that. The acquisition of TMAC, and we talked about it in this morning's call and all the exciting exploration results up there and the potential of that asset. And then finally and importantly, the merger of equals with Kirkland Lake Gold. And I want to welcome, again, the new members of the Agnico Board that transitioned from the Kirkland Board. So what do we have now at Agnico Eagle? We are, in our view, the highest-quality gold miner in the world. We operate in the safest jurisdictions with the best geologic potential and the ability to operate for decades. We are guiding to 3.2 million to 3.4 million ounces this year, which puts us #3 in the world at the most attractive costs of between $725 to $775 an ounce. And that is a high-quality gold company, the best parts of the world, with the best assets at the lowest cost. We're the largest Canadian gold producer. So 2.4 million to 2.5 million of those ounces are coming from Canada. I think the number is we produce more gold in Canada than the next 8 gold companies combined. Strong mineral reserve base of 44.6 million ounces. Mineral resource base, measured and indicated, of 40 million ounces and inferred of another 31 million ounces. Again, an exceptional company by any measures. Strong ESG initiatives, strong ESG performance. But really, it starts with strong ESG culture, and this goes to who we are. Long before ESG got the publicity it does now and before it got the publicity it deserves, Agnico was a leader in this field. And we were a leader because very simply, being responsible to your community, being responsible to the environment is just the right way to operate. And it's the right way to operate for all miners, but it's especially the right way to operate if you want to be somewhere for 50 or 60 years. Because it's one thing to mess up on your first mine, but you'll never be able to build a second mine or a third mine in that community. And this is part of who we are. So we continue to be industry leaders, and we will continue to be industry leaders in ESG not just because that's what the market demands, and it's good that the market demands it, but again, that's because who we are and it's part of the strategy. So in conclusion, the title of this slide says The New Gold Standard, but it's really the same best-in-class, best-in-the-world gold standard that's built this company. And with our merger of equals with Kirkland Lake, it's going to create an even better company going forward. We are going to maintain a simple, consistent, disciplined and proven strategy to value creation: low cost, strong margins, strong cash flows, good production with strong growth in good jurisdictions and a proven leadership team with a track record of building per share value, the ESG leadership, the growth in existing assets in existing regions where we can leverage off the infrastructure and again, a long history of delivering value and returning value to shareholders with 38 years of dividend payments and probably as early as next week, initiating our share purchase program of up to $500 million over the next 12 months. So with that, I'd like to say one final thanks and that's to all of our shareholders. We have the opportunity to have a lot of meetings and to talk to a lot of investors and analysts and partners. But the AGM is a little bit special because it's directly to the owners of the company. So for everyone who is the owner of the company, thank you for entrusting us with your money. We've done a good job over the years. We've got a great team, and we will endeavor to do an even better job going forward. Thank you.

Thank you, Ammar. Very good job. I'll now open the meeting to questions from shareholders and from proxyholders. All of those attendees who would like to ask a question online, use the instant messaging feature. And you can submit your questions there, and then Chris will relay those questions, if any, as they come online. For those participating in person, good old-fashioned way, raise your hand. And once you're acknowledged, please state your name, identify yourself as a shareholder or as a proxyholder prior to asking your question. So are there any questions in person or online?

There's a question here.

[ Paul Vernon from Burlington ]. I'm a shareholder. A couple of questions. Okay. Now you're the third largest publicly traded gold mine. I'd like to know particularly Kirkland Lake, Macassa and Detour, how much have you added in size to the company? Like 25%? I guess it's to include Australia, too. And I'd like to know their mine life of the acquisition, each of those 3. And I got another question. I'd like to know exactly how the war in Ukraine is affecting the gold price and the gold supply to the world. Are the Russians -- they are obviously taking over the 2 Kinross mines. Is that gold just going to be kept by the Russians? Is it going to be put on the world market? How will the Russia factor play into everything? Those are my 2 questions.

Okay. We'll start with the easy one. I'm not sure I have an answer to the second one, but we'll start with the easy one. And good question on the Kirkland Lake assets because if we look at Q1 and the reporting that was done yesterday and on the conference call today, we've got strong performance from Detour; strong performance from Fosterville, as you referenced, which was the mine in Australia; excellent performance from LaRonde, which has been our flagship for over 30 years. So I think it's the power of that combination. And so from a producing ounce standpoint, prior to the merger, Agnico was producing about -- almost 2.1 million ounces. Kirkland Lake was producing 1.3 million to 1.4 million ounces. So that's order of magnitude, in terms of size, market cap and the combination, it was 46-54, I think, Jeff, that was the number? So almost 50-50 in terms of bringing the companies together. And so what we have now is we have a collection of assets which are benefiting from the concept of regional consolidation. And I think what you saw in the press release is the fact that we're starting to realize on the synergies that were expected from this combination, and that's one of the prime benefits of looking to do it. And in fact, as Ammar explained on the conference call and the operating people in the conference call explained, that we're ahead of schedule in terms of how we're realizing on those synergies. So I think that was the magic of the combination, but there's more potential. So in order of mine life, you asked about mine life. Well, I think if you look at Kitco in the past week, they put out a list of the top 10 gold mines in the world by annual production. #8 was Canadian Malartic, which we own half of with our partner Yamana; and #9 was Detour, which the new Agnico Eagle owns 100% of. What we're going to see is we're going to see Canadian Malartic transition into an underground mine, but have an extensive mine life. Agnico put out a study about a year ago, a little over a year ago. And of our 14 million ounce envelope at Canadian Malartic underground, we incorporate a little over 7 million ounces in the study. And that suggested a mine life out to 2039. We know that, that deposit now is bigger than 14 million ounces just based on some of the step-out holes. So we will begin incorporating more of those ounces as we move forward, as we put in infrastructure, open up that area, so long mine life. Detour is another long-life mine. So not only are these 2 big, big annual producers of gold and some of the biggest in the world, they have extensive mine lives. So Detour and the Kirkland team announced significant drill holes last year. The team led by Eric Kallio estimated that those drill results increased the size of the Detour deposit by 10 million ounces of resource. The combined teams have been working on a new study which will convert some of that 10 million ounces into reserves, so the reserves will continue to grow, and put out a life of mine plan with our Q2 results in late July. But as Ammar said on the conference call and Natasha made reference, too, that's only the start because what we'll do is we're finding more, as Eric also said. We're drilling 500 meters outside of the known mineralized envelope at Detour, and we're getting significant wide intercepts of gold. So again, both of these mines will likely be producing gold beyond 2050. So I think that's the magic of this business. It's getting tougher to find high-quality deposits in the right part of the world that have extensive mine lives. And we're fortunate to have one for over 30 years, being LaRonde, and that was one of our best cash flow generators and one of our lowest cost producers. So that's the strength, and that's the strength that Ammar referred to in his presentation. As for the impact of the unfortunate situation and tragedy in Ukraine -- and let's start with that. It's a tragedy. It's -- people are dying. Lives are being destroyed. Not sure how it will ultimately roll out and impact gold. But I think -- the lesson, I think, from a gold perspective is that -- I would kind of relate it to what Germany was doing a few years ago. Germany, a few years ago, had most of their gold outside of Germany. A lot of it was in the U.S., in New York. And I'm not sure exactly when, it was around 10 years ago, Germany announced that they wanted to physically bring back a huge proportion of that gold. So I think that demonstrates a couple of things. It's the importance of gold and central bank reserves, but also more importantly, where it's located because when you need it, you want to be able to access it. And I think that's one of the challenges that we hear Russia has had is Russia has been a known buyer of gold for years. And we're hearing things like they may be a bit challenged in accessing a huge chunk of their central bank reserves due to sanctions, but also maybe due to where that gold is located. So we hope for a quick end to that war and -- but I think Russia's situation in terms of the proportion of gold and central bank reserves, I think, highlights why you should hold gold. Any other questions here? Any online, Chris? No? There's a question back -- in the back. It's good to see you again, sir. So these are the long-time shareholders that we see year in and year out, and we appreciate the support and appreciate the turnout at the annual meeting.

Yes. [indiscernible] shareholder. My question is based on these buybacks -- on these buybacks -- did you hear my name? [indiscernible] Anyhow, my question is a buyback, I disagree with this firmly, but I keep saying the dividend. I believe my dividend is nothing to boast about. In my opinion, it should increase a lot more with how well Agnico Eagle and gold is doing. We should get a much [ higher ] dividend. As far as the buying back the shares, if the shares drop tomorrow morning, [ they've got -- they're fine. But that's ] [indiscernible] top. Well, at the top, at least you've got your dividend. But if you buy back the shares as a company and then [ it drops ], it doesn't do me or any shareholder any [indiscernible] but the dividend does. Thank you.

Yes. So the question was around the share buyback versus dividends. And so I'll let Dave give you some color on the mechanics. But in terms of just the thinking behind the 2 options, I think the dividend component that you referred to, and Ammar mentioned it, we've paid a dividend for 38 consecutive years. So in order to do that in an industry as volatile as the gold mining industry given the volatility in the gold price is a tremendous accomplishment. So there were years when it was -- in this building, there were years when it was extremely difficult to find the cash to pay that dividend. But we felt that it was so critical even during tough times. And what Paul Penna would say is, "You know, we may have to pay a little bit less this year but we need to pay something." And you know what? The shareholders will actually appreciate it more that, because they know how tough it is, the fact that we've paid some. So part of your question is we should pay more. We just announced an increase in the dividend earlier this year. And a few things about how the dividend has moved here. In 2011, gold fell fairly dramatically. It took Agnico over 2 years before we adjusted the dividend down, and our dividend was one of the top dividends at that point in time. So we structured the dividend so that even if the gold price goes down, we don't have to react right away. I think that's important. And so we moved it up in increments. In 2013, gold went down $400 in 6 weeks, and Agnico did have to adjust the dividend. So in 2014, we were paying half of what we were paying a year earlier. But we didn't eliminate it. There were many gold companies that totally eliminated their dividend and took it down to $0. We couldn't do that because of that track record and the importance of it in terms of providing cash to the shareholders. So we are paying a lot now. So think about the merger. So our shares outstanding, about 455 million. We're paying $0.40 a quarter, so $1.60. That's a significant amount of money on an annual basis. Do we have the capacity to pay more? Yes, we do. Do we think that we will be paying more? Yes, we do. Now a lot of it depends on the gold price. But we would expect to see our dividend go up because we're confident in the gold price, but we're even more confident in our ability to grow production and do it in a way where we keep cash costs in line so that we can deliver the margin expansion to our shareholders. On the buyback and the philosophy, we filed a plan to buy back, but it's a tool. And it doesn't mean that we go into the market tomorrow and we start buying back the shares. So I'll leave it to Dave now to explain it and how it's set up and how we think about it as a tool to provide that additional return to shareholders.

Yes. Thank you, Sean. I think you explained it extremely well, in fact. It is another tool for us to return capital to shareholders. There are shareholders out there that actually prefer the buyback. And one of the reasons that, that could be is because it is, in fact, a more tax-efficient way to return capital to the shareholders. But I think as Sean said, our strong first preference is to continue that dividend and to continue that over time. But I think it is important that as a variable tool, we also have this in our back pocket as well. So I think it's part of our overall strategy. And I think it's a differentiating strategy with the investors where we can say that we can do everything for the shareholders, including continue to drill, find and build good new gold mines and maintain a very strong company that way. Just a tool, but I actually appreciate having an extra ability to do something for shareholders.

Thanks, Dave. Are there any -- there's a question here. We'll get you a microphone there.

Can you hear me, Sean?

Yes, I can.

First of all, I congratulate you on your promotion.

Thank you.

Now you've acknowledged -- I'm a shareholder. Now you've acknowledged that there's an increase in inflation, and you anticipate that to be worldwide. And you've acknowledged that there's a value disconnect between the price of gold and the equity price of the miners. Now for -- regarding Agnico Eagle's performance for headwinds, what are you expecting on drag of cost of operations with respect to inflation and the increase in the value of the U.S. dollar?

Sure. Maybe, Ammar, you dealt with that on the conference call this morning about inflation, the impacts of inflation, potential impacts on our cost structure and our business.

That's a very common question. We get that a lot. And you're absolutely right. There is inflation out there, and it's -- we don't think it's transitory, and I think most people at this point don't think it's transitory. Our team did an exceptional job getting out ahead of it. We've also done a very good job of managing costs through efficiencies. But we are seeing inflation out there, and we're doing the best that we can to manage it. Dave and his team on the finance side contributed a lot of mitigation of that by doing some hedges, buying fuel in advance, that type of thing. But there is pressure on inflation. What I would say, however, is we're a gold company. And a lot of what's happening with gold moving up is correlated with those expectations of inflation. It's not perfect. We admit that. But we do believe that, frankly, simply put, we think that the, over the long run, the gold price appreciation will be higher than the cost inflation.

And there was a reference -- you made a reference there to the U.S. dollar. So I think what we've seen is that has an impact on the cost structure because it impacts the Canadian dollar. So 3/4 of our production is in Canada. We have a lot of Canadian dollars in our cost structure. And our treasury team is constantly monitoring that to try to protect the budget price, which impacts the cash cost that's reported in U.S. dollars. So the gold price actually at $1,920 is doing fairly well when you think about the strength of the U.S. dollar over the last little while, but the Canadian dollar has weakened because of that. And we've been able to put on some hedges in Canadian dollar and Aussie dollar over the last week or so, which get us better levels for the back half of 2022. And now we're looking into 2023 that are protecting our budget assumption of 1.25 on the exchange rate. And so recently, we can get -- if we look at the forward curve, we can get between 1.28 and 1.29. So we layer that in, and the team has done an effective job. The other one is on diesel. The forward curve is favorable on diesel. So the team has done a really good job on the diesel side. Our diesel hedges are well in the money. That's not good, but it is protection. We'd rather have a lower diesel price. So you have to try to manage that. And so that's why we're comfortable when we look at some inflationary pressures because the team has done a good job of sort of seeing that and having mechanisms available to provide the hedges against that to protect that budget level. I hope that helps. Any other questions in the room? I know we have one online. Maybe we'll go to the online one now?

Thanks, Sean. Shareholder [ Christopher Allen ] asks, how does management factor buying back royalties as part of the strategy to reduce cost long term? And is it a priority?

Yes, that's another great question. We actually just bought a royalty back on a project, a property in the Abitibi near Canadian Malartic because it's potentially got the eastern extension of the favorable geology that hosts all of that gold we talked about earlier. And there was a royalty on that when we acquired the property a few years ago. And talking to Guy, who manages the exploration program that covers that area, we bought that one back. So we're constantly on the lookout evaluating royalties that are on our properties to see whether the numbers make sense. It's strictly a numbers exercise where you're making projections and you're running numbers. And over the years, we have bought back royalties where we can. I know Dave, as our CFO, is always telling us, "Look, these things are good to get in," and we would really agree with that, as a policy. If we can have a willing seller and the price is reasonable, what we're doing, in effect, when we do that is we're basically demonstrating our confidence in our exploration team that on that ground that holds that royalty, by taking that step to put up cash now and buy it back, we're basically expressing our confidence in our exploration team that they're going to find a lot more gold and make that royalty much more valuable. Because when you run the numbers, there's only a really narrow margin. It's easy to come up with a value. On our side, we're trying to say what could it become. So we do, do that. That's a good question. Yes. So there's no more questions online, and I don't see any more questions here, which is good. So a few thank yous now. Certainly thanking everybody that attended here today. It's good to see you, and thank you for making the effort to come out. I'd like to thank our Board for their support, and we can't do this without the support of the Board and their engagement and their care for the company and their care for the employees. Obviously, I'd like to thank the employees, the combined company, over 17,000 employees. So as Jim Nasso would always say, that 17,000 times 2 or 3 or 4 or 5 family members and then you take the communities and the suppliers, and that means there's tens of thousands of people that are relying on our employees to do the right thing and to maintain a strong business so that we can continue to make a positive contribution in those communities. So thank you to our employees. Thank you for Mélanie, and congratulations for Mélanie to winning the Paul Penna Award, and thank you for coming. And thank you, Pierre, her husband, for coming as well. So there's no further questions. So this concludes the meeting. So for those joining us in person today, we have the traditional lunch. And so I have to tell the story because some of you don't know it, but it's a classic. And so what we would normally do, we'd have the meeting and then we'd ask all of the attendees to go to another room and enjoy the lunch and we always put out a pretty good lunch. And then the Board would stay with some of the officers and we'd just vote in the officers for the following year. So we would not get to the lunch until 5 or 10 minutes. So one year, we'd go in and I'd get into the lineup, and there's a gentleman beside me and I'm thinking, I don't recognize him from the meeting because he wasn't wearing a shirt but he had a leather vest on, had a long ponytail and he was standing beside me. And he leaned over and he was, "Man, these guys went cheap on the lunch this year." So I knew then he wasn't at the meeting because he didn't recognize me. So I would ask everybody here to enjoy the lunch. And again, thank you very much for coming. It was great to see everybody. Thank you.