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

Welcome back. My name is Courtney Libby, and I'm a Vice President in Canaccord's Natural Resources Investment Banking team based out of Perth. I've had a few coaching lessons on how to pronounce our first speaker's name, and I'm sure I'll still probably get it wrong, but let's give it a go. First up, we have Jean Robitaille, who is the Executive Vice President, Chief Strategy and Technology Officer at Agnico Eagle Mines. Jean is one of the original members of an executive group established in the late '90s at Agnico Eagle. He's been instrumental in Agnico Eagle's journey from a small regional mining company in Abitibi to a globally recognized industry leader. Today, Agnico Eagle has 11 operating assets, generates over USD 5 billion of EBITDA and has become a benchmark in the industry. Over to you, Jean.

Thank you, Courtney. So apparently, it's very serious. So I'm not supposed to -- it's the first time I present here. So normally, I will do a joke, I will not. And in the room, we have the group of Agnico Eagle. They are phoning me on again on my watch just to make sure I will be fully concentrate. So good day, Australia. Is it Okay? Good. So thank you, Courtney. So let's go. I will not burn all of the time. So good morning, everyone. It's really a pleasure to be today at Diggers & Dealers. I'm quite impressed with the -- everything organized. It's the second year I'm coming. So I really appreciate the opportunity to present Agnico Eagle. In fact, 37 years ago, I started with Agnico Eagle from a very small mining company to now what is, in fact, a global enterprise worldwide. And we are the second largest by market cap gold company in the world. It's not too bad. So I will give you a good perspective on the -- what we were able to accomplish and what is our vision moving forward. The -- please note the cautionary statement on forward-looking information and also all of the currency are in U.S. dollar. Before going any further, I would like to acknowledge the traditional owners of the country where we are meeting today, and I pay my respect to their culture, to the elders past, present and emerging. Agnico Eagle. What is our strategy? It's quite simple. We focus on region with high geological potential and political stability, allowing us to develop mine for a decade to come. And more than in any region, we're looking not just to have one mine, but eventually develop a regional platform. So we are global, but we are regional oriented. So we are currently in 4 countries: Canada, Australia, Finland and Mexico. The majority, you can see on the chart on the right, the majority of our production, 85% come from Canada in Northern Ontario, Northern of Quebec -- northwest of Quebec and in Nunavut. Nunavut is quite north and colder than here, to be honest. And when we developed this, we were able to build competitive advantage with the different entrepreneur or service provider, and that was the core of building our business. So in Canada itself, we have 12,000 employees currently, and we are an employee -- an employer of choice. One of the competitive advantage we have, as I mentioned, with the contractor, with the entrepreneur, with the different stakeholder, we have also -- our competitive advantage, we will say, will resume in terms of the technical ability to advance our -- different project. So it's not too big, the team, but it's not too small. So we have in the field of the different expertise, geology, mining, metallurgy and all related to the business, we are able to support our operation to be able to improve them. And in parallel, we are also able to develop our project that we have in the pipeline. So this is an angle that we -- and I will come back. This is an angle that we -- on this later on. This is an angle that it make a huge difference from our perspective to be where we are at this point of time. So if you look at our track record over the last 20 years, you can see on the slide from 2005 to 2024, we passed from 1 operating mine to 11 currently operating mines. We're in 1 country. Now we are in 4 countries. In terms of the production profile, we're at 240,000 ounces, and now we're near 3.5 million ounces and a production that we'll be able to sustain moving forward, and we see some growth I will explain later on. On the key metrics per share metrics, if you look the 3 other components, we were able to substantially improve the return to our shareholder mainly on the per 1,000 share, the production per ounce, the ounces per 1,000 share, the EBITDA per 1,000 share and as well as if you look bottom line, the dividend, and we pay dividend for many, many years. In fact, we never reduced -- since I'm with the company, we never cut the dividend. It was always a dividend, and it's quite decent, USD 1.60 per share on an annual basis. You can see on the chart also in terms of our gold production, the last quarter that we just reported, we produced 866,000 ounces at a cash cost, all-in sustaining cost, $1,293. It's sustained, it's stable. We are within our guidance, maybe slightly above, looking forward statement at the beginning. And if you look the chart below, we were able to increase the all-in sustaining cost margin percentage. So everything we do, we were able with the technical support with the good operation team we have to be able to participate to the margin expansion with the price of gold going up. So this is -- we are very proud, and we are working really to return as much as we can to our shareholders. So to be able to develop this, we have -- our strategy, it's quite simple. So we look to develop more and more the pipeline looking forward in the long-term pipeline. So in terms of evaluation of our different project [indiscernible] that we do, we have a dedicated team working closely with. We have our project evaluation, working with the technical services and the exploration group. Exploration is key for us. This is what makes a difference to build the company we are. So if you look just in terms of our exploration program to be able to add value in the area that we focus mainly, it's resource conversion in terms where we have any mine, what can we explore around to be able to continue to feed our operation or the ore processing facilities that we have and expand mineral resource, it's one of the key drivers. This year, in 2025, the budget is above USD 500 million -- USD 525 million. Just in terms of exploration, in terms of the drill, we have 121 drilled presently worldwide for a budget above $300 million. In parallel, we are -- and I will talk later on, we are advancing exploration infrastructure for close to $150 million. And finally, in terms of the technical study, advancing our project slightly above $70 million. You have on this slide also 2 examples how we are able to -- when we develop a project or we move, how we are able through exploration, through the different study, we're able to increase the value. So at Kittila, in 2005, we acquired Riddarhyttan Resources. Kittila is in Finland. And you see the -- based on resource, what we're able to achieve. And also in Nunavut Meadowbank, when we did the -- from the acquisition in 2007 from Cumberland Resources, we're able to expand the resource. And for sure, we are continuing to mine. So it's a proven model that add value. Just to give you a perspective in terms of our strategy. So I took the example of in Canada, the Northwest -- the Northern Ontario and Northwest of Quebec, the consolidation that we were able to do over years. So based on this, what you can see, we're able to acquire 50% of Canamartic (sic) [ Canadian Malartic ] in 2014. We're successful to acquire the other half in 2023. We added Upper Beaver, what is an ore body close of Macassa in Kirkland Lake. We did the merge with Kirkland Lake Gold in 2022, what brought also Fosterville into the equation and adding Wasamac and more recently, O3 Mining in Quebec with the project Marban. So all of this presently from -- you look Canadian Malartic 2014 to now, you see again the expansion in terms of the resource base and Detour from 2020 when Kirkland Lake acquired them and where we are at this point of time. So our intention is always the same, how can we continue to add value. One of the key elements, it's always with -- through the drill bit and after being able to support the study and support the operation, maintaining a very decent cash cost of operation, and be able to deliver for our shareholders. Canadian Malartic, more as an example. So our plan is to go to 1 million ounces towards -- in 2030. Bottom line, Canadian Malartic, it's a large open pit in Quebec, Canada and 60,000 tonnes per day mill capacity. We have through exploration, we're able to discover an extension underground. So we approve the sinking of a shaft, and it's already in operation. We continue to sink the shaft. And this will transit from 60,000 tonnes per day at 1 gram-ish to 20,000 tonnes per day from underground at 3 gram. So it give us a 40,000 tonnes mill capacity in excess. On this presently, with continuous exploration. I feel I repeat myself, exploration. So we have Guy Gosselin in the room. He is our Head of Exploration. So probably he will be very happy. Normally, I don't talk that much about the group, but we are very proud of them. So we are looking to add another shaft to add more because the size of the ore body in excess of it, we will add the Marban that we just did the acquisition. It's roughly 13 kilometers from the mill. So we are conducting a study now, and we anticipate to be in a position to bring the ore to the mill. We have also acquired Wasamac when we did the other half of Canadian Malartic. All this combined show us that we will be in a position to produce 1 million ounces per year at Canadian Malartic. It gives you an example of what the way we are working really oriented with regional opportunity, how we can build from one asset and we can expand. Now with the merge of -- with Kirkland Lake, we were fortunate to have a Fosterville operation. Listen, this is a good operation. Recently, they have the long-term approval. So we see at least another decade of operation. We're working to improve the asset and probably increase slightly the throughput to maintain a decent operation. On this side, we are aggressive on exploration. So I don't know who know Ian in the room. He has a strong accent. I'm telling you he has a very strong accent. I have hard time to understand when he talked to me. So -- but after a few beer, I understood that he said there is another Swan Zone. So we are investing more on exploration, not more, but we are aggressive on exploration. We would like to discover the full potential of Fosterville. So the budget is quite substantial as on the other projects that we have across the organization. In Australia, also, we are in Northern Territory. We own the entire Pine Creek district. We have a mill facility, permitted mill process plant and tailing facility. It's in care and maintenance. We are doing study. We're doing also exploration, and we are looking if there is an opportunity to restart the operation. Stay tuned. We will update you. We don't have a time on this, but Yes. So I have 13 or 12 from Agnico Eagle, so they are watching me. So on this, the -- we have 5 -- I have 5 minutes, but we have 5 key projects in our pipeline. We have a lot of projects, but the major one that we are working on presently, it's to advance those projects, the study to be able to continue to build our production profile and maintain and being sustainable. So the first one is Detour. Mainly Detour, the key point is last year, we approved an exploration ramp, and we will go underground and we will do a bulk sample. We will be in a position to confirm the continuity and the grade, and we anticipate in 2027 to be in a position to move forward. We perceive this. It's a good addition with a higher grade to help -- not help, but this is our vision also for Detour to go at 1 million ounces per year in 2030-ish. Canadian Malartic, I will not go in more detail. Study is expected in the first half of 2027. Now Upper Beaver, it's another ore body, 10% copper in terms of revenue versus gold. We will need to have a process plant with the flotation circuit. So we'll not use what we have at Macassa, but we will be able to use the infrastructure or the synergy out there. We are doing an exploration shaft. Everything will be properly positioned or built to allow us to go in operation. And we are doing in parallel an exploration ramp, again, to bulk sample continuity of the ore body and the grade before making a final decision in terms of moving forward in operation. Now OP in Nunavut. We have currently Meadowbank and Meliadine in Nunavut. We want to stay in Nunavut. We want to expand. So in 2021, we acquired TMAC. And from there, we decided to put in care and maintenance. It's challenging operating in the north remotely, and we just decided to invest massively in exploration. We need -- based on our experience, we need roughly 400,000 ounces, and we are looking at 10 years of operation. We're successful in operation. The exploration continue. The study is advancing well, and we anticipate in the first half of 2026 to be in a position to update the market and potentially make a decision. And finally, in terms of Mexico, we have our JV with -- that we recently did. We are advancing with Teck, and we are advancing -- this is a VMS. We're advancing the feasibility study. The permitting are all in place. We are expecting by the end of the year or early next year to be in a position to make a decision. This is -- so that summarize high-level Agnico Eagle. So what we are looking across all of the regions we operate, we -- if you recall, I said high geological potential and political stability. We are working in partnership. We're looking to a partner. When we do any investment or we work with others, okay, we want to make sure that we'll participate, but not just financially when we invest, but also on the technical side. So we are not shy to share our expertise to help to develop other projects. And when time happen, if it's happened, we want to be the best partner. So on this, I would like to thanks the organization committee, Diggers & Dealers, very great. I'm very pleased to be here. And thank you to listen my presentation. Sorry for the accent, okay? But I decided to do anything. No, I'm not sorry. okay. So thank you, everyone.