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

Good morning, ladies and gentlemen. My name is Vanessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Mines Limited Q2 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] And thank you, Mr. Ammar Al-Joundi, you may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for joining our Agnico Eagle Second Quarter 2026 Conference Call. I'd like to remind everyone that we will be making a number of forward-looking statements. So please keep that in mind and refer to the disclaimers at the beginning of this presentation. Next slide, please. My colleagues and I are pleased to report another strong quarter with not only record free cash flow generated by our operations, but also record capital returns to our shareholders. Gold production of 856,000 ounces was -- for the second consecutive quarter above budget with cash costs and all-in sustaining costs both within our guidance range. This is not a small accomplishment in a quarter where oil traded above $100 per barrel for much of the time. As you'll hear on this call, the business is strong, and we continue to move towards creating substantial additional value for our owners. This quarter, we're reporting solid operations -- excellent progress on our growth pipeline, continued exceptional exploration results, all with yet another quarter of record financials. My team will go through all of this in more detail. But let me outline and summarize what I believe are the key messages that are important to take away from this call. The first key message is that we continue to work hard every day not only to deliver what we promise but also to continue to take every opportunity to improve our business step by step, quarter by quarter. For example, this quarter, I'm pleased to highlight that at Macassa, we had record skip tons, record mill throughput and the first processing of our Akiak at LZ5. At Detour, record total in record total mine tons and record daily mill throughput at Meliadine, record mill throughput at Kittila record mill throughput. Individually, these may seem like small accomplishments. But when we step back and when we look at the big picture, collectively, this quarter, we've had record mill throughput at mines representing slightly more than half of our total production. In and of itself, record mills throughput at half our minus represents substantial continuous operational improvement. But the real message we want to convey is that these improvements are an illustration of the culture and the dedication of our teams, a culture of commitment to always do the best they can and then to look to do even better, even when things are going well, even when gold prices are high and even when we're delivering record financial returns to our owners. I have to tell you sincerely as the CEO, that makes me very proud. To be sure, mining is a challenging business in Agnico Eagle is not immune to these challenges. For example, on July 1, we had a rock movement in the wall of our Barnat pit. Of course, this was a disappointment. But I am proud of our team and importantly, of our systems and our processes, including the systems and processes we had in place to track potential wall movement that allowed us to move quickly to protect both our people and our equipment. The safety of our people remains the most important thing always. I'm proud that within 24 hours of the event, we had a good understanding of its impact and we were able to communicate to our owners and to the market that we are still able to forecast 2026 production within our original guidance range of 3.3 million to 3.5 million ounces, albeit towards the lower end of that range. Agnico Eagle is not immune to the challenges common to our businesses, but we have a long and demonstrated history of managing these challenges well, and we have a long and demonstrated history of recovering from these challenges quickly. The second key message I want to convey this morning is that we continue to aggressively reinvest in our business into projects that deliver exceptional returns at relatively lower risk. We're making steady progress, and in many cases, we're well ahead of schedule. We've announced the go ahead of our Hope mine, this will be a world-class low-cost mine producing between 40,000 450,000 ounces a year that we expect to happen for decades. We had the opportunity to tour this project with our Board a few days ago. And while we're all impressed with the very real and substantial progress I think what really stood out was the excitement of the team regarding the potential on these 2, 80-kilometer greenstone belts. We really are just starting to scratch the surface of the potential at Hope Bay. Tom and Natasha will spend some time talking about continued progress in moving both Malartic and Detour to 1 million ounces of yearly production and moving forward on Upper Beaver and other high-quality, low-cost brand-new mine in our backyard. Dyane, who runs our Northern European business will talk about our recent consolidation of what our team believes to be the most prospective exploration belt in the Nordic region and his team's plans to more than double that business to over 500,000 ounces of yearly production. We're making excellent and steady progress on our target of increasing production by up to 20% to 30% over the next decade and that target was before the Finland land consolidation. We have the strongest pipeline in our history. We have the strongest pipeline in the business, and there is more to come. We're only in the third or fourth inning here. We remain long-term bullish on gold, and we remain focused -- heavily focused on steadily increasing gold production per share for years and for decades to come. The third key takeaway is, again, continued exceptional exploration results. Exploration is the lifeblood of our business, and Guy will spend some time going over some exciting holes that are both confirming and expanding our key mines and our organic growth projects. As Jamie, our CFO likes to say, we're in a gold price environment where with strong operating performance and with good cost control, we're able to do it all. We're able to reinvest in our business to support the best organic growth in the industry -- this quarter, we invested over $800 million in advancing key projects and in capitalized exploration. This quarter, we're able to opportunistically pursue strategic M&A opportunities that add value per share and that improve the quality of our business. This quarter, we consolidated the best land package in Northern Europe, including using almost $600 million in cash. We continue to strengthen the balance sheet. In the second quarter, we added over $350 million of cash to reach a record $3.5 billion of cash on hand. All of this while delivering another record quarter of returns to our shareholders. In the second quarter, we delivered $625 million to our owners between our dividends and our $400 million of share repurchases. Second quarter of 2026 has been volatile, volatile geopolitically, volatile economically and certainly volatile gold prices. But even in this environment, our team was able to deliver the steady, reliable performance that Agnico Eagle is known for delivering solid results across the business. But before I turn this call over to the rest of our team, to talk about this in more detail. I need to spend a moment to talk about the very sad fatality we had since our last call. [ Danielle Jirau ], partner of Michelle and father of 2 teenage girls tragically lost his life while on the job on May 1. Every fatality is devastating not only to the families involved but to all the people they've touched in their lives, including friends and colleagues here at Agnico Eagle. In the almost 70 years of operation from 1957 to today, we've had a total of 23 fatalities and 3 of these have occurred in the last year. I will repeat what I said last quarter. Fatalities every single 1 is not acceptable. I want to assure all of you -- and more importantly, I want to assure all of our people who come into work every day, working hard for the company that we are more focused on safety than ever before, taking care of all of you remains our #1 responsibility. Again, and with great emphasis, there is nothing more important than the safety of our people and of our communities. I'll now ask Jamie Porter, our CFO, to discuss our Q2 financial results.

Thank you, Ammar. This was another solid quarter for Agnico Eagle, reflecting our high-quality asset portfolio solid operational execution and continued leverage to the gold price. Strong operational performance and disciplined cost management, combined with a favorable gold price environment to drive record free cash flow of over $1.3 billion for the quarter. We also delivered excellent financial results, generating adjusted net income of approximately $1.5 billion or $3.07 per share and adjusted EBITDA of approximately $2.7 billion. Gold production was ahead of plan at 856,000 ounces, reflecting a very strong finish to the second quarter. This outperformance was led by Detour Lake, Kittila and Fosterville, reflecting the benefits of continuous operational improvement at these sites. We are extremely proud of the work of our teams who remain focused on productivity initiatives, operational optimization and disciplined cost control. These efforts translated into another quarter of solid cost performance. Total cash costs were $1,054 per ounce and all-in sustaining costs were $1,459 per ounce, below our cost in the first quarter below the midpoint of our guidance ranges and hundreds of dollars below the industry average. This cost control is particularly impressive given the inflationary pressures we're seeing across the industry. Overall, our business continues to demonstrate the consistency and resilience that have long differentiated Agnico Eagle, allowing us to translate strong gold prices into record cash generation and record shareholder returns this quarter. If we turn to Slide 5. We remain in the strongest financial position in the company's history. Our strong balance sheet and record cash generation, allows us to maintain a balanced and disciplined approach to capital allocation, creating value through shareholder returns, investment in future growth and continued financial strength. As Ammar mentioned, that I like to say, we are in a gold price environment where we are truly able to do it all. We generated approximately $3.5 billion of operating cash flow in the first half of the year. Approximately 30% of that was returned to shareholders through dividends and share buybacks with a record $625 million of shareholder returns in the second quarter alone. Nearly 40% of the operating cash flow year-to-date was allocated to sustaining and growing our business through investments in our organic pipeline. We invested over $800 million in capital expenditures and capitalized exploration in the second quarter alone. Advancing our 5 key value driver projects will support long-term production growth of 20% to 30% over the next decade. Another 15% of our cash flow was used to support our acquisitions in Finland, again, these acquisitions strengthen an already high-quality regional business and create additional opportunities to generate value from our established operating presence in the region, which [ Jane ], our Vice President of Europe, will discuss later in the presentation. The remaining 15% of our operating cash flow was applied to continue strengthening our balance sheet. We're paying healthy returns to our owners while positioning the company for long-term first share value creation. Our balance sheet continues to grow stronger. At the end of the second quarter, our net cash position increased to approximately $3.3 billion, reinforcing our position of having 1 of the strongest balance sheets in the sector. This financial strength was recognized in April when Fitch Ratings upgraded Agnico Eagle's long-term issuer default rating from BBB+ to A-. Beginning of the year, we set a target of returning approximately 40% of free cash flow to shareholders. Through the first half of the year, we've exceeded that objective, returning approximately 48% of free cash flow through dividends and share repurchases. Given our strong free cash flow generation in the current gold price environment, we see the potential to exceed our original target for the full year. During the quarter, we monetized a portion of our equity investment portfolio, creating additional flexibility to accelerate share repurchases. We continue to view buybacks as an attractive use of capital -- and again, at current gold prices, we see the capacity to continue to buy back shares while investing in growth and maintaining a best-in-class balance sheet. Overall, we are exceptionally well positioned in the current gold price environment with record cash flow supporting record shareholder returns, continued balance sheet strength and ongoing investment in our industry-leading growth pipeline. This balanced approach remains a key differentiator for Agnico Eagle and positions us well for long-term value creation. With that, I'll turn the call over to Dom.

Thank you, Jamie. Good morning, everyone. In my section, I will cover the highlights for Quebec, Nunavut and Finland. Overall, the quarter ended in line with the plans and great to see -- to continue to see all initiative ongoing to control costs. In Quebec, Canadian Malartic are facing more challenges, but thanks to the team, led by Dan, [indiscernible] and Justin for the management of those challenges and their dedication to win. Overall, Canadian Malartic finished the first half on target unless they have some challenges. Concerning Barnett Pitt wall, I will explain what are the next steps. First, all the rock that moved from the wall, approximately 1 million tons going to stay there. So the first step is to build some burn safety burn to allow us to get back to mining in the Barnett pit. Second is to build access. We already built 1 along the south wall to get back to that mining area, but we still need to build some access inside that pit and also to finish the perms. The burn side will be between 15 and 25 meters high to catch if ever there is other rock that's going to come from that located area. So we're planning to do those mitigation in Q3, and we expect to resume mining in Q4. For Nunavut, the first half of the year production is also on plan, good news, the spring migration is over, and it went very well. Today, 6 of the 19 vessels are already received from our sales and an interesting highlights Ammar mention about it, but the mill at Meliadine achieved a quarterly record over 7,000 tonnes per day average during the quarter, the target was 6,500. For Finland, Kittila delivered an excellent quarter, both on production and costs, thanks to the entire team for their outstanding accomplishment. It is especially timely as we are expanding our presence in Finland. It is a good timing to give them a bigger playground. Jane will provide more details shortly. On the optimization initiative, I would like to highlight the LZ5 team that keep improving the performances when we do autonomous trucking. During the fully automated shift, which are Friday, Saturday, Sunday night when our employees better like to be at home, this is when we do automated trucking for mining. We managed to increase the productivity by 65% in the first half of the year. So 65 more tonnes all by shift by the trucks. They did that by improving the network communication, the software, but also a better technology using a scanner that could see or analyzing 3D instead of 2D. That reflects in the past, we had to do actions or to stop the sequence 1,700x per shift right now is down to 700x and it keeps improving. Good job team. Next page, -- on the project pipeline at Malartic, we continue to advance our field and mill vision to potentially grow the annual production towards 1 million ounces per year. Two important milestones -- we completed the first phase of the shaft sinking 3 months ahead of schedule. The last bench was taken on July 9, reaching approximately 1.6 kilometers underground. So now we're moving to the -- how it change over to get back to a production mode. That's going to start -- this is starting in Q3. And we're still planning to start the commissioning of that products and shaft in Q2 2027. Another important milestone, we attracted our two 1st stopes where the second stope is still ongoing, having then the team is going through that typical learning to that first mining. We will mine another 4 stope during the end of the year in '26. -- and we're planning to mine 30% in '27 and above 90% in 2028. So you could see the ramp-up, and this is why we need the production shaft to take those down at the top. At Obey, we've reached our target of the detail engineering, which was the trigger for us to give the green light for construction that we did in May. I have the privilege to work with a great team led by Chris led by Kishan led by Marc Andre and also working well with the exploration guide with Conrad and Nathalie that they work together to develop a very strong study. And this is where we're -- we know we're going to deliver that project. Well, I'm really confident we're going to deliver that project, safely, on time and on cost. We had the privilege to also to expose the project and our people to the Board of Directors earlier this week. Still a lot of work to do, but we are in good position. And why I feel we're in good position because today, we are over 70% of the engineering completed, because the teams that are building it, planning it, I've already did Meliadine, Middle Bank and Ammar project in the Arctic, and we have more than 15 years of experience built operating into the Arctic. One of the critical path of the project is the logistics. And currently, we are ahead of the delivery at Becancour receiving the material, which is the port where the vessel are starting. And the first vessel is going to leave the port to the Hope Bay on the next weekend, the coming weekend. So around August 10, it should be at Hope Bay. So we are on target. We're going to have 9 of those vessels going to the top of the Hope Bay. Also, as you could see in the picture, there's 3 new wins, the camp is ready, that we could ramp up the workforce and also the construction schedule is from what we learned, where we're going to close the building before the winter and work internally. And on top of that, right now, we see a good quality of contractor from the construction side we are poking more into the west. So half of the crew of the construction is now coming from the west. We really welcome those new resources, and this is helping us go to deliver that. So Jean will give you more information on what we see into the exploration, but Hope is a world-class deposit and in the end of a world-class team. Hope Bay will create value for decades to come. for shareholders, employees and Nunavut communities. On this, I will pass the mic to Jenny that will talk about our Finland hub.

Thank you, Dominique, and good morning, everyone. I'm Yan Leseman, Vice President, Europe, and I've been leading our European business over the last 10 years. Today, I'll talk about our Finland platform and our growth brands in the region. As you know, Kittila mine is the largest gold mine in Europe and even after 17 years of operation, it still has substantial upside potential. My that exploration continues to deliver exciting results. The deposit remains open both along strike and at depth. And I'm confident that Kittila will continue operating for another 20 years. investment program, including shaft, mill expansion and surface infrastructure investments was completed in 2023. After that, we have focused on operational excellence, cost control and productivity. Our results are very positive and comparable cost per ton, excluding royalty and mining tax in 2025 was lower than in 2024. And again, first half of '26 unit costs are lower than first half of 2025. Maintaining a decline in unit cost trends despite inflationary pressures and a deepening underground operation is not easy and it's clear evidence that systematic productivity work makes a difference. One recent example of productivity gains in Q2 was all-time high mill throughput, which helped us to achieve all-time high revenue, operating margin and cash flow in the history of Kittila. All in all, I think that Kittila is in the strongest position it has ever been -- we have an experienced management team that has worked for Agnico for years, gaining experience, not just in mining, but also building strong relationships with global authorities, communities and other key stakeholders. Based on that experience, we believe we are in a good position to move forward with growth opportunities also outside of Kittila. Over the last 10 years, Agnico has made several strategic investments in promising exploration and development company in Finnish Lapland, trial strengthening Agnico's strategic position in the region. In Q2, the time was right for a more significant consolidation transaction, we will solidify Agnico's position in Finland for decades to come. Based on years of work and thorough analysis, our conclusion was that the great potential for value creation can be achieved by acquiring 3 company product resources, Origio Resources and the thing called joint venture. As a result of the transactions, Agnico gained average position in the Lapland Grinton belt, which we believe is 1 of the most prospective areas for gold exploration. In addition to a highly prospective land package covering approximately 2,500 square kilometers A key component of this transaction is the Care project, which is the most significant coal discovery in Finland since the Kittila mine. In June, after closing the transactions, we welcomed 44 new colleagues and the integration work has started very well. The most important priority is that the field teams begin working seamlessly together, while we also continue integrating business processes and systems. At the consolidation transactions removed prior proper foundry constraints, and we are now working on project optimization, including unconstrained open pit scenario. We expect the results of the optimization work will be available by the end of 2027. Condemnation drilling to support surface infrastructure planning started in June. Exploration drilling will continue near the ikkari deposit with 3 diamond drill rigs in August, increasing the fries by the end of the year. In addition to the project optimization and exploration activities, we are also advancing work on the environmental impact assessment and land use planning. Overall, we see great potential in Fallon. By option in Kittila, advancing Ikkari and unlocking the exploration upside across our 2,500 square kilometer land package. We are building a business with the potential to grow towards 0.5 million ounce per year platform. Our team is excited for this opportunity and have the ability and experience to deliver on the vision. With that, I'll pass the call over to Natasha.

Jeane, and good morning, everyone. I'll cover the operational highlights for Ontario, Australia and Mexico. So the region delivered another strong quarter, led by excellent performances at Detour, at Fosterville, at Pinos Altos, all of which exceeded the plan. The results reflected the operational and cost improvement efforts underway at each site, all aimed at extracting the full potential of our assets. All the initiatives that Dom and I speak about, they take time, they take effort. They take persistence by the sites to implement. And now we're seeing the benefits of that work. With the records achieved this quarter. So we just wanted to say thank you. Thank you to all our teams across the operations for their commitment in driving these results and for continuing to create long-term value for our shareholders. So now at Detour, we achieved another consecutive quarterly record in tonnes mined, and this is a result of the productivity initiatives started last year, which are now paying off. An example is increasing shovel utilization by increasing the amount of blasted material inventory that's available and also getting that higher shovel productivity by diligently improving on our loading practices. Detour also had a record in tonnes per day at the mill as a result of incremental improvements achieved now that the plant is operating at a stable state. Couple that with their lowest total medical aid frequency in the first half, and it's made for a very, very strong first half for the site. And also at Detour, we continue to advance initiatives to improve our overall mine to mill performance. We have the newly created integrating operating center, the IOC at Detour aimed at improving the decision-making process by connecting the mine operations, the mill operations, the planning and the maintenance. And basically, the IOC is just an operational hub. The initiative here is to break down silos, to integrate people to integrate processes and technology to enhance our safety, to enable quicker, better decisions and to help optimize performance from the mine to the mill. Over at Macassa, the mill delivered another quarter of record throughput, which was expected as the team continues to work on optimization efforts as we ramp up towards 2,000 tonnes per day by the end of the year. Fosterville also performed well. The commissioning of the primary fans underground in the first -- in the quarter and significant step changes in development in the first half of this year marked important milestones for the operation. So far, this year, we've seen a 14% increase in development rates year-over-year. This improvement, it reflects a number of productivity initiatives that started last year. It includes improving the ventilation system, training, retraining our operators and enabling independent blasts when we can. Together, these initiatives are increasing the development productivity, but it's also increasing our operational flexibility by opening up more mining areas and positioning Fosterville to sustain the higher throughput rate in the mill in the coming years. And these are just a few examples of our ongoing focus on productivity and operational improvement. What's particularly encouraging is that many of our initiatives that I talked about today are still in their early stages. And we see additional opportunity to further optimize and improve our overall mine and mill performance in the periods ahead. Now moving to the next slide. I'll give you a quick update on the projects in Ontario and Mexico. And I'll start with Detour and despite progress towards becoming a 1 million-ounce producer annually. And of course, the Detour Underground project plays a big part in this plan. So we're still in the early days of the project, but we're making good progress, and we're advancing on schedule. We continue to advance the exploration ramp and have achieved just over 1,000 meters of development reaching a depth of 180 meters. We also continue to excavate the overburden for the conveyor portal near the mill and also progress on the camp expansion. As well to complement the bulk sample that's planned, we continue to progress with the high-intensity drill program in an area we're also considering to mine early in as early as 2028 and Guy will speak to this program shortly. Over at Upper Beaver, progress on both the exploration ramp and shaft continued this quarter, the ramp development, coupled with the lateral development has advanced over 600 meters in the quarter, reaching a depth of 165 meters shaft thinking, which commenced in the fourth quarter of last year. It reached a depth of 470 meters. And the high-intensity drill program that focused in Upper Beaver between the 500 and 600-meter depth, that was also completed during the quarter, ahead of schedule, and we now have an improved understanding of the mineralized zones in this area. So following these results, we're now evaluating the potential for an expanded exploration program by extending the shaft to support infill drilling and possible mineral resource expansion at depth. And finally, over to San Nicolas, we are very happy to share that we reached an important milestone. The joint venture received the approvals for both the change of land used and the environmental impact assessment permit. And now this allows the joint venture to advance on supplementary permits needed before construction can commence. And as part of that, the JV, of course, will take into account the terms within the MEA approval. And in parallel, the JV will also continue to advance detailed engineering and work on critical infrastructure to reduce the execution risk and better refine our capital cost estimates. The team will also work to accelerate construction and operational readiness activities to position the project for a potential sanction decision. Overall, we continue to make really good progress across our projects this quarter, and we remain really excited about the significant exploration upside emerging across our portfolio. With that, I'll turn the call over to Guy.

Thank you, Natasha, and good morning, everyone. We had another very strong quarter in terms of exploration drilling, safely completing almost 400 kilometers of diamond drilling for a year-to-date total of 760,000 meters, having 126 drill rig and operational on mine sites and our key value driver project, well on our way to achieve our ambitious budget of 1.4 million meters for the year. Aiming to replace and grow our global mineral reserve and resources per share at the end of the year, as we have been doing for the last several years in a row. Diving now into some specific project on Slide 11. In Malartic, 21 rigs are in operation, completing almost 61 kilometers of drilling in the second quarter and close to 140-kilometer year-to-date from underground drill platform as well as surface drilling into the extension of the Egoli deposit, some regional targets around Canadian Malartic and the adjacent Marban project. We continue to get strong exploration results in the East Gobe both at depth with 3.8 grams over 19.2-meter in Hold354 at 1,950 meters below surface in the lower portion of the deposit. And the upper eastern portion of the East Gouldie as well in Joho 62 with 5.1 gram over 14.3 meter at 915-meter depth from Level 75. To the north, -- in the Audis internal zone, we continue to get very exciting results in a structure known as the Artemis zone in Hole13 drove from underground at level 57 with multiple interest reported with the most significant returning 13.7 grams over 14.6 meter core land at around 1,000 meters below surface, supporting our view of additional exploration upside from the internal zone at Odyssey close to the mine infrastructure as we continue to add drilling from underground. On the adjacent project at Marban, Del rig completed 100 drill hole year-to-date, continuing condemnation and some exploration drilling to confirm the potential location of the surface and structure related to the project. Now on Slide 12, at Detour Lake drill rigs completed close to 53 kilometers of drilling in the second quarter for a year-to-date total of 92 kilometers of drilling. Drilling was dedicated to advancing the high-intensity drilling program in Domain 54. And to close to the exploration ramp and continuing the recess expansion towards the west at depth. And Domain 54 close to the exploration ramp, west of the open pit giant and city drilling is aiming to confirm the Georgia resources model by reducing the drill spacing to 20-meter -- some strong results were reported such as 2.5 gram over 62 meters, including 15.2% over 5.9% in drill hole 11.34 at 275-meter depth. While in the exploration in the western extension of the deposit towards the current extreme west of the ore body, Doho 1290 returned 20.8 grams over 4.8 meters at around 840-meter debt with a deposit that remains open towards the west and at depth. And finally, at Hope Bay on Slide 13, we've drilled close to 37 kilometers of core in the second quarter with 6 drill rig for year-to-date total of close to 70-kilometer ahead of our budget and well on our way to complete and exceed our 110 kilometers of drilling budgeted at Hope Bay for 2026. We were on site earlier this week, as mentioned Ammar and Dominic with the Board, and it was exciting to see some passionate people and the large number of exploration targets that are being developed on the entire belt, supporting our view of major long-term potential for this belt. Resources to reserve conversion in field and exploration drilling in the patch 7 area continue to be the priority with again some very exciting results, such as in Draho478that -- those of you that were on site around the project announcement in May got to see on the table at the core Shack we got the result, and we got 28.8 grams over 21-meter core land in that drill hole. When considering capping and estimated through it, it's about 15.2 grams over 5.6 meters, but it shows how spectacular locally, the grade could be. And so it's quite significant to see those multiple double-digit grade and double-digit meter width in that patch even area. I'm also pleased to report that we have remobilized to drill rig at the Boston deposit and have reopened the camp with the aim to complete 7,000 meters this year. All of the drill hill we had seen visually report strong visual mineralization, with as is expected to be available in the third quarter news release in October. So stay tuned for some more good news coming out of the exploration at op rig. And before passing it back to Ammar, I would like to comment as well on the Finland consolidation. I shared Jani's excitement and the team enthusiasm around the acquisition. We're starting to ramp up activity with some condemnation drilling already underway and expected to have up to 5 drill rig by the end of the year to CAD investigation. -- of the extension of the known ore body as well as the numerous exploration target on the large end position. And I will also like to take the opportunity to welcome our new colleague from Rupert and Orion Resources, who have joined the Agnico Eagle team. and our request to test the full potential of this under-explored cal belt that we consider to be the most prospective belt in Northern Europe. And on that, I will return the microphone to Ammar.

Thank you, Guy. Very, very exciting stuff, as always, well done, and thank you to the rest of the team and to all of our people for delivering another strong quarter. As you can see, we continue to work hard for all of our stakeholders, and we'll continue to build off the same foundational pillars that have defined our strategy and have served us well for almost 70 years. We'll focus on the best mining jurisdictions based on geologic potential and political stability. We'll be disciplined with our owners' money, making investment decisions based on technical and regional knowledge creating value through the drill bit and through smart acquisitions where and when it makes sense. We are uniquely well positioned with a high-quality project pipeline, leveraging existing assets in the best regions in the world where we believe we have a competitive advantage. And importantly, we will continue to be focused on creating value on a per share basis and on being leaders in our industry and returning capital to shareholders as evidenced by over 43 years of consecutive dividend payments and increasing share buybacks. We have a clear and executable strategy to create additional value per share for our owners well into the foreseeable future with manageable risk leveraging off existing infrastructure and regional competitive advantages. We have the assets -- we have the projects, we have the resources, and we have the people. We are making it happen right now. We will stay focused, and we will not be distracted. Thank you again for joining us on this call and for many of you, thank you for decades of trust and support. We'll always work hard to maintain that trust, and we will never take it for granted. Operator, may I now ask that we open up the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And we have our first question from Josh Wolfson with RBC Capital Markets.

Yes. Thank you very much, operator. Just going back to Barnett for a moment. You talked about the 1 million tons of material that slid. Is there any way the company can quantify the volume and grade of material that would be inaccessible as a result of that flip?

Well, we disclosed that there's 370,000 ounces that will not be accessible anymore, which is 60, 80 in '26, 150 in '27, '28. Let's say, the remaining ounces in Barneet is approximately 300,000 ounces that we're going to mine. I don't know the tonnage on the grade, but I don't know, grade average grade in Barnett around 1, 1.1.

Okay. And then when you think about maybe beyond remediation, but any potential offsets -- is there any way to incorporate more low-grade material in the mine plan to offset some of the impact over the course of the next 3 years. And even maybe beyond that, are there other assets in the portfolio that are being maybe rethink in some way to look at offsets?

Maybe I'll jump in there, Josh, and thank you for the question. So clearly, we are going to be milling the low-grade stockpile. So the mill is going to be busy. We're going to be able to get back into parts of that pit. But I think it's worth to your point of offsetting, that pit has already produced a lot more gold than the original plan had -- the team has done a really good job of looking at opportunities. And based on everything you've heard, we are not only finding a lot more gold throughout the company. We're also improving our operations on a continuous basis. So it is disappointing. We are at the very end of the mine life for that pit. The team did everything right. And as I tried to say on the call, we do have a long track record of recovering from these operational issues when they happen.

We have our next question from Bennett Moore with JPMorgan.

Team congrats on another strong quarter. Maybe a question for Guy, but I was wondering if you could unpack the Odyssey drop results a bit further. They look quite positive upper eastern extension and Artemis zone. I believe this is near existing underground interest. So I'm wondering if there's a potential opportunity with more drilling to bring forward some of these higher-grade zones in the production profile.

Yes. Thanks for the question. So to start with in the upper eastern portion of ESG, that's an area that we had identify earlier as a higher grade inferred that we're kind of focusing to convert. And that area to the east, as we've discussed a few times, could offer, let's say, maybe another mining area in the upper part of the mine. So that's currently why we are kind of focusing on this specific area being closer, shallower into the ore body, closer close from the current infrastructure we're having. So this is why we're making a big push to bring it to reserve progressively, and we're going to see some addition as well at year-end in this area. As well as into the internal zone. The internal zone are a bit more subtle. We know that there was some potential in between the Odyssey North, Odyssey South. It's just that now that we're underground with all of the access and we can conduct more drilling and fill drilling we're starting to better understand the geometry of this zone in order to start to put additional thinking on how to approach them and mine them. But as you described, they are also fairly close to the north of the shaft. So they will provide optionality and other mining -- potential mining area in the near future.

And this gets exactly to the question about how do you replace things? I mean if Malartic is sort of unique in that there's a lot of gold and as we expand the underground. So -- and this is early, and this is just us talking. So I don't put it into your models yet. But -- to the extent you have high-grade underground ore close to surface that's accessible in shallow areas of the operation, you can move more of that high-grade tons into a mill and very -- if you're bringing in stuff at 5 grams and you're displacing the stockpile stuff at 0.5 grams, it does give you an awful lot of flexibility. Again, it's very early. -- but it does show you the quality of the asset and the quality of the thinking on the team's part

And then real quick on San Nicolas. It's nice to see the MEA and then use permits come in. So wondering if you could walk us through where detailed engineering stands, if there were any contingencies tied to the approval and how we should think about next steps in terms of permits and studies?

Thanks for the question, Bennett. So yes, really, the joint venture is very much appreciative of working with the Mexican authorities as they conducted a very thorough assessment of the process and ensuring that our partnership is -- will be committed to the responsible development, the construction of San Nicolas. That being said, it is a fairly large document, the approval process, the approval. So we are looking at understanding the terms of the approval. So that's going to take sometime before we apply for the supplementary permits. In the meantime, though, we're continuing to advance the engineering to derisk the project. It's currently at 45% engineering. And at the same time, we're continuing to accelerate the construction readiness plan, the activities associated with that, the operational readiness plan for the fourth project to ensure that we have the -- all the processes in place, ensuring that we have the resources in place before we make that decision to sanction.

Our next question is from Fahad Tariq with Jefferies.

One of your peers talked about increased labor costs and contractor costs in Northern Ontario. And I saw in your release, there was a mention of just higher labor costs, but that's more year-over-year. Can you just touch on what the labor dynamics are looking like in Ontario, specifically? And if you have the latest numbers on retention rates, attrition, et cetera, that would be super helpful.

Yes. Sure, I can start. So with Ontario, so we -- in terms of our internal labor, we're running around 4% year-over-year increase. In terms of our contractors, just in general, workforce is a challenge across our operations. And so we have a focus on retention, on recruiting, and we have a recruitment hub, a centralized recruitment hub to ensure that -- we have provided the team with a detailed plan and we -- on our detailed growth plan on specific personnel that we're looking for, and we're working actively to hire them internally. Of course, that being said, we do have focused in on bringing in contractors wherever needed. In terms of our contractors, nothing major in terms of increased to our labor cost on that end, not that I see.

And I would add, and Fahad, that's a very important question. We've identified here at Agnico, and we've been in these places for decades. Labor is going to be a challenge over the next 10 or 15 years, and we put a lot of effort into it. As you know, we have the lowest turnover of any of our peers. We probably have half the turnover of our peers. And actually, the turnover over the last year, we've reduced it. But -- we're going beyond that. I'll give you some examples. With regards to getting people up there, sometimes there's no housing. So we are working on projects, where we are actually building permanent homes in communities, not just camps where people come and go after tubes, but permanent homes in communities. That will help attract people, we have mentioned that in places like Hope Bay, the team has done a great job accessing not just the usual pools of people we get, but we've really put a big, big push to recruit from Western Canada, and we've had excellent results. So it's a good question. It is going to be a challenge for everyone. But I think Agnico is doing a really, really good job of getting ahead of that.

We have our next question from Richard Garchitorena with Barclays.

If I could just circle back to Canda Malartic. You took the cash cost guidance for the rest of this year for the second half. Just wondering how we should think about cash costs across the portfolio to mitigate that? And then also just going forward to '27 and '28, is the higher cost in the second half of this year have any impact going forward?

Yes. Thanks, Richard. It's Jamie here. I'll address that question. So yes, very strong cost performance in the second quarter. We did take the cost guidance at Malartic up for the second half of the year. But we are seeing a much stronger U.S. dollar than what we budgeted and guided at the start of the year. So we're getting the benefit from that. You'll recall that we also guided at a $4,500 gold price. So we're seeing a bit of a benefit on cash costs with respect to royalties. And thirdly, with respect to byproduct credits, we have more conservative assumptions on our copper and silver pricing. So those are all helping. We're starting -- we're actually in the process of our multiyear budgeting and planning process now. So it's premature to be commenting on future year costs. But we obviously will see slightly higher costs at Canadian Malartic, given less production through '27 and '28. But on an overall basis, again, we'll do what we can to offset inflation through continuous improvement and other efficiency initiatives.

Great. And then as a follow-up, you maintained the target of 1 million ounces from Malartic the Barnett incident, like does it impact the cadence in terms of how you get there? Are you looking at some changes to the sequencing of anything at the other bits? How are you thinking about that bigger picture?

Dominique speaking. No, it is completely different deposits. There's no impact from the wall of Barnett to the future, let's say, OTC undergoing Barnett for Ammar.

And that pit was running out, as everybody knows. It would have run out in advance of the 1 million ounces that will be in the early 30s. .

We have our next question from Lawson Winder with Bank of America.

Thank you, operator, and good morning, and team. It's nice to hear from you all and thanks for today's update. I guess probably where I would start would be on Detour. So in these results, you again mentioned the potential to deliver some underground production in 2028 instead of the 2030 date in the last technical report, I guess it would be helpful to get an idea of how material that could come or could ultimately become, but then you also mentioned an updated volume plan for 2027 what quarter in 2027, would you be anticipating putting that out?

Lawson, in terms of -- the first question was on -- the answer is -- sorry, the answer -- yes. For Detour underground, we look at it, it was -- we're looking at maybe 20,000 to 30,000 ounces for 2028 and 2029 each year. And with respect to the update, we're expecting by some time in mid-2027, we'll give an update on Detour underground.

Okay. And Jamie, you mentioned in your remarks to Richard's question about the multiyear budgeting planning process unfolding at the current moment. Just curious if you could give us a look at what you're seeing as a reasonable inflation assumption going into 2027.

Yes. Thanks, Lawson, for the question. Again, it's pretty early. We're just starting to initially, we started the process, obviously, with our mine plans and then we work through the costing. We're seeing CPI in Canada that's obviously going to impact our labor and contractor costs, which is 40%, 50% of our overall cost structure. So 3%, 4% of for labor is probably not unreasonable at this time, but we'll see as we get closer to the end of the year. Across the rest of our input costs, there's nothing -- I guess the 1 thing that really stands out is diesel. And we do have some of that exposure hedged for the back half of this year, but that's going to be, I'd say, the biggest kind of cost pressure in 2027 relative to 2026. And diesel, just as a reminder, represents about 7% of our overall costs.