Q3 2020 Agnico Eagle Mines Ltd Earnings Call

This time I would like to welcome everyone to the Agnico Eagle third quarter results 2020 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. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

If you would like to withdraw your question. Please press the pound key thank you Mr., Sean Boyd you may begin your conference.

Thank you operator, and good morning, everyone and thank you for joining US this morning for our 2023rd quarter operating results before we begin I just want to refer you to our cautionary statement on forward looking statements. Because this presentation will well have forward looking statements.

Before we get into the numbers I just wanted to sort of put it in context and sort of connect so what we've been working on into sort of our strategic focus on how we see things moving forward certainly when you look at the press release, you can see the impact of.

Rising production into these gold price environment. So what that has on earnings impact on earnings and cash flow and free cash flow. So that's certainly a major highlight for us as we get our production back into the 480 to 500000 ounces per quarter range.

And that's from the space that we'll be able to steadily grow the production over the next several years. So that that's clearly important and that's what we're here to do is generate those returns.

For our shareholders, but also in this release.

Which is just as important from a value creation standpoint.

As the unfolding exploration story, which we've been talking about for several quarters as we're seeing a lot of life left in some of our mature mining camps. So many of our existing mine.

We're showing that these deposits will likely to continue to grow and continue to add high quality ounces.

At these operations and this has important implications for our longer term production profile as we sort of begin to look out over the next 10 years with a computer growing above the 2 million ounce, mark and sustaining a production level above 2 million ounces for an extended period of time, so but in the.

This presentation will talk about some of the key projects.

And so I think it's important to note that because of these results will also be increasing our we have increased our drill program and we're going to have a more significant increase in our exploration budget.

By Jets and drill programs.

As we move into next year, because we're still in the process you know as we get into the slide presentation see we're still in the process of ranking our projects on a relative basis. So that we can effectively allocate the capital.

To those projects.

The important thing for us is to continue to steadily grow.

Do it in a way, where we're generating free cash flow. So that's why it's critical for us to rank them in stage, though and invest in them over time and does not increase the rest level by piling projects on top for projects that eating up all that free cash flow. So that's an important part of our story and will connect some of those dots in the presentation.

Other aspect here is the dividend and so we've seen a 75% increase in the dividend. It's now 35 cents a quarter to over 40 on an annual basis. That's approximately in total dollars about 300.

40 million.

Dollars per year, the dividend increase is not solely based on higher gold prices up but also we factored in our ability to continue to grow the output from the current levels. If you look at that sort of assume an average production over the next several years between 2.1 and two.

2.2 million ounces that works out to $160 an ounce.

In terms of dividend payment on an annual production basis. So that's very manageable for us as we've invested heavily in the business and now that harvesting stage one more thing on that.

And started the dividends and the philosophy, there and I think the Industrys positioning itself well, it's certainly been a good to see that companies that eliminated dividends six or seven years ago reinstating them now it's certainly good to see from an industry perspective companies growing dividends I think we as an industry hurt.

Owners, I'm, saying, we want to return of capital.

We certainly have been there for many years as you know we started to pay a dividend back in 1983, and we've paid one every year since then but it wasn't just the fact.

That we were able to pay that dividend over that 37 year period like paying that dividend, we didnt pay a dividend and as a result of paying that dividend and maintaining that track record.

It didn't take money away from our ability to invest in our business over time and so if we reflect on why we've been successful we've been successful because we've identified a high quality projects early.

We put money to work early we drilled those projects.

And we realized on that geological potential so effectively what we've done is we've taken a geological risk and we've kept the other risks in our business low and what Weve also done this share count both so the idea was to.

Ensure that over time, when we had the ability to pay a dividend and return cash to our shareholders. We did and we made it a priority, but while we're doing that that wasn't just good enough. What we were also a more focused on is ensuring the business was strong in a way where we were adding.

Ounces cheaply using our in house mine building skills to turn those growing deposits into meaningful parts of our business.

And while we kept our share count while.

We were able to Oh put up.

Above average share price returns to our shareholders. So.

Really what we're trying to say is that's been a very effective strategy for us because it's been well matched to our skills.

As we said it's proven that it works and it's worked over several decades. So the message here is we'll continue to follow that plan as we move forward.

Because of how it works and how effective it's been and the one other point before I get into the details as to just to note that we've had some really a prestigious acknowledgements on the safety side here. So our teams are have done an excellent job and have been recognized.

For that work so lets move into the presentation and.

Get into some of the details.

We talked a little bit about the summary.

We always expected that the second half would be much stronger or we can see that in Q3. So we expect a.

A solid second half in terms of our ability to produce gold, where we expected to produce it but also to generate the free cash flow at these gold price levels. So we've maintained our production and cost guidance we've maintained.

Our longer term guidance, that's unchanged as we said.

We're producing roughly at a run rate of close to 2 million ounces and we expect given our pipeline and what we are seeing or assets to be able to go above that we still have to decide how we're going to build those projects in terms of scheduling and relative ranking.

As we said, we're working on that but a big piece to how we're going to make those assessments is really on the exploration side as we said at the start.

Theres still more work to do we've seen some really good results, which are suggesting that we can extend mine life add.

Add ounces in the mine plan, which is important and we'll get into some of those ideas in this presentation on the back of a higher exploration budget as we move into next year as we said.

On the gold production side, we produced over 490000 ounces.

<unk> cash costs of $764 per ounce, there's still more work to do on the cost side. We believe we can do better next year. So we're expecting to see some improvements on that side. As we said there is no change to our 2020 guidance. So our longer term production guidance that remains the same.

We did decide to spend a bit more in the closing months here in 2020 to position the business going forward or adding a boat.

HM 40 million it could take the midpoint of that range and that's being spent.

Kits are left to accelerate that expansion program at Amaruq, We had stopped the underground program or restarting the underground program, we stopped it in the first half largely around cope it and the fact that we had to go to minimum activities, there and we're actually purchasing pipe.

For the water lines that we expect to have permitted next.

Next year at Meliadine. So we thought that was smart to do in terms of being able to position the business forward and we've talked about the dividend cold it.

Clearly important our teams responded as you know we've talked about this before.

Responded well.

In Q2, principally in getting testing up and running early on effective testing system in.

In addition to the other protocols.

So that certainly helped us position the business and make the case to the authorities that we could operate safely and as a result, as you know we were able to get our minds up and running in Quebec, and Mexico earlier that had been suggested by the government shutdown and I think the real question is.

How is the business and how is the industry position now where we are seeing rising case counts and rising case counts and some of the areas where we're operating.

What we're doing is we're expanding testing now we have two laps going now we're adding another lab another lab in Quebec in the Val Dor area. So testing has been effective we're looking at changing when we test to test for a period before people workers show up.

For their transportation to site I think that's important.

Because sometimes they are asymptomatic may not test positive may test positive a day later when they are at the site, which has happened, but we've been successfully able to isolate employees in those instances and avoid spread within the workforce, which is important.

I think the other thing that's important for a second wave is the way that the business is positioned not just the eco but the industry and I think the industry has made a strong case to the authorities that not only can we operate safely.

We're clearly economic engine in those regions, where we operate and you can just see based on the profitability on the third quarter results from our peers and ourselves that these.

These companies bring a lot of benefits to the region and given the profitability in both.

Most instances, we'll be paying lots of taxes, which the governments are looking for so there is a strong case to be made in one other point here is that everybody knows that and don't have it be communities are particularly susceptible to the virus and.

Back in March we were one of the approaches we took was to ensure that we separated our business from the community. So that there would be no transmission as we were bringing people up from the south to the north even though we were testing we wanted to be extra careful.

Unfortunately, the Intuit workforce is still at home they are very important to us.

We're focused on getting everybody back, but only when we can ensure the safety of the communities and right now that we can't do that we continue and we are continuing dialogue.

With the government none of it with the public health authorities and none of it to understand.

Best way to bring them all back to work.

That will happen, we're just not sure when.

We're bearing the cost of that.

For the quarter of $3.7 billion.

We'll be patient because it's the right thing to do.

Also on coal bed, which has in our cost per ounce is about $6, an ounce largely due to additional testing and the additional protocols.

So I just want to mention one more point on the none of it workforce what we've done.

To keep them engaged and to assist the communities who are in need of help.

Is we've actually brought.

Many employees back to work not at the mine.

They are actually working in the communities for community agencies they're.

They're doing things like cleaning up least fill sites there.

They're working in daycares, they're working community centers and when they do that we pay them, 100% right now if our one of our Intuit workers is at home they get to 75% of their pay if.

If we can find a way that we can get them engaged and the community will pay them, a 100% to keep them active and engaged but also the give back to the communities that we partner with and operate in.

As far as gold production.

Looking forward, we're forecasting about a 24% increase through 2022.

Our focus is not.

Not only on executing that but understanding what comes in and beyond that and as we said, we're still doing the relative ranking on which projects. We're focused on we'll talk a little bit about them. We know about the ketzel expansion we've made major.

Progress there, it's going to cost us a little bit more because we got the lead there.

With Covance, we had to settle the shaft sinkers back home to Canada, So it costs us four months or so there.

Which is increasing some of the costs Meliadine phase two is underway ambre underground, we talked about the restart of that and ought to see small article talk about that in a minute, but there is an opportunity there in the early stages as we began the ramp to bring up some development or open to ramp.

We're also focused in this context as we look at the production profile.

In the out years 2027 to 2032 and part of that is this.

Increased drill program to help us convert resource at existing mines into reserves. So we can put those ounces in the mine plan, which is really focused around how we can not.

Not only going to be up above 2 million ounces, but sustain it for a longer period of time.

So that's where our team is focused on just talking a little bit more in detail about exploration.

I talked about kids love from an expansion point of view, we're at we've got the permits to be at 2 million tons a year.

We're moving to 2 million tons a year, we commissioned the plant.

As I've gone a well there, but what we've also seen recently.

An extension of the seas ourselves so the Caesars owned his own thats parallel to our main zone, we continue to intersect that zone outside of the known outline and that could be important as we move forward because it's an additional source of ore for us and.

And it's growing in size. So we're focused on what is the next level of up 2 million tons per year is a 2.4 as a 2.5 a lot of this drilling on the csrs owners will tell us whether we have.

Additional sources of ore to increase the mining rate. So that's how we are focused on adding value.

At the Kitzmiller mine in Finland.

I'll skip over Canadian Malartic on the slide for a minute and talk about the wrong.

Ron.

The focus there we can see adapt as we mine the west zone, we're getting an upgrading in.

In that West zone. So the Laronde mine has been in production for over 30 years were seeing some of the best grades in terms of volume we've seen in that 30 year history and we also have a lot of efforts have had a lot of exploration success, we see the reappearance of zinc zone.

The recent drilling has been deeper on that zinc tone, the gold grades have gotten better the NSR values are very high here, what we're trying to do is figure out how big it is.

But it's close to infrastructure.

That will be part of the increase in exploration budget to understand the size. It would certainly open up a lot of flexibility in the lower mine and extend the mine life and also at Laronde. We are focused on the old boost gate property now known as Els at five and there is a whole package of felt of rocks that.

The previous owners Barrick and lack never drilled that Mike was shut down due to gold prices ahead of that and that opens up a bit.

Entirely new exploration front for us and for the wrong. So we need to understand what that opportunity is.

At Kirkland Lake I think we we know and have concluded its a buildable projects. The question is when when does it fit in.

There's still more work to do we continue to get good drill results. It's got low cash cost because it's got a copper credit there so unique deposit for that part of of Ontario, but it's well situated we like it because it's a 45 minute drive from Rwanda, which is where we have a good part of our workforce live.

So there is a natural fit there.

And we're working on the study and hope to have it completed.

By the end of 2021 Canadian Malartic, it's getting a lot of attention as it should.

It's really moved up the depth chart.

In terms of potential over the last two years largely on the back of East Goldie, because what east Goldie does is it gives us.

Another fairly.

Fairly large source of ore, which is thicker and much better grade than what we see in other parts of the underground and the Odyssey.

East Malartic areas. So it's changed the completion of that opportunity largely because we can now look at it as a much larger underground mining scenario and what it has the potential to do a significantly extend the mine life.

And so there is work to do it's still early.

It's not a slam dunk by any means but I think our confidence level is high there because of our experience of almost 50 years in that region.

50 years of successfully building and operating underground mine. So we know what the things looked like they know what they feel like we know what to do with them when we see them back.

Back in 2014, when we sort of stepped into the the hostile takeover.

Part of our thesis was that there was a pretty good chance that there was underground opportunity here and it looks like the risk and so we put our best people.

To help and work with the Canadian Malartic team and with our partners and Humana.

Sort it all out the news flow will be an updated resource in February as well as the preliminary economic assessment, which will outline our thinking on a shaft it needs a shaft.

I think you can take from our decision to advance the ramp we're confident that we have an underground scenario here.

And we just need to continue to drill it we need to improve the confidence level around the resource need to understand how big it is but we also now.

Given where east Goldie is located in a package of rocks, which previously you didnt really it wasn't really known to have a lot of potential.

We've got over 20 kilometers of coverage now of that favorable rock package. So clearly it's a regional play now as well as a.

Play around the immediate vicinity the mine. So when you add all those things up these are telling us that these traditional caps have a lot more life left in them and I think what it means to us is.

As we look at external opportunities, we continue to look because we're always focused on the pipeline as we look on the on five years. That's how we've built this business, that's where kitzmiller came from that through Peanuts Altos came from that's where meadowbank and leading came from that's.

That's really India came from with that theory, we talked about the strategy at the top that's what we're going to continue to look for those.

We also need to be able to understand what we already own at existing mines to make those relative comparison. So that's an important part.

Im not going to go through each individual mine slight they're all there in the deck I won't get that far because we want to open it up for questions I know nuance.

Coming up.

At the top of the hour, but I'll just use the slide on the operating results to touch on.

On some of the mine.

And then I'll talk about some of the financial results and then we'll open it up for questions.

I'll start with Laronde laronde, although it's been in production for 30 years.

Just keeps going it's one of these things that.

And it's not an easy money. So I think we have to give our team credit for I listen to our presentation. A couple of weeks ago from Ron team and when you add in everything they are dealing with there. It's a really complex business onto itself and its more complex because theyre dealing at depth, but they're also dealing with exploration opportunities and how that fits in.

The sites located community.

So there's lots of things to worry about here. They are continuing to open up the lower part of the mine for getting an upgrade in the West mine.

We're getting tonnage from the other parts of the deposit.

We have opportunities elds at five.

We're using more automation.

She is going to be extremely important as we go forward.

And the end result of all that is a quarter, where they produced about 100000 ounces at cash cost of $476 an ounce. So still after all these years is an important contributor.

To our operation part of that success is the vision that team had several years ago to take the old boost gate property, which we paid Barrick 7 billion Canadian in cash for almost 15 years ago.

And use it as a test case for automation, but also use it as a way that we can extract some of the resources that were left there and part of the strategy going forward. There's a lot more ounces there there's several hundreds of thousands of ounces more.

They're not in our mine plan and Theres exploration opportunities in that fell sick package of rocks that we need to understand so that will continue to be a focus going forward.

So exploration is key all of the mine continues to generate extremely strong cash flows and not only do we have opportunities to the west as we look at the old paper in ground, we now own but also.

To the east of our deposit when we see the potential of the base metals.

Gold actually talked about safety Awards Goldex was awarded the FG O'connell Trophy by the Quebec Mining Association for Excellence and health and safety. So congratulations.

To the Goldex team also in September they.

Has the highest throughput since the mine restarted back in 2013.

So they continue to get good drill results at depth in the south so.

So it's still an important contributor.

Two the company at Canadian Malartic.

Also awarded an upscale Connell board and the open pit category.

By the Qubec Mining Association for excellence in health and safety. So that's a big line.

That's a big mine that requires.

Regular overhauls plant, where you have 812000 contractors running around.

And so a lot of people in a confined space and there clearly doing it safely so.

I think that's a good example of how effective that team.

There is they had record monthly tonnage milled in August.

So coming back from the shutdown.

Q2, with Covance, they've done an extremely good job.

Barnett reach commercial production at the end of September.

So slightly ahead of schedule with our mining activities. There. The project we mentioned the underground we started the ramp so I think that's a really good sign that we talked about.

The expanded drilling and the potential for east goals at kit.

Hello.

As we said.

We're commissioning of the expanded mill that's ongoing now.

Fleet at the tie end from September late September two third we connect tobar. So that's a good thing.

As we said the shaft.

The project was delayed because we had the sense of the contract workers back home to Canada, So there'll be a delay in the construction.

The delay on the other side of the expansion in the plant because we kept working on that.

As we used our arm.

Our employees in Finland, and look more local contractors that could actually offer.

Operate and move in the country.

So still producing over 50000 ounces.

But with the ability to expand and go higher with exploration potential as we continue to look at depth at Meadowbank.

Meadowbank was important from the perspective of that.

We achieved our plan target of over 100000 tons, a day of ore and waste.

So that was critical we struggled to get there as you know we struggled to get there because of.

Backlog and maintenance, which affected equipment availability.

So were able to achieve that tonnage in Q3.

We're also focused on the long haul trucking we've added more vehicles, we received on the barge three in the third quarter.

So that will give us some flexibility.

In that aspect of the business, which is important for us.

The IDR pit development.

Has been accelerated we mentioned we've restarted the underground ramp for the underground program I think which is also important for the future of that deposit and as we go forward over the next several quarters, we should see an improvement in the strip ratio there.

The deposit because the early part of the production there was near surface lower grade higher strip ratio. So the mining conditions should improve as we go forward there.

Meliadine, we had record production there.

86000 ounces.

Good cost performance. So they've had also a successful ramp up.

Q2 and being reduced.

Down to minimum activities. So the focus there going forward is to continue to steadily ramp up.

Our throughput and production rate over the next several quarters.

As we move into 2021 and take advantage of.

The better grades that were seeing as we open up the new mining horizon.

That started in Q3 of 2020 and Weve begun overburden stripping at tier again, so a lot of that expansion work and adding.

Additional reserves into the mine plan is ongoing we continue conversion drilling at the discovery satellite deposit.

We should add to the reserve position there at the end of the year in Mexico.

We continue to move and develop the centre deposits to help out at Pinos Altos. We also see some good drill results at the co Birol deposit, which we think is going to be important for peanuts altos in terms of accessing good grade material in the vicinity of the existing infrastructure. So it's important for them there.

The next slide is crest in the Skoda really us Thank you, Chris and the Skoda.

An open pit that added some really good quality production for our.

Business in Mexico.

Very close to the Pinos Altos mine, it's now winding down its just in the Leach pad.

Position now, where we're just getting the residues off the heap leaches going into next year. So.

Just to thank you to the team there for doing an exceptional job over a number of years and adding value to our business in Mexico at the India.

Another safety award.

India for the third year in a row was recognized by the Mexican chamber of Commerce.

For their health and safety awards. So they won silver held that award and what we're looking at at the India We're drilling.

Infill drilling and extending the chip riona deposit that will allow us we feel to extend the mine life.

The India. So the focus really in Mexico continues to be on taking advantage of here the synergy deposits to the infrastructure and also working on sand to protrude us and some other.

Opportunities that we see in Mexico.

So moving off the site quickly to the financial highlights we can see that our earnings.

Were strong, but we're focused really on the operating cash flow per share, which was $1.90, so and see the impact that.

Increasing production being able to maintain costs and delivering into this high gold price environment has on our ability to generate cash not only cash from operations, but also free cash flow as we look forward to keep a lid on our capital spend by staging out projects and and building about overtime and not being in her.

It is a real focus moving.

Moving to financial position.

As we entered the quarter.

We had about 250 million draw.

Drawn under our credit line, that's been now paid as we expected it would be.

So nothing drawn on the credit line and we ended the quarter with 322.

In in cash so strong cash position comes.

Coming out of the quarter and I'll just end with the dividend slide I think what we see there is the progression since 2014.

We were confident in our business, even when gold was 1200 we.

We didn't eliminate the dividend some others, where we're having to based on their positioning we were in a better position. So we didnt, but we.

We're confident that we could increase it every year.

After that reduction and that was largely in a period, where gold wasn't doing much. It was sort of between 10 50 and Paul 50.

And we were spending a lot in 2017, and 18 and none of it and we were still increasing the dividend and as we said it's been a big part of our history and were comfortable increasing it again.

To the level of 35 cents a quarter.

And so one of the things for us, it's really about balance and so weve highlighted the dividend, but I think more importantly, we've highlighted the fact that we can pay that dividend and still invest.

And continue to invest in our quality projects to improve.

The value in the business, while we keep the share count down so on that operator, I'd like to open it up open the lineup for questions.

Certainly at this time I would like to remind everyone in order to ask your question. Please press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the culinary roster.

Your first question comes from the line of Paul hard to read from Credit Suisse. Your line is open.

Hey, good morning, Thanks for taking my question.

First as we think about the upcoming reserve update.

Is it fair to say that this will be euro.

Please send reserve replacement reserve growth.

Sounds like next year is really when you're going to see higher exploration spend and maybe maybe.

Maybe more reserve growth. So I'm, just trying to get a sense of what this year is shaping up to be yes.

Yeah, we haven't finalized that number we do sort of a internal mid year run.

Theres still some projects were updating studies on Theres still some drilling that were doing I think we're hopeful we can maintain where we were.

Maybe a little bit of growth, but we still haven't done the numbers.

We're still working on that.

Okay no problem.

And the only other question I had was it.

I was looking at the co good case data and it looks like the.

The vast majority of the cases I think 75% are in Mexico are there any specific health and safety protocols that you have in place there to try to mitigate that and.

From a financial perspective is there a higher cost that we should expect there. Thanks.

I'll I'll just give you.

Sort of a general response, and then Mark.

Logo is here and he can provide some color.

Unfortunately, the situation in northern Mexico, where we operate are there there are a lot of cases in the big population centers and were drying on.

Our workforce in some of those big population centers and.

So we've had to adjust the protocol because although we do testing.

Sometimes the testing isn't 100% accurate so sometimes we're finding that.

We do have someone that appears on site, but doesn't habit and a day or two later May report symptoms and then show a positive test. So what we've been able to do is isolate very effectively when that does happen. So the limit the spread and we havent seen extensive spread.

But we've had to change some things.

The big population centers, what we're finding is that.

Some of the employees to get to the pickup point, we're taking public transit and so now we pick them up and.

And so it seems simple we probably should have been doing that before.

Theres lots to manage here so.

So that's one of the things we're doing we're looking at getting a better testing.

System, there as well.

We don't have the testing to the level, we have it in Canada.

Fortunately, we'd certainly like to bring what we have in Canada down there, but it's a different country. So it's not as easy as you'd hope that would be.

But we are trying to mobilize testing resources in Mexico that can improve the accuracy of the testing.

So those are the BBB additional protocols it doesnt add a lot to the cost structure.

I think what's important is to ensure that.

The mining isn't contributing to spread.

And the other side of that equation is the mine is actually in those regions in the best position to provide logistics and support to the communities because of our own medical facilities and medical personnel that are there that aren't there from the community. So our team has done a lot of work there providing.

That and the government is really appreciative of those efforts so.

That's what you've been doing there mark signaling that I've covered it pretty well so.

That.

That's why I listen to those calls I actually pick some of that stuff up.

Thank you.

That's clear thank you.

Your next question comes from the line of Josh Wolfson from RBC capital markets. Your line is open.

Thank you very much.

With regards to the Odyssey PJ I guess the freezing in the release does make it focus on that asset and the comment about synergies from the other deposits.

I'm just trying to understand what is going to be the focus of this study will include.

What that would be I guess full expectations are for each school. The will include some of the open pit extension.

Just kind of what are the high level sort of ideas for this yeah, I'll just Dominic Scott some detail on that but I think.

Oh no.

That we're going to have to make a call on this project.

On resource.

And we're not going to have an old down on a reserve and that's why we're tightening up the drill spacing to improve the confidence level of the resource.

So we know that's a given.

So as we move forward I think the focus now is to understand.

The next stage outside of the ramp which is the shop, so that will be the big part of that and then how does that tie into the existing processing facility, but dominic's is going to provide.

A bit more color and detail on the expectations for what's in that study this.

So he is going to integrate different.

Our body, including Easter Marty could you see the new one east Goolsbee.

We're sitting goes one since a while but now with the addition of east Guti, though it's a game changer with the project and that's going to be all owning so we did as well as well.

What else really its remaining into to get.

The team is looking for example at Barnett.

How could we extend a bit.

Their food that might add to reserves at the end of the year, but this is also part of the part of the equation.

We have the meal, we have that and now we have a new a new project, how would we closed or feel more to GAAP.

Between both of them.

Yes, I think that's important Josh.

Because it's still not clear to us how without potential production gap gets filled and.

But weve experienced that before and none of it and we didnt sort of panic and rush Meliadine, we actually slowed down a year.

So we've got a really put all of our collective experience together.

With the Malartic team both humanity eco on.

What can be done at the Malartic pit.

Side.

And also what can we do in terms of the project side.

But we what we don't want to do is we don't want to sort of cut corners in Russia. Because this is probably 15 to 20 years of high quality production. That's sitting there. We're just trying to sort it out now so the worst thing. We can do is try to jam. It just to fill in six to 12 months whatever could be.

The focus will be on the quality of the project.

Just just so I understand it doesn't sound like the production would go to zero I think.

The ramp production would come earlier is that correct.

Yes, that's correct.

But it depends on.

The question will be what is the quantities of what we can access from the ramp and the challenge with the ramp is it's only going to give us access to the lower grade parts of that whole underground scenario the gravy.

The really good stuff the fix stuff the much better great stuff is deeper in east Goldie.

Got it.

And then second question in terms of the dividend level going forward, we saw major increase this quarter.

Where do you see that that dividend.

Going being going forward.

Given obviously uncertainty with the gold prices and what capital needs are for the business.

Well, we'll just have to consider that as we move forward as we gather more information.

The problem project pipeline.

And.

That will give us.

Direction.

Yes.

How do we split the pie and the pie is really projects dividends and financial flexibility.

Balance sheet, they don't want to sit with a lot of cash. So then it principally comes down to.

Returned to shareholders and project pipeline on the project pipeline, we don't want to pile up capital.

To drive Capex up to $1 billion again, the focus is to keep it at 700 to 800.

We still believe the project up so theres still gold price will depend on that how do we move our production to 2.2 million ounces and maybe better will also dictate some of those.

Decisions around the dividend as well.

Great. Thank you very much thank you.

Your next question comes from the line of Penny signal from Industrial Alliance. Your line is open.

Great. Thanks folks.

Thanks, Anthony or none of an asset so Adam.

Letting you got them a higher grades this quarter I just want to know as.

Throughput desktop and cared janiak grows what should we expect in terms of average grade going forward at the mine and Matt.

My other question would be on Meadowbank.

Seeing the strip ratio is going to drop off in the next year, so what sort of impact without having to have on your cost per ton there. Thanks.

Yes, okay.

At Meliadine.

We are going to increase throughput at 40 600000 to 4600 tonnes per day as you mentioned.

And with more are coming from to fit but.

Let's see the site is going to produce EBITDA.

90, and 100000 ounces.

Water so great that would be I think if you do the math you can I read between I mean around 6.5 gram per tonne overall.

And the 42 bank assets.

They are really the driver is one of them is the the stripping ratio. So since the beginning of the year were mining at around 11, the fourth quarter is going to be a Tam and next year, we're going to be between seven and eight so that's going to be very helpful for the cost.

As well as the announces.

We're going to see that.

Nick the next quarter is going to be in the same area 70, 75000 ounces, but per quarter, but we're going to go through first housing 85000.

I wasn't on says per quarter and up to 100000 ounces per quarter.

Same area, the median and gains in monarch in lateral and that's going to be also a very helpful.

Performances by increasing those units.

And this is going to do is going to come from with higher grade more we go deep into the.

Whale tail and IDR bit.

Great going improve so next year, it's going to be starting the year 3.4, and we're going to finish the year at around four into into me too.

Great that's really helpful. Thank you.

Your next question comes from the line of.

Jackie proves below skew from BMO capital markets. Your line is open.

Thanks, very much I just wanted to circle back quick on on Joshs question about the Malartic underground project.

You mentioned in the Mdna that you're using some geo technical drilling.

Added potential shaft to location. So just can you give us some color on that.

Is that something like that.

Final stats have you more or less settled on the shaft location or is there still on multiple sites that you're investigating how much more work to do you think there has to be done in terms of determining the overall layout.

Well the shaft. This through these review will again.

I think were like get to over 90% advance that's in food to have more information with the geotechnical to understand where was that it would it.

We going to ride with it which is going to be pea level on the resources, but we are going to be more and more advance into infrastructure.

The team is looking out with we do it.

As best as we can as we mentioned to minimize.

The GAAP to bring on says faster.

But we don't have we don't have the full picture yet we don't have the fruits vision on the economy to end of December.

Okay that sounds good.

And if I could just I mean, maybe me going to jump over to Laurans on five mine.

You've noted that you've you've had some real automation successes and that might open up some new opportunities whether its deepening the mine or otherwise fine.

Finding new efficiencies can you give us a little bit more color on on how you're able to rollout those.

Successes that you've achieved and is there opportunity to kind of move that into other mines as well or is it something that is more.

Related I guess to to the ultimate five area.

No that's really what we're looking for when we list. These cards more aggressive on a commission.

<unk> said, there's no this would.

With that does that five whats going to be kind of the I. We're mining school to do more information and are able to do there.

Part of this on our own.

15% to 20% of that on Asia pretty optimistic so from the loading.

The holding up to the surface, we don't we don't see any driver assistance.

We're not there yet.

Our own because of the infrastructure and also the equipment that we have but what we're focusing right now is to really.

Where we have the right.

Yes.

And gentlemen, we use remote.

Remote loading our salary remote mucking.

This is done well.

We did over 50% of the mocking done in the West mine.

Last quarter, I think domestically within six months from now we're going to have in our new design, where we are going to be able also to load the truck automatically because we need to design to.

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The area probably to do with safe.

Right now was not necessarily the capex.

Mining that was not the according to that but more and more we go we go in that direction and the.

Vision is may be do we need we need three to be able then to do more it's not wrong I being because you need to have a dedicated ramp to.

You do have any.

But this is what we were looking and right now.

On the automation part with the 15 did did see the commissioning at the end at five or now all at me do at mediating.

People working with the suppliers. So the same people are there and we're going to start we're starting the implementation. So yes. The idea is to to replicate that everywhere.

Okay, that's great and be exciting to see if I can just ask one final question.

Can you provide us maybe with some thoughts on the equity investment that you've made recently specifically against nipple gold mines in Rupert like how are you thinking about those assets.

Do you see those moving into full.

Full agnico ownership at some point.

Great and maybe where they stack up in your in your pipeline if it's possible to talk about and I guess, just finally on that point.

Are you looking to add other equity investments are or where else would you be looking at other equity investments until it you're right.

Thanks, Yes in terms of the general question on equity investments Weve as.

As you know we've used that successfully since the seventies, that's where goldex and Laronde came from so it's an important part of the strategy and.

It doesn't necessarily mean, if we buy something that it ends up a wholly owned by agnico. Some do some don't we trade that portfolio I don't see the overall size of that portfolio going up much because of the way we're managing that now if the team comes with something they really like we tend to take.

Take the lowest ranked.

Situation within the portfolio and try to move it out in a graceful way where we're not.

Putting pressure on the stock of that junior so where we're sort of managing it that way.

As for specifics, we tend not to sort of get into specifics of more recent ones. So we can just talk about the rationale for getting involved with them.

The one the most recent was Naples.

Kind of makes sense for us because of the large land package the favorable geology.

The fact that we were able to event in our old you tell property, which.

It wasn't explored that deep and given what we know about some of our mines, which have shown that they've got tremendous life as we drill deeper kind of makes sense to have a revisit of that one.

And it kind of made sense to tie up a lot of ground in that region because we've seen.

Some of the success that other companies have had.

In those regions the final and project et cetera. So there's a lot of all projects that tend to.

Our showing well these days as they get more focused exploration done on them to do a project we've we've.

We've known about it for years, we knew about it when we are operating in to tell.

So the way we've approached it is that.

We look at it.

By stepping back and say, we're really acquiring or getting involved with a large land package.

That is very prospective and has a lot of potential and how do we use our skills.

And the skills of the company that owns the do a project to put forward a sort of a high quality exploration program and we'll see how things unfold, there's no plans to start building anything there.

In the case of Rupert, it's 50 kilometers from Pezzella.

So one of the things that we always told ourselves or thought back in 2005, when we made a bid for grid are hitting which has kept them up as we thought that.

As we don't Kittila.

Any started junior exploration success in Scandinavia will have to come and talk to us because we would be a pretty important player given the size of the capital deposit and the infrastructure, we were going to have to build and the team that we were going to have to put in place.

Not much materialized for a number of years, except for the most recent two or three years and there is a number of things there that are going on.

Our team came to us several months back and said the one we like the best out of all the things that are going on and.

Finland, and Sweden is Rupert.

So given the proximity to our operation given our successful experience in building a high quality business in Finland, and what goes with that which is.

Relationships.

And a track record of doing things properly.

And then exploration budget and team there as well we thought it made good sense to engage the Rupert team provide some capital to work with them on thoughts on how.

The project can grow so we never can say, where these things ultimately end up.

Well I'm not done well on Orlando.

Which we had.

For quite a while as it was harder for sure.

Way back when when it was just the Panama.

So the portfolio is doing well, but we're not here to sort of turn a quick buck.

We are here to see if there's anything that could fit in our pipeline looking out five to 10 years. So that's how we view these things.

That's super helpful. Thanks, very much on thank you.

Your next question comes from the line of Greg Burns from TD Securities. Your line is open.

Thank you Sean it sounds like walking down your production or your project pipeline.

It's pretty important terms of deciding where you go from here.

It sounds like that's 12 to 18 months away. So is that right in terms of how you rank.

Logic underground.

Lever on what a Ralph whatever else is in the pipeline.

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We're we've got a good feel.

So what we're doing I would describe this is.

Dotting, the I's and crossing the Ts I would say now.

And that.

Looking at how we're going to deploy the capital we we know that we've got projects to build.

The question now is which ones will have the biggest impact.

Relative to risk.

That fit them in and the.

We could.

Build them quicker, but that doesn't really make sense to us in this market.

Because our focus is to just keep.

Keep risk down and provide quality and I think we all know that in order for the shares to go up we need new investors and those investors tend to be.

Generally due to the space and they are looking for different things and.

As we've said before we spend a lot of our time when we talk to these new potential investors talking about risk.

So our pipeline and how we manage it is really about risk and one of the reasons that we've always tended to want to own 100% of our project was so we can dictate the pace.

When we spent.

Just on what we spend and how we spend when we spend it and.

Given that we have control of them all except for our partner on Canadian Malartic, the Humana and we're both aligned there we've got the ability to stage them properly. So that will be the focus I think it's more.

That plus it's also in some of the recent exploration it looks like it's going to impact 2027 to 2032, certainly east Goldie would do that.

Certainly laronde at.

Adapt would do that as well kitzmiller has the potential to maybe boost production, but you know we.

We already have a long life mine there. So we need to just understand how that would fit as it give us a multiple another source of ore to go to two and a half million tons. So each of them has a specific thing we're trying to figure out but.

Given our experience, where we're quite a long ways away I wouldn't say 18 months I'd say six to 12 months.

It's probably more like it.

So by this time next year, we'll have a progression laid out of how these things will will fold into the pipeline, yeah, and I think we'll have.

Better visibility on 27 to 32 like we can say now we're pretty comfortable that.

2 million ounces is good for 10 years, but is that number 2.2, we don't know we're trying to say that's what we're trying to also to sort out as we look to add high quality resources at existing mines because in some cases it extends the mine life and if you look at melodic the pit it's ending in 26, maybe 27.

We're still trying to sort that out.

That's the way everybody perceive that project.

We were starting to get results that was kind of changing our view 18 months ago.

But really early.

Luckily we have people that have been through that phase and how things unfold there.

But now it's pretty clear that you could see something that goes from 27 to 2014, there or maybe beyond.

Again, its early we don't know, but those are the types of things we were trying to get more clarity on right now.

Thanks, Sean.

Your next question comes from the line of John Tumazos from.

John Tumazos very independent research your line is open.

Congratulations on all the success. Thank you John.

Could you explain.

37860 ounces of pre.

Preproduction.

Underground dismal Arctic.

Year to date, mostly in the third quarter I'd say because.

The biggest preproduction.

Recall.

Was it something like a five meter stringer that was multi multi ounce.

No I think that was our Barnett I think that would be the barnett pre production ounces.

It was more like 200 meters were 100000 tons grades four tenths of an ounce or.

Talk about the configuration of the development Mark.

Yeah, I'm just checking dominant do I think thats from Barnett. So I don't think it was Malartic underground John you said, we're not arrogant murder I might have the name is wrong, it's excuse.

Yes.

Yes, so that was the development of the open pits.

At Barnett and so we were producing develop.

Development ahead.

Ahead of.

Hitting commercial production, which we achieved at the end of September so it was waste stripping.

Yes, yes.

Yes.

Issue go underground are you hitting any surprises where there's.

General where you don't expect it.

Well I think it's too early now.

But I think the expectation and this is really around.

He school, we know the development ramp is just started we know that we'll be having development monk from.

The zones in the upper part of that opportunity.

Bus lower grade material, that's in that two Gram range.

Whereas Odyssey has areas, which are four five and six grams.

So our expectation is when we get into that zone.

We'll see that much higher grades, but what we're still trying to figure out that's going to one of the previous questions is there will be underground development coming out of the development ramp.

Thats going underground Lark we're.

We're just trying to quantify all that as part of the studies.

So that could have an impact much before.

2027 so.

So there is a potential.

Potential bump that we'll see there and it has for grades were just not there yet we have drilled holes, but we don't have development from there yet.

Thank you.

Your next question comes from the line of Anita Soni from.

You see world markets. Your line is open.

Hi, just snuck in under the wire there so.

Most questions have been answered. So I just was curious can you talk about.

Coloration budget. So I think you talked about them increasing next year.

I do yes broadly at the moment.

The magnitude of what you're looking at or around.

Yes weve.

As we go through the budgeting process and we havent landed anywhere.

But what we said to Gewgaws Len.

As we said as we go through the budgeting process based on the return results that were coming in during Q3.

Why don't you look in the neighborhood of 50% bump, which would be roughly $50 million and allocate that to some of these projects, where we've got wide open intersections that could have a meaningful impact on the value of the deposit and you need to tell US one other thing you need to tell us if we invest.

Acts of that 50 million what is your expectation in terms of what we will see at the end of the year in terms of additional resource ounces and where will they be so that's the way we're going to make the decision.

So I'd say Max is 50% it may come out to be less than that because we're not just going to spend at the spend that we need to spend to make sure that it's going to add the ounces.

Okay. Thank you very much helpful. Thank you.

Your next question comes from the line of Kerry Mercury from Canaccord Genuity. Your line is open.

Hi, Good afternoon, Sean you mentioned that.

Malartic underground isn't a slam dunk and other than making a call on resources. As you mentioned is there anything that stands out from a risk perspective.

While I say that because it's a big project and it's early so we've been around long enough to know that we're dealing with nature at the end of the day and although we're confident because of the skills that we have living and working in that region and we've done it before and we've seen it before from that aspect we know the sky.

Those are all there we know that the Canadian Malartic team.

Has exceptional skills and demand an eco will build to bring additional skills to the table, but right now were working off of 150 meter drill spacing.

Although the project in the deposit, particularly at East goalie.

You know looks good in terms of continuity, but we still have to do the infill drilling.

So we're just cautious.

In that regard and where.

Our PC results coming out from us for using cap rates.

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The grades are higher if you don't capital.

Which I think is important but it's just the way we sort of approach it and think about things.

I don't want to maybe I use the word slam dunk wrong.

It wasn't.

We view the project is being a very challenging.

Project filled with a lot of risk.

We just view it as there is a lot of work still to do we've done a lot of that work before on other mines. We know we can do the work, but we still have to do the work and that's why we don't want to get too far ahead of ourselves.

But I think we are excited.

So in terms of just general tightening post the PDP any like when were the shafts even be breaking ground and or is there going to be a PFS the paula.

Yeah, Bob just dominic's going to jump in here, but I think that that really drives the timing.

So if you have to talk about a production gap or how you could manage that.

Part of managing that will be decisions around shaft, sinking and timing of making that decision. So we'll be mindful of that.

For sort of considering that but it all has to sort of fit.

And it all has to be done in a way that.

We're not cutting corners. So dominant has got some thoughts on the shaft, what we said we.

We agree with the team is to push as much as you can on the engineering to be ready when we are going to have the economic and to take a decision that engineering is willing at Vince.

We are in good position for that so when we are going to see in the fit the economy and everything we work.

Let's see procurement works and stuff like that could start going into Q.

Great. Thank you guys.

Your next question comes from the line of Tony a jacuzzi connect from Scotiabank. Your line is open.

Hey, good morning, everybody.

Yes.

Hi, Good morning, maybe just Dominic and I have you on if you can just continue on Canadian Malartic, So would it be fair to see that.

Topic Kennedy, starting as a mining from the decline.

For a few years.

Matt let grade ore out that two to two and a half grams per tonne and then moving on Q E. Colby, let chosen three grams per tonne.

Now 3.1 years out after that.

Yes.

What will happen and this is what the team is looking for.

As early as we can to start to have some development or on that some points I'm still being from the Ram.

During that time also to extend the pit Barnett bits could we do bigger, but we do a push back.

Low grade stockpile also with the current price those.

Those topline might make sense. So we're going to put everything together to extend up you start to beef.

Beef up with the ramp.

Or material and that's when we're going to have to shop more later I don't know 2027 ish.

That could be the shovel ready and then we were back to the same.

Pills may be the same production, we're doing right now.

Okay, and I know that we talked about Tom on your Jack mentioned talking a top scenario racking up to 20000 tons per day from the underground at the contract is that something that you see as when you step up over time.

I don't have the detail dude to speak about that we're not we're not there yet Kenya and that's why we're sort of not we don't want to get too far ahead of ourselves here, there's still some work to do.

But I think well, maybe that's driven off of their excitement for east Goldie when you see thickness and you see grade and you see multiple sources war I know, but 18 months ago. Yvonne Sylvest. His office was next to mine and he came in and he said this has the potential to be a sizable underground mine with multiple source.

As more.

So you can pick a number we're not going to put a number out we'll wait for the study.

Okay. So I guess, what Dominic mentioned is that we could get in 2027, when we had the east Goldie there some thinking that some of the rate that we actually day producing.

Yeah, again that needs to be to be looking detail with all when we're going to add albeit deposit together, but that's that's the objective to to to reach back to you to keep that.

That's just as a as as it is right now I think 10 years those are important questions and we don't have the answers to those questions. I think the important question is is there a gap.

How long is the potential gap.

What a what can we do to maybe minimize the gap.

Thus the production fall two during the potential gap I think is important also whats important is.

This this idea that we could have a mine.

That's producing the same as its producing today, we haven't made that call.

Because you're going to have a mine that significantly lower tonnage, but better grade what is that tonnage what is that grade. It it's still a few years away.

So thats why we don't want to get too far ahead here, but we like it yes I appreciate that maybe again just far apart from the resource estimate that we're acting with year end numbers would it be safe to assume.

I'll make that that's mainly coming from the east Goldie and refund back so much from coming back to the topic.

Well I will pass the question to get on that yes.

Yes, you're right. The 10, yes, the growth will come from east will be mostly.

And if I can one more question and to some I'm just.

I know you have a lot going and then north Anna business I, just wonder about that being carbon business strategy.

Looks like we have a few little things at the mine site is there something more beyond that in terms of opportunity at a public or private that you can grow that business pick up.

Yes, Theres a few things that the team is working on order of magnitude in terms of financial dollars. It's small.

But they like the geology, there relatively new in terms of.

Our engagement with them.

So.

It's unfortunate in Mexico, we've got a fabulous team.

That have done an exceptional job.

It's almost like the business currently is relegated to working satellite deposits waiting.

Waiting for that next opportunity. So there's a few things were working on.

As I said not significant anywhere near significant relative to our overall size.

That the team down there likes.

So we'll see how that unfolds. So order of magnitude there are tens of millions of dollars and hundreds of millions of dollars.

Okay, Okay, good and we'll begin to see some somewhat Kennedy found that yeah.

Yeah.

Very good thank you.

There are no further questions I will turn the call back to you for closing comments. Thank you operator, thanks, everyone. Sorry, we went a little bit long and cut into lunch, but theres any follow up questions give us a call. Thanks again.

That concludes today's conference call you may now disconnect.

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