Q4 2020 Agnico Eagle Mines Ltd Earnings Call

Okay.

Good morning, My name is Denise and I'll be your conference operator today at this time.

And welcome everyone.

Agnico Eagle fourth quarter results 'twenty and 'twenty conference call all lines have been placed on mute to prevent any background noise. After the.

The Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star and the number one on your telephone keypad, if you'd like to withdraw your question. Please press the pound key.

Mr. Sean Boyd you May begin your conference.

Thank you operator, and good morning, everyone and welcome to our fourth quarter and two.

2020 full year, our results conference call before we get started with the slide just want to remind everybody that this presentation.

And as include forward looking statements and we have that material.

In the slide deck.

Just to start off.

In terms of how we close the year and how we're positioned.

For moving forward over the next several years, we had and.

And a record quarter in terms of production and which drove a record cash flow.

But more importantly, we posted our best ever safety performance, although we're pushing on.

More volume than ever.

And we have more employees than ever and we're operating more safely than we've ever done on our history. So a big thank you to our employees. It's a testament to their focus and the fact that they show up to work every day looking to make a contribution and caring about.

Their work environment and the people they work closely with.

As a result of that.

Performance on the operating side the business and the full year 2020 generated operating cash flow of $1 2 billion. So that continues to improve our financial position good liquidity.

Declared our quarterly dividend of 35.

Per share also got and additional credit rating agency to rate us as investment grade by Moody's.

To do that recently so it just shows you the strong financial position, which you.

Continues to strengthen as we grow our production over the next several years, we expect to grow output.

The 2020 amount by 24% as we move through 2024, and that's supported by a record reserve position. So.

Lots of records as we close 2020.

The reserve growth is supported by exploration results. So.

This is really not just a story about production growth, but also being able to improve.

Improve the quality of our asset base growing deposits at our existing mines as we move forward as a result of that.

We've increased our exploration budget by over 40% to $160 million. So very much still a focus on exploration and we'll talk about how that fits into the strategy.

And it's a key part of the story.

The strategy is a bone.

On a remain the same it's consistent it's really too the growth production per share by focusing on the geological potential of our asset base by optimizing our existing mines as we said through exploration and then building out our project pipeline.

We can see visibility.

Iran that gold acts in terms of additional conversion of resource into reserves, which will extend those lives of those assets as well as bringing new projects.

Into the production base and the company with the announcement of <unk> underground and Canadian Mill Arctic underground.

A big part of the strategy is to keep the business low risk to manage political risk stay in those jurisdictions that we know well, but also to continue our leadership and excellence and ESG, which we continue to do it.

Double a rating at MSCI corporate Knights ranked us number 73, and the world not just and mining, but if all companies and ESG. So we continue to be recognized for our leadership and ESG just going to the highlights for the quarter. As we said first time and our 60 plus year history, we produced over 500000 ounce.

And the quarter that put us over the top end of the guidance range in 2020 at one seven and three six.

Italy and ounces.

And as we said.

Our reserves grew to a record level at $24 1 million ounces will break that down.

And a minute.

And that's backed up by an increase and exploration budgets as we said and that exploration is really focused on.

Places like Canadian market, where the combined budget with the partnership is about $30 million, we'll talk about that and a minute.

Big budgets at La Ronde, where were extending.

Drifts and for different areas to open up that whole fell sick rock package as we move to the west and also the east.

And so a big year for exploration and as we said our board yesterday approved the go ahead for Odyssey and <unk> underground projects, we'll talk about that.

And in a minute so steadily growing production.

In 2021 cost will be lower than in 2000 and.

<unk> 'twenty as we grow our output so as we said we're expecting production growth over the next four years up 24%.

In 2021, we should be up over 300000 ounces from 2020 with our unit costs down about 6%.

And.

And as we move forward and we're looking for slightly higher costs, we've outlined on our press release.

And that's largely driven and almost primarily driven.

By higher costs at our <unk> deposit and we.

We continue to get very good cost performance at a number of our mines.

Particularly and the Abitibi and we'll talk about that so it's really the high cost and <unk> that have tended to skew that.

The overall average a bit higher.

Capital expenditures were forecasting about $800 million.

In 2021, as we approved two new projects.

We're still going to generate significant net free cash flow with that number and as we look forward on the project pipeline we're.

We're not in a hurry, we're going to we're going to stage them and we're going to spread them out and we're going to keep our capex in line with where it's been over the last couple of years as we move forward, we talked about our gold reserves and mineral resources.

With the exception of Hammond reef all of those reserves were done at 12 50 Hammond Reef was done at $13 50, as we said it increased 12% we had over a million ounces added at several of our.

Current producing assets with the balance coming from Hammond reef.

What that number and what these reserves and resources do not include is the reserves and resources that are hosted at the recently acquired wholesale project and I'll talk about that.

And a minute. So we also had a maintain a strong resource base.

Indicate it measured and indicated 15 million ounces inferred.

3 million ounces.

So a strong reserve and resource base that supports our ability to continue to grow.

Our output.

In terms of the near term opportunities we have several.

Kittila.

Had a.

A good year, they produced record amounts of gold they continue to ramp up.

Their annual throughput last year, I think had average 185 million tons, a year going to two 2 million tons per year.

The mill expansion was completed slightly ahead of schedule in Q4.

And so they continue to move that opportunity forward and they are also studying.

Based on exploration success.

They drill.

On the deposit as it plunges.

So the north they are looking to potentially.

<unk> increase annual throughput from the 2 million tons per year amount up 20% to 25% from that amount. So that study will take place over the next two to three years just to optimize to continue to optimize the growing size and that ore body melody and phase II remains on track.

In January and we are about 4600 tonnes a day, so we'll be gradually increasing that over the next few years to 6000 tonnes a day.

We talked about.

The <unk> underground project being approved.

For construction and the objective is essentially just to mine higher.

Your grade underground portions of that deposit in conjunction with the open pits first gold production, we're expecting in 2022 is.

We begin to access ore from the underground ramp system.

The average mining rate over the five year period in the underground components about 2000 tons. A day overall, we expect to be mining about 3 million tons that are on average rate of about five and a half.

Grams per tonne that adds just from the underground about 100000 ounces a year to the Amor production there are years, where when we combined the underground the open pit and <unk> will become a eco eagle's largest single producer of gold.

So it's a high quality assets that will generate significant cash flow as we go forward.

And we will produce those amounts because when we add the open pit ore with the underground ore.

Pasadena plant to handle about 12000 tons a day, so the capital cost of that underground about $140 million construction.

And almost $40 million and sustaining at $15 50, It's got an after tax rate of return of 28%.

Odyssey.

Talk about that now.

We've continued to have drilling success and exploration success, there as we've expected to have.

Because we've had a very active drill program going there for the last two to three.

Years at East Goldie, we saw over 130% increase and the resource to six 4 million ounces there is.

11 drills currently are targeting the east Goldie zone.

To continue to expand.

That deposit.

And also to tighten up that drill spacing, particularly on the high grade core of the East Goldie zone property wide in 2001, Eco and Humana, we will spend about $30 million on drilling and that's a significant budget $24 million and that's largely on east Goldie 6 million will be to.

Our regional targets because it's interesting with the discovery of these goldie, it's essentially opened up and entirely new mining horizon.

Tremendous potential and given what we're seeing at east Goldie. So that's also a focus of our drill program in 2021, the underground ramp is and process and progress that's important because as that continues down and.

It makes it easier to drill it just gives us a better drill setup.

Drill most underground targets, particularly.

And Odyssey and east melodic and also at East goes and as far as the project.

Project.

Odyssey Canadian melodic the underground project, it's really.

And a very large low risk high quality opportunity.

We anticipate it becoming the largest underground.

And the mine and Canada based on annual production.

And when it reaches full production, we expect it to be producing about 550000 ounces per year, that's based on day.

Daily throughput of about 19000 tons.

We're able to run it at that high rate because theres essentially four underground sources of ore so that was the real.

And the.

The game changer, let's say on this whole project was really the discovery of east <unk>, because that just opened up a much bigger higher grade additional sources source of ore, which when you combine it with Odyssey, north and south and the old east melodic area.

Volume and it's the volume that's really made this work in terms of the size underground cash costs at full production expected to be around 650.

On a dollars per ounce, so very long mine life.

About 2040, and Thats only based on a plan that currently incorporates about 7 million ounces and.

The analysis.

And we know when we add up everything and I guess, we're not supposed to add up everything, but we add up everything reserve and resource it's more than double.

We currently have.

And the economic plan and the mine plan going forward and these deposits are still wide open as we know them and the entire horizon is wide open. So we believe this is going to be a big part of both Humana and <unk> business for many many years at $15 50, It's got an after tax rate of return.

17%, 18%.

And there is still.

Room, we feel to optimize.

The study optimize the plan.

And we're going to continue to work hard on doing that Capex of 100% Capex is one three.

<unk> billion dollars.

But from the period from 2021 to 2028, which is really the construction phase. During this period, we would expect to produce over 900000 ounces at a cash cost of about $800. So.

It's almost self funding and a way when you think about it.

That $1 3 billion includes an 800 meters deep.

Duction shaft with a capacity of approximately 20000 tons per day.

As we said, we'll phase and production over several years beginning in 2023 late in 2023 from the ramp.

With the shaft, we expect to commission the shaft in 2000 and.

2007, and as we said full production and we expect at around 19000 tonnes a day as we ramp up the.

Underground mining floating east Goldie, which is the deepest of the four sources of ore by 2031.

As we said over the last little while we're comfortable making this production decision now based on.

Our resource because from a cost perspective.

The numbers are solve many of the design criteria.

And the parameters that are being used in this study are very similar to the eco eagle's existing operations in the region and.

And when you combine that confidence and the fact that we're dealing with live cost data and experience at Canadian <unk>, we have got good confidence and.

Production plan and and the cost estimate.

As far as the project pipeline.

We continue to optimize the project pipeline as we said at the start we're in no hurry.

And to build these were just focused on continuing to add value to these assets through exploration and through updating studies.

Employing innovation.

As we think about innovation on certain projects like Hammond reef, we're looking at ore sorting.

So theres still work to do before we decide to spend capital here.

But we have made significant progress and the last year on these projects at upper Beaver the.

Deposit continues to grow we expect it to be.

And at some point.

On the road, a low cost producer given the significant copper credit, it's and a good part of the World Pro mining district, it's very near our operations and Quebec.

Put it in a better spot and.

We continue as we said to add value and through drilling and we will continue to drill that and update the study for roughly the end of the year this year.

And I'll talk about Hammond reef, and I'll talk about whole day, and Hammond reef, we've incorporated three.

$3 $3 million and reserves the overall.

Mineralized envelope is over 5 million ounces.

So we're looking to optimize that plan and bring additional gold resources, Inc.

And to the mine plant.

This is sort of the first cut at it.

We started to revisit and about a year ago, we always liked it because the location is good.

Permitting straightforward community support is there.

The challenge was.

On the low grade side.

But we feel there's ways that we can use things like ore sorting to improve the economics. So will continue to move forward and add value, but again no commitment to spend significant dollars there at.

At Holt day, the transaction closed on February the second project host reserves of three and 5 million ounces.

And resources of $3 eight.

Ounces as we said on those numbers are in our current reserve and resource statement.

And the property position and as many of you know is very extensive and 80 kilometer greenstone belt and host three known deposits Doris Madrid and Boston.

As we've said the focus this year will be on exploration with a plant budget of approximately $16 million 5 million of that will be delineation drilling and 11 million and will be testing targets around.

The three known deposits and other targets along the 80 kilometer greenstone belt and the mine currently produces about 18% to 20000 ounces a quarter cash costs around $9 52 975.

Mills operated three weeks on three weeks off.

We're forecasting hope day to be cash flow neutral in 2020 on it and those production cost or Capex numbers are not in any of our overall total like eco cost guidance. So while we focus on expanding from the reserve and the resource and the property.

We will also focus on optimizing.

The existing doors mines, and then evaluate expansion scenarios.

We believe the project that ultimately produce 250 300000 ounces.

But we still have to do the study and still have to do the work.

We're confident that.

And there is a solid plan to move forward as we put our and none of it expertise to work there.

And we do not anticipate spending any significant.

Capital expansion capital there over the next two years.

In terms of the specific assets and operating results I'll start with Lauren. It's still remains after 30 plus years, our largest cash flow generator and produced over 105000 ounces at cash costs.

34, So continued strong performance in Q4, it actually for the full year achieved its original budget. Despite the fact that the mines stopped in Q2 due to the impacts of Covid and.

And it's also interesting and Q4 that 28% of La Rhonda tonnage was marked with automated scoops and 16% of the tonnage at <unk> at five.

Mine with automated Skus and so that's the way forward on Mara and as we mine deeper our exploration suggests that.

And there's more.

And our mine life at depth, so automation will be important and not just from an efficiency and cost perspective, but also.

From a safety perspective.

In Q4.

Performance was really driven by more tons.

Being mined and the West mine area at higher grades than we had anticipated. So the deposit continues to grow as we said, we're adding reserves, we're still adding quality ounces, we're still adding.

Tons of the mine plan.

And we'll talk about the exploration shortly at gold ex record quarterly production.

Uh huh.

And what 40000 ounces at cash cost below $600 per ounce, we averaged in excess of 8000.

Once a day that's record daily tonnage since we restarted the mine back in 2013, so the teams have done.

And excellent job, there and what's really helped them to achieve over 8000 tonnes a day is.

Some tremendous performance coming out of the underground rail their system, which was something that our team looked at a few years ago invested the capital to put in and that's just been really important addition to the efficiency of that line. When you think about it we're mining and around one five grams per tonne and it still is an extremely <unk>.

<unk> line.

Our Canadian market.

Best ever full year safety performance.

And Q4, we continue to sort of tweak up the.

And the throughput and the plant.

Setting another quarterly record at over 62000 tons per day, when you add up the Abitibi and those three assets and Q4 produced over 230000 ounces at a cash cost of approximately $540 an ounce. So those three mines are still very much and important part of our.

But more importantly important cash flow generators, particularly as we look at opportunities to extend moron.

Mine life with our exploration success at depth and also extend the gold ex mine life, because we're also getting good drill results and.

And the gold acts as we look at the deep two zone.

And then with the addition of the Canadian Mill Arctic underground.

And it's going to be and important part of our business for a number of years at Kittila.

And as we said record oil production.

And the year leads to record gold output in 2020. So we're finally after many years getting.

Into a rhythm, let's say where.

We're able to better match.

This sort of large size of the ore body with the production rate.

Going to 2 million tonnes per year, but there's more work to do because that deposit continues to grow. So we could see it with additional ore sources that are being suggested by the recent drilling that we can take that up another 20% to 25%.

Again, not in a hurry to do that it's going to take US two to three years to do the work on that and think about that.

But it still has upside and the deposit continues to grow at Meadowbank Amber steady improvements we've seen quarter after quarter there.

Record open pit production and the quarter at $3 8 million.

Tons mined per month.

Done a good job with the maintenance and availability of equipment and steadily improving that operation over time and with the addition of the higher grade underground ore that will become a much more significant producer of ours, we still need to work on the costs. The costs are higher based on strip ratios as we move.

Into the next couple of years will come down as we get to 12000 tonnes a day with more high grade.

As we move into 2024.

We still need to do some more work on the cost side at <unk> and record quarterly safety performance another strong quarter.

And another strong operating and production quarter nine.

And 90000 ounces at approximately $650, an ounce cash costs, but a good very good operating margin quarter and cash generating quarter at $108 million.

Dollars and a quarter. So that's our second biggest contributor.

<unk> on each.

Even more than Canadian <unk>, so again.

We're going to continue to expand that so also on important part of our business going forward and.

Mexico steady operations and good cash generation continuing from our Mexican operations.

Just quickly touching on the on the financial highlights.

And what struck me being here for 36 years.

As record cash provided by operating activities of over one.

One 2 billion.

20 years ago late nineties are revenue was only $50 million.

So it's a testament to our strategy of adding small pieces and turning them into meaningful parts of our business and doing it while keeping our share count down. So we can generate per share returns to our shareholders that strong cash generation and improves our financial flexibility.

<unk>, our investment grade credit rating, where we added duties to our list of credit rating agencies, our cash position grew $400 million at the end of December again, low share count after 60 plus years and.

And the business and the debt maturity schedule, that's extremely manageable as we look forward.

Dividends are still unimportant part.

Of our story, we paid them for 38 years, given our production growth given how we see the ability to extend some of our major mines just given the recent projects that we've just announced approval on which when you look at <unk> underground very long life.

We expect to be and are positioned to continue to increase our dividends as we move forward and grow the output and this business. So I'll just quickly summarize and then.

And we will open it up for questions. So.

Essentially a strong close to 2020, which we anticipated we expected.

Based on coming through with the challenges of Q2, we did do a lot of important work and that quarter to position the assets for the strong second half that we didn't deliver.

That was not only important for the cash generation, but also important to set us up for continued growth going forward over the next four years as well as positioning projects beyond 2024th to continue to grow and continue to add value.

No change and our appetite for geopolitical risk.

Sort of where we are.

We continue to be focused on.

Not just to do the right thing on ESG, but to be at a leader and ESG, we haven't really talked much about how the how much contribution we made to our communities.

Yes.

During COVID-19, but thats certainly being recognized by federal governments.

In the countries we operate in.

I'll, just sort of close off on and on exploration because it has.

Our success there is really.

Forced us to rethink sort of 10 to 15 year production profile versus where we were about three years ago on that and.

A lot of that has to do with them.

And our strategy all the time is.

We want to note what we all we want to know what we owned as early as we can and that's why we have a history of drilling deep holes to understand.

Whether those deposits do continue on that.

We're here talking about Canadian <unk> underground there was a deep target that wasn't in the budget that we put in the budget.

After our mines visit to say look our history at La Ron tells us that it's important to understand when you have a geological structure, that's wide open how deep it goes and so.

We're seeing that it gets to let al.

We're seeing that continuing on la Ronde.

We're after 30 plus years.

<unk> more growth than we ever have.

And generating more cash than we ever have and we're still finding more gold and as a result of that we're going to invest and for exploration drifts.

To move to the west to go into the old Barrett Brown, because that same felsic package of rocks that host all the Lauren and World class ore bodies also exists on that land package to the west So we're going to open it wide open.

See what's there but.

But we're also going to drill to the east where we've got.

Some high value.

Net smelter return and drill holes on zinc.

Zinc zone, the reappearance of the 20 <unk> zinc zone.

So a lot happening at maran, which bodes well for the future of our largest cash flow generator.

Kirk on late Upper Beaver continues to grow so we're confident that's a mine at some point, but again.

And we'll update our study later this year and we'll decide how we can fit it in.

Pinos Altos and Mexico continue to get good drill holes at the satellite deposits and at Santa Protruded. So we'll work those in.

Our production planning going forward, so essentially from a strategic standpoint.

We're just going to continue to focus on what's worked very well for us for many years.

Optimizing and realize the full potential of our existing mines.

With a distinct exploration focus because it's adding really good value for the dollars. We're investing in exploration, we're going to work. The project pipeline. We were fortunate we have a solid project pipeline. We added whole day, we like it long term, we think it's going to go well beyond.

Beyond the current reserve and resource, we're going to work that pipeline and a steady consistent manner, and where appropriate we're gonna add high potential projects that have excellent geological potential and parts of the world, but we have good scale.

We've done that since 2005, when we started buying assets like <unk> like Pinos Altos. So it's worked well for us in terms of creating per share value and.

We're going to continue to do that so operator.

I'd be happy to open up the line, we've got our full team virtually here.

And happy to answer.

And the questions we get from the callers on the line.

And certainly ladies and gentlemen to ask a question. Please press Star then the number one on your telephone keypad.

From Goldman from Province, many roster.

Your first question comes from Tyler Langton with Jpmorgan. Your line is open.

Good morning, and thanks for taking my question and <unk> had a question on.

And on <unk>, I guess for <unk> and 'twenty three year kind of guiding to total production at meadowbank of like around 415000 ounces.

Around 100 from the underground and and a little you know 300 or so from the open pit and I guess post 2023.

And you're guiding to the underground and being a little around 120000.

What does the open pit I guess look like and.

And 24 and beyond is it kind of stay around 300000 ounces or should it should ease a little bit.

Dominic Joanna and help us with that.

The split between <unk> and underground and open pit at Meadowbank as we go beyond 2023.

Yeah.

And the.

And my real condo gone and there's going to bring a 100 and 140.

And answers to the to the game and that's going to bring overall middle Bank.

Getting.

And that Theyre going to reach over 500000 ounces, which is going to be our biggest operation and.

Those years, 'twenty 'twenty, four 'twenty and 'twenty five.

Great No that's helpful and then just.

And I guess final question on the free cash flow is really strong.

And 2020 when.

When you look to 2021, you know outside of I guess sort of earnings and and Capex are there other and then.

Items like taxes, or something like that that could sort of have a and <unk>.

Impact on the free cash flow profile. This.

And this year.

Cash taxes will be slightly higher than 2020 because.

Of the 300000 ounces of additional production, which is going to be more profitable or add to add to the total profit so cash taxes will be up a bit.

But not significantly higher.

Great. Thanks, so much.

Your next question comes from Fahad Tariq with Credit Suisse. Your line is open.

Hey, good morning, Thanks for taking my two questions.

First on hope and I know you mentioned over the next two years you don't expect to spend significant capex beyond that time line as you think about co pay versus some of the other projects can you just provide some color on how youre thinking about what it is competing against is it competing against upper Beaver and Hammond reef or is there already a priority among those projects that authority.

Even before you've done more work on a whole day no. It's competing with the two you mentioned.

Those would be the ones that.

And we're still studying I would say upper Beaver has the upper hand, let's say.

Given our familiarity given its location.

Hope day is.

Is it work in progress I think what we liked about it was.

The 80 kilometer greenstone belt.

Had big success with geological belts, when we can control and I'm, 100%.

And adding ounces. So we believe this will get bigger.

Basically we have to step back on this one because everybody understands we need and new processing facility. So the question will be what and where.

And the way it will depends on the exploration results as we move forward. So there's still work to do that's why we're not in a rush here.

We've already had.

Our top crews up there recently they spent a week there our project development team some of our senior team and none of US. So we've begun the process of putting people from our technical service group.

To look at various expansion scenarios and again as.

And the whole concept with our strategy is to stage and spread these projects over time.

So it's just going to require us applying.

Some of our key project development team is working with our technical service group and the operating teams in those jurisdictions to optimize the project studies and compete for the capital.

Okay, Great that's really clear on my only other question on Kittila I'm, just trying to understand that the shaft thinking contract issues.

Is it right to did I understand this right that.

Now all of that will be done in house or is it still being contracted with.

And with some additional.

Local personnel and I'm, just trying to get a sense of what's going on there.

Dominic.

Yeah, we're going to continue to contracted of course, we're looking to mitigation now to introduce more local worker training local people, but still on the shaft sinking.

Thinking construction phase.

Contracted the challenges are really with the traveling.

We have with our challenges we have with the Covid. So people need to get these and you did and tested so that's bringing some.

The challenge on that having a Canadian contractor going there, but the team are looking for mitigation to minimize that with.

Bidder.

Conditions, Florida, guys and as well as our training more local people.

Okay.

Okay got it so that's different than the terminating the underground development contract that's got a different rate.

Yes, that's a different let's say the overall project is completed.

At 80%, 90% and if we're talking about the.

Rock line and all the work done.

To be ready to operate.

<unk> be on the critical path, which is the shaft sinking.

This is the area, where we struggle and there were some delays at the end of the day that wasn't that impacted production because we're able to mine it.

Two and a ramp.

It is just more costs each month that we do with two day ramp compared to the shop, but that was net effect.

The products on rates at the casino.

Okay, Great. That's it from me thank you.

Your next question comes from Ralph <unk> with.

Eight capital your line is open.

Hi, there good morning, everyone.

Sean I have a question on Canadian melodic exploration, but specifically for open pit ore sources and the context of filling up that mill capacity right, especially post 2026 is now the time.

And this becomes a more of a strategic priority.

I would say that the focus.

Before that is really on.

Now this is the first cut of the study is just optimizing that study.

Rather than looking at outside additional sources of ore.

And so it's really and optimize Asian effort, if we can sort of reduce the dip and production.

Those years during the initial transition from the open pit.

To the underground, but what we won't do is rush.

On the build out here. This is a 17 plus year life.

It doesn't need to be rushed if theres, a dip and production theres a dip and production that's not the end of the world. So, we'll just try to manage and build.

And the most effective project, but.

From an exploration standpoint, or Dominic from our.

Productions.

And our sourcing standpoint, and the pit and is there any color you can add on that.

So is key here.

We also control a large property over there and over that two hour 20 kilometer of round and we control we continue to investigate and reassess the potential of order and near surface ore body.

Towards the west from the Canadian monarch.

Western porphyry for ex Easter and former operation So and at the same time to day east of the of the Odyssey project, while we're still controlling and other 10 kilometer and towards the east that we are continuing to assets. So that's that's one of our <unk>.

And to continue to task for both shallow and and extension of the east Goldie and see if we can.

And integrate them eventually in the mine plan.

Okay. Thanks for that yes, thats good color.

Sean.

And the economies are starting to.

So some light on Hammond reef right and we have some good first cut numbers.

But it doesn't seem like it's maybe meets them agnico investment criteria right here with this study in terms of IRR.

And first of all do you think it could get there and particularly with respect to the Capex number of $1 billion.

Is this something you'd be open to partnering up on.

Our selling it and yes, we're open minded on that one.

What we like about it is.

It was a throw in and the.

Cisco deal in 2014, and we bought the other half for $12 5 million.

So we've had a lot more value than what we pay for it and.

And so the only question now is how do we realize on that value. So we're open minded with respect to Hammond reef.

Got it well said thanks very much.

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

Thanks.

Couple of questions first on the capital I know the.

And the number and Thats been outlined is really just indicated on that 700 5800.

We have some details in the release on <unk> underground and <unk>.

And the indicative guidance I guess implies roughly $400 million on the project side.

And sorry, I have a greyhound trying next to me and.

And then.

Yes, I was just trying to fill the gap in terms of what.

Where the rest of that could come from.

As the release you said.

There were still hoping and there either.

Well.

And just put.

Net of a hold on things because we expect at some point will advance upper Beaver. So all of that is as sort of a bookmark to allow us to move those projects forward that are and the pipeline and a very steady and stage manner.

Okay. So.

Okay.

I'll follow up maybe.

Ah directly.

My other question is for La Ronde.

Guidance for the year looks somewhat lighter versus what the operation has already been doing the last couple of quarters is that just conservatism, that's been incorporated or sort of a change and sequencing.

Not really a change.

I think it's just being generally conservative there.

We did have an upgrade and the web.

West mine area and Q4.

So we don't have that all factored in.

Okay. Thank you very much.

Your next question comes from Jackie.

The Lucky with BMO capital markets. Your line is open.

Thanks, very much and good morning, everyone I guess on a couple of questions I'll start with <unk>.

On.

It looks like you're planning to run it through this year.

And and work on the on the longer term ex.

Pension option is the plan still too.

Just sort of take a step back close the operation down for an extended period of time like should we expect that sort of announcement for 2022.

And I guess, maybe if you could give us just a little bit of.

Guideline as to how long you think that exploration and studies all of that stuff might take and when we might see it come back into your production profile.

Yes, it's still too early to.

And sort of make a decision on.

Do we put it on care and maintenance as we said, it's not leading money I think which is important. So we can continue to run it optimize it drill it and complete the studies, we will have a much better idea.

At this time next year after.

Doing all the study work through 2021, while we continue with the drill program.

As to what it looks beyond.

2022.

That's still to be determined based on the results of the drill program and the study.

Okay got it so we'll wait and see and hopefully next next February we'll have a better have a clear picture that sounds great and similar question, maybe on them and Arctic underground.

We've been waiting for this study and and I think the.

Details you can give us is really helpful and and it looks it looks quite positive.

Where's the next.

Next information flow or where is the next data point that we should be watching for from here and it kind of feels like we're going to be in a period of drilling ramp development and that kind of thing is there is there more news flow that you are expecting to relates to the market in 2021.

While I would expect as you said Jackie it's more exploration detail as we said we have the combined partnership budget there is $30 million.

And with 24 of that on East Goldie, which is wide open and so we would expect the news flow to be.

And on those exploration results on east Goldie and as we drill and the structure.

Along the trend and we will continue to always optimize and.

Study and look for ways to improve and look for ways that maybe we can.

Minimize the production during that transition from the open pit to the underground.

But there is no timeline for information flow on that so.

But there will be on exploration and because of the size of the budget and the fact that Theres 11 drills.

Going on the site.

Got it thanks very much one final question I know on 2020 was a it was a challenging year for for your operations for Covid.

Certainly we're not out of the woods, yet and it sounds like there's still some lingering effects in terms of travel restrictions and things.

I guess, mostly related to your more remote operations and none of it how are you coping at the moment with Covid are you starting to think about bringing the local workforce back.

Is there.

And increased risk of Covid up there at this point or are things getting better can you maybe just give us a broad update in terms of the operations yeah on the vaccines, there now and none of it I think which is important so that's a that bodes well and that will be sort of a key part of the decision on bringing the workforce back so we've been very.

Patient on that because of the.

Because of the risks to the community as we said from the start that.

And that we wanted to make sure of that.

Equally eagle wasn't causing.

Bringing virus.

And none of it so.

And.

But I should say and Canada, we've got five testing labs going now.

So we started testing early and we've continued to expand our testing.

Capabilities and we're using that.

To help us manage.

Sort of Covid.

Okay, that's perfect and I'll leave it there. Thank you very much Sean Okay.

Okay.

Your next question comes from Greg Barnes with TD Securities. Your line is open.

Yeah. Thanks, Sean I, just want to get on a clearer picture of Cameroon and Elliot.

Meadowbank complex.

Costs will remain high for next couple of years will come down as we on the ground comes on.

The underground mines out in 2026, just what happens.

And medium and longer term growth.

Production and costs.

Yes, I think from a production standpoint.

It's still a relatively short life mines compared to our other mines and Thats why the focus is on.

Exploration in and around Meadowbank and <unk> looking for preferably additional open pit material because that would extend.

On the.

<unk> underground with our affiliate to mix, but maybe Dominic on the cost side, you can give us some sense of sort of strip ratios and the impact of that on.

On costs over the remaining mine life.

Yeah, we were going to see some fluctuation on the class and it's drew.

Driven by the.

Stripping ratio and the grade to the sequence.

'twenty, one strip ratio is going to be more around seven ish.

Better than we need to we need where we were more on 11, so thats going to its going to be ample.

The impact is when strip ratio is lower you're building stockpile, that's helped and when stripping ratio is higher than you need to consume stockpile.

So that's impacting it.

Cost, but overall on a real condo gone is going to bring is bringing a positive and pack. It is higher grade material and all the fixed costs are already paid so that's going to improve.

And the costs and the site and also we've we've launched a new optimization and let's see we've counted the strategic optimization at the site.

The beef beefed up the team to look at two different ways to improve it.

And mainly on the contractor side rental side on the logistic and.

Moving to re.

He's been through us.

And let both divisions and I've been to an expansion phase now and last year.

They're doing their units.

That's the first step now and.

This is more stable, we're really transferring two and up two musicians sites and I think there is up.

There is room to improve there we are going to see we just need to let the team some room to optimize or their operation.

So we have a big bump in production in 2004, 25, and then 26 after that.

And Murray finished after 2026 at this point.

Yeah at this point, we go up to 2026.

As Sean mentioned, we still have a good resources underground on the PMI for us because we keep the mining in the cross border and Myra.

Phase one American underground phase one.

Exploration and <unk> could give a flavor on that but the exploration and are still ongoing.

Beth <unk> will be to find another pit.

We have all the infrastructure to manage that and.

And to continue to mind, though would be higher grade on coming from underground, but up to now. The this is this is where we have the resources reserve at <unk> and Amazon.

Okay.

Okay.

Okay.

And just secondarily on the beach.

Sean It does sound like that slipped.

For Q.

And effectively it looks like it's going to be the next operation after from logic underground and timing on studies or any kind of decision on that one.

Oh, well it'll be later this year when we get the study so.

Decision would be sort of maybe this time next year, depending on the results of the study.

Okay.

Thank you.

Your next question comes from Carey <unk> with Canaccord Genuity. Your line is open.

Good morning, everyone.

Sean as you mentioned you said the resource is about half of the total resource outline there is that more of a function of <unk>.

Drill spacing or the economics on from other people who are potentially.

And you're referring to Canadian <unk> underground.

Yes, yes.

Well.

The bulk of its east Goldie and so the balance of it would be east melodic and Odyssey, North and south which are lower grade. So we fully expect that as we optimize the plan that we'll be able to add some additional ounces to it.

And also we would expect east Goldie to continue to grow so.

As we said this is the results of the.

Yeah.

So the first study, let's say and which remains to be optimize as we look at adding additional resources.

To the mine plan.

And then maybe just again on extending the open pit I know your reserves are at $12 53.

Three years down the road and for $2000 price environment.

And there are bigger pit shell potentially at the open pit or is it sort of not that.

Sensitive to the gold price.

And that melodic.

Yes, yes.

Yes, I don't think theres much room to expand the open pit the future there will be.

The underground and so certainly a higher gold price bodes well for some of the lower grade material.

And the old east melodic area.

And so we'll certainly be looking at that as we continue to drill it and as we continue through the construction phase and the underground infrastructure I think will be important.

And that's what was really.

Something that.

And we're on from a small and line into the large mine is the underground.

Ramp and shock gave us access to drill the deposit so I think we'll probably see in this instance, getting better access to drill.

And it gives us the potential to.

Add more resources and do more effective conversion of.

The resource to reserve some of that resource is only drilled at 150 meter spacings.

And so as you said and your question part of why it's not and the plan is we still need to do some more drilling and tightened up spacing.

And then maybe just one last from me.

And what did the processing costs looks like guidance.

And you're running at 19000 tonnes, a day versus today at 50, 557000 tons and G&A per ton and can you give some color on unit costs Dominic.

Dominic do we have.

The breakdown I don't have the breakdown in front of me on processing cost per ton when we're at full production at 19000 tonnes a day.

No.

<unk> give there the cash costs, but I don't have no I don't have the detail.

We could come back on and get that we'll get that for you.

Okay, great. Thanks.

Your next question comes from John Tumazos, very independent research your line is open.

Thank you very much for taking my question.

Concerning hope.

As the original gecko mill up to Agnico standards, I know, they're not as they werent as well financed as your team.

And how much of the issue with the plant is the 80 kilometer trend and figuring out where the center of gravity is yes.

Yes, no the mill is not up to our standards.

Not even close.

But we knew that sort of going in.

So it does need a new plant and that question is largely location now based on the.

And the size of the geological belt and the.

Distance between the deposits.

And Thats, what were really trying to do.

And they'll down over the next year or so as we continue to sort of look at it and.

And assess it.

Hi, can I ask a second one and I'm sorry to ask a big company question.

The southern business and Mexico is the other businesses Norris grow.

And this is getting close to 10% of the prospective mix.

Is it worth keeping.

And because of the value of the heap Leach and low capital cost.

Simple or mining and your exposure to the.

Sundar, Sierra Madre, southern and belts as well as Latin America and <unk>.

Heap leaching and southwestern U S or is it getting to be too long of a plane flight and.

And with the comp may be better to have less admin and be tighter. If it was just the northern business.

Well that's a that's a good question, we ask ourselves those questions all the time.

Our best asset there is our people and their ability to do business.

And in that country.

So we think it's worth keeping based on that skill set and based on its proximity is just set to those geological belts.

And so.

We'd like to have something else for them to build.

We still believe centered Retrude us as a buildable project again, when we don't know.

So right now we are.

And we're just.

Mining satellite deposits and developing satellite deposits too.

General and cash and we've got day.

And exploration budgets going.

But we still like Mexico as a place to do business, it's still a pro mining country and despite what you may see or read.

And the news.

We haven't had any issues.

That sort of change our view on wanting to invest in Mexico.

Competitive.

There's no doubt about it but we think we have a competitive advantage just based on the skill set there. So it's still important for us, but it clearly needs a pipeline that.

And then.

It doesn't have that the northern business does have and from a management perspective, it's not difficult to manage because it's almost self managing that leadership team there.

<unk> has done an exceptional job and it's not something that eats up a lot of senior management time.

Thank you congratulations Paul Pena's up and have been doing impactful Sean Sean Okay. Great job. Thank you. Thank you John.

Your next question comes from any of the Sarnia with CIBC World markets. Your line is open.

Hey, guys.

And.

So just a few questions.

Firstly, just as I understand it look we're going to model the $7 50 to 800.

Capex for the next three years and I should probably also be modeling.

Upper Beaver like that includes the capital from that.

And what some of the capital obviously.

Yes, but we don't have that define our really saying is is that.

This is also for internal discussion for our teams is look this is the envelope we're prepared to spend.

You do the analysis on the projects and we'll decide whether it meets the investment criteria.

Whether it's the risk profile to invest in it. So all we're saying is we've left room in the event that we have a positive production decision for something like upper Beaver.

And then also just a financial question just to confirm that does conclude your capitalized stripping number right as well.

And sorry capitalized exploration and I keep hearing on yes.

Yes, yes.

Yes.

Alright, and then the <unk>.

Second question, Lauren and great. So I noticed when I.

And my sort of reserve analysis, and depletion that you actually added.

Even higher grades that and overall the mineral inventory went up on higher grade. So can you talk about exactly where he found that exploration success.

Aloha and Yep.

And you could help us with that.

So basically.

And as we discussed over the last.

Couple of quarters, you know with the I agreed and the effect. We were we were seeing on the long I've been wrong mines, we've been investigating on our reconciliation.

And basically found out was that we were a bit too conservative where are.

Applying it at too low a capping.

Linear to the high grade assets, where we're getting into deposit so we basically NUCYNTA bit hour hour and capping and and even still I think we've been running a couple of assumption and even with that higher.

Phase capping approach.

We still getting weaker.

And we kind of style and now we're getting more gold than what our predictive model. So we've taken a little bit of that plus with the success, we're having at the Lv five we've been extending the resources beneath the previous the EPS.

Limit that was around 400 meter we've extended the limit now close to 700 on meter below sort of phase <unk> due to success so at kings from it.

And the dose dose two modification that's around that we have more than replaced what we mined this year and <unk> seen an increase of the grade for the loan portion.

Okay, and then that leads me to a little bit on the byproduct.

Have you.

The same kind of parameters on the on the byproduct from me I noticed you guys are always tend to do a little bit better than what you saw at the beginning of the year from a byproduct on whenever you put suffering the same kind of capital.

No change to day, you bet byproduct estimation and neither are any of them Joe the only change was on the go.

Okay.

Alright, and then just in terms of the.

Canadian <unk> royalty.

Understanding that your partner reports their total either unit cost a little differently.

So that part of the slide five 5% royalty that should be on just yet.

The name of Arctic under the Odyssey project underground material all right and then if we were to just look at the.

Barnett and Canada.

And you had on.

And I take the costs that you guided to on a unit cost basis for that material, but not have to include a royalty is that correct.

Yeah.

Yes, Im not sure I am not sure I.

Follow that the royalties and the cash costs on all.

The current production and will be on the underground production as well I.

I guess, what I'm asking is I thought my understanding was that the way you guys report your unit costs and you already include the royalty within the unit costs, yes.

And for the open pit, but here in the underground you can split out the royalty because it doesn't actually give it the same way as you can.

Brian I don't know Brian.

Help us quickly.

It's okay, we can take it offline.

Okay, Alright, that's it from my questions. Thank you very much okay. Thanks.

Your next question comes from Matthew Murphy with Barclays. Your line is open.

Hi.

A question on costs and.

On the here ISC.

Youre going to be and the high nine hundreds I guess.

Last year, this time and sound.

And I'd like they were going to come down near term now it sounds like there'll be.

Flattish so I guess two parts to the question number one and what has changed that that's keeping that elevated and number two if we look beyond 2024.

Ill equal do you have kind of a range you want to get too on ASC.

Yes.

That's really a largely <unk> and <unk> has two high cost years, 'twenty, two and 'twenty three.

And then it goes lower and so that's what sort of drove the all of it because the cash costs go up there drives the all in sustaining costs up.

As well and they come down after that.

Okay.

Yeah.

And do you have a level that you can talk about for 2025 non in 'twenty.

No, we're not guiding that far out.

Okay, and I guess, maybe as it related question.

It has the experience and <unk> changed the way you think about satellite opportunities and none of it.

And.

No I think thats a function of.

So the longevity of that asset it doesn't have the longevity that <unk> has.

And so we are fortunate with the exploration success at at Amarin could provide higher grade underground ore.

So it's really volumes that worked well there and volumes in terms of tonnage that work.

Well.

Trucking does add costs.

And that certainly our trucking costs are a bit higher based on sort of availability and reliability of equipment.

But it's really great that's driven the unit cost of grades and a bit lower.

And then what we expected.

Okay. Thanks, Sean.

Your last question comes from Ken, Yes, Chucky connect with Deutsche Bank. Your line is open.

Thanks, Dan Good morning, everybody.

And I just wanted to circle back.

I know Dominic we talked about the mine going till 2026 and that is underground.

Potential further there, but my understanding is that you just can't run the underground without having open pit so maybe D and.

Number one is that correct like 2000 tonnes a day from the on demand is not going to support that complex.

Yes, that's correct maybe day can you talk about the exploration focus for open pit material on this property.

That's something we are pursuing and year over year on investigating especially along the infrastructure either.

On the road that connects Baker late to Meadowbank ore from Meadowbank to MRO and.

And we BCP continue I know I get the deprecation and target testing and.

Year after year, we're generating good target on Fortunately, we're not making discovery something like Embraer will give you a year, but it's not the lack of FERC and the.

And fitness remains there.

And generally you would target the thing them and we'll provide an update as soon as we hit something.

And what's the budget and for this year.

Generally speaking and we.

Allocating 20 to 30000 meter for regional exploration.

Both for <unk> and <unk> and then in terms of allocation depends on all things well on Ravel. So.

And so what you can assume that that something like a 20000 meter regional it's detailing and the newsworthy but.

20000 meter and generating new you would target.

On Meadowbank and Merck.

And maybe maybe for Sean our dominant and maybe just a bigger picture.

And if we don't and finding anything here Ken.

Infrastructure.

Moving on infrastructure. Some of you had a question on people be used at all day.

Potentially yes.

<unk>.

Okay. So the MAU, maybe could be movable and true.

And et cetera.

We'd have to look at the specifics of that but certainly when you look at hope day at.

And reserves of $3 5 million ounces resources of over $3 5 million ounces still wide open so it's likely going to be seven to 10 million ounces or so.

We bought it because of its location and its geological upside and our skill sets to operate in that area. So.

So if we can leverage off of existing infrastructure because the.

Mine life doesn't exist at <unk> will certainly be looking to do that.

Yeah.

Hey, good hopefully find more elaborate and thanks a lot.

Thank you.

And I would now like to turn the call back over to Sean Boyd for closing remarks.

Thank you operator, and thank you everyone further questions and if theres any other.

Follow up information you require.

And just get get in touch we'll be happy to help thank you.

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

Okay.

Okay.

And then.

Okay.

And.

And then.

And then.

[music].

And.

And.

And the management team.

And then.

And.

And ill.

And.