Q4 2021 Agnico Eagle Mines Ltd Earnings Call

Good morning, My name is Chris and I'll be your conference operator today at this time I would like to welcome everyone to the Agnico Eagle fourth quarter results 2021 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'd like to ask a question. During this time simply press star.

Then the number one on your telephone keypad, if he would like to withdraw your question. Please press Star then the number two.

I'd now like to turn the call over to Sean Boyd Executive Chairman. Please go ahead.

Thank you operator and.

Good morning, everyone and thank you for joining agnico Eagle's fourth quarter.

Conference call.

I'd like to start off by thanking Tony <unk>.

And the Kirkland Lake team, particularly Tony for his contributions.

To Kirkland Lake.

More particularly for his work over the past.

Several months in laying the foundation for the combined new Agnico Eagle, which as we've said is well positioned.

To deliver on its production and cost guidance and deliver a high quality low risk senior gold producer.

What I will do today is.

I will pass the call over.

Two.

Our new CEO Tomorrow, Judy I'll congratulate EMR.

I'd like to congratulate also.

Agnico Eagle senior leadership team I'm looking forward to working with all of them and I'm highly confident in the team's collective ability and experience to deliver on the promise of the merger.

So now I'd like to turn the call over to Omar.

Thank you very much Sean and good morning, everyone.

I'd like to.

Many of you on the phone I have known for a long long time.

I'm honored to have this opportunity I'm humbled to have this opportunity.

And I look forward to our discussion today, because I think you will see.

Just how exciting the future is for agnico like Sean I'd like to take a minute to talk about.

The opportunity I've had to get to know Tony <unk> over the last six months, we've worked closely together and.

He is a man of integrity.

Our high quality individual a good person a good human being.

And.

He will be successful.

With whatever endeavor. He does next then Tony we wish you the best of luck, both personally and professionally going forward.

I have to say, it's been exceptional working with the new team and looking at all the opportunities.

I'm 57 years old I've been in this industry for 23 years and I've never been more excited about the ability to add value.

And then I am today.

And I hope that message will come out loud and clear as we go through the day.

The key messages today are going to be forward looking much more so than backward looking and remember to look at the forward looking statements.

They are now up to four pages long with increasingly small print.

<unk>.

The other looking forward is that agnico eagle.

Is going to maintain.

The simple consistent disciplined and proven approach to value creation that we've always had.

And that frankly Kirkland has always had.

Low cost strong margins and strong cash flows.

Robust production profile with tremendous growth.

In safe jurisdictions.

Proven leadership team with a proven track record of being able to create value on a per share basis.

We're going to talk about.

Three year guidance of.

A three 2% to $3 4 million ounces.

Slowing growth.

Growing slowly, but importantly, we view this as a base from which to grow and.

And we think we will grow and we'll talk about that.

Record mineral reserve.

44 <unk>.

6 million ounces of gold with the potential to grow both in the short term and the long term and we'll talk about that later on.

I am going to spend some time confirming the opportunities we see with regards to the synergies in fact.

We see opportunities that are greater than the expectations that we identified when we announced the merger and we'll talk about that.

And then finally and importantly.

Building on our long history of capital returns.

Announcing a 14% increase in the quarterly dividend to <unk> 40 per share and our intention to launch a normal course issuer issuer bid to replace to repurchase up to $500 million of our shares now I'm going to take a minute and say.

A lot of US are now repurchasing shares and this is think about it what a nice difference from 10 years ago. When the share price went up and people Werent repurchasing shares this demonstrates.

A discipline in the industry that wasn't there 10 years ago and it demonstrates that this discipline is not just with us, but with all of our peers, which is good for the gold industry and good for all of you our investors.

Please.

We have a proven and trusted leadership with decades of experience.

Of course by Sean Boyd, our executive chair.

But the board also has some other strong names that you know, Jeff Parr as Vice Chair, who has been the chairman of Kirkland Lake as they've created lots of value for shareholders and Jamie Sakowski, our lead director one of the most distinguished professionals in the gold space.

We also have a very strong management team that I think most of you know most of your trust.

<unk>.

It's on the list here I won't go through it name by name, but it combines excellent people from both companies.

And what I will say is.

The bench strength of this new company is exceptional.

Quality of the of the management team is not just what you see on this chart, but goes down many levels.

Yes.

We are continuing to focus on growing the business as I mentioned, we've got record reserves, but what I'd like to point out in this chart on page eight.

It's it's all about building a pipeline and creating value over the long term.

To create value you have to find gold in the ground to create reserves you have to find resources and we're doing that across the board and continuing to do that and what Youll see is this formula that we've had.

Which has worked for us over the last decade.

They're agnico Eagle the combined entity has.

Has increased reserves by over a 100% over the last decade compare that to many of our peers. This is not a knock against the peers. It's simply to say that this is the toughest part of the business.

Finding pipelines of quality and profitability to grow this is what we do well and we're going to keep that strategy.

We're going to focus on growing mineral mineral reserves and mineral resources through continued exploration and we'll talk about our very aggressive exploration program. This year.

Going to be announcing.

Increased reserves.

When we gave our technical reported detour in.

In the middle of the year and again in <unk>.

Aggressive exploration program in 2022, but importantly, and differentiating and very safe jurisdictions and most of that is off existing infrastructure and as most of you know the best return on capital the best risk adjusted return on our on capital in this business is taking advantage of existing.

Structure in safe jurisdictions.

Page nine we show on the top left our ability, both agnico Eagle and gold and Kirkland Lake historically in blue of growing gold production, but more importantly gold production per share.

Gold production in and of itself is nice, but it doesn't matter what really matters is production and profitability per share and thats, what we focus on and as you can see.

Through our long history of growing.

We grow production than sometimes you plateau off a base you've continued to invest in you grow again, you plateau, you continue to invest and you grow again and Thats whats happening with US both Kirkland Lake and Agnico Eagle both of US individually had record production last year.

Both of US individually had record production per share.

That's impressive at Agnico Eagle record production per share after 64 years.

It is really remarkable but the next three years are a little bit of growth.

The middle of guidance growing from three three to 335 million ounces, but again. This is a base from which we can grow and we think there is opportunity to increase.

That number as we go out.

The gold production is underpinned by six.

Cornerstone World class assets, producing more than 300000 ounces, a year detour Fosterville <unk>, Lauren Meadowbank and Canadian melodic.

And importantly.

Agnico Eagle continues to invest.

In the future, we are investing over $300 million in exploration.

That's quite remarkable $324 million in exploration and development capital above sustaining development capital of $700 million.

Yes.

So I'm going to ask <unk> to talk a little bit about some of this exploration because it really is exciting but before they do I just want to point out.

Yet.

All of that we're going to talk about on page 10, and 11 as we go through it if you look at it.

All of this is either on existing assets, where we have existing infrastructure in safe jurisdictions.

Or new projects in jurisdictions, we've been operating for decades, So if I could and excuse me if we have any technical issues, but I would like Eric Kallio.

Who has been the.

The head of exploration at Kirkland Lake and is going to be.

Chief.

The growth.

And exploration at.

The new company, along with key maybe Eric if you can talk a little bit about <unk>.

Detour.

And Mckesson on Fosterville.

Thanks, Mark and good luck.

Yes.

And.

Okay.

A program that we have there is going to be another large program for 'twenty two.

And continuing on from the success that we already have.

'twenty one we're looking at about 234000 metered.

And.

Lot of the drilling that we're going to be doing is focused on the west pit and saddle areas again looking to extend them further to depth and to the west.

In addition to that we've also got quite a bit of work.

Plan about.

Okay.

30000 of that 230 that.

That will be starting to look at new targets that will be a long strike.

The main deposit area.

East and west on the Sandy.

<unk> and.

And.

Slide two.

Discovered the next extension to the mine.

The.

In terms of the cancer.

We do have.

A lot of drilling plans here this year about another 150000 meters and continuation.

I've worked.

To expand the S&P for the most part both to the east and West.

We are also initiating work on another important project one of the main one being that the deep extension of the main great.

The number four shaft, where we identified the highway quarter. We finally, we'll have a new access fees 58 level, where we can start to really accelerate that drilling.

To that we're going to be having some additional focus on drilling on the middle part of the mine once the new targets about the SMC and we'll also be looking at work near surface surrounding the near surface.

Ramp.

And then of course, the exciting new programs, we're looking at.

Doing an extension from the near surface ramp towards what we call. The <unk>, which is about 400 meters to the south and omni.

Equal property. So this is a <unk>.

Area, which already has.

In the range of 5 million ounce indicated inferred resources.

Which.

We can access fairly quickly and which we're going to be.

Working hard too.

To further define and then tried to bring into the mine plant.

So additionally that fosterville.

I believe the information that's on that on the next slide here, but I.

I could potentially talk about that now and then come back to the other project plus.

Another aggressive program planned.

And in.

In the order of 200000 meters.

The large majority of the drilling focused on the lower Phoenix and Robin's Hill deposits.

And an additional extension zone to depth as well as converting additional interact material.

The indicated category exciting parts of the program. This year as they were going to have some new extension to the drifts lower Phoenix 39, 12 with as well as on the Robin Hill decline, that's going to provide some excellent new platforms in both areas. So we feel very good about our chances of replacing reserves and reserves again for a second time.

Next year.

Thank you.

Thank you Eric that was that kind of <unk>, maybe you can talk about some of the highlights.

With some of the projects you were focused on yes. Thank you Omar so very briefly main priority moving forward continue to be at advancing <unk>, we've seen tremendous success, so far and the filling of the deposit so we're moving towards converting.

East Gulati from inferred resources to indicated again, having in mind to deliver.

In the near future.

The study and converting the large gold deposit in the surrounding Odyssey project into reserves.

Continuing at low raw extending our life of mine it's been.

Scolari special this year, even after close to 34 years of operation of around the mine with successful that completely replacing what they've mined during the course of the year, so completely replacing the 400000 ounces that was mined by.

Combination of success converting the recently discovered 20, north zinc land extending in the main loan and also integrating more and more of the <unk> five into the reserve as we continue to build on success at ramping up production at the <unk> five.

Moving to the north that Dean again deposit remains open in all direction, establishing now an exploration drift and that will allow to increase the pace of exploration moving forward to replace.

Production.

With the large quantity of target that we have across the property, but more precise eaton proximity of that.

And in proximity of the current mining area and last but not least we oversee at Kittila with continued success at depth all the way down to two kilometer. So we've seen and that we've been now integrating.

Inferred resource estimation, all the way down to those deep drill hole and continue to have an aggressive plan to extend the deposit at depth and towards the north and I'll leave it there for now Omar.

You Ian.

And Erik <unk> Erik.

Just before I move on its something that that I want to point out again.

Talking about the opportunities to think about the two probably two of the biggest gold discoveries anywhere in the world in the last 24 months and they've got to be the the roughly 15 million ounce potential at melodic and probably similar at detour and additional ounces.

Those are tremendous find funds, but they are in assets that have been around for decades.

This talks to the geologic potential.

Of the Abitibi Kirkland Lake corridor.

And the potential that we think is there we talk and we will talk about the $2 billion plus of synergies we see.

But we think there are multiples of that an opportunity as we go forward.

Yes.

If I could move maybe to page 12.

Just to highlight some of the we talked about $700 million of development capital.

And we outline on page 12, some of these projects most of you I think know these projects pretty well.

But what I would point out again is these are not pie in the sky projects. These are not.

Things that we think we might be able to do.

These are operating assets that have proven themselves.

We're going to be expanding.

And investing where we already have an existing infrastructure at detour frankly has the potential to be one of the best gold mines in the world and one of the best jurisdictions in the world and as.

As Eric mentioned, we continue to see the potential there.

<unk> aggressive spending.

On what has been over the last couple of years, probably at the highest grade gold mine in the world.

<unk>, where we stopped drilling a decade ago, because we hit 10 million ounces.

That is performing exceedingly well and we've just started drilling at depth again getting excellent results Canadian melodic in the east Gulli, I think youre, all aware of that and the tremendous potential there <unk> with the shaft going in in the ore body is still open at depth.

Again, macassar and <unk> and we can go on and on one thing I do want to point out is we have made the decision not surprisingly and I think most of you would agree. It's the right decision at Hope Bay, we're going to be focusing on exploration, we acquired hope a 100% for the exploration upside.

Past year of exploration has shown that we are.

More confident than ever of the exploration upside and we're going to shift our resources. There from some small operations to really just focused 100% on exploration and we're going to hit it hard over the next couple of years, we think there's a lot there and.

Keep tuned on that one.

Just moving to page 13 to talk about the synergies.

I'll start by saying.

We think we have the potential to do materially better than the $2 billion over 10 years that we initially talked about.

We have spent a lot of time and a lot of work looking at the potential we think the potential is there, but let me just give you an update.

The deal only closed on the eighth but we've been working on this longer than that.

But synergies we targeted $35 million a year, we think we will beat that number we think we're already going to have between 15 and $25 million really.

Realized in 2022.

I can tell you that is faster than we thought.

We think we'll be at $35 million by the end of next year.

And we think we're going to exceed that in.

In 2024 on the operational synergies.

That is a much bigger bucket with a lot more opportunities.

And frankly, a lot more complex.

But we are.

We are confident.

We will be able to hit the $130 million I can tell you we've identified the potential.

For materially more than that probably the potential and I'm going to use that word for closer to $200 million, but.

Thats.

That's down the road and we're going to stick with our $130 million target for now we think we will realize.

25% to $35 million this year.

With the with the target to get to the $130 million run rate in future years.

And then on the strategic optimization this was.

A target of about $600 million over 10 years and the one we talked about the most obvious one we talked about and Eric referred to as amalgamated Kirkland.

Again I gave the example, when I was when I was up at Mckesson over the summer as part of the due diligence underground.

We got two within a 150 to 200 meters of the amalgamated Kirkland.

Our ore body.

The technical team has done a great job.

We are looking at that and we are.

The view that we might be able to start producing ounces there as soon as 2024 low cash costs.

That alone represents probably about half of the total number that we were targeting so a lot of potential there.

Again that said synergies that's a lot of work, it's going to take time.

Just on page 14. This is a chart we've talked about before what I would like to do is ask Dave Smith, our CFO to talk a little bit about this.

And then to talk about some of the capital discipline and return strategies that we're looking at David Thank you Omar.

As you can see on page 14, we have.

Very impressive amount of operating margin generated from the mine sites.

Close to $4 billion U S per year and of course, we'll use that to to run the rest of the business as well, but it will result in large amounts of cash available to continue to push exploration forward.

Do believe in creating value with the drill bit if theres anything easy in this business.

I think thats the way to do it we find gold for about $25 per ounce. So a lot of value add from that program, but also I think we will be able to push that pipeline forward a lot of growth capital being spent.

That's great and as Amar mentioned that high return projects because of the existing infrastructure and the nature of our pipeline, which is effectively in the shadow of the headframe is we like to joke. We'll also have the ability to increase return of capital to the shareholders specifically dividends I think we have.

<unk>.

A significant capacity to increase that dividend over time as we continue to.

Push everything forward.

We will grow cash on the balance sheet as well and all in all I think what we're going to do for shareholders is a little bit of everything and that includes letting them sleep soundly at night.

As we only operate in the best parts of the World.

Just flipping over to page 15.

Talking about the financial position, obviously very strong with the merger Kirkland Lake brought over.

A lot of cash and an unlevered balance sheet and when you added that to agnico is already conservative balance sheet investment grade.

You'll see that we have a lot of financial capacity, especially with the mine operating margins being very very strong and enhanced as well.

Acknowledging the strong agnico balance sheet for new combined <unk> Nikko <unk>.

<unk> three credit rating agencies immediately put us on a positive outlook for our credit ratings were already Triple B mid company very strong investment grade Fitch has already confirmed a positive trend and in coming days, we will be meeting with Moody's and Dominion bond rating service.

<unk> as well so very excited about our financial capacity very conservative and Thats, how we intend to remain going forward committed to that investment grade balance sheet and then finally, turning to page 16 on the dividend as I mentioned, we've got a 14% increase here, but I believe we have room.

To grow this dividend as well going forward I think the industry has done a great job of.

Paying attention to the shareholders in recent years and Youll see that our peers are also pang increase dividends and increasing our return of capital with buybacks as well. So I think in summary, we've got the capability and capacity to continue moving all of these great initiatives forward.

For the shareholders Omar.

Thank you David.

Just looking at page 17 again.

You all have this data I want to hit a couple of things, it's our fifth consecutive quarter of over 500000 ounces. The number this quarter, excluding <unk> of 502000 ounces.

We were we were on a run rate to be closer to about 525000 ounces, but.

With the.

Rapid onset of omicron.

We had to slowdown some of the production and none of it let me put this into perspective.

That hope a we had an outbreak in both September and again in October .

<unk>.

And we effectively had to shut down the mill at Meadowbank.

The second half of.

December where historically in the past.

We would have had one or two infections that we caught at the airport.

It got to the point, where the number of infections were higher and affected the operation. So I just want everybody to know that.

While our production was lower than our costs were higher than we had hoped that was almost completely.

The result of Covid and I would also say as we're past the worst of it in.

In fact, we're running at pretty much the full run rate now it affected us a little bit at the beginning of <unk>.

January but we think we're going to be able to recover but I did I did want to point that out and we're going to have time for questions. If anybody has after and then just finishing and I'll finish on this on this last slide in the package is a lot more information we can go through on the question period, but.

This really.

The two Ceos, who are standouts in generating value for shareholders in our space.

Tony and Sean.

And Tony and Sean spent two years talking about the.

Opportunity to get together and create a better company and neither Tony North Sean.

Felt they had to do this both companies were doing very well this was a conscious decision.

That was based on strong industrial logic.

Still is.

I just want to repeat that it's still is we remain very excited.

Going to be the same strategy.

Define the results for both Agnico Eagle and Kirkland Lake.

That strategy is focus on the best gold mining jurisdictions in the world based on two parameters of course geologic potential.

But also on the ability to build and operate multiple mines over multiple decades, because frankly, that's how you get good.

It's a strategy that is based on creating value through the drill bit and by building and operating high margin low risk assets with a lot of exploration upside and a long life.

It's a strategy based on capital discipline, where we not only invest.

In projects that meet our after tax hurdle rate of 15%.

But all of you who are in the business all of you who are in the business.

Capital discipline.

Important part of any investment is are you actually going to get that return and our capital discipline is not just the 15% hurdle, but it has to be based on sound and analysis in.

In regions, we know.

And projects that we know.

It's a strategy that includes returning capital to.

Shareholders for over 38 years in a row.

So I think unmatched in the industry, it's a strategy based on per share metrics.

It's actually quite simple profitable production per share.

Leads to increased earnings and cash flow per share.

We're in the business of making money for our shareholders on a per share basis, and then finally, it's a strategy based on ESG leadership.

And the simple reason agnico and Kirkland had been ESG leaders.

In our case for example, we've been in business and some of the communities for over 60 years.

And you can't be a welcome member of the community. If you don't take care of the environment and the social environment around you and then before I turn it over to <unk>.

Questions.

I want to say finally again how.

Honored and humbled all of US are to have the opportunity to move this great company forward a lot of us here on both sides.

Both agnico and Kirkland feel passionately about the company, we feel passionately about the communities we're in.

<unk>.

We can't promise everything, but we can promise you we're going to work really hard.

And stay really focused and with that we'll turn it over to questions.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone if.

You will hear three teleprompter acknowledging our request and your questions will be pulled in the order they are received.

Should you wish to decline from the polling process. Please press star followed by two.

You are using a speaker phone please lift the handset before pressing any keys.

Your first question comes from Tyler Langton Jpmorgan Tyler. Please go ahead.

Good morning, Thanks for taking my questions.

I guess, just starting with the at the cash costs in the ASIC guidance I think in the release you mentioned they'd be flat in 'twenty three 'twenty four but that he also expect them to decline.

As you realize the synergies is that I guess, saying that sort of the operations on a standalone costs will be flat, but you expect the cost to be down when you sort of factor in the synergies and then I guess can you provide any details on sort of how much these cost could potentially decline over the next couple of years.

Well I'll start and then I might ask some of my operating colleagues.

Our costs, we expect costs to decline for both of those reasons Tyler on a stand alone basis, excluding synergies, we expect costs to decline and I can I can talk a little bit about that.

And then also with the synergies we believe that we're going to hit our 30 to $40 per ounce.

Target and.

And that isn't yet included in the guidance that we've given but with regards so I'll give you a very simple example, one of the reasons.

Costs.

We will go down as.

Some of the sequencing at some of our mines the next.

This year and next year there are some lines that have higher stripping, but then.

Sure.

The costs go down considerably so some of the ASIC is a result of accounting associated.

With timing.

And in no small element associated with stripping but.

Maybe Dominic you can hit a couple of the couple of the key points as well.

Yes in term of synergy this year, we could think around 10 U S per ounces and.

Mark mentioned on the more mid long term 30 to 40 plus.

Thats, what we added into our plan right now that's include.

Improving productivity.

At each site by using our technical skills and curtain Nick skills too.

Healthy charters to be best practices. This is what we see on the procurement side to.

35% to 50 millions to come by having a more bigger volume in a better position to negotiate and to get good pricing. This is also part of those.

Cost savings.

That we see coming into the the synergies.

Thank you.

Great. Thanks, and then just.

Question on Mcarthur, I know you've lowered.

The production guidance for the next two years.

Some of it was just looking at sort of the mine sequence and then also some battery issues can you just provide a little bit more details on the issues there and kind of what gives you sort of the confidence that the production will continue to ramp.

Yes, I can start again with that.

So the Casa is an exceptional mine with a lot of gold and very high grade gold.

<unk> Challenge frankly is the mining rate right now and the mining rate is being restricted.

The Makassar mined from the thirties that Kirkland has done an exceptional job modernizing over the last few years.

But it's not complete yet the program the shaft.

The shaft is built but it's a couple of it.

About a year away from being in operation that will increase.

The haulage materially and reduce haulage costs, but Tyler the real the real challenge there is on the mining rates.

And that is being restricted in large part.

Because of the history of the mine there was the ventilation wasn't suitable.

For diesel equipment, and so mckesson mate.

Kirkland made the decision to go into battery.

Vehicles to their credit they have done a tremendous job, but I would say they were probably five years ahead of the technology and so we have had issues with batteries.

We take it very seriously, we're making progress.

But as soon as we get the mining rate up the potential at macassar is tremendous.

Great. Thanks, so much I'll turn it over.

Thank you. Your next question comes from Fahad Tariq Credit Suisse Fahad. Please go ahead.

Hi, Good morning, Thanks for taking my question just following up on the Makassar comments.

So you mentioned the battery performance as well is there any talk or consideration of maybe going back to conventional fleet and.

Is it right way to think about this guidance as being conservative for the next several years.

Thanks, Phil.

Think.

What I would say is.

I don't know if I would say the guidance is conservative what I would say is there's a lot of potential to increase it.

It's a subtle difference, but I want to be clear.

When we were there in the summer we ask the team. We said look if you had the ventilation would you like to have diesel equipment and the answer was yes.

So it is an option that we're looking at.

To be sure the future in underground mining is electric.

But it's probably it's probably another 10 years away. So what I would say is.

There is a lot of potential there and what I would.

Expect is that we're going to have a hybrid fleet, where we have some battery equipment, but we also have some diesel equipment and that will allow us to get the mining rate up to the point, where this is.

350 to 400000 ounce producer rather than 200000 ounce producer.

Understood and just.

A quick follow up to as you think about the 2020.

2020 for guidance.

Relatively flat versus 2022, just like there is potential upside at macassar, where else in the portfolio do you see potential upside.

Well, we certainly we see.

Upside at Odyssey to come in a little bit quicker we see.

Upside.

Potentially at <unk> with some projects.

We're looking at there.

We see a total based on things that we're working on.

And again this is stuff that.

We haven't put in the budget, but we think is possible in and around another 100 to 150000 ounces a year potentially added to 2024.

That's helpful. Thank you very much.

Thank you. Your next question comes from Josh Wolfson RBC capital markets. Josh. Please go ahead.

Thank you just continuing on those questions from a cassette.

So I understand are these same issues expected to affect the long term production from the asset I think.

Now is guiding to over 350000 ounces. The prior commentary was something like over 400000 ounces. So is that is that the same mining equipment related item.

Well, we don't expect a battery issue to be a constraint.

That far out Josh.

Simply put.

One of two things is going to happen either the technology gets better and we use it or it doesn't get better and we're using diesel.

No.

We can't.

We can't be dealing with this indefinitely and we don't expect to so no I think I.

We're going to get through this and I think that the mine does certainly have.

Potential to gain to be in that sort of $3 50, 400000 ounce range.

Okay and then also just.

The cap there.

It's not just macassar.

So for example, amalgamated kirklin could add 40000 ounces a year, that's a small thing, but at $650 to $750 an ounce with almost no capital.

You can see how valuable that is and this is a camp that's produced more than 25 million ounces.

And we have a tremendous land position.

In areas, where we know Theres a lot of gold. So I think thats those one message I would give all of you. We didn't do this merger because we're going to transition to electric batteries to diesel equipment.

We did this because of the potential in this region and that in our view is the future of <unk>.

Of mining is taking.

The best positions and the best camps in the world and leveraging off those strengths.

In terms of other sort of large assets or where there is an opportunity each who are in the upcoming mine plan update.

We'll have to sort of wait for the details, but I noticed that was not sort of signaled as an opportunity for upside within at least the three year guidance.

Is that a potential with this update or maybe theres, just not that visibility yet or is the ups is the opportunity for upside longer term.

Theres, great opportunity for upside longer term and Thats a good point, Josh maybe we should have articulated that better no. We absolutely do see upside at detour.

Theyre almost finding gold faster then we can figure out a mine plan to mine it so thats a good thing.

But no there is absolutely upside both in production and longevity.

Sorry, just to clarify that wood that upside is after three year guidance based on the status of it yes.

Okay.

Great. Thank you.

Thank you. Your next question comes from Anita Soni CIBC World markets. Anita. Please go ahead.

Hi, guys. Thanks for taking my questions I was just wondering in terms of growth and dividend would you.

Outline the strategy or sort of a framework that you have in mind or is it just.

When you see that you have.

A comfortable position there that you'll continue to increase or is there a target or goal in mind.

Yes, Hi, Anita we have not adopted any sort of formulaic dividend policy on purpose.

Nor do we have a specific target in mind, because it all depends on market conditions and opportunity.

And the rest of the pipeline as well frankly, but our dividend strategy I would say overall remains unchanged and that we like a sustainable dividend that over time, we increase and then it sustainable until it increases so I think as of today.

Where we still stand and as you've seen we have the intention to launch in CIB as well to give us further flexibility and improving.

Our return of capital to our loyal shareholders.

Okay.

Thank you.

In terms of.

Detour and not the plan.

That had.

<unk> had previously had there can you give us some guidance on.

Scott going forward and how you will evaluate that and then.

Turning off the capital spend are.

Well construction process.

As it were.

Alright.

<unk> time.

How is the two.

Too much together.

Hi, Anita well, we have the capacity to do both both financially and from a technical expertise basis, and I will say as you would expect actually as soon as this merger was announced we had technical teams from both camps going to each other sites to to look at the best practices, but.

Tour.

It's pretty clear, we're going to be coming up with a with a new technical report in the middle of the year that'll talk that will incorporate some of the drilling that's been done.

That 10 plus million ounces are added to resources and don't be surprised if more is added.

By the time you see the technical report and it will also have an update on reserves. So.

We're working hard we have.

Really an excellent team that knows what they're doing working on it we're finding opportunities.

John <unk> and his team have already found opportunities that might allow us to do that.

Even better longer term, but.

Stay with the guidance that Kirkland had given which is an update in the middle of the year.

Alright, Thank you ill, let others ask questions.

Thank you. Your next question comes from Mike <unk> Bank of America, Mike. Please go ahead.

Congratulations on the new position.

And well deserved.

I just had a question Omar I'll bring it to Australia Fosterville.

No it will see reserve grade fell 33%.

It's all possible pleasingly had.

500, 570000 ounces of new reserves added roughly.

Great. Obviously, the mine was about 23 grams last year with our mines.

I see this year at $16 six six grams.

So I guess, it's a question for Eric as the pace of exploration more focus on lower grade material.

Does that.

Obviously your focus on high grade.

We are finding lower grade so I'm just wondering what's the.

Our plan possible, replacing reserves this year and next year. Thanks.

Erica.

Thanks.

For the congratulations thank you Eric would you mind responding to.

Excellent question.

For sure yes.

I guess I can say.

First of all no we're not.

Yes.

We are putting a strong effort at fosterville and trying to fill.

Identify new high grade zone.

But we know that when we do that it's not going to be simply just by doing a direct extension of the known zones.

We have seen lower Phoenix that the grade has declined a little bit.

At depth.

And.

And we only see sort of localized higher grades drop in <unk>. So far. So there is the longer term objective to identify higher grades, but the reserve replacements that we're doing right now is working with the with the.

Conversion of the inferred resources, we have right now an extension of those down.

Tend to be a little bit on the lower right side, but still having higher grade zones within.

We're kind of working with what we have.

We are working towards the high grade.

We had.

And the other thing you have to keep in mind is we are a little bit restricted in Boe.

<unk> area North Phoenix.

We did.

The development at the lower part of the mine does not extend to the <unk>.

Limit of the incurred so we can only drill a portion of it and we are putting a new drift in this year and it is.

Going to be ready by sometime in June and this is giving us access to a much bigger portion of that.

Deposits again so.

Anything with Robert we have to work the decline is not quite over to Robyn Hill. So.

We're drilling more of that less of the resort.

But this year.

Probably again in the second half second half, we're going to have much better ability to target.

Right into the resort and convert more of those things into the mix there.

Reserves.

So I hope that helps out with that.

Paul.

You mentioned about the catheter as well I mean, I guess I could talk about that as well.

Why not.

Sure.

Okay.

You mentioned about from the capital yes, great.

All of this year.

Like a lot of other places.

We were quite a bit by having the.

Contractor shortages.

Specifically the driller.

We did not do nearly as much dealing with what we would've hoped.

But we did generate new resources, but in the inferred category, we were not able to convert those to indicated in time.

Youll see we did have pumping input, but we didnt convert as many to reserves and indicated.

We also.

Some of the zones were being <unk>.

Dragging a little bit with great.

In the areas, we mined so we did adjust some parameters.

And.

On behalf.

Giving us a higher confidence in some of those areas.

You can see that reflected that.

And those are.

When once we factor in the depletion of course, you've taken away higher grade youre, not adding as many in year adjusting parameters of it.

Thanks, Ron and Eric had been on a constant since like 1995, so look forward to going back and maybe Mark just one question on <unk>.

Yes.

Based on your production plans and reserves looks like it was about a six year life, but correct me if I'm wrong.

Just wondering.

But the plans are to extend that because obviously level hungry mill there.

Thanks, Yes, thanks, Mike.

<unk>.

We are going underground that's going well.

The plan right now is too.

Drill aggressively underground we think there that this is going to continue well below the permafrost.

And then we will take a look at the economics of that so the ore body is still open underground and as you said if we can.

Prove up enough.

Underground and some additional open pits.

Then we'll be able to extend that and hopefully materially I don't know <unk>. If you wanted to comment at all on that yes, while we are very aggressive this year close to $20 million will be spent in both of the mine and in regional exploration and is going to come from a combination as Omar mentioned that the deposit remains open at depth. So we could extend potentially the LIFO mind, if we can.

Combine that with the new open pit discovery in that large land position around Meadowbank and our team are actively working at making it happen.

Thanks Keith.

Thanks, Omar Khwaja until those caribou. Thank you.

Thank you.

Thank you. Your next question comes from John Tumazos of John Tumazos, very independent research John . Please go ahead.

Congratulations to everybody on everything.

Thank you John concerning synergies.

Okay.

Could you give us some granularity on the.

Revenue lines.

For example, when the amalgamated Kirk one ores might start going through the Mckesson mill.

Or when upper Beaver ores.

Start going through the whole smell.

Or.

The benefits of the.

Gold getting sold to make revenue.

Over and above the cost savings.

And on all fronts.

Good question, John I am going to ask.

John Robo tie to respond to that.

Hi, gentlemen, thanks.

I can just say to everyone I will.

I continued to serve as I did the last 30, plus here and I'm more than excited with this.

Combined company and the skill set that we bring to the table so far this synergy.

You have to understand that the 8-K, we're not accessible for us at Nicole the past like nickel and now this is really a substantial value creation, we're doing as a near surface shrimp, whilst close by.

<unk> itself, we are expecting 2024.

Early stage and we'll keep you updated moving forward.

And the rate will be near at 40000 ounces.

After 24, it's open for exploration. So it's not limited to what we see and we will need to do more exploration and needs may be.

At the beginning of a long life asset. This is what we'll combine with this you you have to understand that it will also have the positive.

Come on the Neo-latin ADESA and Thats also.

Bring some value to certain part of the risk.

A resource or reserve lower grade that will allow us to process up to my guess so we see the number we provided to you are on the <unk> I will.

Cancer on the low side, but we are very confident.

That will be able to achieve at <unk>.

Early stage for the upper Beaver, we are considering the different option.

To move forward with the shaft sinking considering the merge we have decided to postpone it and reconsider all of the different option. So moving towards the year, we'll be able to update you as well the Dore bar.

But with the negotiation or the contract in place.

We are expecting saving roughly a little bit more than $1 per ounces on the part of.

At this point of time and.

This app to be.

It's done.

So very confident too with working with Mckesson detour and foster available combining the different expertise to achieve what we are seeing that we will achieve and probably more.

Thank you if I could do a follow up.

Okay.

It was in the Securities law.

Could you tell us how you're merging the hockey teams.

And used to win the tournament.

Agnieszka was famous for having <unk> NHL players on their hockey teams.

Yes.

John we used to complain because he will use to hire people based on their hockey skills at one point.

The gold X and.

All the other teams and I think given Finland performance, we're going to be relying on key pillar this year.

Sean are you general manager of the Hockey League in Finland.

Ontario, none of it or all of the above.

I am a Toronto Maple leaf fan and I can't say that too loudly here because theres a lot of Montreal Canadian fans. So certainly are watching the hockey closely and I know the Pittsburgh Penguins their near and Dear to your heart. So we're cheering for them as well.

But I can go on in terms of the band.

As George and I are in.

Mark and explorations still going forward or have they gotten golden bear shoots do we still have the band, Georgia sitting here right across from US and he is nodding he still got the band and Mark's on the line here and he is still very much in the band as well.

Hockey, we got the band and we got gold Alright.

And even still in the band and he turned 70. This weekend. So that shows you how time flies.

Congratulations everybody.

Good health. Thank you. Thank you John Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone you're.

Your next question comes from Tanya <unk> Scotiabank Tanya. Please go ahead.

Yes, hi, good morning, everybody and congrats on yet.

Oh My God.

Yes.

Thank you.

I have a few questions if I could I just wanted to come back to and phosphate.

Cassa.

We're about 5%.

Right.

Longer term guidance and what we were looking for I would say just overall.

Also within the cap that.

Expect then you get into a full rate capacity would that be more in the 2025 range with that.

Something that is doable.

Yes, I think so I think tenure debt.

Probably the right timeframe, maybe maybe sooner than that and the other thing I would say is.

We've talked a little bit about this with fosterville.

Fosterville is a mine that has a lot of gold and then has some.

Jewelry box has some really exceptionally high grade.

Areas, but they're small and they're hard to pick up from the drilling and Thats why you get.

The variability in guidance so.

What I would say is.

It's a hard one to predict.

But what we're trying to do is give a number with a high level of confidence and just given the nature of the ore body.

Sometimes you hit stuff that you couldnt, possibly have have seen from the drill bit.

I'll start.

We have quite a bit from 2024 and this one.

<unk> you know how confident are you in.

And being able to.

Look at the exploration and grades.

Lessen the blow in 2024.

Thanks, Paul.

It is fixable I think but.

We can only give you know what.

What we are.

Our firm on and again.

As Eric mentioned and it's the nature of the ore body.

It's hard it's hard to hit those jewelry box is you almost have to drill.

Of.

Less than five meters apart in some spots so.

I would say it's a good question because it has been such a stellar producer.

I would say that.

We're confident that that's.

A number we're going to hit but there is upside.

To that end, we're working hard tenure and we're spending a lot of money on the drilling with people who know what theyre doing.

But at this point.

I can only give the information based on what we've got.

Andy just coming to some shorter term guidance.

Just two things one is just on the G&A guidance, yes. It was a lot higher than we were expecting just wondering in that guidance, whether you have some severance packages in there and whether we should look at and have a different run rate.

Half a sandwich packages in there.

Yes, we are.

They are running a little higher than we even we anticipated and some of that is.

Frankly, a lot of Thats good work from Dave Smith team.

On that.

We haven't gone through.

As Fulsome review of head count as you might think at this point, we're still working on that.

So I.

I guess.

It doesn't have the.

Severance, but it also doesn't have the savings associated with that yet.

Okay. So we should think about sovereign sits on top of that are making Q1.

Report.

Yes.

Yes.

Organizational structure I, just wanted to you talked about having.

Looking at people positioning in the short term and not having everything done.

I just wanted to see whether you have made all of the changes that you need to make.

The critical people in the critical spots right now.

Are we expecting more changes.

We have the critical people in the critical spots and again on the on the G&A just to be clear I think we're going to be able to well surpassed the $35 million target that we've said it'll take a little bit of time.

But we think we're going to get there, but we do we do have the critical team set up and again as you can see from the names on the list there are very high quality people.

<unk> got a lot of experience.

As we look to the year.

Just give us.

Some guidance from the operational side, how we should look at quarterly.

Outlook. It appears that Q1 is going to be weak, but I just would like to understand how the year develops but I'll, let you define assets now.

Q1 is going to be the weakest on thank you for raising that.

I wanted to mention that Q1 is going to be the weakest.

And strengthen.

During the year so Q1.

Partly that sequencing, but partly it's because of COVID-19 .

That was still lingering primarily in the first half of January but again to be sure. We're we're past most of it now, but I do want to say and Dave Smith asked me to remind everybody.

We're hoping we're through Covid.

We're always going to put the safety of our people and communities first.

And we're confident with the numbers.

But it would be disingenuous to say that there is zero risk of Covid going forward, it's still something that that is out there.

I have a bit more clarity Q1, the weakness in Q4 are the strongest are once we get to Q1 or all the other quarters evenly distributed just a little bit market.

It's more evenly distributed.

The last three quarters.

Okay perfect.

And then my last question is and I know I'm pushing this.

Hi, Sean.

At what point do you think.

You will be ready to get longer term guidance beyond the three area. He is Kevin what do you need to see before you then any comfortable to get let's say five or longer term guidance beyond that.

Well, it's never Daniel Youre never pushing it and we always appreciate.

Your time and comments.

I think the simple answer is we'll give five year confidence guidance when we have.

Enough confidence to do that without variability I mean, it is a it is a business thats variable that said I think probably more than most of our peers. We have mines that have been around that our study that are operating well.

That's something we think about every year.

But we will get the detour plan in the middle of the year.

As I mentioned this year, it's about stabilizing some of the operations.

Upper Beaver the whole Kirkland Lake District, So theres, a lot going on and also $325 million of exploration in regions, where we're already operating so.

We're going to work aggressively to build the pipeline.

And we will give.

Five year guidance.

To the extent that.

We think.

It makes sense.

Part of that thank you so much <unk>.

It's a pleasure. Thank you Tony and thank you for the nice words, and I think with that we're out of time.

So thank you everyone.

This is my inaugural call I'm delighted and thank you for your patients have a great day and be safe.

Yes.

Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Okay.