Three-Year Guidance Outlines Growing Production with Stable to Declining Unit Costs; Meliadine Mill Commissioning Underway with Project Ahead of Schedule and Under Budget; Year-over-Year
Stock Symbol: AEM (NYSE and TSX)
For further information: Investor Relations (416) 947-1212
(All amounts expressed in U.S. dollars unless otherwise noted)
AGNICO EAGLE REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS - THREE-YEAR GUIDANCE OUTLINES GROWING PRODUCTION WITH STABLE TO DECLINING UNIT COSTS; MELIADINE MILL COMMISSIONING UNDERWAY WITH PROJECT AHEAD OF SCHEDULE AND UNDER BUDGET; YEAR-OVER-YEAR INCREASE IN MINERAL RESERVES AND MINERAL RESOURCES; QUARTERLY DIVIDEND INCREASED
Toronto (February 14, 2019) – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net loss of $393.7 million, or a loss of $1.68 per share, for the fourth quarter of 2018. This result includes impairment losses of $389.7 million ($1.66 per share), non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments of $14.4 million ($0.06 per share), losses due to change of reclamation estimates relating to closed sites (net of tax) of $12.4 million ($0.05 per share), derivative losses on financial instruments, mark-to-market and other adjustments of $8.3 million ($0.04 per share) and non-cash foreign currency translation losses of $2.7 million ($0.01 per share). Excluding these items would result in adjusted net income1 of $33.8 million or $0.14 per share for the fourth quarter of 2018. For the fourth quarter of 2017, the Company reported net income of $37.5 million or $0.16 per share.
The impairment losses of $389.7 million ($1.66 per share) include an impairment of goodwill relating to the Canadian Malartic mine of $250.0 million ($1.07 per share), an asset impairment relating to the El Barqueno project of $100.7 million ($0.43 per share) and an impairment of goodwill relating to the La India mine of $39.0 million ($0.16 per share).
Included in the fourth quarter of 2018 net income, and not adjusted above, is non-cash stock option expense of $3.9 million ($0.02 per share).
1 Adjusted net income is a non-GAAP measure. For a discussion regarding the Company's use of non- GAAP measures, please see "Note Regarding Certain Measures of Performance".
For the full year 2018, the Company reported net loss of $326.7 million, or a loss of $1.40 per share. This compares with the full year 2017, when net income was $240.8 million, or $1.05 per share.
In the fourth quarter of 2018, cash provided by operating activities was $140.3 million ($150.4 million before changes in non-cash components of working capital), as compared with the fourth quarter of 2017 when cash provided by operating activities was $166.9 million ($209.5 million before changes in non-cash components of working capital).
For the full year 2018, cash provided by operating activities was $605.7 million ($645.5 million before changes in non-cash components of working capital), as compared with the full year 2017 when cash provided by operating activities was $767.6 million ($839.4 million before changes in non-cash components of working capital).
The decrease in cash provided by operating activities during the fourth quarter of 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower realized gold prices, lower by-product revenue and expected higher costs at several operations, principally at LaRonde, Meadowbank and the Company's Mexican operations. Lower gold sales were mainly as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site.
The decrease in cash provided by operating activities for the full year 2018 compared to the prior year period was mainly due to lower gold sales volumes, lower by-product revenue and expected higher costs at several operations, principally at Meadowbank, Kittila and the Company's Mexican operations, partially offset by slightly higher realized gold prices. Lower gold sales were largely as a result of the expected lower gold production in the period primarily due to reduced throughput levels at Meadowbank as described above.
"From an operational standpoint, 2018 was another strong year as we exceeded production forecasts at lower than expected unit costs for a seventh consecutive year while growing gold reserves and successfully advancing our Nunavut development projects", said Sean Boyd, Agnico Eagle's Chief Executive Officer. "With the start of new operations at both Meliadine and Amaruq this year, we anticipate record gold production in 2019 with further production growth in 2020 and beyond. This growing production platform should result in increased cash flow allowing us to advance our project pipeline, reduce debt and increase dividends", added Mr. Boyd.
Fourth quarter of 2018 and full year 2018 highlights include:
- Strong quarterly operational performance; annual gold production and costs better than forecast for seventh consecutive year - Payable gold production2 in
2 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
the fourth quarter of 2018 was 410,712 ounces at production costs per ounce of $693, total cash costs per ounce3 of $608 and all-in sustaining costs per ounce4 ("AISC") of $852. Payable gold production for the full year 2018 was 1,626,669 ounces at production costs per ounce of $713, with total cash costs per ounce of $637, compared to the most recent guidance of 1,600,000 ounces of gold at total cash costs per ounce of $650. AISC for the full year 2018 were $877, compared to the most recent guidance of $915 per ounce
- Increased gold production guidance in 2019 with further gold production growth forecast through 2021 - The gold production forecast for 2019 is now 1.75 million ounces, compared to the most recent guidance of 1.70 million ounces. The mid-point of gold production guidance for 2020 is unchanged at 2.0 million ounces, and the mid-point of gold production guidance for 2021 is 2.05 million ounces
- Unit costs expected to be stable to declining through 2021 as gold production increases - In 2019, total cash costs per ounce are forecast to be between $620 and $670 and AISC are forecast to be between $875 and $925 per ounce as the Nunavut business transitions from the Meadowbank deposit to Amaruq and Meliadine. With much higher gold production expected in 2020, total cash costs per ounce are forecast to decline to between $600 and $650, while AISC are forecast to decline to between $840 and $890 per ounce. The Company expects total cash costs per ounce and AISC to decline further in 2021
- Meliadine project ahead of schedule and under budget with commissioning of
the mill now underway; Amaruq project remains on track for production start- up in the third quarter of 2019 - Commercial production at Meliadine is now expected to be achieved early in the second quarter of 2019 (compared to previous guidance of late in the second quarter of 2019). Development activities at Amaruq are progressing as planned. Open pit mining has commenced at the Whale Tail pit and commissioning of the long-haul truck fleet is underway
- Year over year increase in gold reserves and average grade - 2018 gold mineral reserves, net of 2018 gold production, increased by 7% to 22.0 million ounces of gold (254 million tonnes grading 2.70 grams per tonne ("g/t") gold), while the gold reserve grade increased by approximately 8% from the previous year. A large portion of the increase comes from LaRonde 3, the Kittila shaft expansion, the acquisition of the remaining 50% interest in the Kirkland Lake assets and a new open pit mine plan at Amaruq. Gold contained in measured and indicated mineral resources and inferred
3 Total cash costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a byproduct basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
4 All-in-sustaining costs per ounce is a non-GAAP measure and, unless otherwise specified, is reported on a by-product basis. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance".
mineral resources increased by 9% and 19%, respectively; however, the grades of these mineral resources decreased as high grade resources were transferred to mineral reserves in 2018
- Dividend increased by 14% - A quarterly dividend of $0.125 per share has been declared. The previous quarterly dividend was $0.11 per share.
- Exploration Continues to Focus on Organic Growth Opportunities
- Meliadine drilling extends Tiriganiaq mineralized zones - Drilling has encountered mineralization outside the known mineral resource areas. Highlights include: 29.1 g/t gold over 3.8 metres at 626 metres depth and 40.0 g/t gold over 2.8 metres at 748 metres depth. These new areas are expected to increase inferred mineral resources in 2019 with additional diamond drilling
- Amaruq drilling enhances open pit mineral reserves and underground potential - Drilling has resulted in the addition of 0.5 million ounces of gold reserves at open pit depths. Exploration also continued to demonstrate the extension of high-grade mineralization below the proposed open pits at both the Whale Tail and V Zone deposits. At Whale Tail, drilling intersected up to 11.3 g/t gold over 8.1 metres at 278 metres depth, while drilling at V Zone encountered up to 27.4 g/t gold over 6.4 metres at 613 metres depth. The Company continues to evaluate the potential for an underground operation at Amaruq, which could run partially concurrent with the open pit mine that is currently under development
- Initial mineral resources declared at Santa Gertrudis; exploration outlines high-grade mineralization and potential for growth - Drilling in 2018 outlined an initial inferred mineral resource of 962,000 ounces of gold (27.5 million tonnes grading 1.09 g/t gold). In addition, drilling outlined high-grade mineralization with values of up to 12.1 g/t gold over 5.1 metres at 99 metres depth and 9.7 g/t gold over 15.0 metres at 33 metres depth. Work in 2019 will focus on expanding the mineral resources, testing the extensions of the high-grade structures and evaluating the economic potential of the project
Fourth Quarter and Full Year 2018 Financial and Production Highlights
In the fourth quarter of 2018, strong operational performance continued at the Company's mines, which led to payable gold production of 410,712 ounces, compared to 413,212 ounces in the fourth quarter of 2017. For the full year 2018, payable gold production was 1,626,669 ounces, compared to 1,713,533 ounces in the prior-year period.
The lower level of gold production in the fourth quarter of 2018 and the full year 2018, when compared with the prior-year periods, was expected and primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site. A detailed description of the production at each mine is set out below.
Production costs per ounce in the fourth quarter of 2018 were $693, compared to $697 in the prior-year period. Total cash costs per ounce in the fourth quarter of 2018 were $608, compared to $592 in the prior-year period.
Production costs per ounce for the full year 2018 were $713, compared to $621 in the prioryear period. Total cash costs per ounce for the full year 2018 were $637, compared to $558 in the prior-year period.
Production costs per ounce and total cash costs per ounce in the fourth quarter of 2018 and the full year 2018, when compared to the prior-year periods, were negatively affected by lower gold production levels at Meadowbank and higher costs at several mines, partially offset by the weakening of local currencies against the U.S. dollar. In addition, total cash costs per ounce were negatively affected by lower by-product revenues.
AISC in the fourth quarter of 2018 were $852 per ounce, compared to $905 in the prior-year period. The lower AISC when compared to the prior-year period is primarily due to lower sustaining costs, partially offset by expected lower gold production and higher total cash costs per ounce compared to the fourth quarter of 2017.
AISC for the full year 2018 were $877 per ounce, compared to $804 in the prior-year period. The higher AISC when compared to the prior-year period is primarily due to expected lower gold production and higher total cash costs per ounce, partially offset by lower sustaining costs. A detailed description of the cost performance of each mine is set out below.
In the fourth quarter of 2018, a total impairment loss of $389.7 million was incurred in connection with an impairment review performed under International Financial Reporting Standards ("IFRS"). After more than four years of strong operational performance at Canadian Malartic, an impairment loss relating to goodwill of $250.0 million was realized in the quarter as goodwill is not amortized over the life of mine under IFRS. The Company continues to see encouraging drill results at the East Malartic and Odyssey projects with drilling ongoing to extend and upgrade the mineral resources in these zones.
Although the El Barqueno project continues to have geological potential, an asset impairment of $100.7 million was realized in the quarter as current development studies indicate that the project does not meet the Company's investment criteria. As a result, the carrying value of the property has been reduced while exploration activity continues in 2019.
The La India mine has been in operation since 2014 and as a result an impairment loss relating to goodwill of $39.0 million was realized in the quarter as goodwill is not amortized under IFRS. Exploration is ongoing to discover and expand other satellite zones similar to El Cochi and El Realito (which each declared initial mineral reserves at December 31, 2018).
Liquidity and Hedges - Existing Cash and Undrawn Credit Facility Provide Financial Flexibility
The Company continues to maintain its investment grade balance sheet and has sufficient financial flexibility to finance currently planned capital requirements at its various mines and development projects from operating cash flow, cash and cash equivalents, short term investments and undrawn credit lines.
Cash and cash equivalents and short-term investments decreased to $307.9 million at December 31, 2018, from the September 30, 2018 balance of $533.4 million, as a result of capital spending primarily at the Company's Nunavut projects.
The outstanding balance on the Company's credit facility remained nil at December 31, 2018. This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.
On December 14, 2018, the Company amended its $1.2 billion credit facility to extend the maturity date from June 22, 2022 to June 22, 2023.
Approximately 40% of the Company's 2019 Canadian dollar exposure is hedged at an average floor price of approximately 1.29 C$/US$. Approximately 50% of the Company's 2019 Mexican peso exposure is hedged at an average floor price of approximately 19.00 MXP/US$. Approximately 15% of the Company's 2019 Euro exposure is hedged at an average floor price of approximately 1.17 US$/EUR. The Company's full year 2019 cost guidance is based on assumed exchange rates of 1.28 C$/US$, 18.00 MXP/US$ and 1.18 US$/EUR. The Company anticipates adding to its operating currency hedges, subject to market conditions.
Approximately 40% of the Company's diesel exposure relating to its Nunavut operations for the July 2019 to July 2020 consumption period is hedged at prices better than the 2019 cost guidance assumption of C$0.85 per litre (excluding transportation costs). The Company anticipates adding to its diesel hedges, subject to market conditions.
Capital Expenditures
Total capital expenditures (including sustaining capital) for the full year 2018 were $1.07 billion, compared to guidance of $1.08 billion. The following table sets out capital expenditures (including sustaining capital) in the fourth quarter and the full year 2018.
Capital Expenditures (In thousands of US dollars)
Three Months Ended Twelve Months Ended December 31, 2018 December 31, 2018 Sustaining Capital
| LaRonde mine | $ 20,278 $ | 67,314 |
| LaRonde Zone 5 | 917 | 3,058 |
| Canadian Malartic mine | 7,998 | 50,860 |
| Meadowbank mine | — | 14,876 |
| Kittila mine | 16,384 | 54,331 |
| Goldex mine | 6,308 | 21,477 |
| Pinos Altos mine | 12,193 | 35,070 |
| Creston Mascota mine | 1,520 | 4,167 |
| La India mine | 1,923 | 7,345 |
| Total Sustaining Capital | $ 67,521 $ | 258,498 |
Development Capital
| LaRonde mine | $ 3,031 $ | 10,174 |
| LaRonde Zone 5 | 1,691 | 21,418 |
| Canadian Malartic mine | 13,073 | 31,973 |
| Amaruq satellite deposit | 50,480 | 171,277 |
| Amaruq underground ramp | 7,500 | 16,200 |
| Kittila mine | 41,995 | 119,373 |
| Goldex mine | 7,618 | 31,380 |
| Pinos Altos mine | 3,463 | 5,227 |
| Creston Mascota mine | 412 | 15,333 |
| La India mine | 211 | 1,852 |
| Meliadine project | 91,884 | 388,736 |
| Other | 1,032 | 3,135 |
| Total Development Capital | $ 222,390 $ | 816,078 |
| Total Capital Expenditures | $ 289,911 $ | 1,074,576 |
Quarterly Dividend Increased by 14%
Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.125 per common share, payable on March 15, 2019 to shareholders of record as of March 1, 2019. Agnico Eagle has now declared a cash dividend every year since 1983.
Expected Dividend Record and Payment Dates for 2019
| Record Date | Payment Date |
| March 1* | March 15* |
| May 31 | June 14 |
| August 30 | September 16 |
| November 29 | December 16 |
*Declared
Dividend Reinvestment Plan
Please see the following link for information on the Company's dividend reinvestment plan: Dividend Reinvestment Plan
Fourth Quarter 2018 Results Conference Call and Webcast Tomorrow
Agnico Eagle's senior management will host a conference call on Friday, February 15, 2019 at 11:00 AM (E.S.T.) to discuss the Company's fourth quarter and full year financial and operating results.
Via Webcast:
A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 1-647-427-7450 or toll-free 1-888-231-8191. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Replay Archive:
Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 1796279. The conference call replay will expire on Friday, March 15, 2019.
The webcast along with presentation slides will be archived for 180 days on the Company's website.
New Three-Year Guidance - Forecast Shows Production Growth Through 2021
The Company is announcing its detailed production and cost guidance for 2019, and mine by mine production forecasts for 2019 through 2021. Gold production in 2019 is now forecast to be 1.75 million ounces (the mid-point of the previous guidance was 1.7 million ounces). Given the expected start up and expansions at several operations, the Company is providing a range of gold production guidance for 2020 and 2021. Gold production in 2020 is now forecast to be between 1.96 million and 2.04 million ounces (mid-point of 2.0 million ounces), which compares to previous guidance of between 1.95 and 2.05 million ounces (mid-point of 2.0 million ounces). Gold production guidance in 2021 is forecast to be between 2.01 million and 2.09 million ounces (mid-point of 2.05 million ounces).
The increased gold production guidance for 2019 is primarily due to advancing the expected start-up of commercial production at Meliadine to early in the second quarter of 2019 (previously the end of the second quarter of 2019), and a slight increase in gold production at Meadowbank (due to extended mining activities and the processing of stockpiles).
Total cash costs per ounce in 2019 are expected to be between $620 and $670 using a C$/US$ foreign exchange rate assumption of 1.28. Despite general industry cost pressures (primarily energy and labour), the Company expects a similar total cash cost per ounce for 2019 as compared to 2018. At all mine sites, the Company is focused on reducing costs and beating the inflation rate through productivity improvements and innovation initiatives. In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, total cash costs per ounce are forecast to decline to between $600 and $650, largely due to higher gold production volumes. The Company expects total cash costs per ounce to decline further in 2021 based on the same foreign exchange rate assumption.
AISC for 2019 are expected to be between $875 and $925 per ounce. In 2020, using a C$/US$ foreign exchange rate assumption of 1.28, AISC are forecast to decline to between $840 and $890 per ounce, largely due to higher gold production. The Company expects AISC to decline further in 2021 based on the same foreign exchange rate assumption.
In 2019, the Company expects to have four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex, which includes the Amaruq satellite deposit) each with annual production rates of approximately 250,000 to 400,000 ounces of gold. In addition, at Kittila, with the ongoing expansion, annual gold production in 2021 and beyond is expected to increase by approximately 25-30% over current levels, to more than 250,000 ounces as new sources of ore are developed underground.
With the construction of the Meliadine and Amaruq projects, 2018 was a peak year for development capital spending. With both of these projects expected to achieve commercial production in 2019, development capital spending is forecast to decline significantly. At budget assumptions for the gold price and foreign exchange rates ($1,225 per ounce of gold, 1.28 C$/US$, 1.18 US$/EUR, 18.00 MXP/US$), the Company is forecasting a return to free cash flow generation in the second half of 2019.
Using the budget assumptions described above, total capital expenditures are forecast to be approximately $660 million in 2019. Annual sustaining capital expenditures (included in the above) for 2019 and beyond are expected to remain stable at approximately $300 to $325 million. Based on the extensive list of high quality development growth opportunities, which are set out below, and depending on prevailing gold prices and the timing of project approvals, the Company expects that total future growth and sustaining capital expenditures in 2020 and 2021 could be in the range of $500 to $700 million per year.
Near-Term Potential to Increase Life of Mine Production (2021 to 2023)
The Company is evaluating several potential opportunities (none of which has yet been approved for construction, with the exception of the construction of the new Kittila shaft) at a number of existing operations to build further value and enhance the gold production profile in 2021 and beyond. These opportunities are set out in the table below with certain projects discussed in more detail below.
| Minesite/Region | Opportunity |
| LaRonde Complex | Evaluating phased development of LaRonde 3 (located below a depth of 3.1 kilometres) where recent drilling has resulted in significant mineral resource conversion. In addition, other production opportunities such as Bousquet 11-3 are also being evaluated |
| LaRonde Zone 5 ("LZ5") | Potential to mine additional ounces from LZ5 and other nearby satellite zones |
| Goldex | Potential for increased throughput from Deep Zone 1 and potential for advanced development of Deep Zone 2. Also potential for increased gold production from the South Zone and Akasaba West |
| Canadian Malartic (50%) | Potential production from Odyssey and East Malartic underground zones |
| Meadowbank Complex | Potential to develop the higher grade underground deposits at Amaruq |
| Meliadine | Advancement of Phase 2 pit implementation and testing the depth and lateral extensions of the Wesmeg, Normeg and Tiriganiaq zones |
| Kittila | Expansion to 2.0 million tonnes per annum ("mtpa"), including optimization of the Rimpi and Sisar zones via the new shaft currently under construction |
| Pinos Altos/Creston Mascota | Potential development of the Cubiro, and Reyna de Plata satellite zones. |
| La India | Potential development of the El Realito and El Cochi satellite zones |
Drilling is ongoing at LaRonde 3, with a focus on mineral resource to mineral reserves conversion. At year-end 2018, approximately 800,000 ounces of gold (3.2 million tonnes grading 7.9 g/t gold) were converted to mineral reserves at LaRonde 3. The Company continues to evaluate a phased approach to development between level 311 (a depth of 3.1 kilometres) and level 340 (a depth of 3.4 kilometres). The Company is also studying the best design approaches to LaRonde 3 and the current western pyramid with consideration of potential seismic risk and ventilation requirements in the deeper portion of the mine.
Work is underway at Amaruq to evaluate the potential for an underground operation, which could run partially concurrent with the open pit mine that is currently under development. Preliminary evaluation work suggests the potential to selectively mine higher grade portions of the underground mineral resources (approximately 1.0 million ounces of gold) from 2022 through 2028.
There may also be potential to mine the bottom of the Whale Tail open pit from underground, which would provide quicker access to higher grades and reduce overall stripping costs. Underground ramp development is ongoing and the permitting process for open pit mining activities at the V Zone and underground commenced on October 15, 2018, with issuance of the permit expected in late 2020.
At present, the Amaruq underground deposit contains indicated mineral resources of 676,000 ounces of gold (4.6 million tonnes grading 4.56 g/t gold) and inferred mineral resources of 1.95 million ounces of gold (11.7 million tonnes grading 5.19 g/t gold). Drilling is ongoing to expand and upgrade these mineral resources. A production decision for the Amaruq underground project is expected to be made later this year.
At Canadian Malartic, the Canadian Malartic General Partnership (the "Partnership") is evaluating the potential for underground mining of the Odyssey and East Malartic deposits from surface to a depth of 600 metres. These deposits could provide higher grade tonnes that could potentially supplement open pit production at Canadian Malartic. On a 50% basis, Odyssey contains inferred mineral resources of 809,000 ounces of gold (11.5 million tonnes grading 2.19 g/t gold); and East Malartic has indicated mineral resources of 361,000 ounces gold (5.3 million tonnes grading 2.13 g/t gold) and inferred mineral resources of 1.4 million ounces of gold (22.0 million tonnes grading 1.98 g/t gold). Drilling is ongoing to extend and upgrade the mineral resources in these zones. The permit and Certificate of Authorization was received in December 2018, which allows for the development of an underground ramp at Odyssey .
At Goldex, the Company continues to evaluate the potential for the development of the Deep 2 Zone which hosts mineral reserves of 79,000 ounces of gold (1.4 million tonnes grading 1.7 g/t gold), indicated mineral resources of 159,000 ounces of gold (2.0 million tonnes grading 2.47 g/t gold) and inferred mineral resources of 303,000 ounces of gold (8.2 million tonnes grading 1.15 g/t gold). In addition, mining activities have commenced in the South Zone, which contains mineral reserves of 10,000 ounces of gold (89,000 tonnes grading 3.38 g/t gold), indicated mineral resources of 73,000 ounces of gold (555,000 tonnes grading 4.09 g/t gold) and inferred mineral resources of 243,000 ounces of gold (1.4 million tonnes grading 5.41 g/t gold). Future exploration is expected to focus on the conversion of portions of the above mineral resources into mineral reserves.
Development of the Akasaba West open pit has been postponed until 2021 based on the prioritization of development capital spending. Akasaba West contains mineral reserves of 147,000 ounces of gold and 25,800 tonnes of copper (5.4 million tonnes grading 0.84 g/t gold and 0.48% copper) and is expected to contribute approximately 20,000 ounces of gold per year to the Goldex production profile once in production.
An expansion is underway at Kittila to increase throughput rate to 2.0 mtpa from the current rate of 1.6 mtpa. This expansion includes the construction of a 1,044-metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades over a period from 2018 to 2021.
The expansion project is expected to result in a 50,000 to 70,000 ounce annual increase in gold production with reduced operating costs starting in 2021. In addition, the shaft is expected to provide access to the mineral resources located below 1,150 metres depth, where recent exploration programs have shown promising results.
Development Pipeline Expected to Provide Further Production Growth Beyond 2023
Agnico Eagle has a strong pipeline of development projects that could provide further gold production growth beyond 2023. These opportunities are typically at an earlier stage than those outlined above. A summary of the longer-term opportunities is presented in the following table with certain projects discussed in further detail below.
| Minesite/Region | Opportunity |
| Goldex | Evaluation of the Deep 3 Zone (below 1,500 metres) |
| Canadian Malartic (50%) | Evaluation of the potential for production from deeper portions of the Odyssey and East Malartic underground zones |
| Kittila | Further optimization of underground mine and development of the lower mine with shaft access |
| Meadowbank Complex | Continued evaluation of the regional potential at Amaruq |
| Meliadine | Further drill testing of known zones and gold occurrences on the 80- kilometre-long greenstone belt |
| Barsele | Testing additional mineralized zones and evaluation of production potential |
| Santa Gertrudis | Evaluation of known mineralized trends with a view to potentially restart operations at this past producing heap leach mine |
| Kirkland Lake | Potential production scenario at Upper Beaver and potential synergies from development of other properties such as Upper Canada |
| Hammond Reef | Potential for production in a higher gold price environment |
In the Kirkland Lake camp in Ontario, the Company is evaluating potential development strategies. One scenario under evaluation is to develop the Upper Beaver deposit as a stand-alone operation, which could have potential synergies with the LaRonde operations given its copper content. Upper Beaver has mineral reserves of 1.4 million ounces of gold and 20,000 tonnes of copper (8.0 million tonnes grading 5.43 g/t gold and 0.25% copper), indicated mineral resources of 403,000 ounces of gold and 5,000 tonnes of copper (3.6 million tonnes grading 3.45 g/t gold and 0.14% copper) and inferred mineral resources of 1.4 million ounces of gold and 17,000 tonnes of copper (8.7 million tonnes grading 5.07 g/t gold and 0.20% copper).