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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-FooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR ýýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015 Commission file number: 1-13422
AGNICO EAGLE MINES LIMITED (ExactnameofRegistrantasspecifiedinitscharter)
Ontario, Canada 1040 98-0357066(Provinceofotherjurisdictionofincorporationor
organization) (PrimaryStandardIndustrialClassificationCodeNumber) (I.R.S.EmployerIdentificationNumber)
145 King Street East, Suite 400 Toronto, Ontario, Canada M5C 2Y7
(416) 947-1212 (AddressandtelephonenumberofRegistrant'sprincipalexecutiveoffices)
Davies Ward Phillips & Vineberg LLP 900 Third Avenue, 24th Floor, New York, New York 10022
Attention: Scott D. Fisher (212) 588-5500
(Name,address(includingzipcode)andtelephonenumber(includingareacode)ofagentforserviceintheUnitedStates)
SecuritiesregisteredortoberegisteredpursuanttoSection12(b)oftheAct:
Common Shares, without parvalue
New York Stock Exchange
(TitleofClass) (Nameofexchangeonwhichregistered)
SecuritiesregisteredortoberegisteredpursuanttoSection12(g)oftheAct:None
(TitleofClass)
SecuritiesforwhichthereisareportingobligationpursuanttoSection15(d)oftheAct:None
(TitleofClass)
Forannualreports,indicatebycheckmarktheinformationfiledwiththisForm:
ýAnnualinformationformýAuditedannualfinancialstatements
Indicatethenumberofoutstandingsharesofeachoftheissuer'sclassesofcapitalorcommonstockasofthecloseoftheperiodcoveredbytheannualreport.
218,028,368CommonSharesasofDecember31,2015
Indicateby check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports)and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.
YesýNoo
IndicatebycheckmarkwhethertheRegistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedand posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theRegistrantwasrequiredtosubmitandpostsuchfiles).
YesoNoo
EXPLANATORY NOTE
AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isaCanadianissuereligibletofileitsannualreportpursuanttoSection13oftheSecuritiesExchangeActof1934,asamended(the"ExchangeAct"),onForm40-Fpursuanttothemulti-jurisdictionaldisclosuresystemoftheExchangeAct.TheCompanyisa"foreignprivateissuer"asdefinedinRule405undertheSecuritiesActof1933,asamended.EquitysecuritiesoftheCompanyareaccordinglyexemptfromSections14(a),14(b),14(c),14(f)and16oftheExchangeActpursuanttoRule3a12-3.
FORWARD-LOOKING INFORMATION
This Annual Report on Form 40-F and the exhibits attached hereto (the "Form 40-F") contain "forward-looking statements" within the meaning of theUnited States Private Securities Litigation ReformAct of 1995. These statements relate to, among other things, the Company's plans, objectives, expectations,estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "anticipate", "believe", "budget", "could", "estimate","expect","forecast","intend","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisForm40-Finclude,butarenotlimitedto,thefollowing:
• theCompany'soutlookfor2016andfutureperiods;
• statementsregardingfutureearnings,andthesensitivityofearningstogoldandothermetalprices;
• anticipated levels or trends for prices of gold and by-product metals mined by the Companyor for exchange rates betweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;
• estimatesoffuturemineralproductionandsales;
• estimates of future costs, including mining costs, total cash costs per ounce, all-in sustaining costs per ounce, minesite costs per tonne andothercosts;
• estimatesoffuturecapitalexpenditures,explorationexpendituresandothercashneeds,andexpectationsastothefundingthereof;
• statements regarding the projected exploration, development and exploitation of certain ore deposits, including estimates of exploration,developmentandproductionandothercapitalcostsandestimatesofthetimingofsuchexploration,developmentandproductionordecisionswithrespectthereto;
• estimatesofmineralreservesandmineralresourcesandtheirsensitivitiestogoldpricesandotherfactors,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;
• estimatesofcashflow;
• estimatesofminelife;
• anticipatedtimingofeventswithrespecttotheCompany'sminesites,minedevelopmentprojectsandexplorationprojects;
• estimatesoffuturecostsandotherliabilitiesforenvironmentalremediation;
• statements regarding anticipated legislation and regulations, including with respect to climate change, and estimates of the impact on theCompany;and
• otheranticipatedtrendswithrespecttotheCompany'scapitalresourcesandresultsofoperations.
Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisForm40-Farebased,andwhichmayprovetobeincorrect,includetheassumptionssetoutelsewhereinthis Form40-F as well as: that there are no significant disruptions affectingAgnico Eagle's operations, whether due to labour disruptions, supply disruptions,damageto equipment, natural or man-madeoccurrences, miningor milling issues, political changes, title issues orotherwise; that permitting, development andexpansionateachofAgnicoEagle'sminesandminedevelopment
projectsproceedonabasisconsistentwithexpectations,andthatAgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheU.S.dollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisForm40-F;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations;thatproductionmeetsexpectations;thatAgnicoEagle'scurrentestimatesofmineralreserves, mineral resources, mineral grades and mineral recoveries are accurate; that there are no material delays in the timing for completion of developmentprojects;andthattherearenomaterialvariationsinthecurrenttaxandregulatoryenvironmentthataffectAgnicoEagle.
Theforward-lookingstatementsintheForm40-FreflecttheCompany'sviewsasatthedatehereofandinvolveknownandunknownrisks,uncertaintiesandother factors which could cause the actual results, performance or achievements of the Company or industry results to be materially different fromany futureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutunder"RiskFactors" onpage86of the Company's annual information formfor the year endedDecember 31, 2015, whichis filed as Exhibit 99.1 to this Form40-Fandincorporatedbyreferenceherein(the"AIF").Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisForm40-Fcontainsinformationregardinganticipatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects. TheCompanybelievesthatthesegenerallyacceptedindustry measures are realistic indicators of operating performance and are useful in allowing year over year comparisons. Investors are cautioned that thisinformationmaynotbesuitableforotherpurposes.
CURRENCY
AgnicoEaglepresentsitsconsolidatedfinancialstatementsinUnitedStatesdollars.AlldollaramountsinthisForm40-FarestatedinUnitedStatesdollars("U.S.dollars","$"or"US$"),exceptwhereotherwiseindicated.OnMarch15,2016,thenoonexchangerate(asreportedbytheBankofCanada)ofUnitedStatesdollarsintoCanadiandollars("C$")wasUS$1.00equalsC$1.3359.
NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES
ThemineralreserveandmineralresourceestimatescontainedinthisForm40-FhavebeenpreparedinaccordancewiththeCanadiansecuritiesregulatoryauthorities'(the"CSA")NationalInstrument43-101StandardsofDisclosureforMineralProjects("NI43-101").ThesestandardsaresimilartothoseusedbytheUnitedStatesSecuritiesandExchangeCommission's(the"SEC")IndustryGuideNo.7,asinterpretedbyStaffattheSEC("Guide7").However,thedefinitionsinNI43-101differincertainrespectsfromthoseunderGuide7.Accordingly,mineralreserveinformationcontainedorincorporatedbyreferencehereinmaynotbecomparabletosimilarinformationdisclosedbyU.S.companies.UndertherequirementsoftheSEC,mineralizationmaynotbeclassifiedasa"reserve"unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.TheSECdoesnotrecognizemeasuresof"mineralresource".
Themineralreservefigurespresentedhereinareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicated level of recovery will be realized. The Company does not include equivalent gold ounces for byproduct metals contained in mineral reserves in itscalculationofcontainedounces.
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources
TheForm40-Fusestheterms"measuredmineralresources"and"indicatedmineralresources".Investorsareadvisedthatwhile thosetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or all of mineral deposits in thesecategories will ever be converted into mineral reserves .
Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources
TheForm40-Fusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbe assumedthat any part or all of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or allof an inferred mineral resource exists, or is economically or legally mineable .
NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE
TheForm40-Fpresentscertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce"and"minesitecostspertonne",thatarenotrecognizedmeasuresunderUnitedStatesgenerallyacceptedaccountingprinciples("USGAAP").Thisdatamaynotbecomparabletodatapresentedbyothergoldproducers.ForareconciliationofthesemeasurestothefigurespresentedintheconsolidatedfinancialstatementspreparedinaccordancewithUSGAAP,seethemanagement'sdiscussionandanalysisfortheyearendedDecember31,2015,whichisfiledasExhibit99.3tothisForm40-Fandincorporatedbyreferenceherein(the"AnnualMD&A").TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowing year over year comparisons. However, these non-USGAAPmeasures should be considered together with other data prepared in accordance with USGAAP,andthesemeasures,takenbythemselves,arenotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithUSGAAP.ThisForm40-Falso contains information as to estimated future total cash costs per ounce, all-in sustaining costs per ounce andminesite costs per tonne. Theestimatesoftotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnearebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethattheCompanyexpectstoincurtominegoldatitsprojectsand,consistentwiththereconciliationprovided,donotincludeproductioncostsattributabletoaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-USGAAPfinancialmeasurestothemostcomparableUSGAAPmeasure.
DISCLOSURE CONTROLS AND PROCEDURES
TheCompany'smanagement,withtheparticipationoftheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,evaluatedtheeffectivenessoftheCompany's disclosure controls and procedures as of December 31, 2015 pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating thedisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonableassuranceofachievingthedesiredcontrolobjectives.Inaddition,thedesignofdisclosurecontrolsandproceduresmustreflectthefactthatthereareresourceconstraintsandthatmanagementisrequiredtoapplyitsjudgmentinevaluatingthebenefitsofpossiblecontrolsandproceduresrelativetotheircosts.
Basedonsuchevaluation, theCompany's Chief Executive Officer andChief Financial Officer concludedthat, as of December 31, 2015, the Company'sdisclosurecontrolsandproceduresweredesignedatareasonableassurancelevelandwereeffectivetoprovidereasonableassurancethatinformationtheCompanyis required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the timeperiodsspecifiedinSECrulesandforms,andthatsuchinformationisaccumulatedandcommunicatedtotheCompany'smanagement,includingtheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,asappropriate,toallowtimelydecisionsregardingrequireddisclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
ManagementoftheCompanyisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.Internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,theCompany'sChiefExecutiveOfficerandChiefFinancialOfficerandeffectedbytheCompany'sboard of directors (the "Board"), management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and thepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofuture
periodsaresubjecttoriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
TheCompany'smanagement, includingtheCompany'sChiefExecutiveOfficerandChiefFinancial Officer, assessedtheeffectiveness oftheCompany'sinternal control over financial reporting as of December 31, 2015. In making this assessment, the Company's management used the criteria set out by theCommittee of Sponsoring Organizations of the Treadway Commission in InternalControl —IntegratedFramework . Based uponits assessment, managementconcludedthat,asofDecember31,2015,theCompany'sinternalcontroloverfinancialreportingwaseffective.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2015 has been audited by Ernst & Young LLP, anindependentregisteredpublicaccountingfirm,asstatedinitsattestationreportonpage2oftheCompany'sAnnualAuditedConsolidatedFinancialStatements,whicharefiledasExhibit99.2tothisForm40-Fandincorporatedbyreferenceherein(the"AnnualFinancialStatements").
The Company will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may makemodificationsfromtimetotimeasconsiderednecessaryordesirable.
ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
Ernst&YoungLLP'sattestationreportonmanagement's assessmentoftheCompany'sinternalcontroloverfinancial reportingisfoundonpage2oftheAnnualFinancialStatements.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
ManagementregularlyreviewsitssystemofinternalcontroloverfinancialreportingandmakeschangestotheCompany'sprocessesandsystemstoimprovecontrols and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities asimplementingnew,moreefficientsystems,consolidatingactivities,andmigratingprocesses.
TherewasnochangeintheCompany'sinternalcontroloverfinancialreportingthatoccurredduringtheperiodcoveredbythisForm40-Fthathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theCompany'sinternalcontroloverfinancialreporting.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Board has a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. The AuditCommittee is composed of Dr. Leanne Baker (Chair), Mr. Mel Leiderman, Dr. Sean Riley and Mr. Jamie Sokalsky, as described under "AuditCommittee—CompositionoftheAuditCommittee"onpage104oftheAIF.
AUDIT COMMITTEE FINANCIAL EXPERT
TheBoardhasdeterminedthattheCompanyshallhaveatleastone"auditcommitteefinancialexpert"(asdefinedinparagraph(8)ofGeneralInstructionBtoForm40-F)andthatMr.MelLeidermanandMr.JamieSokalskyaretheCompany's"auditcommitteefinancialexperts"servingontheAuditCommitteeoftheBoard.EachoftheAuditCommitteefinancialexpertsis"independent"underapplicablelistingstandards.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Ernst&YoungLLPservedastheCompany'sindependentpublicaccountantforeachofthefiscalyearsinthetwo-yearperiodendedDecember31,2015.ForadescriptionofthetotalamountbilledtotheCompanybyErnst&YoungLLPforservicesperformedinthelasttwofiscalyearsbycategoryofservice(auditfees,audit-relatedfees,taxfeesandallotherfees),see"AuditCommittee—ExternalAuditorServiceFees"onpage105oftheAIF.Noaudit-relatedfees,taxfeesorothernon-auditfeeswereapprovedbytheAuditCommitteepursuanttoparagraph(c)(7)(i)(C)ofRule2-01ofRegulationS-X.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
For a description of the pre-approval policies and procedures of the Company's Audit Committee, see "Audit Committee —Pre-Approval Policies andProcedures"onpage104oftheAIF.
CODE OF ETHICS
TheCompanyhasa"codeofethics"(asdefinedinparagraph(9)ofGeneralInstructionBtoForm40-F)that appliestoitsChiefExecutiveOfficer,ChiefFinancialOfficer,principalaccountingofficer,controllerandpersonsperformingsimilarfunctions.TheCompany'scodeofethicsisavailableontheCompany'swebsiteatwww.agnicoeagle.comor,withoutcharge,uponrequestfromtheCorporateSecretary,AgnicoEagleMinesLimited,Suite400,145KingStreetEast,Toronto,OntarioM5C2Y7(telephone416-947-1212).
OFF-BALANCE SHEET ARRANGEMENTS
Notapplicable.
CONTRACTUAL OBLIGATIONS
FortabulardisclosureoftheCompany'scontractualobligations,seepage14oftheAnnualMD&Aundertheheading"LiquidityandCapitalResources".
MINE SAFETY DISCLOSURE
Notapplicable.
CORPORATE GOVERNANCE
TheCompanyissubjecttoavarietyofcorporategovernanceguidelinesandrequirementsenactedbytheTorontoStockExchange(the"TSX"),theCanadiansecuritiesregulatoryauthorities,theNewYorkStockExchange(the"NYSE")andtheSEC.TheCompanyislistedontheNYSEand,althoughtheCompanyisnotrequired to comply with most of the NYSE corporate governance requirements to which the Company would be subject if it were a U.S. corporation, theCompany's governancepractices differ fromthose required of U.S. domestic issuers in only the following respects. The NYSErules for U.S. domestic issuersrequireshareholderapprovalofallequitycompensationplans(asdefinedintheNYSErules)regardlessofwhethernewissuances,treasurysharesorsharesthattheCompanyhaspurchasedintheopenmarketareused.TheTSXrulesrequireshareholderapprovalofsharecompensationarrangementsinvolvingnewissuancesofshares,andofcertainamendmentstosucharrangements,butdonotrequiresuchapprovalifthecompensationarrangementsinvolveonlysharespurchasedintheopenmarket.TheNYSErulesforU.S.domesticissuersalsorequireshareholderapprovalofcertaintransactionsorseriesofrelatedtransactionsthatresultintheissuanceofcommonshares, or securities convertible intoor exercisable for commonshares, that have, or will haveuponissuance, votingpowerequal toor inexcessof20%ofthevotingpoweroutstandingpriortothetransactionoriftheissuanceofcommonshares,orsecuritiesconvertibleintoorexercisableforcommonshares,are,orwillbeuponissuance,equaltoorinexcessof20%ofthenumberofcommonsharesoutstandingpriortothetransaction.TheTSXrulesrequireshareholderapprovalofacquisitiontransactionsresultingindilutioninexcessof25%.TheTSXalsohasbroadgeneraldiscretiontorequireshareholderapprovalinconnectionwithanyissuancesoflistedsecurities.TheCompanycomplieswiththeTSXrulesdescribedinthisparagraph.
UNDERTAKING
AgnicoEagleundertakestomakeavailable,inpersonorbytelephone,representativestorespondtoinquiriesmadebytheSECstaff,andtofurnishpromptly,whenrequestedtodosobytheSECstaff,informationrelatingto:thesecuritiesinrelationtowhichtheobligationtofileanannualreportonForm40-Farises;ortransactionsinsaidsecurities.
INCORPORATION BY REFERENCE
This Form40-F, which includes the exhibits filed herewith (other than the section of the AIF entitled "Ratings"), is incorporated by reference into theCompany'sRegistrationStatementsonFormF-3D(registrationno.333-190888)andFormS-8(registrationnos.333-130339and333-152004).EachoftheAIF(otherthanthesectionentitled"Ratings"),theAnnualFinancialStatementsandtheAnnualMD&AisincorporatedbyreferenceasanexhibittotheCompany'sRegistrationStatementonFormF-10(registrationno.333-206498).
EXHIBIT INDEX
Exhibit Description99.1
AnnualInformationFormoftheCompanyfortheyearendedDecember31,2015.
99.2
AnnualAuditedConsolidatedFinancialStatementsoftheCompany,includingthenotesthereto,asatDecember31,2015and2014andforeachoftheyearsinthethree-yearperiodendedDecember31,2015,togetherwiththeauditors'reportthereonandtheauditors'reportoninternalcontroloverfinancialreporting.
99.3
Management'sDiscussionandAnalysisfortheyearendedDecember31,2015.
99.4
CertificationoftheChiefExecutiveOfficerrequiredbyRule13a-14(a)orRule15d-14(a),pursuanttoSection302oftheSarbanes-OxleyActof2002.
99.5
CertificationoftheChiefFinancialOfficerrequiredbyRule13a-14(a)orRule15d-14(a),pursuanttoSection302oftheSarbanes-OxleyActof2002.
99.6
CertificationoftheChiefExecutiveOfficerpursuanttoTitle18,UnitedStatesCode,Section1350asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002.
99.7
CertificationoftheChiefFinancialOfficerpursuanttoTitle18,UnitedStatesCode,Section1350asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002.
99.8
ConsentofIndependentRegisteredPublicAccountingFirm.
99.9
ConsentofDanielDoucet.
99.10
ConsentofDonaldGervais.
99.11
ConsentofLouiseGrondin.
99.12
ConsentofTimHaldane.
99.13
ConsentofPaulCousin.
99.14
ConsentofFrancisBrunet.
99.15
ConsentofDominiqueGirard.
99.16
ConsentofChristianProvencher.
SIGNATURES
PursuanttotherequirementsoftheExchangeAct,theCompanycertifiesthatitmeetsalloftherequirementsforfilingonForm40-Fandhasdulycausedthisannualreporttobesignedonitsbehalfbytheundersigned,theretodulyauthorized.
Toronto,CanadaMarch23,2016
AGNICO EAGLE MINES LIMITED
by /s/DAVIDSMITH
DavidSmithSeniorVice-President,FinanceandChiefFinancialOfficer
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EXPLANATORYNOTEFORWARD-LOOKINGINFORMATIONCURRENCYNOTETOINVESTORSCONCERNINGESTIMATESOFMINERALRESERVESANDMINERALRESOURCESNOTETOINVESTORSCONCERNINGCERTAINMEASURESOFPERFORMANCEDISCLOSURECONTROLSANDPROCEDURESMANAGEMENT'SANNUALREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGATTESTATIONREPORTOFTHEREGISTEREDPUBLICACCOUNTINGFIRMCHANGESININTERNALCONTROLOVERFINANCIALREPORTINGIDENTIFICATIONOFTHEAUDITCOMMITTEEAUDITCOMMITTEEFINANCIALEXPERTPRINCIPALACCOUNTANTFEESANDSERVICESAUDITCOMMITTEEPRE-APPROVALPOLICIESANDPROCEDURESCODEOFETHICSOFF-BALANCESHEETARRANGEMENTSCONTRACTUALOBLIGATIONSMINESAFETYDISCLOSURECORPORATEGOVERNANCEUNDERTAKINGINCORPORATIONBYREFERENCEEXHIBITINDEXSIGNATURES
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Exhibit 99.1
Annual Information Form for the year ended December 31, 2015
Dated as of March 15, 2016
AGNICO EAGLE MINES LIMITED
ANNUAL INFORMATION FORM
Table of Contents
Page INTRODUCTORYNOTES ii
CurrencyandExchangeRates ii
Forward-LookingStatements ii
PresentationofFinancialInformation iv
NotetoInvestorsConcerningEstimatesofMineralReservesandMineralResources iv
NotetoInvestorsConcerningCertainMeasuresofPerformance iv
SELECTEDFINANCIALDATA 1
GLOSSARYOFSELECTEDMININGTERMS 2
CORPORATESTRUCTURE 9
DESCRIPTIONOFTHEBUSINESS 11
GENERALDEVELOPMENTOFTHEBUSINESS 12
OPERATIONSANDPRODUCTION 16
BusinessUnitsandForeignOperations 16
NorthernBusiness 16
SouthernBusiness 59
RegionalExplorationActivities 70
MineralReservesandMineralResources 70
PrincipalProductsandDistribution 83
Employees 83
CompetitiveConditions 83
SustainableDevelopment 83
EmployeeHealthandSafety 84
Community 84
EnvironmentalProtection 85
RISKFACTORS 86
DIVIDENDS 98
DESCRIPTIONOFCAPITALSTRUCTURE 98
RATINGS 98
MARKETFORSECURITIES 99
DIRECTORSANDOFFICERSOFTHECOMPANY 100
Directors 100
Committees 101
Officers 102
ShareholdingsofDirectorsandOfficers 103
CeaseTradeOrders,Bankruptcies,PenaltiesorSanctions 103
ConflictsofInterest 104
AUDITCOMMITTEE 104
CompositionoftheAuditCommittee 104
RelevantEducationandExperience 104
Pre-ApprovalPoliciesandProcedures 104
ExternalAuditorServiceFees 105
LEGALPROCEEDINGSANDREGULATORYACTIONS 105
INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS 106
TRANSFERAGENTANDREGISTRAR 106
MATERIALCONTRACTS 106
INTERESTSOFEXPERTS 109
ADDITIONALINFORMATION 109
SCHEDULE"A"AUDITCOMMITTEECHARTEROFTHECOMPANY A-1
i
INTRODUCTORY NOTES Currency and Exchange Rates
Currencies:AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")presentsitsconsolidatedfinancialstatementsinUnitedStatesdollars.AlldollaramountsinthisAnnualInformationForm("AIF")arestatedinUnitedStatesdollars("U.S.dollars","$"or"US$"),exceptwhereotherwiseindicated.CertaininformationinthisAIFispresentedinCanadiandollars("C$")orEuropeanUnioneuros("Euro"or"€").
ExchangeRates:Thefollowingtablessetout,inCanadiandollars,theexchangeratesfortheU.S.dollar,basedonthenoonbuyingrateasreportedbytheBankofCanada(the"NoonBuyingRate").OnMarch15,2016,theNoonBuyingRatewasUS$1.00equalsC$1.3359.
Year Ended December 31, 2015 2014 2013 2012 2011
High 1.3990 1.1643 1.0697 1.0418 1.0604
Low 1.1728 1.0614 0.9839 0.9710 0.9449
EndofPeriod 1.3840 1.1601 1.0636 0.9949 1.0170
Average 1.2787 1.1045 1.0299 0.9996 0.9891
2016 2015
March
(to March 15) February January December November October September
High 1.3468 1.4040 1.4589 1.3990 1.3360 1.3242 1.3413
Low 1.3215 1.3523 1.3969 1.3360 1.3095 1.2904 1.3147
EndofPeriod 1.3359 1.3523 1.4080 1.3840 1.3333 1.3083 1.3394
Average 1.3344 1.3796 1.4223 1.3705 1.3280 1.3073 1.3267
OnDecember31,2015andMarch15,2016,US$1.00equaled€0.9185and€0.9002,respectively,asreportedbytheEuropeanCentralBank.
Forward-Looking Statements
Forward-LookingStatements:CertainstatementsinthisAIF,referredtohereinas"forward-lookingstatements",constitute"forward-lookinginformation"undertheprovisionsofCanadianprovincialsecuritieslawsandconstitute"forward-lookingstatements"withinthemeaningoftheUnitedStatesPrivateSecuritiesLitigationReformActof1995.Thesestatementsrelateto,amongotherthings,theCompany'splans,objectives,expectations,estimates,beliefs,strategiesandintentionsandcangenerallybeidentifiedbytheuseofwordssuchas"anticipate","believe","budget","could","estimate","expect","forecast","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisAIFinclude,butarenotlimitedto,thefollowing:
• theCompany'soutlookfor2016andfutureperiods;
• statementsregardingfutureearnings,andthesensitivityofearningstogoldandothermetalprices;
• anticipatedlevelsortrendsforpricesofgoldandby-productmetalsminedbytheCompanyorforexchangeratesbetweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;
• estimatesoffuturemineralproductionandsales;
ii
• estimatesoffuturecosts,includingminingcosts,totalcashcostsperounce,all-insustainingcostsperounce,minesitecostspertonneandothercosts;
• estimatesoffuturecapitalexpenditures,explorationexpendituresandothercashneeds,andexpectationsastothefundingthereof;
• statementsregardingtheprojectedexploration,developmentandexploitationofcertainoredeposits,includingestimatesofexploration,developmentandproductionandothercapitalcostsandestimatesofthetimingofsuchexploration,developmentandproductionordecisionswithrespectthereto;
• estimatesofmineralreservesandmineralresourcesandtheirsensitivitiestogoldpricesandotherfactors,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;
• estimatesofcashflow;
• estimatesofminelife;
• anticipatedtimingofeventswithrespecttotheCompany'sminesites,minedevelopmentprojectsandexplorationprojects;
• estimatesoffuturecostsandotherliabilitiesforenvironmentalremediation;
• statementsregardinganticipatedlegislationandregulations,includingwithrespecttoclimatechange,andestimatesoftheimpactontheCompany;and
• otheranticipatedtrendswithrespecttotheCompany'scapitalresourcesandresultsofoperations.
Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisAIFarebased,andwhichmayprovetobeincorrect,includetheassumptionssetoutelsewhereinthisAIFaswellas:thattherearenosignificantdisruptionsaffectingAgnicoEagle'soperations,whetherduetolabourdisruptions,supplydisruptions,damagetoequipment,naturalorman-madeoccurrences,miningormillingissues,politicalchanges,titleissuesorotherwise;thatpermitting,developmentandexpansionateachofAgnicoEagle'sminesandminedevelopmentprojectsproceedonabasisconsistentwithexpectations,andthatAgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheU.S.dollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisAIF;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations;thatproductionmeetsexpectations;thatAgnicoEagle'scurrentestimatesofmineralreserves,mineralresources,mineralgradesandmineralrecoveriesareaccurate;thattherearenomaterialdelaysinthetimingforcompletionofdevelopmentprojects;andthattherearenomaterialvariationsinthecurrenttaxandregulatoryenvironmentthataffectAgnicoEagle.
Theforward-lookingstatementsinthisAIFreflecttheCompany'sviewsasatthedateofthisAIFandinvolveknownandunknownrisks,uncertaintiesandotherfactorswhichcouldcausetheactualresults,performanceorachievementsoftheCompanyorindustryresultstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutin"RiskFactors"below.Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisAIFcontainsinformationregardingestimatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowingyearoveryearcomparisons.Investorsarecautionedthatthisinformationmaynotbesuitableforotherpurposes.
Meaningof"including"and"suchas":WhenusedinthisAIF,theterms"including"and"suchas"meanincludingandsuchas,withoutlimitation.
iii
Presentation of Financial Information
InternationalFinancialReportingStandards:TheCompanyreportsitsfinancialresultsusingInternationalFinancialReportingStandards("IFRS").TheCompanyadoptedIFRSasitsbasisofaccounting,replacingUnitedStatesgenerallyacceptedaccountingprinciples("USGAAP")effectiveJuly1,2014.Asaresult,AgnicoEagle'sconsolidatedfinancialstatementsfor2015arereportedinaccordancewithIFRS,withcomparativeinformationforpriorperiodsrestatedunderIFRSandatransitiondateofJanuary1,2013.TheCompany'stransitiontoIFRSreportinghadnosignificantimpactonthedesignoreffectivenessoftheCompany'sinternalcontrolsoverfinancialreporting.TheCompanyadoptedIFRSasitsbasisofaccountingtomaintaincomparabilitywithothergoldminingcompanies.Unlessotherwisespecified,allreferencestofinancialresultshereinaretothosecalculatedunderIFRS.
Note to Investors Concerning Estimates of Mineral Reserves and Mineral Resources ThemineralreserveandmineralresourceestimatescontainedinthisAIFhavebeenpreparedinaccordancewiththeCanadiansecuritiesregulatoryauthorities'(the"CSA")NationalInstrument43-101Standards of Disclosure for Mineral Projects ("NI43-101").ThesestandardsaresimilartothoseusedbytheUnitedStatesSecuritiesandExchangeCommission's(the"SEC")IndustryGuideNo.7,asinterpretedbyStaffattheSEC("Guide7").However,thedefinitionsinNI43-101differincertainrespectsfromthoseunderGuide7.Accordingly,mineralreserveinformationcontainedorincorporatedbyreferencehereinmaynotbecomparabletosimilarinformationdisclosedbyU.S.companies.UndertherequirementsoftheSEC,mineralizationmaynotbeclassifiedasa"reserve"unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.TheSECdoesnotrecognizemeasuresof"mineralresource".
Themineralreserveandmineralresourcedatapresentedhereinareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoverywillberealized.TheCompanydoesnotincludeequivalentgoldouncesforby-productmetalscontainedinmineralreservesinitscalculationofcontainedounces.
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources
Thisdocumentusestheterms"measuredmineralresources"and"indicatedmineralresources".InvestorsareadvisedthatwhilethosetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or allof mineral deposits in these categories will ever be converted into mineral reserves.
Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources
Thisdocumentusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbeassumedthatanypartorallofaninferredmineralresourcewilleverbeupgradedtoahighercategory.UnderCanadianregulations,estimatesofinferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legallymineable.
Note to Investors Concerning Certain Measures of Performance ThisAIFdisclosescertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce"and"minesitecostspertonne"thatarenotrecognizedmeasuresunderIFRS.Thesedatamaynotbecomparabletodatareportedbyothergoldproducers.ForareconciliationofthesemeasurestothemostdirectlycomparablefinancialinformationpresentedintheconsolidatedfinancialstatementspreparedinaccordancewithIFRS,andforanexplanationofhowmanagementusesthesemeasures,pleaseseetheCompany'smanagementdiscussionandanalysisfortheperiodendedDecember31,2015(the"AnnualMD&A").
Thetotalcashcostsperounceofgoldproducedisreportedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Thetotalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincome(loss)forby-productrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Thetotal
iv
cashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasthetotalcashcostsperounceofgoldproducedonaby-productbasis,exceptthatnoadjustmentismadeforby-productmetalrevenues.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.Thetotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecash-generatingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scash-generatingcapabilitiesatvariousgoldprices.
All-insustainingcostsperounceisusedtoshowthefullcostofgoldproductionfromcurrentoperations.TheCompanycalculatesall-insustainingcostsperounceofgoldproducedonaby-productastheaggregateoftotalcashcostsperounceonaby-productbasis,sustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andreclamationexpensesdividedbytheamountofgoldproduced.Theall-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastheall-insustainingcostsperounceofgoldproducedonaby-productbasis,exceptthatthetotalcashcostsperounceonaco-productbasisisused,meaningnoadjustmentismadeforby-productmetalrevenues.TheCompany'smethodologyforcalculatingall-insustainingcostsperouncemaydifferfromtothemethodologyusedbyotherproducersthatdiscloseall-insustainingcostsperounce.TheCompanymaychangethemethodologyitusestocalculateall-insustainingcostsperounceinthefuture,includinginresponsetotheadoptionofformalindustryguidanceregardingthismeasurebytheWorldGoldCouncil.
Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsperounceofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.
Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingexchangeratesandmetalprices.ThisAIFalsocontainsinformationastoestimatedfuturetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonne.Theestimatesarebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethattheCompanyexpectstoincurtominegoldatitsminesandprojectsand,consistentwiththereconciliationoftheseactualcostsreferredtoabove,donotincludeproductioncostsattributabletoaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-GAAPfinancialmeasurestothemostcomparableIFRSmeasure.
v
SELECTED FINANCIAL DATA Thefollowingselectedfinancialdataforeachoftheyearsinthefive-yearperiodendedDecember31,2015arederivedfromtheconsolidatedfinancialstatementsofAgnicoEagleauditedbyErnst&YoungLLP.TheselectedfinancialdatashouldbereadinconjunctionwiththeCompany'soperatingandfinancialreviewandprospectssetoutinAgnicoEagle'sannualauditedconsolidatedfinancialstatementsasofandfortheperiodendedDecember31,2015,includingthenotesthereto(the"AnnualFinancialStatements")andtheAnnualMD&A.
Year Ended December 31,
2015 (1) 2014 (1)(2) 2013 (1) 2012 (3) 2011 (3) (in thousands of U.S. dollars, other than share and per share information) Income Statement Data Revenuesfromminingoperations 1,985,432 1,896,766 1,638,406 1,917,714 1,821,799
Production 995,295 1,004,559 866,082 897,712 876,078
Explorationandcorporatedevelopment 110,353 56,002 44,236 109,500 75,721
Amortizationofproperty,plantandminedevelopment 608,609 433,628 313,890 271,861 261,781
Generalandadministrative 96,973 118,771 113,809 119,085 107,926
Impairmentlossonavailable-for-salesecurities 12,035 15,763 32,476 12,732 8,569
Loss(gain)onderivativefinancialinstruments 19,608 6,156 268 819 (3,683)
Provincialcapitaltax – – – 4,001 9,223
Financecosts 75,228 73,393 62,455 57,887 55,039
Otherexpenses(income) 12,028 (7,004) 3,396 2,389 5,188
Environmentalremediation 2,003 8,214 3,698 – –
LossonGoldexmine – – – – 302,893
Impairmentloss – – 1,014,688 – 907,681
Gainonsaleofavailable-for-salesecurities (24,600) (5,635) (74) (9,733) (4,907)
Foreigncurrencytranslation(gain)loss (4,728) 3,781 1,769 16,320 (1,082)
Income(loss)beforeincomeandminingtaxes 82,628 189,138 (818,287) 435,141 (778,628)
Incomeandminingtaxesexpense(recovery) 58,045 106,168 (131,582) 124,225 (209,673)
Netincome(loss)fortheyear 24,583 82,970 (686,705) 310,916 (568,955)
Attributedtonon-controllinginterest – – – – (60)
Attributedtocommonshareholders 24,583 82,970 (686,705) 310,916 (568,895)
Netincome(loss)pershare–basic 0.11 0.43 (3.97) 1.82 (3.36)
Netincome(loss)pershare–diluted 0.11 0.39 (3.97) 1.81 (3.36)
Weightedaveragenumberofcommonsharesoutstanding–basic 216,167,950 195,222,905 172,892,654 171,250,179 169,352,896
Weightedaveragenumberofcommonsharesoutstanding–diluted 217,101,431 196,201,626 172,892,654 171,485,615 169,352,896
Cashdividendsdeclaredpercommonshare 0.32 0.32 0.66 1.02 –
Balance Sheet Data (at end of period) Property,plantandminedevelopment 5,088,967 5,155,865 3,694,461 4,067,456 3,895,355
Totalassets 6,683,180 6,809,255 4,580,081 5,256,119 5,034,262
Long-termdebt 1,118,187 1,322,461 987,356 830,000 920,095
Reclamationprovision 276,299 249,917 184,009 101,753 105,443
Netassets 4,141,020 4,068,490 2,717,406 3,410,212 3,215,163
Commonshares 4,707,940 4,599,788 3,294,007 3,241,922 3,181,381
Shareholders'equity 4,140,020 4,068,490 2,717,406 3,410,212 3,215,163
Totalcommonsharesoutstanding 217,650,795 214,236,234 173,953,975 172,102,870 170,813,736
(1) Figuresreportedfor2015,2014and2013arepresentedinaccordancewithIFRS.
(2) Assetoutinnote5oftheAnnualFinancialStatements,certainpreviouslyreportedDecember31,2014consolidatedbalancesheetlineitemshavebeenupdatedtoreflectadjustedfinalestimatesoffairvaluerelatedtotheJune16,2014jointacquisitionofOsiskoMiningCorporation("Osisko")bytheCompanyandYamanaGoldInc.("Yamana").
(3) Figuresreportedfor2012and2011havenotbeenrestatedtoconformtoIFRSandarepresentedinaccordancewithUSGAAP.
AGNICO EAGLE 1 ANNUAL INFORMATION FORM
GLOSSARY OF SELECTED MINING TERMS
"alteration" Anyphysicalorchemicalchangeinthemineralcompositionofarocksubsequenttoitsformation,generallyproducedbyweatheringorhydrothermalsolutions.Milderandmorelocalizedthanmetamorphism.
"anastomosing" Anetworkofbranchingandrejoiningfaultorveinsurfacesorsurfacetraces.
"andesite" Adark-coloured,fine-grainedcalc-alkalinevolcanicrockofintermediatecomposition.
"assay" Toanalyzetheproportionsofmetalsinanore;totestanoreormineralforcomposition,purity,weightorotherpropertiesofcommercialinterest.
"banded iron formation" Anironformationthatshowsmarkedbanding,generallyofiron-richmineralsandchertorfine-grainedquartz.
"bedrock" SolidrockexposedatthesurfaceoftheEarthoroverlainbyunconsolidatedmaterial,weatheredrockorsoil.
"bench" Aledgeinanopenpitminethatformsasinglelevelofoperationabovewhichmineralsorwasterockareexcavated.Theoreorwasteisremovedinsuccessivelayers(benches),severalofwhichmaybeinoperationsimultaneously.
"breccia" Arockinwhichangularrockfragmentsaresurroundedbyamassoffine-grainedminerals.
"brittle" Ofminerals,pronenesstofractureunderlowstress.Aqualityaffectingbehaviourduringcomminutionofore,wherebyonespeciesfracturesmorereadilythanothersinthematerialbeingcrushed.
"bulk emulsion" Waterresistantexplosivematerialpumpedintoadrilledblastholeandignitedremotelyinordertofracturerockintheminingcycle.Emulsionproductsareparticularlywellsuitedtowetconditions.
"by-product" Asecondarymetalormineralproductrecoveredfromtheprocessingofrock.
"carbon-in-leach (CIL)" Apreciousmetalsrecoverystepinthemill.Goldandsilverareleachedfromthegroundoreandatthesametimeadsorbedontogranulesofactivatedcarbon,whichisthenseparatedbyscreeningandprocessedtoremovethepreciousmetals.
"carbon-in-pulp (CIP)" Apreciousmetalsrecoverystepinthemill.Aftergoldandsilverhavebeenleachedfromgroundore,theyareadsorbedontogranulesofactivatedcarbon,whichisthenseparatedbyscreeningandprocessedtoremovethepreciousmetals.ACIPcircuitcomprisesaseriesoftanksthroughwhichleachedslurryflows.Goldiscapturedontocaptiveactivatedcarbonthatwillperiodicallybemovedcounter-currentlyfromtanktotank.Headtankcarbonisextractedperiodicallytofurtherrecoveradsorbedgoldbeforebeingreturnedtothecircuittailstank.
"chalcopyrite" Asulphidemineralofcopperandiron.
"concentrate" Thecleanproductrecoveredbyfrothflotationintheplant.
"conglomerate" Acoarse-grainedsedimentaryrockcomposedofroundedfragmentssetinafine-grainedcementedmatrix.
"contact" Aplaneorirregularsurfacebetweentwotypesoragesofrock.
"counter-current decantation" Theclarificationofwasherywaterandtheconcentrationoftailingsbytheuseofseveralthickenersinseries.Thewaterflowsintheoppositedirectionfromthesolids.Thefinalproductsareslurrythatisremovedandclearwaterthatisreusedinthecircuit.
2 AGNICO EAGLE ANNUAL INFORMATION FORM
"crosscut" Anundergroundpassagedrivenfromashafttowardstheore,at(ornear)rightanglestothestrikeofaveinorotherorebody.
"cut-off grade" Theminimummetalgradeinanorethatcanbeminedeconomically.
"cyanidation" Amethodofextractingexposedgoldorsilvergrainsfromcrushedorgroundorebydissolving(leaching)itinaweakcyanidesolution.Maybecarriedoutintanksinsideamillorinheapsoforeoutofdoors(heapleach).
"deposit" Anaturaloccurrenceofmineralormineralaggregate,insuchquantityandqualitytoinviteexploitation.
"development" Thepreparationofaminingpropertyorareasothatanorebodycanbeanalyzedanditstonnageandqualityestimated.Developmentisanintermediatestagebetweenexplorationandmining.
"diamond drill" Adrillingmachinewitharotating,hollow,diamond-studdedbitthatcutsacircularchannelaroundacore,whichcanberecoveredtoprovideamore-or-lesscontinuousandcompletecolumnarsampleoftherockpenetrated.
"dilution" Thecontaminationoforewithbarrenwallrockinstoping,increasingtonnageminedandloweringtheoveralloregrade.
"dip" Theangleatwhichavein,structureorrockbedisinclinedfromthehorizontalasmeasuredatrightanglestothestrike.
"disseminated" Saidofamineraldeposit(especiallyofmetals)inwhichthedesiredmineralsoccurasscatteredparticlesintherock,butinsufficientquantitytomakethedepositanore.Somedisseminateddepositsareverylarge.
"dore" Unrefinedgoldandsilverbullionbars,whichwillbefurtherrefinedtoalmostpuremetal.
"drift" Ahorizontalopeninginornearanorebodyandparalleltothelongdimensionoftheorebody,asopposedtoacrosscutthatcrossestheorebody.
"ductile" Ofrock,abletosustain,underagivensetofconditions,5%to10%deformationbeforefracturingorfaulting.
"dyke" Anearthenembankment,asaroundadrillsumportank,ortoimpoundabodyofwaterormilltailings.Also,atabularbodyofigneousrockthatcutsacrossthestructureofadjacentrocks.
"electrowinning" Anelectrochemicalprocessinwhichametaldissolvedwithinanelectrolyteisplatedontoanelectrode.Usedtorecovermetalssuchascopperandgoldfromsolutionintheleachingofconcentrates.
"envelope" 1.Theouterorcoveringpartofafold,especiallyofafoldedstructurethatincludessomesortofstructuralbreak.
2.Ametamorphicrocksurroundinganigneousintrusion.
3.Inamineral,anouterpartdifferentinoriginfromaninnerpart.
"epigenetic" Orebodiesformedbyhydrothermalfluidsandgasesthatwereintroducedintothehostrocksfromelsewhere,fillingcavitiesinthehostrock.
"epithermal" Referringtoamineraldepositthatformedlaterthantheenclosingrocksconsistingofveinsandreplacementbodies,containingpreciousmetalsor,morerarely,basemetals.
"extensional-shear vein" Aveinputinplaceinanextensionfracturecausedbythedeformationofarock.
"fault" Afractureorafracturezoneincrustalrocksalongwhichtherehasbeendisplacementofthetwosidesrelativetooneanotherparalleltothefracture.Thedisplacementmaybeafewinchesormanykilometreslong.
AGNICO EAGLE 3 ANNUAL INFORMATION FORM
"feasibility study" Acomprehensivetechnicalandeconomicstudyoftheselecteddevelopmentoptionforamineralprojectthatincludesappropriatelydetailedassessmentsofrealisticallyassumedmining,processing,metallurgical,economic,marketing,legal,environmental,socialandgovernmentalconsiderations,togetherwithanyotherrelevantoperationalfactorsandadetailedfinancialanalysis,thatarenecessarytodemonstrateatthetimeofreportingthatextractionisreasonablyjustified(economicallymineable).Theresultsofthestudymayreasonablyserveasthebasisforafinaldecisionbyaproponentorfinancialinstitutiontoproceedwith,orfinance,thedevelopmentoftheproject.Theconfidencelevelofthestudywillbehigherthanthatofapre-feasibilitystudy.
"felsic" Atermusedtodescribelight-colouredrockscontainingfeldspar,feldspathoidsandsilica.
"flotation" Themethodofmineralseparationinwhichafrothcreatedbyavarietyofreagentsfloatssomefinelycrushedminerals,whereasothermineralssink.Themetal-richflotationconcentrateisthenskimmedoffthesurface.
"flowsheet" Adiagramshowingtheprogressofmaterialthroughatreatmentplant.
"foliation" Ageneraltermforaplanararrangementoffeaturesinanytypeofrock,especiallytheplanarstructurethatresultsinametamorphicrock.
"footwall" Therockbeneathaninclinedveinororedeposit(oppositeofahangingwall).
"fracture" Anybreakinarock,whetherornotitcausesdisplacement,duetomechanicalfailurebystress;includescracks,jointsandfaults.
"free gold" Goldnotcombinedwithothersubstances.
"glacial till" Dominantlyunsortedandunstratified,unconsolidatedrockdebris,depositeddirectlybyandunderneathaglacier.
"grade" Therelativequantityorthepercentageofmetalcontentofanorebody,e.g. ,gramsofgoldpertonneofrock,orpercentcopper.
"greenstone belt" Anareaunderlainbymetamorphosedvolcanicandsedimentaryrocks,usuallyinacontinentalshield.
"grouting" Theprocessofsealingoffawaterflowinrocksbyforcingathinslurryofcementorotherchemicalsintothecrevices;usuallydonethroughadiamonddrillhole.
"hanging wall" Therockontheuppersideofaveinororedeposit.
"head grade" Theaveragegradeoforefedintoamill.
"hectare" Ametricmeasurementofarea.1hectare=10,000squaremetres=2.47acres.
"horst" Anup-faultedblockofrock.
"hydrothermal alteration" Alterationofrocksormineralsbyreactionwithhydrothermal(magmatic)fluids.
"igneous rock" RockformedbythesolidificationofmoltenmaterialthatoriginatedwithintheEarth.
"indicated mineral resource" Thatpartofamineralresourceforwhichquantity,gradeorquality,densities,shapeandphysicalcharacteristicscanbeestimatedwithalevelofconfidencesufficienttoallowtheappropriateapplicationoftechnicalandeconomicparameterstosupportmineplanningandevaluationoftheeconomicviabilityofthedeposit.Theestimateisbasedondetailedandreliableexplorationandtestinginformationgatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholesthatarespacedcloselyenoughforgeologicalandgradecontinuitytobereasonablyassumed.
WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeconvertedintomineralreserves.
4 AGNICO EAGLE ANNUAL INFORMATION FORM
"inferred mineral resource" Thatpartofamineralresourceforwhichquantityandgradeorqualitycanbeestimatedonthebasisofgeologicalevidenceandlimitedsamplingandreasonablyassumed,butnotverified,geologicalandgradecontinuity.Theestimateisbasedonlimitedinformationandsamplinggatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholes.
WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeconvertedintomineralreserves.Investorsarecautionednottoassumethatpartoforallofaninferredmineralresourceexists,oriseconomicallyorlegallymineable.
"infill drilling" Drillingwithinadefinedmineralizedareatoimprovethedefinitionofknownmineralization.
"intrusive" Abodyofigneousrockformedbytheconsolidationofmagmaintrudedbelowsurfaceintootherrocks,incontrasttolavas,whichareextrudedupontheEarth'ssurface.
"iron formation" Achemicalsedimentaryrock,typicallythin-beddedorfinelylaminated,containingatleast15%ironofsedimentaryoriginandcommonlycontaininglayersofchert.
"ITH drill" Atypeofrockdrillinwhichahammerismountedinthehole,applyingpercussiveforcedirectlytothedrillbit.
"kilometre" Ametricmeasurementofdistance.1.0kilometre=1,000metres=0.62miles.
"leaching" Achemicalprocessfortheextractionofvaluablemineralsfromore;also,anaturalprocessbywhichgroundwatersdissolveminerals.
"lens" Ageologicaldepositthatisthickinthemiddleandtaperstowardstheends,resemblingaconvexlens.
"lithologic groups" Groupsofrockformations.
"lode" Amineraldepositconsistingofazoneofveins,veinletsordisseminations.
"longitudinal retreat" Anundergroundminingmethodwheretheoreisexcavatedinhorizontalslicesalongtheorebodyandthestopingstartsbelowandadvancesupwards.Theoreisrecoveredunderneathinthestope.
"mafic" Igneousrockscomposedmostlyofdark,iron-andmagnesium-richsilicateminerals.
"massive" Saidofamineraldeposit,especiallyofsulphides,characterizedbyagreatconcentrationoforeinoneplace,asopposedtoadisseminatedorvein-likedeposit.Saidofanyrockthathasahomogeneoustextureorfabricoveralargearea,withanabsenceoflayeringoranysimilardirectionalstructure.
"matrix" Thefine-grainedrockmaterialinwhichalargermineralisembedded.
"measured mineral resource" Thatpartofamineralresourceforwhichquantity,gradeorquality,densities,shapeandphysicalcharacteristicsaresowellestablishedthattheycanbeestimatedwithconfidencesufficienttoallowtheappropriateapplicationoftechnicalandeconomicparameterstosupportproductionplanningandevaluationoftheeconomicviabilityofthedeposit.Theestimateisbasedondetailedandreliableexploration,samplingandtestinginformationgatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholesthatarespacedcloselyenoughtoconfirmbothgeologicalandgradecontinuity.
WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeconvertedintomineralreserves.
AGNICO EAGLE 5 ANNUAL INFORMATION FORM
"Merrill-Crowe process" Aseparationtechniqueforremovinggoldfromacyanidesolution.Thesolutionisseparatedfromtheorebymethodssuchasfiltrationandcounter-currentdecantation,andthenthegoldisprecipitatedontozincdust.Silverandcoppermayalsoprecipitate.Theprecipitateisfilteredtocapturethegoldslimes,whicharefurtherrefined,e.g. ,bysmelting,toremovethezincandbytreatingwithnitricacidtodissolvethesilver.
"metamorphism" Theprocessbywhichtheformorstructureofsedimentaryorigneousrocksischangedbyheatandpressure.
"mill" Amineraltreatmentplantinwhichcrushing,wetgrindingandfurthertreatmentoforeisconducted;alsoarevolvingdrumusedforthegrindingoforesinpreparationfortreatment.
"mineral resource" Aconcentrationoroccurrenceofdiamonds,naturalsolidinorganicmaterialornaturalsolidfossilizedorganicmaterialincludingbaseandpreciousmetals,coalandindustrialmineralsinorontheEarth'scrustinsuchformandquantityandofsuchagradeorqualitythatithasreasonableprospectsforeconomicextraction.Thelocation,quantity,grade,geologicalcharacteristicsandcontinuityofamineralresourceareknown,estimatedorinterpretedfromspecificgeologicalevidenceandknowledge.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinanycategoryofresourceswilleverbeconvertedintomineralreserves.
"mineral reserve" Theeconomicallymineablepartofameasuredorindicatedmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.Thisstudymustincludeadequateinformationonmining,processing,metallurgical,economicandotherrelevantfactorsthatdemonstrate,atthetimeofreporting,thateconomicextractioncanbejustified.Amineralreserveincludesdilutingmaterialsandallowancesforlossesthatmayoccurwhenthematerialismined.
"muck" Finelyblastedrock(oreorwaste)underground.
"net smelter return royalty" Aroyaltypaymentmadebyaproducerofmetalsbasedontheproceedsfromthesaleofmineralproductsafterdeductingoff-siteprocessinganddistributioncostsincludingsmelting,refining,transportationandinsurancecosts.
"ounce" Ameasurementofweight,especiallyusedforgold,silverandplatinumgroupmetals.1troyounce=31.1035grams.
"outcrop" ThepartofarockformationthatappearsatthesurfaceoftheEarth.
"oxidation" Achemicalreactioncausedbyexposuretooxygen,whichresultsinachangeinthechemicalcompositionofamineral.
"pillar" Ablockoforeorotherrockentirelysurroundedbystoping,leftintentionallyforpurposesofgroundcontroloronaccountoflowvalue.
"plunge" Theinclinationofafoldaxisorotherlinearstructurefromahorizontalplane,measuredintheverticalplane.
"polydeformed" Arockthathasbeensubjectedtomorethanoneinstanceoffolding,faulting,shearing,compressionorextensionasaresultofvarioustectonicforces.
"porphyritic" Rocktextureinwhichoneormoremineralshasalargergrainsizethantheaccompanyingminerals.
"porphyry" Anyigneousrockinwhichrelativelylargecrystalsaresetinafine-grainedgroundmass.
6 AGNICO EAGLE ANNUAL INFORMATION FORM
"preliminary feasibility study"or "pre-feasibility study"
Acomprehensivestudyofarangeofoptionsforthetechnicalandeconomicviabilityofamineralprojectthathasadvancedtoastagewhereapreferredminingmethod(inthecaseofundergroundmining)orthepitconfiguration(inthecaseofanopenpit)isestablished,andaneffectivemethodofmineralprocessingisdetermined.Itincludesafinancialanalysisbasedonreasonableassumptionsonmining,processing,metallurgical,economic,marketing,legal,environmental,socialandgovernmentalconsiderationsandtheevaluationofanyotherrelevantfactorswhicharesufficientforaqualifiedperson,actingreasonably,todetermineifallorpartofthemineralresourcemaybeclassifiedasamineralreserve.
"pressure oxidation" Aprocessbywhichsulphidemineralsareoxidizedinordertoexposegoldthatisencapsulatedintheminerallattice.Themaincomponentofapressureoxidationcircuitconsistsofapressurizedvessel(autoclave)wheretheoxygenlevel,processtemperatureandacidityaretheprimarycontrolparameters.
"probable mineral reserve" Theeconomicallymineablepartofanindicatedand,insomecircumstances,ameasuredmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.
"proven mineral reserve" Theeconomicallymineablepartofameasuredmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.
"pyrite" Ayellowironsulphidemineral,FeS2,normallyoflittlevalue.Itissometimesreferredtoas"fool'sgold".
"pyroclastic" Rocksproducedbyexplosiveoraerialejectionofash,fragmentsandglassymaterialfromavolcanicvent.
"recovery" Thepercentageofvaluablemetalintheorethatisrecoveredbymetallurgicaltreatment.
"rock burst" Asuddenandoftenviolentbreakingofamassofrockfromthewallsofamine,causedbyfailureofhighlystressedrockandtherapidreleaseofaccumulatedstrainenergy.
"run-of-mine ore" Theraw,minedmaterialasitisdelivered,priortosorting,stockpilingortreatment.
"sandstone" Asedimentaryrockconsistingofgrainsofsandcementedtogether.
"schist" Astronglyfoliatedcrystallinerockthatcanbereadilysplitintothinflakesorslabsduetothewell-developedparallelismofmorethan50%ofthemineralspresentinit,suchasmicaorhornblende.
"sedimentary rocks" Rocksresultingfromtheconsolidationofloosesedimentthathasaccumulatedinlayers.Examplesarelimestone,shaleandsandstone.
"semi-autogenous grinding(SAG)"
Amethodofgrindingrockwherebylargerchunksoftherockitselfandsteelballsformthegrindingmedia.
"shear" or "shearing" Thedeformationofrocksbylateralmovementalonginnumerableparallelplanes,generallyresultingfrompressureandproducingmetamorphicstructuressuchascleavageandschistosity.
"shear zone" Atabularzoneofrockthathasbeencrushedandbrecciatedbymanyparallelfracturesduetoshearstress.Suchanareaisoftenmineralizedbyore-formingsolutions.
"sill" Anintrusivesheetofigneousrockofroughlyuniformthicknessthathasbeenforcedbetweenthebeddingplanesofexistingrock.
"slurry" Finerockparticlesincirculatingwaterinatreatmentplant.
"stope" 1.Anyexcavationinamine,otherthandevelopmentworkings,madeforthepurposeofextractingore.
2.Toexcavateoreinanundergroundmine.
AGNICO EAGLE 7 ANNUAL INFORMATION FORM
"strike" Thedirection,orbearingfromtruenorth,ofahorizontallineonaveinorrockformationatrightanglestothedip.
"stringers" Mineralveinletsorfilamentsoccurringinadiscontinuoussubparallelpatterninahostrock.
"sulphide" Amineralcharacterizedbythelinkageofsulphurwithametal,suchaspyrite,FeS2.
"tabular" Saidofafeaturehavingtwodimensionsthataremuchlargerorlongerthanthethird,suchasadyke.
"tailings" Materialrejectedfromamillaftertheeconomicallyandtechnicallyrecoverablevaluablemineralshavebeenextracted.
"tailings dam" or "tailingsimpoundment" or "tailingspond"
Areaclosedatthelowerendbyaconstrainingwallordamtowhichmilleffluentsaresent,theprimefunctionofwhichistoallowenoughtimeformetalstosettleoutorforcyanidetobenaturallydestroyedbeforethewaterisreturnedtothemillordischargedintothelocalwatershed.
"tenement" Therighttoenter,developandworkamineraldeposit.Includesaminingclaimoramininglease.Asynonymofmineraltitle.
"thickener" Avesselforreducingtheproportionofwaterinapulpbymeansofsedimentation.
"thickness" Thedistanceatrightanglesbetweenthehangingwallandthefootwallofalodeorlens.
"tonne" Ametricmeasurementofmass.1tonne=1,000kilograms=2,204.6pounds=1.1tons.
"transfer fault" Astructurethatcanaccommodatelateralvariationsofdeformationandstrain.
"transverse open stoping" Anundergroundminingmethodinwhichtheoreisexcavatedinhorizontalslicesperpendiculartotheorebodylengthandthestopingstartsbelowandadvancesupwards.Theoreisrecoveredunderneaththestopethroughadrawpointsystem.
"trench" Anarrowexcavationdugthroughoverburden,orblastedoutofrock,toexposeaveinororestructureforsamplingorobservation.
"vein" Amineralfillingofafaultorotherfractureinahostrock.
"wacke" A"dirty"sandstonethatconsistsofamixtureofpoorlysortedmineralandrockfragmentsinanabundantmatrixofclayandfinesilt.
"winze" Aninternalmineshaft.
"Zadra elution circuit" Theprocessinthispartofagoldmillstripsgoldandsilverfromcarbongranulesandputsthemintosolution.
"zone" Anareaofdistinctmineralization,i.e. ,adeposit.
8 AGNICO EAGLE ANNUAL INFORMATION FORM
CORPORATE STRUCTURE AgnicoEagleMinesLimitedisacorporationorganizedundertheBusiness Corporations Act (Ontario).TheCompanywasformedbyarticlesofamalgamationunderthelawsoftheProvinceofOntarioonJune1,1972,asaresultoftheamalgamationofAgnicoMinesLimited("AgnicoMines")andEagleGoldMinesLimited("Eagle").AgnicoMineswasincorporatedunderthelawsoftheProvinceofOntarioonJanuary21,1953underthename"CobaltConsolidatedMiningCorporationLimited".EaglewasincorporatedunderthelawsoftheProvinceofOntarioonAugust14,1945.
Since1972,severalcorporatealterationshavetakenplace.OnAugust22,1972,theCompany'sarticleswereamendedtopermittheCompanyto:(i)borrowmoneyonthecreditoftheCompany,(ii)issue,sellorpledgedebtobligationsand(iii)charge,mortgageorpledgetheCompany'sproperty.OnJune27,1980,ArticlesofAmendmentwerefiledtoallowtheCompanytousethename"MinesAgnico-EagleLimitée".OnJuly5,1984,theCompany'sarticleswereamendedtodeletealloftheobjectsoftheCompanylistedandspecifythatnorestrictionsapplytothebusinessorpowersthattheCompanymayexercise.OnJuly3,1986,ArticlesofAmendmentwerefiledtosettheminimumnumberofdirectorsoftheCompanyatfiveandthemaximumatnine.OnJuly29,1988,theCompany'sarticleswereamendedtoprovidethattheCompanyisauthorizedtoissueanunlimitednumberofshares.
OnDecember31,1992,theCompanyamalgamatedwithLuckyEagleMinesLimited.OnJune30,1993,themaximumnumberofdirectorsoftheCompanywasincreasedfromnineto12.OnJanuary1,1996,theCompanyamalgamatedwithGoldexMinesLimitedand1159885OntarioLimited.OnOctober17,2001,theCompanyfiledArticlesofArrangementwhichprovidedfortheamalgamationoftheCompanyandMentorExplorationandDevelopmentCo.OnJuly12,2002,thenameoftheCompanywaschangedto"Agnico-EagleMinesLimited/MinesAgnico-EagleLimitee".OnAugust1,2007,theCompanyamalgamatedwithCumberlandResourcesLtd.,Agnico-EagleAcquisitionCorporationandMeadowbankMiningCorporation.OnMay4,2010,themaximumnumberofdirectorsoftheCompanywasincreasedfrom12to15.
OnJanuary1,2011,theCompanyamalgamatedwith1816276OntarioInc.(theultimatesuccessorentitytoComaplexMineralsCorp.).OnJanuary1,2013,theCompanyamalgamatedwith1886120OntarioInc.(thesuccessorcorporationto9237-4925QuébecInc.).OnApril26,2013,ArticlesofAmendmentwerefiledtoeliminatethehyphenbetween"Agnico"and"Eagle"andtheofficialnameoftheCompanybecame"AgnicoEagleMinesLimited/MinesAgnicoEagleLimitée".
TheCompany'sheadandregisteredofficeislocatedatSuite400,145KingStreetEast,Toronto,Ontario,CanadaM5C2Y7;telephonenumber(416)947-1212;website:www.agnicoeagle.com .TheinformationcontainedontheCompany'swebsiteisnotpartofthisAIF.TheCompany'sprincipalplaceofbusinessintheUnitedStatesislocatedat1675E.PraterWay,Suite102,Sparks,Nevada89434.
AGNICO EAGLE 9 ANNUAL INFORMATION FORM
ThefollowingchartsetsoutthecorporatestructureoftheCompany,eachofitssignificantsubsidiariesandcertainotherentities,togetherwiththejurisdictionoforganizationoftheCompanyandeachsuchsubsidiaryorentityasatMarch15,2016(allofwhicharedirectlyorindirectlywholly-ownedbytheCompany,unlessotherwiseindicated).
10 AGNICO EAGLE ANNUAL INFORMATION FORM
DESCRIPTION OF THE BUSINESS TheCompanyisanestablishedCanadian-basedinternationalgoldproducerwithminingoperationsinnorthwesternQuebec,northernMexico,northernFinlandandNunavutandexplorationactivitiesinCanada,Europe,LatinAmericaandtheUnitedStates.TheCompany'soperatinghistoryincludesoverthreedecadesofcontinuousgoldproduction,primarilyfromundergroundoperations.SinceitsformationonJune1,1972,theCompanyhasproducedapproximately12.7millionouncesofgold.
TheCompany'sstrategyistodeliverhighqualitygrowthwhilemaintaininghighperformancestandardsinhealth,safety,environmentalmattersandsocialacceptability;buildastrongpipelineofprojectstodrivefutureproduction;andemploythebestpeopleandmotivatethemtoreachtheirpotential.TheCompanyhasspentapproximately$3.6billiononminedevelopmentoverthelastsevenyears.Throughthisdevelopmentprogram,theCompanytransformeditselffromaregionallyfocused,singlemineproducertoamulti-mineinternationalgoldproducerwithsevenoperating,100%ownedmines,oneoperating50%ownedmine,andoneadvancedexploration/developmentproject.
Thefollowingtablesetsoutthedateofacquisition,thedateofcommencementofconstruction,thedateofachievingcommercialproductionandtheestimatedminelifefortheCompany'smines.
Date of Acquisition (1)Date of Commencement
of ConstructionDate of achieving
Commercial ProductionEstimated
Mine Life (2)
LaRonde mine 1992 1985 1988 2024
Lapa mine June2003 June2006 May2009 2016
Goldex mine (3) December1993 July2012 October2013 2024
Canadian Malartic mine June2014 n/a May2011 2026
Kittila mine November2005 June2006 May2009 2035
Meadowbank mine April2007 Pre-April2007 March2010 2018
Pinos Altos mine March2006 August2007 November2009 2024
La India mine November2011 September2012 February2014 2020
Notes:
(1) Datewhen100%ownershipwasacquired,otherthantheCanadianMalarticminewhichisthedatewhen50%ownershipwasacquired.
(2) EstimatedenddateforgoldproductionbasedontheCompany'scurrentlifeofmineplans.
(3) ConstructionofinfrastructureforpurposesofminingtheGoldexExtensionZone(the"GEZ")commencedinJuly2005andtheGEZachievedcommercialproductioninAugust2008.MiningoperationsontheGEZhavebeensuspendedsinceOctober2011.Inlate2013,miningandproductionbeganfromtheMandEZonesoftheGoldexmine.
Since1988,theLaRondemine,intheAbitibiregionofQuebec,hasbeentheCompany'sflagshipoperation,producingapproximately5.2millionouncesofgoldaswellasvaluableby-products.TheLapamine,oneoftheCompany'shighestgrademetalsmines,is11kilometreseastoftheLaRondemine,andtheGoldexmine,whichachievedcommercialproductionfromtheMandEZonesinOctober2013,is60kilometreseastoftheLaRondemine.ThesynergiesbetweenthesesitescontributetotheCompany'seffortstoreducecosts.TheCompany's50%ownedCanadianMalarticmine,alsointheAbitibiregionofQuebec,wasacquiredinJune,2014.TheKittilamineinFinland,whichachievedcommercialproductioninMay2009,hasalongreservelifeandhassignificantproductionexpansionpotential.TheCompany'sMeadowbankmine,inNunavut,achievedcommercialproductioninMarch2010andisexpectedtoproducethemostgold(approximately305,000ounces)ofanyoftheCompany'sminesin2016.ThePinosAltosmine,inMexico,achievedcommercialproductioninNovember2009andalsohassignificantproductionexpansionpotentialandtheLaIndiamine,alsoinMexico,achievedcommercialproductioninFebruary2014.Inaddition,theCompanyplanstopursueopportunitiesforgrowthingoldproductionandgoldreservesthroughtheprudentacquisitionordevelopmentofexplorationproperties,developmentproperties,producingpropertiesandotherminingbusinessesintheAmericasandEurope.
In2015,theCompanyproduced1,671,340ouncesofgoldattotalcashcostsperounceof$567onaby-productbasisandatall-insustainingcostsperounceof$810onaby-productbasis.For2016,theCompanyexpectstoproducebetween1.525and1.565millionouncesofgoldattotalcashcostsperounceofgoldonaby-productbasisbetween$590and$630andatall-insustainingcostsperouncebetween$850and$890onaby-productbasis.See"Introductory
AGNICO EAGLE 11 ANNUAL INFORMATION FORM
Notes–NotetoInvestorsConcerningCertainMeasuresofPerformance"foradiscussionoftheuseofthenon-GAAPmeasurestotalcashcostsperounceandall-insustainingcostsperounce.TheCompanyhastraditionallysoldallofitsproductionatthespotpriceofgoldduetoitsgeneralpolicynottosellforwarditsfuturegoldproduction.
GENERAL DEVELOPMENT OF THE BUSINESS Three-Year History
2013
OnMay16,2013,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofUrastarGoldCorp.("Urastar"),aCanadian-basedgoldexplorationcompanythatwas,atthetime,listedontheTSXVentureExchange(the"TSX-V"),pursuanttoacourt-approvedplanofarrangementundertheBusiness Corporations Act (BritishColumbia).Urastarhelda100%interestincertainminingpropertiesinSonora,Mexico.Underthetermsofthearrangement,eachshareholderofUrastarreceivedC$0.25percommonshareandholdersofunexercisedin-the-moneywarrantsofUrastarreceivedC$0.15perwarrant,foraggregatecashconsiderationof$10.1million.Urastarisnowawholly-ownedsubsidiaryofAgnicoEagle.
InSeptember2013,pre-productioncommissioningactivitiescommencedattheLaIndiamine.
AsofOctober1,2013,commercialproductionwasachievedattheGoldexmine'sMandEZones.
CapitalexpendituresbytheCompanyin2013were$620.5million.Thisincluded$84.3millionattheLaRondemine,$22.7millionattheLapamine,$65.1millionattheGoldexmine,$83.8millionattheKittilamine,$109.3millionattheMeadowbankmine,$70.7millionatthePinosAltosmine(whichincludedapproximately$17.8millionattheCrestonMascotadepositatPinosAltos),$116.8millionattheLaIndiaproject,$61.4millionattheMeliadineprojectand$6.5millionatotherproperties.Inaddition,theCompanyincurred$4.9millionofexpendituresonminesiteexplorationand$39.3milliononexplorationactivitiesattheCompany'sexplorationpropertiesandoncorporatedevelopmentactivities.
2014
AsofFebruary1,2014,commercialproductionwasachievedattheLaIndiamine.
OnJune16,2014,theCompanyandYamanajointlyacquired100%oftheoutstandingsharesofOsiskopursuanttoacourt-approvedplanofarrangementundertheCanada Business Corporations Act (the"OsiskoArrangement")forconsiderationofapproximatelyC$3.9billionconsistingofapproximatelyC$1.0billionincashandacombinationofcommonsharesoftheCompany,commonsharesofYamanaandsharesofanewcompanythatwasspun-offundertheOsiskoArrangement.OsiskowasaCanadianbasedproducinggoldminingcompanythatwas,atthetime,listedontheTorontoStockExchange(the"TSX").Osiskowas100%owneroftheCanadianMalarticmineintheAbitibiregionofQuebec.UndertheOsiskoArrangement,eachOsiskosharewasexchangedfor:(i)C$2.09incash(C$1.045persharefromeachoftheCompanyandYamana);(ii)0.07264ofacommonshareoftheCompany;(iii)0.26471ofacommonshareofYamana;and(iv)0.1ofonecommonshareofOsiskoGoldRoyaltiesLtd("NewOsisko"),thenewlyformedspun-offcompanythatcommencedtradingontheTSXimmediatelyfollowingtheOsiskoArrangement.
InconnectionwiththeOsiskoArrangement,substantiallyalloftheassetsandobligationsrelatingtotheCanadianMalarticmineinQuebecweretransferredtoCanadianMalarticGP(the"Partnership"),anewlyformedgeneralpartnershipinwhichtheCompanyandYamanaeachownanindirect50%interest.TheCompanyandYamanaformedajointmanagementcommitteetooperatetheCanadianMalarticmine.OnJune17,2014,OsiskoandtheacquisitioncorporationformedbytheCompanyandYamanatoacquireOsiskoamalgamatedtoform"CanadianMalarticCorporation"inwhichAgnicoandYamanaeachholdanindirect50%interest.CanadianMalarticCorporationcontinuestohold,amongotherthings,Osisko'sKirklandLake,HammondReef,PandoraandWood-Pandora(50%interest)assetsandproperties.TheCompanyandYamanawilljointlyexploreandpotentiallydeveloptheKirklandLakeassets,andcontinueexplorationattheHammondReefprojectandthePandoraandWood-Pandoraproperties,throughCanadianMalarticCorporation.
PursuanttotheOsiskoArrangement,thefollowingassetsofOsiskoweretransferredtoNewOsisko:(i)a5.0%netsmelterroyaltyontheCanadianMalarticmine;(ii)C$157.0millionincash;(iii)a2.0%netsmelterroyaltyontheKirklandLakeassets,theHammondReefproject,andcertainotherexplorationpropertiesretainedbyCanadianMalarticCorporation;(iv)allassetsandliabilitiesofOsiskorelatingtotheGuerrerocampinMexico;and(v)certainotherinvestmentsandassets.
12 AGNICO EAGLE ANNUAL INFORMATION FORM
TheCompany'sandYamana'srelationshipwithrespecttotheCanadianMalarticmineisgovernedbyaunanimousshareholdersagreementwithrespecttoCanadianMalarticCorporationandageneralpartnershipagreementwithrespecttothePartnership.
DirecttransactioncoststotalingC$16.7millionwereincludedinthecostoftheinvestmentinOsisko.TheCompany'sshareofOsisko'sJune16,2014purchasepricewascomprisedof33,923,212oftheCompany'scommonsharesissuedtoformerholdersofOsiskoshares,C$502,059,784.01incashand871,680oftheCompany'scommonsharesissuedandheldbythedepositaryinrespectofunsecuredconvertibledebenturespreviouslyissuedbyOsiskothatremainedoutstandingfollowingtheOsiskoArrangement.OnJune30,2015,thenegotiatedearlysettlementofalloftheoutstandingunsecuredconvertibledebentureswascompleted.Asaresultofthissettlement,871,680commonsharesoftheCompanywithafairvalueofapproximately$24.8millionwerereleasedbythedepositarytothedebentureholders,alongwithacashpaymentofapproximately$10.1million.Additionalcashconsiderationof$3.2millionwaspaidtotheholdersoftheconvertibledebenturesuponsettlement.
AbusinessacquisitionreportinrespectoftheOsiskoArrangementwasfiledbytheCompanyontheSystemforElectronicDocumentAnalysisandRetrieval("SEDAR")onAugust22,2014.
OnNovember28,2014,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofCaydenResourcesInc.("Cayden"),aCanadianbasedgoldexplorationcompanylistedontheTSX-V,pursuanttoacourt-approvedplanofarrangementundertheBusinessCorporations Act (BritishColumbia).Caydenindirectlyholdsa100%interest,oranoptiontoearna100%interest,incertainminingpropertiesinJaliscoandGuerrero,Mexico,includingtheElBarquenoproperty.Underthetermsofthearrangement,eachshareholderofCaydenreceived0.09ofacommonshareoftheCompanyandC$0.01incash.Cayden,whichisnoworganizedunderthelawsofMexico,isnowanindirectwholly-ownedsubsidiaryofAgnicoEagle.
CapitalexpendituresbytheCompanyin2014were$475.4million.Thisincluded$76.6millionattheLaRondemine,$20.2millionattheLapamine,$34.3millionattheGoldexmine,$36.1millionattheCanadianMalarticmine,$106.2millionattheKittilamine,$48.4millionatthePinosAltosmine,$10.9millionattheCrestonMascotadepositatPinosAltos,$22.7millionattheLaIndiamine,$65.9millionattheMeadowbankmine,$48.3millionattheMeliadineprojectand$5.9millionatotherproperties.Inaddition,theCompanyincurred$25.9millionofexpendituresonminesiteexplorationand$56.0milliononexplorationactivitiesattheCompany'sexplorationpropertiesandoncorporatedevelopmentactivities.
2015
OnFebruary23,2015,AgnicoEagleenteredintoabindingletterofintent(the"LOI")withCanadianMalarticGP,YamanaandAbitibiRoyaltiesInc.("AbitibiRoyalties")regardingtheMalarticCHLprospectwhichabutstheCanadianMalarticmineandinwhichCanadianMalarticCorporationhelda70%interest,withtheremaining30%interestheldbyAbitibiRoyalties.OnMarch19,2015,AbitibiRoyaltiessoldits30%interestintheMalarticCHLprospecttoCanadianMalarticGP(the"CHLTransaction")inexchangefor459,197commonsharesoftheCompanyand3,549,685Yamanacommonshares,withavalueofapproximatelyC$35million(basedontherespectiveclosingpricesofsuchsharesontheTSXonFebruary20,2015,thedateimmediatelypriortothepublicannouncementbyAbitibiRoyaltiesofenteringintotheLOI),and3%netsmelterreturnroyaltiestoAbitibiRoyaltiesandNewOsiskoontheprospect.Inaddition,aspartoftheCHLTransactionallprioragreements,claimsandproceedingsrelatingtotheMalarticCHLprospect,includingthosepreviouslyinstitutedbyAbitibiRoyaltiesagainstOsiskopriortotheCompanyandYamanacompletingtheOsiskoArrangementwereterminated,settledandreleased.
PriortocompletionoftheOsiskoArrangementonJune6,2014,CliftonStarResourcesInc.("Clifton")institutedproceedingsagainstOsisko(nowCanadianMalarticCorporation)seeking,amongotherthings,anorderthatOsiskopayCliftonC$22.5millionindamages.Intheproceedings,Cliftonalleged,amongotherthings,thatOsiskowasobligatedtolendCliftonC$22.5milliononoraroundDecember1,2012pursuanttoaDecember10,2009commitmentletterandaDecember10,2009optionandjointventureagreement,eachbetweenCliftonandOsisko,andthatOsisko'sfailuretoadvancesuchloanresultedindamagestoClifton.CliftonfurtherallegedthatsuchloanwasintendedtobeusedtomakepaymentsundercertainoptionagreementsbetweenCliftonandthirdpartieswhichentitledCliftontoacquiresharesofsuchthirdpartiesthatownedinterestsintheconcessionscomprisingthe"DuparquetProject".FollowingthejointacquisitionofOsiskobytheCompanyandYamanaonJune16,2014,theCompanyandYamanaengagedindiscussionswithCliftontoadvancethesettlementofsuchclaims.EffectiveMarch2,2015,CanadianMalarticCorporation(asthesuccessortoOsisko)enteredintoasettlementagreementwithClifton,pursuanttowhichCanadianMalarticCorporationpaidCliftonapproximatelyC$5.27millioninconsiderationforafullandfinalreleaseofallclaimsarisingfromthefacts
AGNICO EAGLE 13 ANNUAL INFORMATION FORM
describedintheCliftonproceedings.Concurrently,undertwoseparatenon-brokeredprivateplacements,eachoftheCompanyandYamanasubscribedfor4,772,786commonsharesofCliftonatapriceofC$0.60pershare,fortotalproceedstoCliftonofapproximatelyC$5.73million.
OnJune9,2015,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),aCanadianbasedgoldexplorationcompanylistedontheTSX-V,pursuanttoacourt-approvedplanofarrangementundertheCanada Business CorporationsAct .Soltoroindirectlyholdsa100%interest,oranoptiontoearna100%interest,incertainminingpropertiesinJalisco,Mexico,includingtheElRayopropertywhichiscontiguouswiththeCompany'sElBarquenoproperty.Underthetermsofthearrangement,eachshareholderofSoltororeceived0.00793ofacommonshareoftheCompany,C$0.01incashandonecommonshareofanewlyformedOntariocompanynamedPalaminaCorp.valuedatC$0.02pershare.Soltoroisnowawholly-ownedsubsidiaryofAgnicoEagle.
OnJune11,2015,theCompanyacquiredfromOrexMineralsInc.("Orex")55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn"),whichholdstheBarseleprojectinnorthernSweden.Considerationfortheacquisitionwascomprisedof$6millionpaidtoOrexatclosingandadditionalpaymentsof$2millionincashorAgnicoEaglecommonshares(attheCompany'ssolediscretion)duetoOrexoneachofthefirstandsecondanniversariesoftheclosing.TheCompanyhasalsocommittedtoincurring$7.0millioninexplorationexpendituresassociatedwiththeBarseleprojectbyJune11,2018,andmayearnanadditional15.0%interestinGunnarniftheCompanycompletesapre-feasibilitystudyrelatedtotheBarseleproject.TheCompanyholdsamajorityoftheseatsontheboardofdirectorsofGunnarnandisthesoleoperatoroftheBarseleproject.
OnSeptember30,2015,theCompanyenteredintoanotepurchaseagreementwithRessourcesQuébecInc.,asubsidiaryofInvestissementQuébec,providingfortheissuanceof$50millionprincipalamountof4.15%seniorunsecurednotesdue2025(the"2015NotePurchaseAgreement").TheCompanyhasagreedtoapplyanamountequaltoorgreaterthanthenetproceedsfromtheissuanceofthenotestowardstheexpansion,development,upgradeormaintenanceofminingprojectsintheProvinceofQuébec.Foradditionaldetailssee"MaterialContracts–NotePurchaseAgreements"below.
CapitalexpendituresbytheCompanyin2015were$449.8million.Thisincluded$67.3millionattheLaRondemine,$6.5millionattheLapamine,$48.8millionattheGoldexmine,$43.4millionattheCanadianMalarticmine,$56.4millionattheKittilamine,$61.8millionatthePinosAltosmine,$4.2millionattheCrestonMascotadepositatPinosAltos,$23.4millionattheLaIndiamine,$65.2millionattheMeadowbankmine,$66.7millionattheMeliadineprojectand$6.0millionatotherproperties.Inaddition,theCompanyincurred$10.2millionofexpendituresonminesiteexplorationand$100.2milliononexplorationactivitiesattheCompany'sexplorationpropertiesandoncorporatedevelopmentactivities.
14 AGNICO EAGLE ANNUAL INFORMATION FORM
ThefollowingtablesetsouttheCompany'sexpectedcapitalexpendituresfor2016.
Estimated 2016 Capital Expenditures
(millionsof$) SustainingDevelopment
ProjectsCapitalized Exploration
Northern Business LaRonde 62 – 2Lapa – – –Goldex 10 64 3Kittila 56 10 3Meadowbank 41 – –Meliadine – 96 –CanadianMalartic 59 2 – 228 172 8
Southern Business PinosAltos 54 7 2LaIndia 8 – 2CrestonMascota 7 – 1 69 7 5
ProjectEval/CorpDev OtherExploration – – 2 Total Expenditures 297 179 15
Pre-2013
Inthesecondquarterof2004,theCompanyacquiredanapproximate14%ownershipinterestinRiddarhyttanResourcesAB("Riddarhyttan"),aSwedishpreciousandbasemetalsexplorationanddevelopmentcompanythatwasatthetimelistedontheStockholmStockExchange.InNovember2005,theCompanycompletedatenderoffer(the"RiddarhyttanOffer")foralloftheissuedandoutstandingsharesofRiddarhyttanthatitdidnotown.TheCompanyissued10,023,882ofitscommonsharesandpaidandcommittedanaggregateof$5.1millioncashasconsiderationtoRiddarhyttanshareholdersinconnectionwiththeRiddarhyttanOffer.OnMarch28,2011,RiddarhyttanwasmergedwithAgnicoEagleABandAgnicoEagleSwedenAB,withAgnicoEagleSwedenABasthecontinuingentity.TheKittilamineiscurrently100%ownedbyAgnicoEagleFinlandOy,whichiswholly-ownedbyAgnicoEagleSwedenAB,anindirectsubsidiaryoftheCompany.
Inthefirstquarterof2005,theCompanyenteredintoanexplorationandoptionagreementwithIndustriasPenolesS.A.deC.V.("Penoles")toacquirethePinosAltospropertyinnorthernMexico.ThePinosAltospropertyiscomprisedofapproximately11,000hectaresintheSierraMadregoldbelt,approximately225kilometreswestofthecityofChihuahuainthestateofChihuahuainnorthernMexico.InFebruary2006,theCompanyexerciseditsoptionandacquiredthePinosAltospropertyonMarch15,2006.Underthetermsoftheexplorationandoptionagreement,thepurchasepriceof$66.8millionwascomprisedof$32.5millionincashand2,063,635commonsharesoftheCompany.
InFebruary2007,theCompanymadeanexchangeofferforalloftheoutstandingsharesofCumberlandResourcesLtd.("Cumberland")notalreadyownedbytheCompany.Atthetime,Cumberlandwasapre-productiondevelopmentstagecompanylistedontheTSXandAmericanStockExchangewhoseprimaryassetwastheMeadowbankproperty.InMay2007,theCompanyacquiredapproximately92%oftheissuedandoutstandingsharesofCumberlandthatitdidnotpreviouslyownand,inJuly2007,theCompanycompletedtheacquisitionofallCumberlandsharesbywayofacompulsoryacquisition.TheCompanyissued13,768,510ofitscommonsharesandpaid$9.6millionincashasconsiderationtoCumberlandshareholdersinconnectionwithitsacquisitionofCumberland.
InApril2010,theCompanyenteredintoanagreementinprinciplewithComaplexMineralsCorp.("Comaplex")toacquirealloftheoutstandingsharesofComaplexthatitdidnotalreadyown.Atthetime,Comaplexowneda100%interestinthe
AGNICO EAGLE 15 ANNUAL INFORMATION FORM
advancedstageMeliadinegoldproperty,whichislocatedapproximately300kilometressoutheastoftheCompany'sMeadowbankmine.InMay2010,theCompanyexecutedthedefinitiveagreementswithComaplexand,inJuly2010byplanofarrangement,theCompanyacquired100%oftheMeliadinegoldpropertythroughtheacquisitionofComaplex,whichwasrenamedMeliadineHoldingsInc.Pursuanttothearrangement,ComaplextransferredtoGeomarkExplorationLtd.allassetsandrelatedliabilitiesotherthanthoserelatingtotheMeliadineproject.Inconnectionwiththearrangement,theCompanyissued10,210,848ofitscommonsharesasconsiderationtoComaplexshareholders.
InSeptember2011,theCompanyenteredintoanacquisitionagreementwithGraydResourceCorporation("Grayd"),aCanadian-basednaturalresourcecompanylistedontheTSX-V,pursuanttowhichtheCompanyagreedtomakeanoffertoacquirealloftheissuedandoutstandingcommonsharesofGrayd.Atthetime,Graydhelda100%interestintheLaIndiapropertylocatedintheMulatosGoldBeltofSonora,MexicoandhadrecentlydiscoveredtheTarachigoldporphyryprospectlocatedapproximatelytenkilometresnorthoftheLaIndiaproperty.InOctober2011,theCompanymadetheofferbywayofatake-overbidcircular,asamendedandsupplemented,and,inNovember2011,acquiredapproximately95%oftheoutstandingcommonsharesofGrayd.InJanuary2012,theCompanycompletedacompulsoryacquisitionoftheremainingoutstandingcommonsharesofGraydandGraydbecameawholly-ownedsubsidiaryoftheCompany.Inaggregate,theCompanyissued1,319,418ofitscommonsharesandpaidC$179.7millionincashasconsiderationtoGraydshareholdersinconnectionwiththetransaction.
OPERATIONS AND PRODUCTION Business Units and Foreign Operations
TheCompanyoperatesthroughthreebusinessunits:NorthernBusiness,SouthernBusinessandExploration.
TheCompany'sNorthernBusinessiscomprisedoftheCompany'soperationsinCanadaandFinland.TheCompany'sCanadianpropertiesincludetheLaRondemine,theLapamine,theGoldexmine,theMeadowbankmineandtheMeliadineproject,eachofwhichisa100%interesthelddirectlybytheCompany,anda50%interestintheCanadianMalarticMine,whichisheldindirectlythroughawholly-ownedsubsidiaryoftheCompanyandCanadianMalarticCorporation.TheCompany'soperationsinFinlandareconductedthroughitsindirectsubsidiary,AgnicoEagleFinlandOy,whichownstheKittilamine.In2015,theNorthernBusinessaccountedforapproximately78.9%oftheCompany'sgoldproduction.In2016,theCompanyanticipatesthattheNorthernBusinesswillaccountforapproximately79.3%oftheCompany'sgoldproduction.
TheCompany'sSouthernBusinessiscomprisedoftheCompany'soperationsinMexico.TheCompany'sPinosAltosmine,includingtheCrestonMascotadeposit,isheldthroughitssubsidiary,AgnicoEagleMexicoS.A.deC.V.TheLaIndiamineisownedbytheCompany'sindirectsubsidiary,AgnicoSonora,S.A.deC.V.In2015,theSouthernBusinessaccountedforapproximately21.1%oftheCompany'sgoldproduction.In2016,theCompanyanticipatesthattheSouthernBusinesswillaccountforapproximately20.7%oftheCompany'sgoldproduction.
TheCompany'sExplorationgroupfocusesprimarilyontheidentificationofnewmineralreservesandmineralresourcesandnewdevelopmentopportunitiesinpoliticallystableandprovengoldproducingregions.CurrentexplorationactivitiesareconcentratedinCanada,Europe,LatinAmericaandtheUnitedStates.Severalprojectswereevaluatedduring2015intheseregionswheretheCompanybelievesthepotentialforgoldoccurrencesisexcellentandwhichtheCompanybelievestobepoliticallystableandsupportiveoftheminingindustry.TheCompanycurrentlymanages70propertiesinCanada,5propertiesintheUnitedStates,3groupsofpropertiesinFinland,2propertiesinSwedenand18propertiesinMexico.ExplorationactivitiesaremanagedfromofficesinVald'Or,Quebec;Reno,Nevada;Chihuahua,HermosilloandGuadalajara,Mexico;Kittila,Finland;Storuman,Sweden;andVancouver,BritishColumbia.
Northern Business
LaRondeMine
TheLaRondemineissituatedapproximatelyhalfwaybetweenRouyn-NorandaandVald'OrinnorthwesternQuebec(approximately470kilometresnorthwestofMontreal,Quebec)inthemunicipalitiesofPreissacandCadillac.AtDecember31,2015,theLaRondeminewasestimatedtohaveprovenandprobablemineralreservescontainingapproximately3.1millionouncesofgoldcomprisedof18.2milliontonnesoforegrading5.31gramspertonne.TheLaRondemineconsistsoftheLaRondepropertyandtheadjacentElCocoandTerrexproperties,eachofwhichis100%ownedandoperatedbytheCompany.TheLaRondeminecanbeaccessedeitherfromVald'OrintheeastorfromRouyn-Norandainthewest,eachofwhicharelocatedapproximately60kilometresfromtheLaRondemineviaQuebecprovincial
16 AGNICO EAGLE ANNUAL INFORMATION FORM
highwayNo.117.TheLaRondemineissituatedapproximatelytwokilometresnorthofhighwayNo.117onQuebecregionalhighwayNo.395.TheCompanyhasaccesstotheCanadianNationalRailwayatCadillac,Quebec,approximatelysixkilometresfromtheLaRondemine.
TheCompanyfirstacquiredaninterestintheLaRondepropertyin1974throughanindirectinvestmentinDumagamiMinesLimited("Dumagami").TheCompanyacquired100%oftheoutstandingsharesofDumagamionDecember19,1989,andonDecember29,1992,Dumagamitransferredallofitspropertyandassets,includingtheLaRondemine,totheCompanyandsubsequentlydissolved.
TheLaRondemineoperatesunderminingleasesobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheLaRondepropertyconsistsof36contiguousminingclaimsandoneprovincialmininglease.TheElCocopropertyconsistsof22contiguousminingclaimsandoneprovincialmininglease.TheTerrexpropertyconsistsof21miningclaimsandoneprovincialminingleasethatwasacquiredinJuly2014.TheminingleasesontheLaRonde,ElCocoandTerrexpropertiesexpirein2018,2021and2034,respectively,andareautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.TheCompanyalsohasthreesurfacerightsleasesthatrelatetothewaterpipelinerightofwayfromLakePreissacandtheeasternextensionoftheLaRondetailingspond#7ontheElCocoproperty.Thesurfacerightsleasesarerenewableannually.
LocationMapoftheLaRondeMine(asatDecember31,2015)
TheLaRondemineincludesundergroundoperationsattheLaRondeandElCocopropertiesthatcanbothbeaccessedfromthePennaShaft,amill,atreatmentplant,asecondarycrusherbuildingandrelatedfacilities.In2003,explorationworkstartedtoextendoutsideoftheLaRondepropertyontotheTerrexpropertywhereadown-plungeextensionofZone20Northwasdiscovered.TheTerrexpropertyissubjecttoa5%netprofitsroyaltyinfavourofDelferGoldMinesInc.TheCompanydoesnotexpecttopayroyaltiesinrespectofthispartofthepropertyin2016.Inaddition,theCompanyowns100%oftheSphinxpropertyimmediatelytotheeastoftheElCocoproperty.In2015,85%oftheoreprocessedfromtheLaRondeminewasextractedfromthedeeperportionoftheLaRondemine(thatis,belowLevel245)orthe"LaRondemineextension".In2016,theCompanyanticipatesthatapproximately89%oftheoreprocessedwillbefromthisdeeperpartofthemine.
AGNICO EAGLE 17 ANNUAL INFORMATION FORM
TheCompanyexpectsfutureby-productmetalproductionattheLaRondeminetodeclineasoperationscontinuetoshifttowardsdeepersectionsoftheminewheregoldgradesarehigherandby-productmetalsarelessprevalent.Theassociateddecreaseinby-productrevenuesisexpectedtoresultinhighertotalcashcostsperounceonaby-productbasisattributabletooreextractedfromthesepartsofthemine.
MapoftheAbitibiregionshowingthelocationoftheLaRonde,Lapa,GoldexandCanadianMalarticMines
18 AGNICO EAGLE ANNUAL INFORMATION FORM
Mining and Milling Facilities
SurfacePlanoftheLaRondeMine(asatDecember31,2015)
TheLaRondeminewasoriginallydevelopedwitha1,207-metreshaft(Shaft#1)andanundergroundrampaccesssystem.TherampaccesssystemisavailabledowntoLevel25ofShaft#1andcontinuesdowntoLevel299atthePennaShaft.ThemineralreserveaccessiblefromShaft#1wasdepletedinSeptember2000andShaft#1isnolongerinuse.Asecondproductionshaft(Shaft#2),locatedapproximately1.2kilometrestotheeastofShaft#1,wascompletedin1994toadepthof525metresandwasusedtomineZones6and7.BothorezonesweredepletedinMarch2000andtheworkingswereallowedtoflooduptoLevel6(approximately280metres).Athirdshaft(thePennaShaft),locatedapproximately800metrestotheeastofShaft#1,wascompleteddowntoadepthof2,250metresinMarch2000.ThePennaShaftisusedtomineZones20North,20South,6and7.
In2006,theCompanyinitiatedconstructionoftheLaRondemineextension.HoistingfromthisdeeperpartoftheLaRondeminebeganinthefourthquarterof2011andcommercialproductionwasachievedinNovember2011.AccesstothedeeperpartoftheLaRondemineisprovidedthrougha823-metreinternalshaft(Shaft#4)startingfromLevel203,foratotaldepthof2,858metresbelowthesurfacewhichwascompletedinNovember2009.Arampisusedtoaccessthelowerpartoftheorebodydownto3,110metresbelowthesurface.AninternalwinzesystemisusedtohoistorefromdepthtofacilitiesonLevel215,approximately2,150metresbelowthesurface,whereitistransferredtothePennaShafthoist.
ProductionfromtheLaRondemineextensioncontinuestomovetowardsanticipatedsteady-statelevels.Asaresult,logisticalproblems,suchascongestionintheundergroundworkings,occurfromtimetotime.TheCompanyanticipatesthattheseissues,andanyotherissuesthatmaypreventordelayextractionandtransportationoforefromaparticular
AGNICO EAGLE 19 ANNUAL INFORMATION FORM
stope,willbelessprevalentwhenthestopedevelopmentworkatdepthismoreadvanced.Mostofthedelaysencounteredduring2015wererelatedtoseismicity.
ThecoolingplantonLevel262beganoperatinginDecember2013.Thiscoolingsystemreducesthefrequencyofheatrelateddelaysexperiencedinpreviousyearsinthedeepestpartofthemine.Theventilationnetworkisexpectedtocontinuetoexpandoverthenextfewyearstoincreasetheairflowinthedeeperareasofthemine.
In2015,theCompanycompletedtheinstallationofacoarseoreconveyorsystemthatextendsfromLevel292tothecrusheronLevel280.Thenewconveyorsystemwascommissionedinthesecondhalfof2015.Aneworepassandsilodesignedtofeedtheconveyorsystemareexpectedtobecommissionedinthesecondquarterof2016.Thenewconveyorisexpectedtoimproveminingflexibilityandincreasetherobustnessofthesystem.Thissystemisexpectedtoreducecongestioninthedeeperportionsofthemineandincreasethecapacitytomovematerial.
Mining Methods
TheprimarysourceoforeattheLaRondeminecontinuestobefromundergroundminingmethods.During2015,twominingmethodswereused:longitudinalretreatwithcementedrockbackfillorpastebackfillandtransverseopenstopingwithcementedrockbackfill,pasteorunconsolidatedbackfill.Inaddition,toaddressconcernsregardingthefrequencyandintensityofseismiceventsencounteredatthelowerlevelsoftheLaRondemine,ahybridofthesetwomethodshasbeendevelopedandused.Intheundergroundmine,sublevelsaredrivenatbetween30-metreand40-metreverticalintervals,dependingonthedepth.Stopesareundercutin15-metrewidepanels.Inthelongitudinalmethod,panelsareminedin15-metresectionsandbackfilledwith100%cementedrockbackfillorpastebackfill.Thepastebackfillplantwascompletedin2000andislocatedonthesurfaceattheprocessingfacility.Inthetransverseopenstopingmethod,approximately50%oftheoreisminedinthefirstpassandfilledwithcementedrockbackfillorpastebackfill.Onthesecondpass,theremainderoftheoreisminedandfilledwithunconsolidatedwasterockbackfillorcementedpastebackfill.
ThethroughputatLaRondein2015averaged6,141tonnesperdaycomparedwith6,244tonnesperdayin2014(basedon334workingdays).Thereducedthroughputin2015wasduetothelowerspecificgravityofthematerialandthecontinuingtransitiontothelowermine,wherefactorssuchasheat,congestion,seismicityandlackofoperationalflexibilityundergroundhadanegativeimpactonthemine'sabilitytoprovidetheplannedtonnagetothemill.In2015,approximately85%oftheorewasextracted(mucked)fromtheLaRondemineextension.In2016,thisproportionisexpectedtobeapproximately89%.
TheCompany'soperationsattheLaRondeminereachmorethanthreekilometresbelowthesurface.Thereareveryfewresourcesavailabletomodelthegeomechanicalconditionsatthisdepth,whereoperationsaresubjecttohighstresslevels.TheCompanyconductsperiodictechnicalreviewsofitsoperationsattheselevelsusingconsultantswithexperienceindeepmining.TheCompanyusestheresultsofthesetechnicalreviewstoadaptbestminingpracticesandadjusttheminingsequenceforitsoperationsattheselevels.
Surface Facilities
SurfacefacilitiesattheLaRondemineincludeaprocessingplantwithadailycapacityof7,200tonnesofore,whichhasbeenexpandedfourtimessince1987fromtheoriginalrateof1,630tonnesperday.Beginningin1999,transitiontotheLaRondemine'spolymetallicmassivesulphideorebodyrequiredseveralmodificationstotheprocessingplant.In2008,theinstallationofalimitedcopper/leadseparationflotationcircuit,followingthecopperflotationcircuit,wascompleted.Alsoin2008,acyanidationplantbeganoperationforthetreatmentofsulphideconcentratefromtheGoldexmine.ACILcircuitwascompletedandbeganoperationinApril2013toreplacetheexistingLaRondepreciousmetalMerrill-Crowecircuit.TheLaRondemineisalsothesitefortheLapamineoreprocessingplant(1,500tonnesperday),whichwascommissionedinthesecondquarterof2009.
Theorerequiresaseriesofgrinding,copper/leadflotationandseparation,zincflotationandzinctailspreciousmetalsleachingcircuits,nowfollowedbyCILrecovery.Pastebackfillandcyanidedestructionplantsoperateintermittently.Thetailingsareahasadedicatedcyanidedestructionandmetalsprecipitationplantthatwaterpassesthroughpriortorecirculatingtothemill.Duringthesummerof2014,theinstallationofanewseriesofprocessingtanksbeganinordertoincreasetheprocessingtime.ThisinstallationwascompletedinMarch2015withthereplacementoftheoldseriesoftanksthathavebeeninoperationsince1993.Abiologicalwatertreatmentplantwascommissionedin2005toaddressthebuild-upofthiocyanateinthetailingspondsattheLaRondemine.Thisbuild-upwastheresultofthehighsulphidecontentoftheLaRondemineoreandhighrateofrecirculationoftheprocesswater.Theplantusesbacteriatooxidizeanddestroythiocyanateinthewaterandremovesphosphatepriortoitsreleasetotheenvironment.
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TheGoldexconcentratecircuitconsistsofpulpreceivedfromtheGoldexmillviatruckandsubsequentleachingofthepulpwithcyanide.TheleachedmaterialissenttotheLapaCILcircuitforgoldrecoveryalongwithLaparesidualpulp.TheGoldexconcentratecircuitceasedtooperateinNovember2011followingthesuspensionofminingoperationsatGoldex.Inthefourthquarterof2013,miningoperationresumedintheMandEZonesoftheGoldexmineandtheGoldexconcentratecircuitresumedoperation.FromMay2014toApril2015,theGoldexconcentratewasprocessedintheLapaCILcircuit.SinceApril2015,theGoldexconcentratehasbeenprocessedintheLaRondeCIPcircuit.
TheLapamineoreprocessingplantconsistsofatwo-stagegrindingcircuittoreducethegranularityoftheore.Agravityrecoverycircuitthatisincorporatedintothegrindingcircuitrecoversupto45%oftheavailablegold,dependingonfeedgrades.TheresidualpulpisleachedinaconventionalCILcircuittodissolvethebalanceofthepreciousmetal.Acarbonstripcircuitrecoversthegoldfromthecarbonwhichisrecycledtotheleachcircuit.
Production and Mineral Recoveries
During2015,theLaRondeminehadpayableproductionof267,921ouncesofgold,915,720ouncesofsilver,3,501tonnesofzincand4,941tonnesofcopperfrom2,241,424tonnesoforegrading3.91gramsofgoldpertonneand16.47gramsofsilverpertonne,0.31%zincand0.27%copper.Thetotalcashcostsperounceofgoldproducedonaby-productbasisatLaRondein2015was$590andonaco-productbasiswas$760.TheLaRondeprocessingfacilityaveraged6,141tonnesoforeperdayandoperated93.15%ofavailabletime.TheminesitecostspertonneatLaRondewasC$99.71.Goldandsilverrecoveryaveraged95.02%and77.17%,respectively.Zincrecoveryaveraged50.22%withaconcentratequalityof51.93%zinc.Copperrecoveryaveraged81.35%withaconcentratequalityof20.65%copper.
ThefollowingtablesetsoutthemetalrecoveriesandconcentrategradesattheLaRondeminein2015.
Copper Concentrate (25,282 tonnes
produced)
Zinc Concentrate (7,947 tonnes produced)
Head
Grades Grade Recovery Grade Recovery
Overall Metal
RecoveriesPayable
Production
Gold 3.91g/t 235.7g/t 68.02% 19.2g/t 1.73% 95.09% 267,921oz
Silver 16.47g/t 644.7g/t 44.16% 194.6g/t 4.23% 84.25% 915,720oz
Copper 0.27% 20.65% 86.03% 0% 0% 86.03% 4,942t
Zinc 0.31% 1.66% 6.04% 51.93% 59.26% 59.26% 3,501t
AnnualproductionattheLaRondeminein2016isexpectedtobeapproximately275,000ouncesofgold,1,030,000ouncesofsilver,4,575tonnesofcopperand4,117tonnesofzincfrom2.1milliontonnesoforegrading4.28gramspertonneofgold,20.0gramspertonneofsilver,0.30%copperand0.35%zinc.Thetotalcashcostsperounceofgoldproducedin2016onaby-productbasisareexpectedtobe$592,withgoldrecoveryestimatedat94.9%,silverrecoveryof76.0%,copperrecoveryof80.8%andzincrecoveryof56.1%.GoldrecoveryattheLaRondemineisdistributedapproximatelyasfollows:68.0%inthecopperconcentrate,1.8%inthezincconcentrateand25.3%vialeaching.MinesitecostspertonneofC$114areexpectedin2016.
Environmental, Permitting and Social Matters
Currently,wateristreatedatvariousfacilitiesattheLaRondemine.Watercontainedinthetailingsthatistobeusedasundergroundbackfillistreatedtodegradecyanideusingasulphurdioxideandairprocess.Thetailingsenteringthetailingspondarefirstdecantedandtheclearwatersubjectedtonaturalcyanidedegradation.Thiswateristhentransferredtopolishingpond#1toundergoasecondarytreatmentataplantlocatedbetweenpolishingponds#1and#2thatusesaperoxysilicateprocesstodestroycyanide,andlimeandcoagulant(ferricsulfate)areusedtoprecipitatemetals.Thetailingspondoccupiesanareaofabout175hectares.Wasterockthatisnotusedundergroundforbackfillisbroughtuptothesurfaceandstoredincloseproximitytothetailingspondtobeusedtobuildcofferdamsandberms
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insidethepondtoincreasestoragecapacity.Awasterockpilecontaininglessthan100,000tonnesofwasteandoccupyingaboutninehectaresislocatednorthofthemill.
DuetothehighsulphurcontentoftheLaRondemineore,theCompanyhashadtoaddresstoxicityissuesinthetailingspondssincethe1990s.Thetreatmentprocesshasbeenstablesinceintroducingandoptimizingabiologicaltreatmentplantin2004,andtheeffluenthasremainednon-toxicsince2006.In2006,theCompanycommencedanammoniastrippingoperationinvolvinganeffluentpartiallytreatedbythebiologicaltreatmentplantwhichallowedanincreaseintreatmentflowrate,whilekeepingthefinaleffluenttoxicity-free.Inaddition,waterfromacidrockdrainagearoundthemillsandthewastestockpilearetreatedtoremovemetalspriortodischargeatahighdensitysludgelimetreatmentplantlocatedattheLaRondemill.In2015,thefinalphaseoftheconstructionofamajorcofferdamwascompletedtoanelevationof356metres.Bermswillbecompletedin2016tofinalizethe356cofferdamconcept.
Capital Expenditures
CapitalexpendituresattheLaRondemineduring2015wereapproximately$67.3million,whichincludedsustainingcapitalexpenditures,deferredexpenseandincludedcapitalizeddrilling.Budgeted2016capitalexpendituresattheLaRondemineare$62million,excludingcapitalizeddrilling.
Development
In2015,atotalof12,795metresoflateraldevelopmentwascompleted.Developmentwasfocusedonthepreparationofthelowermineproductionhorizon.Atotalof7,318metresofdevelopmentworkwascompletedfortheLaRondemineextensioninfrastructureandtheramptoaccesstheLaRondemineextension.
TheCompanyisalsoevaluatingthepotentialtodevelopandminetheBousquetZone5ontheadjoiningBousquetpropertyusingundergroundrampaccess.TheminingmethodislikelytobesimilartothatcurrentlyemployedattheGoldexmine(long-holestoping,withcementedpastebackfill),andprocessingcoulduseexcesscapacityfromtheLapacircuitatLaRonde.Dewateringoftheoldpitisunderwayandpermitapplicationstocollectabulksampleareexpectedtobesubmittedshortly.Aninternaltechnicalstudyiscurrentlyexpectedtobecompletedbytheendof2016.
Atotalof12,700metresoflateraldevelopmentisplannedfor2016.Themainfocusofdevelopmentremainsthelowermine(LaRondeextensionarea),thedevelopmenttowardthelowestlevelsandtheWestmineportion.
Geology, Mineralization and Exploration
Geology
TheLaRondepropertyislocatednearthesouthernboundaryoftheArchean-age(2.7billionyearsold)AbitibiSubprovinceandthePontiacSubprovincewithintheSuperiorGeologicalProvinceoftheCanadianShield.ThemostimportantregionalstructureistheCadillac-LarderLake("CLL")faultzone,markingthecontactbetweentheAbitibiandPontiacSubprovinces,locatedapproximatelytwokilometrestothesouthoftheLaRondeproperty.
ThegeologythatunderliestheLaRondemineconsistsofthreeeast-west-trending,steeplysouth-dippingandgenerallysouth-facingregionalgroupsofrockformations.Fromnorthtosouth,theyare:(i)400metres(approximatetruethickness)oftheKewagamaGroup,whichismadeupofathickbandofinterbeddedwacke;(ii)1,500metresoftheBlakeRiverGroup,avolcanicassemblagethathostsalltheknowneconomicmineralizationontheproperty;and(iii)500metresoftheCadillacGroup,madeupofathickbandofwackeinterbeddedwithpeliticschistandminorironformation.
Zonesofstrongsericiteandchloritealterationthatenclosemassivetodisseminatedsulphidemineralization(includingtheorethatisminedforgold,silver,zincandcopperattheLaRondemine)followsteeplydipping,east-west-trending,anastomosingshearzonestructureswithintheBlakeRiverGroupvolcanicunitsacrosstheproperty.TheseshearzonesarepartofthelargerDoyon-DumagamiStructuralZonethathostsseveralimportantgoldoccurrences(includingtheDoyongoldmine,theWestwoodprojectandtheformerBousquetmines)andhasbeentracedforovertenkilometreswithintheBlakeRiverGroup,fromtheLaRondeminewestwardtotheMouskagoldmine.
Mineralization
TheLaRondedepositisaworld-classgold-richvolcanogenicmassivesulphide(VMS)deposit.LaRondelenseswereformedmainlybysulphideprecipitationfromhydrothermalfluidsontheseafloorandbyreplacementbelowlenses.ThestackingoftheLaRondelensesistheresultofsuccessivevolcanicevents,intercalatedbycyclesofhydrothermatactivityassociatedwithreactivationofsynvolcanicfaults.
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Thegold-bearingzonesattheLaRondeminearelensesofdisseminatedstringersthroughtomassiveaggregatesofcoarsepyritewithzinc,copperandsilvercontent.Tenzonesthatvaryinsizefrom50,000to40,000,000tonneshavebeenidentified,ofwhichfourare(orarebelievedtobe)economic.Goldcontentisnotproportionaltothetotalsulphidecontentbutdoesincreasewithcoppercontent.Goldvaluesarealsohigherinareaswherethepyritelensesarecrosscutbytightlyspacednorth-southfractures.
Thesehistoricalrelationships,whichwerenotedatLaRondeShaft#1'sMainZone,aremaintainedatthePennaShaftzones.Thezinc-silver(i.e.Zone20North)mineralizationwithlowergoldvalues,commonintheuppermine,gradesintogold-coppermineralizationwithinthelowermine.ThepredominantbasemetalsulphideswithintheLaRondeminearechalcopyrite(copper)andsphalerite(zinc).
TheCompanybelievesthatZone20Northisoneofthelargestgold-bearingmassivesulphidemineralizedzonesintheworldandoneofthelargestknownmineralizedzonesintheAbitibiregionofOntarioandQuebec.Zone20NorthcontainsthemajorityofthemineralreservesandmineralresourcesattheLaRondemine,including17.9milliontonnesofprovenandprobablemineralreservesgrading5.36gramsofgoldpertonne,representing98%ofthetotalprovenandprobablemineralreservesattheLaRondemine,6.3milliontonnesofindicatedmineralresourcesgrading3.54gramsofgoldpertonne,representing92%ofthetotalmeasuredandindicatedmineralresourcesattheLaRondemine,and7.8milliontonnesofinferredmineralresourcesgrading4.44gramsofgoldpertonne,representing85%ofthetotalinferredmineralresourcesattheLaRondemine.
Zone20Northextendsbetween700metresbelowthesurfaceandatleast3,700metresbelowthesurface,andremainsopenatdepth.Withincreasedaccessonthelowerlevelsofthemine(i.e. ,belowLevel215andfromtheinternalshaftonlevels257and278),thetransformationfromazinc/silverorebodytoagold/copperdepositisexpectedtocontinueduring2016.
Zone20Northcanbedividedintoanupperzinc/silverenrichedgoldpoorzoneandalowergold/copperenrichedzone.Thezinc/silverzonehasbeentracedoveraverticaldistanceof1,700metresandahorizontaldistanceof570metres,withthicknessesapproaching40metres.Thegold/copperzonehasbeentracedoveraverticaldistanceofover2,200metresandahorizontaldistanceof900metres,withthicknessesvaryingfromthreeto40metres.Thezinc/silverzoneconsistsofmassivezinc/silvermineralizationcontaining50%to90%massivepyriteand10%to50%massivelightbrownsphalerite.Thegold/copperzonemineralizationconsistsof30%to70%finelydisseminatedtomassivepyritecontaining1%to10%chalcopyriteveinlets,minordisseminatedsphaleriteandrarespecksofvisiblegold.Goldgradesaregenerallyrelatedtothechalcopyriteorcoppercontent.Atdepth,themassivesulphidelensbecomesricheringoldandcopper.During2015,2.0milliontonnesoforegrading4.02gramsofgoldpertonne,15.91gramsofsilverpertonne,0.22%zincand0.28%copperwereminedfromZone20North.
Exploration and Drilling
ThecombinedamountofgoldinprovenandprobablemineralreservesattheLaRondemineattheendof2015was3.11millionounces(18.2milliontonnesoforegrading5.31gramsofgoldpertonne,19.73gramsofsilverpertonne,0.24%copperand0.81%zinc),whichrepresentsadecreaseof323,000containedouncesofgoldfromtheendof2014,afterproducing267,921ouncesofgold(282,000ouncesin-situgoldminedin2015).Thereductioninmineralreservesisprincipallyassociatedwithoreminedduring2015anddelineationanddefinitiondrillingdoneattheedgesandinthedeepestpartoftheorebody,respectively.UndergroundindicatedmineralresourcesattheLaRondemineincreasedby51,000tonnesoforetoatotalof6.8milliontonnesoforegrading3.49gramsofgoldpertonne,18.25gramsofsilverpertonne,0.24%copperand0.82%zinc,primarilyduetopositivediamonddrillingresultsintheconversiondrillingonthewesternmarginabovelevel284andbelowthedeeperlevelofmineralreserves(level311).UndergroundinferredmineralresourcesattheLaRondemineincreasedby348,000tonnesoforetoatotalof9.1milliontonnesoforegrading4.26gramsofgoldpertonne,15.07gramsofsilverpertonne,0.23%copperand0.90%zinc.TheconversionofinferredmineralresourcestoindicatedmineralresourcesinZone20Northatdepthwasoffsetbypositiveexplorationdrillingbelow3.4kilometresdepth.
DiamonddrillingisusedforexplorationontheLaRondeproperty.In2015,26holes(8,994metres)weredrilledfordefinition(conversion)drillingand23holes(10,511metres)wereforexploration.ExpendituresondiamonddrillingattheLaRondemineduring2015wereapproximately$2.9million,including$1.4millionindrillingexpenseschargedtocapitalcostsattheLaRondemine,and$1.5millionexpensedasexplorationdrilling.
Themainfocusofthe2015explorationprogramwascontinuingtheinvestigationandconversionofZone20NorthatdepthandexplorationoftheZone6and7horizonsatdepthfromthenewaccessesdevelopedin2012and2013onLevels290,292and293.The2015conversionprogramonZone20Northwasfocusedonconversionfrominferredto
AGNICO EAGLE 23 ANNUAL INFORMATION FORM
indicatedmineralresourcesabovelevel281onthewesternmarginandatdepth,intheeasternandcenterportionsofthedeposit(belowtheactuallimitofmineralreserves).Thepositiveresultsobtainedinthisprogramallowedtheadditionofindicatedmineralresourcesbetweenlevel269and281onthewestmarginandcontinuedtoconfirmtheextensionoftheorebodyto3.3kilometresbelowthesurface,or200metresbelowthecurrentmaximumdepthofmineralreserves.Theconversionprogramwillcontinuein2016through2018,andwillinvestigatetheorebodyto3.7kilometresbelowthesurfaceandtothewest.Aspartofthe2015explorationprogram,drillingwasconductedontheeastandcenterportionoftheZone20Northbetween3.4and3.7kilometersbelowthesurface.Positiveresultsallowedtheadditionofinferredmineralresourcesatdepth,mostlytotheeastoftheorebody.Thiscampaignwillcontinuetothewestin2016.The2015explorationprogramalsoincludedafollowupcampaignontheZone6and7horizonsfromthenewlydevelopedaccessesonLevel293.In2012,adeepholefromLevel215intersectedtheZone6horizonatadepthof3,551metresbelowthesurface.The22.8metrethickmassivesulphidezonehadthesamecharacteristicsasotherdepositsontheproperty.In2013,afirstfollowupcampaignwasplannedfromLevel278todeterminetheextentofthedepositbutthecampaignwasstoppedduetoexcessivedeviationduringthedrillingofthefirsthole.TheCompanydecidedtodelaytheprogramuntilnewaccessesweredevelopedfromthelowerlevelsofthemine(Level293)andtheaccessonLevel293wasdevelopedin2014.ThedrillingcampaignstartedinOctober2014andwillcontinueinto2016totestthecontinuityofZone6from2.9to3.2kilometresbelowthesurface.Anotherdrillingaccessisplannedtobedevelopedfrom2016through2019toprovidebetterpositioningforanextensivediamonddrillingprogramonZone6toadepthof3.7kilometres.
In2016,theCompanyexpectstospend$1.9millionon14,115metresofdefinition(conversion)drillingand$2.0millionon11,850metresofexplorationdrilling,foratotalof$3.9millionattheLaRondemine.
LapaMine
TheLapamine,whichachievedcommercialproductioninMay2009,islocatedapproximately11kilometreseastoftheLaRondeminenearCadillac,QuebecandisaccessiblebyQuebecprovincialhighwayNo.117.AtDecember31,2015,theLapaminewasestimatedtocontainprovenandprobablemineralreservesof0.78millionouncesofgoldcomprisedof0.44milliontonnesoforegrading5.49gramspertonne.TheLapapropertyismadeupoftheTonawandaproperty,whichconsistsof44contiguousminingclaimsandoneprovincialmininglease,andtheZulapaproperty,whichconsistsofoneminingconcession.TheminingleaseatLapaexpiresin2029.
LocationMapoftheLapaMine(asatDecember31,2015)
24 AGNICO EAGLE ANNUAL INFORMATION FORM
TheCompany'sinitialinterestintheLapapropertywasacquiredin2002throughanoptionagreementwithBreakwaterResourcesLtd.("Breakwater").TheCompanyundertookanaggressiveexplorationprogramanddiscoveredanewgolddepositalmost300metresbelowthesurface.In2003,theCompanypurchasedtheLapapropertyfromBreakwaterforapaymentof$8.9million,a1%netsmelterreturnroyaltyontheTonawandapropertyanda0.5%netsmelterreturnroyaltyontheZulapaproperty.In2008,theCompanypurchasedallroyaltiesfromBreakwaterforC$6.35million.Inaddition,boththeZulapaandTonawandapropertiesaresubjecttoa5%netprofitroyaltypayabletoDelferGoldMinesInc.In2004,anadditionalminingclaimwasaddedtotheCompany'sholdingsattheLapamineandinJanuary2009,aminingleasewasenteredintowiththeMinistryofEnergyandNaturalResources(Quebec).
Mining and Milling Facilities
SurfacePlanoftheLapaMine(asatDecember31,2015)
TheLapapropertyhostsanundergroundminingoperationandtheoreistruckedtoaprocessingfacilityattheLaRondemine,whichhasbeenmodifiedtotreattheore,recoverthegoldandstoretheresidues.TailingsfromtheLapaminearedepositedinthetailingspondattheLaRondemine.
InJuly2004,theCompanyinitiatedthesinkingofan825-metredeepshaftattheLapaproperty.InApril2006,2,800tonnesofdevelopmentorewasextractedatLapaandwasestimatedtocontain,onaverage,10.65gramsofgoldpertonne.Theseresultsandresultsfromothersamplingmethodswereincorporatedintoafeasibilitystudyand,inJune2006,theCompanyacceleratedconstructionoftheLapamine.Thisconstructionincludedextendingtheshafttoadepthof1,369metres,whichwascompletedinOctober2007.SignificantadditionalconstructionwasrequiredinorderfortheLapaminetoachievecommercialproductioninMay2009,includingtheconstructionoftheLapamineoreprocessingfacilityattheLaRondemine.
AGNICO EAGLE 25 ANNUAL INFORMATION FORM
Mining Methods
TwoundergroundminingmethodsareusedattheLapamine:longitudinalretreatwithcementedbackfillandlocallytransverseopenstopingwithcementedbackfill.Sublevelsaredrivenat30-metreverticalintervals.Stopesareminedin12-metresectionsandbackfilledwith100%cementedrockbackfill.TheundergroundinfrastructureattheLapamineispredominantlylocatedinareaswithstablerockconditions.However,incertainareas,theundergroundinfrastructureislocatedinatalcchloriteschist(mainlyorezones),whichmayhaveahigherpotentialofinstability.ThisriskofinstabilityismanagedattheLapaminethroughagroundcontrolprogram.ExcavatedorefromtheLapamineistruckedviaprovincialhighwaytotheprocessingfacilityattheLaRondemine.
Surface Facilities
TheinfrastructureontheLapapropertyincludestherefurbishedformerLaRondeShaft#1headframeandshafthouse,servicebuildings,offices,asettlingpondforwastewater,dryfacilities,anorebin,adieselreservoirandawatertreatmentplant.AbackfillplantwascommissionedinDecember2008andthesedimentationpondwasextendedin2007tocontrolsuspendedsolidsfromundergrounddewateringdischarge.
OrefromtheLapamineisprocessedindedicatedmillingfacilitiesintegratedintothemillattheLaRondemine.Withanaverageproductionof1,651tonnesperdayin2015,themineoperatedconsistentlyaboveitsdesignrateof1,500tonnesperday.Dilution,mainlyassociatedwithtalcchloriteschistfromthesouthwall,averaged71%in2015,consistentwithprioryears.
Production and Mineral Recoveries
During2015,theLapaminehadpayableproductionof90,967ouncesofgoldfrom559,926tonnesoforegrading5.83gramsofgoldpertonne.ThetotalcashcostsperounceofgoldproducedatLapain2015was$590onaby-productbasisandwas$591onaco-productbasisandtheLapaprocessingfacilityaveraged1,534tonnesperdayandoperatedapproximately93.7%ofavailabletime.Goldrecoveryaveraged86.47%andtheminesitecostspertonneatLapawereC$117in2015.
ThefollowingtablesetsoutthemetalrecoveriesattheLapaminein2015.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 5.83g/t 86.47% 90,967oz
Goldproductionduring2016attheLapamineisexpectedtobeapproximately60,000ouncesfrom0.41milliontonnesoforegrading5.3gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$640onaby-productbasis,andestimatedgoldrecoveryof86.8%.MinesitecostspertonneofapproximatelyC$123areexpectedin2016.Basedonthelifeofmineplan,2016isexpectedtobethefinalyearoffullproductionattheLapamine.
Environmental, Permitting and Social Matters
100%ofthewaterusedundergroundattheLapaminewasinitiallyre-circulatedfromminedewateringaftersettlinginthesedimentationpond.Toreduceammonialevelbuild-upandreducetheammoniacontentinthewater,theCompanybuilta3.5-kilometresurfacepipelinetoobtainfreshwaterfromtheHevaRiver.ThepipelinewascommissionedinNovember2009.TheCompanyalsocommissionedawatertreatmentplantonsiteinthefourthquarterof2010toremovetheammoniaintheminedewateringwater.Outputiscurrentlywithinthetargetrangeatapproximatelytenpartspermillionofammoniaandaverageefficiencyisatapproximately70%.
Inthesecondquarterof2012,anOberlinfiltrationunitwasinstalledinsidethetreatmentplanttoimprovetheremovalofsuspendedsolidsfromwatercomingfromundergroundoperations.Despitetheadditionalfiltration,theprocessremainssensitivetovariationsintheconcentrationsofsuspendedsolidsandmanagingitrequiresparticularattention.Thewasterockpilenaturallydrainstowardsthesedimentationpond.Awasterocksamplingprogramimplementedduringtheshaftsinkingphaseverifiedthenon-acidgeneratingnatureofthewasterock.WatereffluentfromthesedimentationpondissampledasrequiredundertheQuebecandCanadianminingeffluentguidelines.TheorefromtheLapamineis
26 AGNICO EAGLE ANNUAL INFORMATION FORM
transportedandprocessedattheLapamill,whichislocatedadjacenttotheLaRondemill.TheLapatailingsaresenttotheLaRondeminetailingsarea.
TheCertificatesofAuthorizationtoproceedwithmineproductionandwithmillconstructionwereissuedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec)inOctoberandDecember2007,respectively.TheCertificateofAuthorizationformillandtailingsproductionwasreceivedin2008.
ArevisiontotheclosureplanfortheLapaminewassubmittedtotheMinistryofEnergyandNaturalResources(Quebec)in2009andwasapprovedin2012.Financialassurancehasbeenprovidedbasedontheclosureplan.
Capital Expenditures
In2015,theCompanyincurredapproximately$5.3millionincapitalexpendituresattheLapamine,whichincludeddeferreddevelopmentandsustainingcapitalexpenditures(includingundergroundconstructionandminingequipment),butexcludedcapitalizeddrilling.NocapitalexpendituresattheLapamineareexpectedin2016.
Development
In2015,atotalof3,919metresoflateraldevelopmentwascompleted.Developmentfocusedonpermanentdrifts(rampsandhaulageway),stopepreparationandaccesstosatellitezonesandthelowerportionsoftheContactZone.
Atotalof482metresoflateraldevelopmentisplannedfor2016.Themainfocusofdevelopmentworkwillbestopepreparationandaccesstotheorebody.
Geology, Mineralization and Exploration
Geology
TheLapapropertyislocatednearthesouthernboundaryoftheArchean-age(2.7billionyearsold)AbitibiSubprovinceandthePontiacSubprovincewithintheSuperiorProvinceoftheCanadianShield.ThemostimportantregionalstructureistheCLLfaultzonemarkingthecontactbetweentheAbitibiandPontiacSubprovinces.Thefaultzonepassesthroughthepropertyfromwesttoeast,andismarkedbyschistsandmafictoultramaficvolcanicflowsthatcomprisethePichégroup(uptoapproximately300metresthickintheminearea).OntheLapaproperty,thefaultzonedisplaysa"Z"shapedfoldtowhichallofthelithologicgroupsintheregionconform.FeldspathicdykescutthePichégroup,especiallynearthefold.NorthofthePichégroupliestheCadillacsedimentarygroup,whichconsistsof500metresormoreofwell-bandedwacke,conglomerateandsiltstonewithintercalationsofironformation.ThePontiacgroupsedimentaryrocks(uptoapproximately300metresthick)thatoccurtothesouthofthePichégrouparesimilartotheCadillacgroupbutdonotcontainconglomeratenorironformation.
Mineralization
GoldoccurrencesintheCadillac-RivièreHévasectorareallveintypeepigeneticdepositsspatiallyassociatedwiththeCadillac-LarderLakedeformationzone.Assuch,allthedepositsoccurwithinorproximaltothePichéGroup.Thesedepositsarerelativelyarsenic-enrichedandoccurasquartzveinsandveinletsorassulphidedisseminations.ItisgenerallyagreedthatthegoldmineralizationintheCadillacregionwasemplacedafterregionaldeformationandmetamorphism.
TheLapadepositiscomprisedoftheContactZoneandfivesatellitezones.TheContactZoneaccountsforapproximately60%ofthemineralreserves.
Theorezonesaremadeupofmultiplequartzveinsandveinlets,oftensmokyandanastomosing,withinashearedandalteredenvelopecontainingminorsulphidesandvisiblegold.TheContactZoneisgenerallylocatedatthecontactbetweenthePichégroupandtheCadillacgroup.ThesatellitezonesarelocatedwithinthePichégroupatadistancevaryingfromtento50metresfromthecontactwiththeCadillacgroup,exceptforthesatellitezones7and8at150metresfromthissamecontact,andtheContactNorthZone,whichislocatedapproximatelytenmetresnorthoftheContactZonewithintheCadillacgroup.Theshearedenvelopeconsistsofmillimetre-thickfoliationbandsofbiotiteorsericitewithsilicaand,inplaces,cutsacrossrockunits.Quartzveinsandmillimetre-sizedveinletsparalleltothefoliationaccountfor5%to25%ofthemineralization.Visiblegoldiscommonintheveinsandveinletsbutcanalsobefoundinthealteredhostrock.Sulphidesaccountfor1%to3%ofthemineralization;themostcommonsulphides,inorderofdecreasingimportance,arearsenopyrite,pyrite,pyrrhotiteandstibnite.Graphiteisalsorarelyobservedasinclusionsinsmokyquartzveins.
AGNICO EAGLE 27 ANNUAL INFORMATION FORM
TheContactandsatellitezonesaretabularmineralizedenvelopesorientedeast-westanddippingverysteeplytothenorth,turningsouthatdepth.Theeconomicportionofthezonehasbeentracedfromdepthsofapproximately450metrestomorethan1,500metresbelowthesurface.TheContactZonehasanaveragestrikelengthof300metres,variesinthicknessfrom2.8to5.0metresandisopenatdepth.Locally,somethickerintervalshavebeenintersectedbuttheircontinuityhasnotbeendemonstrated.ThesatellitezoneshavethicknessessimilartotheContactZone.
Exploration and Drilling
TheLapaprojecthadalonghistoryofworkbypreviousownersbeforebeingacquiredbytheCompanyin2003.Thisincludedproductionof345,844tonnesoforegrading4.3gramspertonneofgoldbyLapa-CadillacGoldMinesfrom1938to1943,andthecompletionof15,100metresofdrillingfromundergroundoperationsduringthisperiod.GoldmineralizationwasintersectedwithinthePichévolcanicgroupbyCanadianMalarticGoldMines,whichdrilledeightholes(1,200metres)in1955.From1981until1989,Breakwatercompletedline-cutting,groundgeophysics,geologicalsurveys,drilled164holes(26,616metres)andexcavateda759-metre-longexplorationramp,recognizingfivegold-bearinghorizonsinthePichévolcanicgroup.In1988,theCompanypreparedamineralresourceestimateforthe"Highway"zoneof676,177tonnesoforegrading5.3gramspertonneofgold(suchhistoricestimateisnotcompliantwithNI43-101standards).In1999,CambiorExplorationCanadadrilledfourholes(2,926metres)testingthedepthcontinuityofZoneAandtheContactZone.
Overall,therewasadecreaseofapproximately92,000ouncesofgoldinmineralreservesattheLapaminein2015,to78,000ouncesofgold(0.4milliontonnesoforegrading5.49gramsofgoldpertonne),afterproducing90,967ouncesofgold(105,000ouncesin-situgoldmined).Thenetdecreasewasaresultoftheconversionofindicatedmineralresourcesintomineralreserves,offsetbyproduction.UndergroundmeasuredandindicatedmineralresourcesattheLapamineincreasedby67,000tonnesoforein2015toatotalof1.1milliontonnesoforegrading4.26gramsofgoldpertonne,mainlyduetoconversiondrillingintheLapaDeepsector.Approximately326,000tonnesofinferredmineralresourcesgrading6.52gramsofgoldpertonnewereaddedin2015foratotalof1.4milliontonnesoforegrading6.52gramsofgoldpertonne,asaresultofsurfaceandundergroundexplorationdrillingin2015.Drillingandevaluationwillcontinuein2016.
In2015,atotalof138holesweredrilledontheLapapropertyforatotallengthof29,960metres.Ofthedrillingin2015,89holes(13,692metres)werefordefinition(conversion)and49holes(16,268metres)wereforexploration.ExpendituresondiamonddrillingattheLapamineduring2015wereapproximately$2.3million,including$1.2millionindefinitiondrillingexpenseschargedtocapitalcostsand$1.1millionexpensedonexplorationdrilling.
FourexplorationdiamonddrillingprogramswerecompletedattheLapamineduring2015.ThefirstprogramwasexecutedfromsurfacetargetingtheZulapaZ8corridorinordertoaddmineralresources.ThesecondprogramconcentratedonexpandingtheZulapaZone7atdepth.TherewerepositiveresultsintheZulapaZ8zonesurfacedrillingandtheundergroundZulapaZ7zonedeepexplorationprogram.Additionaldrillinginbothoftheseareasisplannedin2016.
ThegoalofthethirdprogramwastoaddandconvertmineralresourcesintomineralreservesinZulapaZone7and73.However,drillingdemonstratedanon-exploitablenarrowlensintheZulapaZ73zone.ThefourthprogramwasexecutedfromtheexplorationtrackdriftonLevel101(onekilometrebelowsurface)testingtheeasternextensionoftheContactEastZoneandthewesternportionofthePichégroupvolcanicrockonthePandoraproperty(inwhichtheCompanyholdsanindirect50%interestthroughCanadianMalarticCorporation).Technicaldifficultieswereencounteredintheholesdrilledfromtheexplorationtrackdrift,becausethedrillinganglewastooclosetothefoliationangle.Furthertestdrillingwillbedoneatdepthin2016,aswideareasarestillunexplored.
In2016,theCompanyexpectstospendapproximately$0.8millionon10,400metresofexplorationdrillingattheLapamineand$1.3millionon15,000metresofundergroundexplorationdrillingonthePandoraproperty.Atotalof1,080metresoflateraldevelopmentisplannedfor2016onthetrackedexplorationdriftonthePandoraproperty.
GoldexMine
TheGoldexmineislocatedintheCityofVald'Or,Quebec,approximately60kilometreseastoftheLaRondemine,andisaccessiblebyQuebecprovincialhighwayNo.117.TheprovenandprobablemineralreservesatGoldexasatDecember31,2015wereestimatedatapproximately0.67millionouncesofgoldcomprisedof12.9milliontonnesoforegrading1.61gramspertonne,allintheM,EandDZones.
28 AGNICO EAGLE ANNUAL INFORMATION FORM
TheGoldexmineoperatesunderaminingleaseobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheGoldexpropertyconsistsof22contiguousminingclaimsand,sinceApril2008,oneprovincialmininglease.Thepropertyismadeupofthreeblocks:theProbeblock;theDaltonblock;andtheGoldexExtensionblock.Theclaimsarerenewableeverysecondyearuponpaymentofasmallfee.Theminingleaseexpiresin2028andisautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.TheCompanyalsohasonesurfaceleasethatisusedfortheauxiliarytailingspond.Thisleaseisrenewableannuallyuponpaymentofafee.
TheGEZ,whichwasthegolddepositonwhichtheCompanywasfocusingitsproductioneffortsbeforeproductionwassuspendedindefinitelyonOctober19,2011,wasdiscoveredin1989ontheGoldexExtensionblock(althoughtheCompanybelievesasmallportionoftheGEZoccursontheProbeblock).OnNovember29,2012,theCompanypurchasedthe5%netsmelterreturnroyaltyinterestontheProbeblockfromProbeMinesLimited("Probe")forcashconsiderationofC$14million.AnadditionalC$4millionwaspaidbytheCompanytoProbein2015ascertainproductionthresholdswereachievedontheProbeblockin2014.
LocationMapoftheGoldexMine(asatDecember31,2015)
AgnicoEaglehashelda100%interestintheGoldexpropertysinceDecember1993,whentheCompanyacquiredtheremaining46.3%interestinGoldexMinesLimitedthatitdidnotalreadyown.Inlate1997,theCompanycompletedaminingstudythatindicatedthattheGEZdepositwasnoteconomicallyviabletomineatthethen-prevailinggoldprice(approximately$323perounceofgold)usingtheminingapproachchosenandthedrill-hole-indicatedgrade.Thepropertywasplacedoncareandmaintenanceandtheworkingswereallowedtoflood.InFebruary2005,anewmineralreserveandmineralresourceestimatewascompletedfortheGEZwhich,coupledwithafeasibilitystudy,ledtoaprobablemineralreserveestimateof1.6millionouncesofgoldcontainedin20.1milliontonnesoforegrading2.54gramsofgoldpertonne.TheGEZresourcemodelwasrevisedand,inMarch2005,theCompanyapprovedafeasibilitystudyandtheconstructionoftheGoldexmine.ThemineachievedcommercialproductiononAugust1,2008.
AGNICO EAGLE 29 ANNUAL INFORMATION FORM
BasedontheresultsofascopingstudycompletedinJuly2009,theCompanydecidedtoexpandthemineandmilloperationsatGoldexto8,000tonnesperday.Thisprojectwascompletedin2010.Capitalcostsinconnectionwiththeexpansiontotaled$10million.Thecrusherfortheexpansionwascommissionedattheendofthefirstquarterof2010atarateof7,811tonnesperday.
OnOctober19,2011,theCompanysuspendedminingoperationsandgoldproductionfromtheGEZ,followingthereceiptofrecommendationsfromindependentconsultantstohaltundergroundminingoperationsduringtheinvestigationintogeotechnicalconcernswiththerockabovethemininghorizon.Asaresult,theCompanywroteoffsubstantiallyallofitsinvestmentintheGoldexmine(approximately$254million),recordedaclosureprovisionofapproximately$44millionandreclassifiedalloftheremaining1.6millionouncesofprovenandprobablemineralreserves,otherthantheorestockpiledonthesurface,asmineralresourcesinthethirdquarterof2011.ThesurfacestockpilewasprocessedintheGoldexmillbyOctober30,2011.Surfaceremediation,intheformofcementinjectionandothercorrectiveworktothemine'ssurfaceinfrastructure(includingtoShaft#2)wascarriedoutin2012and2013.
TheCompanydoesnotexpecttoproducemoregoldfromtheGEZuntilthegeotechnicalconcernswiththerockabovethemininghorizonareresolved,whichmayneveroccur.
InJuly2012,theCompanyapprovedthedevelopmentoftheMandEZonesoftheGoldexmine.Productionfromthesezonesbeganinthefourthquarterof2013andcommercialproductionwasachievedinOctober2013.DevelopmentworkiscontinuingundergroundontheMandEZones.
In2013,afeasibilitystudywascarriedoutontheM2,M3,M4andM5Zones,nowpartoftheMZone,andtheeastpartoftheEZone.ThisfeasibilitystudyindicatedthatminingthesezonesconcurrentlywiththeMandEZonesappearedeconomical.TheCompanyanticipatesthatthecommencementofoperationsonthesenewsatellitezoneswillresultinincreaseddailythroughputofthemineandminelifebeingextendedfurtherinto2017.
In2015,followingthecompletionofapositiveinternaltechnicalstudy,theGoldexDeep1projectwasapprovedforproductionbyAgnicoEagle'sboardofdirectors(the"Board"or"BoardofDirectors").ThestudyfocusedonminingthelowerpartoftheDxZoneandthetoppartoftheDZonefromadepthof850metresto1,200metres.TheCompanyplanstoundertakedevelopmentfromthecurrentGoldexinfrastructure,withexistingequipmentandpersonnel.Theplannedminingmethodislong-holestopingwithcementedpastebackfill,whichisthesamemethodascurrentlyusedattheMandEZones.
30 AGNICO EAGLE ANNUAL INFORMATION FORM
Mining and Milling Facilities
SurfacePlanoftheGoldexMine(asatDecember31,2015)
ThesurfacefacilitiesatGoldexincludeaheadframe,ahoistroom,anorestoragefacility,aprocessingplant,apastebackfillplantandasurfacebuildingcontainingamechanicalshop,awarehouseandanoffice.Inaddition,theGoldexpropertyhasa790-metredeepshaft(Shaft#1),whichhistoricallywasusedtoprovideaccesstoundergroundworkings.Shaft#1isnowpredominantlyusedforgettingmaterialintothemineandservesasanemergencyexitfromthemine.
Thesinkingofanewproductionshaftwascompletedin2007.Thisshaft(Shaft#2)isa5.5-metrediametershaftwitha50-centimetrethickconcreteliningandisusedforventilationaswellashoistingpurposes.Shaft#2is865metresdeepandincludesfivestations.Arefurbishedfrictionhoistwasinstalledforproductionandserviceduties,andanauxiliaryhoistwasinstalledforemergencyandpersonnelservice.
RehabilitationoftheoldrampnearShaft#1wascompletedin2015toaccesstheupperportionoftheMZone.Therampwillbeusedforgettingmaterialintothemineandasanemergencyexit.Inaddition,anewheatingsystematsurfacewasinstalledinearly2015.
Mining Method
TheCompanyminestheMandEZonesusingprimaryandsecondarystopemethods.DrillingiscarriedoutwithITHdrills.Productionholesareeither4.5or6.5inchesindiameter.Bulkemulsionisusedastheprimaryexplosiveforstopeblasting.Forbothzones,stopesareapproximately55metreshigh.Thewidthandlengthofindividualstopesvarybasedonlocalrockmassquality,butanaveragestopeisexpectedtorangebetween60,000and120,000tonnes.OrehandlingintheMZoneisdonewith15yardload-haul-dumpmachines.Thisequipmentunloadsintoanorepassaccessiblefrom
AGNICO EAGLE 31 ANNUAL INFORMATION FORM
eachlevel.IntheEZone,locatedbelowthebottomofShaft#2,orehandlingisdonewith15yardload-haul-dumpmachinesand45tonnetrucks.
Allstopesaresupportedwith10-15metrecablebolts.Inaddition,thestabilityofcertainstopesisremotelymonitoredinrealtime.TheCompanyalsousespastebackfilltoallowforahighextractionratioandtoincreaselongtermstability.
ThesameminingmethodwillbeusedintheDeep1ZoneasisusedintheMandEZones,exceptthataRail-VeyorsystemwillbeusedfororehandlingbetweenthelowermostlevelofDeep1(Level120)andthecurrentorehandlingfacilities(Level76).TheRail-VeyorloadingsystemonLevel120willbefedviaarockbreakerroomatLevel115.ForLevels85to115,15yardloadhauldumpmachineswillunloadintoanorepassreportingtotherockbreakerroomonLevel115.ForthestopesonLevel120,45tonnetruckswillbeusedfororehandlingtoLevel115.
Surface Facilities
PlantconstructionatGoldexcommencedinthesecondquarterof2006andwascompletedinthefirstquarterof2008.Theplantreacheddesigncapacityinthesecondquarterof2009.GrindingattheGoldexmillwasinitiallydonethroughatwo-stagecircuitcomprisedofaSAGmillandaballmill.In2009,asurfacecrusherwasaddedtoreducethesizeoforetransferredtothesurfacefrom150millimetresto50millimetres.Alamellardecanterwasalsoaddedtorecoversmallparticlespresentinthewateroverflowoftheconcentratethickener.Theunderflowpumpforthisthickenerwasupgradedfollowingflotationcircuitmodificationtoincreasethepullrateofthesmallparticles.Approximatelytwo-thirdsofthegoldisrecoveredthroughagravitycircuit,passedovershakingtablesandsmeltedonsite.Theremainderofthegoldandpyriteisrecoveredthroughaflotationprocess.TheconcentrateisthenthickenedandtruckedtothemillattheLaRondeminewhereitisfurthertreatedbycyanidation.GoldrecoveredisconsolidatedwithpreciousmetalsfromtheLaRondeandLapamines.
In2013,anewbackfillplantwasbuiltonthesite.TheplantprovidesfillfortheMandEZonestopes.Thetailingthickenerunderflowfeedsthebackfillplantandtwodiskfiltersincreasethedensitybeforethecontinuousmixerwherebinderisaddedataratioofapproximately3.6%beforebeingsenttotheundergroundminewithapositivedisplacementpump.Currently,thecapacityofthebackfillplantisapproximately6,200tonnesperday.
In2013,metallurgicaltestingonorefromtheMandEZonesshowedthatthecementinthebackfillwouldhaveanegativeimpactontheefficiencyoftheflotationcircuit.Asaresult,apHcontrol(usingcarbondioxide),areservoirandcontrolvalveswereaddedtothemill.
TheoreproductionrateatGoldexin2015averaged6,549tonnesperday,comparedwith5,799tonnesperdayin2014.Theincreasedthroughputin2015waslargelyduetoacceleratedmininglevelscomparedtothe2014period.
Production and Mineral Recoveries
In2015,metallurgicaltestswerecompletedontheDeep1oretoverifyitscompatibilitywiththecurrentoperationalparametersemployedattheGoldexmill,includinghardnesstests,grindabilitysizing,gravimetricrecoveryandflotationalrecoveryofgold.
During2015,theGoldexminehadpayableproductionof115,426ouncesofgoldfrom2.3milliontonnesoforegrading1.66gramsofgoldpertonne.ThetotalcashcostsperounceofgoldproducedatGoldexin2015was$538onaby-productbasisandonaco-productbasis.TheGoldexprocessingfacilityaveraged6,336tonnesoforeperday.Goldrecoveryaveraged93.43%.TheminesitecostspertonneatGoldexin2015wereC$33.
ThefollowingtablesetsoutthemetalrecoveriesattheGoldexminein2015.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 1.66g/t 93.43% 115,426oz
Goldproductionduring2016attheGoldexmineisexpectedtobeapproximately105,000ouncesfrom2.3milliontonnesoforegrading1.52gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$601onaby-productbasis,withestimatedgoldrecoveryof92.6%.MinesitecostspertonneofapproximatelyC$35areexpectedin2016.
32 AGNICO EAGLE ANNUAL INFORMATION FORM
Environmental, Permitting and Social Matters
EnvironmentalpermitsfortheconstructionandoperationofanoreextractinginfrastructureattheGoldexminewerereceivedfromtheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec)inOctober2005.Thepermitsalsocoveredtheconstructionandoperationofasedimentationpondforminewatertreatmentandsewagefacilities.InJune2011,thepermitswererevisedtoallowfortheexpansionofthemineandmilloperationsto9,500tonnesperday.InJune2012,environmentalpermitswerereceivedfortheconstructionandoperationofapastebackfillplantinconnectionwiththedevelopmentoftheMandEZones.
InNovember2006,theCompanyandtheQuebecgovernmentsignedanagreementpermittingtheCompanytodisposeGoldextailingsattheManitousite,atailingssiteformerlyusedbyanunrelatedthirdpartyandabandonedtotheQuebecgovernment.TheManitoutailingssitehasissuesrelatingtoaciddrainage,andtheconstructionoftailingsfacilitiesbytheCompanyandthedepositionoftailingsfromGoldexontheManitoutailingssitewasacceptedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec)asavalidrehabilitationmethodtoaddresstheacidgenerationproblematManitou.Undertheagreement,theCompanymanagestheconstructionandoperationofthetailingsfacilitiesandtheQuebecgovernmentpaysalladditionalcostsabovetheCompany'sbudgetfortailingsfacilitiessetoutintheGoldexfeasibilitystudy.TheQuebecgovernmentretainsresponsibilityforallenvironmentalcontaminationattheManitoutailingssiteandforfinalclosureofthefacilities.TheCompanyhasalsobuiltaseparatetailingsdepositarea(auxiliarytailingspond)neartheGoldexmine.EnvironmentalpermitsfortheconstructionandoperationoftheauxiliarytailingspondwerereceivedinMarch2007.TherehabilitationoftheManitoutailingssiteisexpectedtocontinueduringtheminingoftheMandEZones.
Internaldykeswerebuiltin2013attheManitoutailingssitetomakebetteruseofthereducedquantityofavailabletailingsforrehabilitationoftheManitousite.
AsatDecember31,2015,theestimatedremainingreclamationcostsrelatingtotheGoldexmineareapproximately$11.8million.
Capital Expenditures
CapitalexpendituresattheGoldexmineduring2015wereapproximately$44.7million,whichincludedsustainingcapitalexpenditures,expansionconstructionanddeferredexpenses,butexcludedcapitalizeddrilling.Totalestimatedcapitalexpendituresfor2016are$76million,excludingcapitalizeddrilling.
Development
During2015,approximately10,853metresoflateraldevelopmentwerecompletedattheGoldexmine.Atotalof817metresofverticaldevelopmentwasalsocompletedinordertoestablishboththeorepasssystemservicingtheMZoneandtheventilationnetworkservicingtheMandDeep1Zones.In2015,rehabilitationofthesurfacerampwascompleted,whichprovidesincreasedoperationalflexibilityandaccesstotheM2andM5satellitezones.
Atotalof12,929metresoflateraldevelopmentisplannedforallzonesin2016,while604metresofverticaldevelopmentwillbenecessarytoextendtheorepasssystemandtoensureproperventilationoftheupperpartoftheMandDeep1Zones.In2016,40,000metresofadditionaldrillingisplannedfortheDeep1Zone.However,themajorityofthebudgetwillbefortheconstructionoftheundergroundgarageandore-handlingfacilities,includingtheRail-Veyorsystem,therock-breakerroomandtheelectricaldistributionnetwork.
Geology, Mineralization and Exploration
Geology
TheGoldexpropertyislocatednearthesouthernboundaryoftheArchean-age(2.7billionyearsold)AbitibiSubprovince,atypicalgranite-greenstoneterranelocatedwithintheSuperiorProvinceoftheCanadianShield.ThesoutherncontactoftheAbitibiSubprovincewiththePontiacSubprovinceismarkedbytheeast-southeasttrendingCLLfaultzone,themostimportantregionalstructuralfeature.TheGoldexdepositishostedwithinaquartzdioritesill,the"GoldexGranodiorite",locatedinasuccessionofmafictoultramaficvolcanicrocksthatareallgenerallyorientedwest-northwest.
In2015,explorationeffortsatGoldexwerefocusedontheM,EandDeepZones.Thesezonesaredefinedbytheintensityofthequartztourmalineveinstockworkandgoldassays.In2015,withtheincreaseddensityofdrilling,theM,M2andMxzoneswereconsolidatedintotheMZoneandtheDxandDzoneswereconsolidatedintotheDeep1Zone.NoexplorationwasconductedonthePZonein2015.
AGNICO EAGLE 33 ANNUAL INFORMATION FORM
TheMZonehasanapproximatelengthof440metres,aheightof350metresandathicknessof130metres.TheEZone,adjacenttotheeasternendoftheGEZ,hasanapproximatelengthof250metres,aheightof290metresandathicknessof130metres.TheDeep1Zoneisapproximately90metresbelowtheGEZandextendsto1,500metresbelowthesurface.Itappearstohaveanapproximatestrikelengthof350metres,aheightof600metresandthicknessof120metres.
Mineralization
GoldmineralizationatGoldexcorrespondstotheclassicalquartz-tourmalineveinlode-golddeposittype.Thegold-bearingquartz-tourmalinepyriteveinsandveinstockwork,hostedwithinaquartz-dioritedyke,aretheresultofastrongstructuralcontrol,relatedtoductileshearingandbrittlefaulting.Themostsignificantstructuredirectlyrelatedtomineralizationisadiscreteshearzone,theGoldexMylonite,whichisuptofivemetreswideandoccurswithintheGoldexGranodiorite,justsouthoftheDeep1ZoneandnorthoftheMZone.
AcoupleofveinsetsexistwithintheM,E,Deep1andPZones,ofwhichthemainsetconsistsofextensional-shearveinsdippingapproximately30degreessouth.Theveinsetsandassociatedalterationhaloscombinetoformstackedenvelopesupto30metresthick.
Moderatetostrongalbite-carbonatealterationofthehost-rockquartzdioritesurroundsthequartz-tourmaline-pyriteveinsandcoversalmost80%ofthemineralizedzone;outsideoftheenvelopes,priorchloritealterationaffectsthequartzdioriteandgivesitadarkergrey-greencolour.Occasionally,enclavesofrelativelyunalteredmediumgrey-green-colouredquartzdiorite(withnoveiningorgold)arefoundwithintheM,EandDeep1Zones;theyareremovedwiththerestofthestope'soretoallowforasmoothstopeshape,requiredforminingpurposes.
Mostofthegoldoccursasmicroscopicparticlesthatarealmostalwaysassociatedwithpyrite,generallyadjacenttograinsandcrystalsbutalso20%includedwithinthepyrite.Thegold-bearingpyriteoccursinthequartz-tourmalineveinsandinnarrowfracturesinthealbite-carbonate-alteredquartzdiorite(generallyimmediatelyadjacenttotheveins).
Exploration and Drilling
ExplorationontheGoldexpropertywasconcentratedinthreeperiodsfrom1963to1996.Duringtheperiodfrom1985to1996,Shaft#1wassunkto457metres,followedby3,810metresoflateraldevelopmentand520metresofslashing,abulksampleofroughly55,886tonnesandapproximately32,000metresofdiamonddrillingintheMainZone.Concurrently,widelyspaceddrilling,comprisedofapproximately50diamonddrillholes,ledtothediscoveryandbeginningofthedevelopmentoftheGEZ.In1996,Shaft#1wasdeepenedto790metres,followedby853metresoflateraldevelopment,cross-cutsandslashing,twobulksamplesfor136,200tonnesand23,000metresofundergrounddrillinginGEZ.
ThecombinedamountofgoldinprovenandprobablemineralreservesattheGoldexmineattheendof2015was0.67millionounces(12.9milliontonnesoforegrading1.61gramsofgoldpertonne),whichrepresentsanincreaseofapproximately328,000ouncesofgoldinreservesfromtheendof2014,afterproducing115,426ouncesofgold(123,000ouncesin-situgoldmined).Theincreaseislargelyduetothesuccessfulconversionofmineralresourcestomineralreserves,mainlyintheDZoneaswellasintheMandEZones.ThesearetheinitialDZoneprobablemineralreserves(354,000ouncesofgoldin6.3milliontonnesoforegrading1.75gramsofgoldpertonne)relatedtotheapprovalofminingtheDeep1project,announcedinJuly2015.Themineralreservegradeincreased8%from1.49gramsofgoldpertonneattheendof2014to1.61gramsofgoldpertonneattheendof2015.UndergroundmeasuredandindicatedmineralresourcesattheGoldexmineincreasedby0.7milliontonnesoforeto34.4milliontonnesoforegrading1.87gramsofgoldpertonne,primarilyduetoconversionofinferredtoindicatedmineralresources,reductionofthecut-offgradeandpositivedrillingresultsintheE,DxandDeepZones.In2015,therewasadecreaseininferredmineralresourcesofapproximately4.6milliontonnesoforeto24.6milliontonnesoforegrading1.53gramsofgoldpertonne.Thisdecreaseintheinferredmineralresourceswasprimarilyduetoaconversionofinferredtoindicatedmineralresources,reductionofthecut-offgradeandpositivedrillingresultsintheE,Mx,M,DxandDeepZones.
DiamonddrillingatGoldexin2015totaled449holesforatotallengthof73,085metres.Ofthistotal,69holes(12,187metres)wereforexplorationoftheM,Deep1andSouthZonesatacostof$0.6million,210holes(47,567metres)wereforconversiondrillingprincipallyintheDeep1andMxZonesatacostof$2.7million,138holes(10,477metres)weredelineationdrillingintheMandEZonesatacostof$0.5millionand32holes(2,854.8metres)wereholesdrilledfortheengineeringandminingdepartmentsatacostof$0.3million.Otherexploration-relatedexpensesin2015includedrampdevelopmentandametallurgicalstudyoftheDeepZoneore.
In2016,theCompanyexpectstospend$1.0millionon14,300metresofexplorationdrilling,$3.3millionon32,300metresofconversiondrillingand$0.8millionon10,000metresofdelineationdrilling.
34 AGNICO EAGLE ANNUAL INFORMATION FORM
CanadianMalarticMine
TheCanadianMalarticmineislocatedapproximately25kilometreswestoftheCityofVal-d'Orand80kilometreseastofCityofRouyn-Noranda.TheminelieswithinthetownofMalartic.ItstraddlesthetownshipsofFournière,MalarticandSurimau.AtDecember31,2015,theCanadianMalarticminewasestimatedtohaveprovenandprobablemineralreservescontainingapproximately7.73millionouncesofgoldcomprisedof221.53milliontonnesoforegrading1.08gramspertonne.
TheCompanyacquiredits50%interestintheCanadianMalarticmineonJune16,2014throughitsjointacquisitionofOsiskowithYamana.See"GeneralDevelopmentoftheBusiness–Three-YearHistory–2014"forfurtherdetailsoftheCompany'sacquisitionofits50%interestintheCanadianMalarticmine.
TheCanadianMalarticmineoperatesunderminingleasesobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheCanadianMalarticmineiscomprisedoftheEastAmphiproperty,theCHLMalarticprospectandtheCanadianMalarticproperty.TheCanadianMalarticmineconsistsofacontiguousblockcomprisingoneminingconcession,fiveminingleasesand208miningclaims.
ExpirationdatesfortheminingleasesontheCanadianMalarticpropertyvarybetweenMarch23,2019andFebruary17,2034,andareautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.
TheCanadianMalarticminecanbeaccessedeitherfromVald'OrintheeastorfromRouyn-NorandainthewestviaQuebecprovincialhighwayNo.117.Apavedroadrunningnorth-southfromthetownofMalartictowardsMourierLakecutsthroughthecentralareaoftheCanadianMalarticproperty.TheCanadianMalarticpropertyisfurtheraccessiblebyaseriesofloggingroadsandtrails.TheCanadianMalarticmineisalsoservicedbyarail-linewhichcutsthroughthemiddleofthetownofMalartic.ThenearestairportislocatedinVal-d'Or,about25kmeastoftheCanadianMalarticmine.
Abufferzone135metreswidehasbeendevelopedalongthenorthernlimitoftheopenpittomitigatetheimpactsofminingactivitiesonthecitizensofMalartic.Insidethisbufferzone,alandscapedridgewasbuiltmainlyusingrockandtopsoilproducedduringpre-strippingwork.Theheightofthislandscapedridgeis15metreswheretheconcentrationofresidentsishigherandfivetosixmetresnearlesspopulatedareas.
AGNICO EAGLE 35 ANNUAL INFORMATION FORM
LocationMapoftheCanadianMalarticMine(asatDecember31,2015)
TheCanadianMalarticmineincludesopenpitoperations,anadministration/warehousebuilding,amineoffice/truckshopbuilding,aprocessplantandthecrushingplant.
FollowingthejointacquisitionoftheCanadianMalarticminebytheCompanyandYamana,mostoftheminingclaimsaresubjecttoa5%netsmelterreturnroyaltypayabletoNewOsisko.TheminingclaimscomprisingtheCHLMalarticprospectaresubjectto3%netsmelterreturnroyaltiespayabletoeachofNewOsiskoandAbitibiRoyaltiesInc.Inaddition,ofthe208miningclaimsconstitutingtheCanadianMalarticproperty,101arealsosubjecttoothernetsmelterreturnroyaltiesthatvarybetween1%and2%,payableundervaryingcircumstances.In2015thePartnership,whichistheoperatoroftheCanadianMalarticmine,paidC$53.0millionintheaggregatewithrespecttothesenetsmelterreturnroyalties,andexpectstopayapproximatelyC$50.8millionin2016.
GoldwasfirstdiscoveredintheMalarticareain1923.GoldproductionontheCanadianMalarticpropertybeganin1935andcontinueduninterrupteduntil1965.Followingvariousownershipchangesovertheensuingyears,OsiskoacquiredownershipoftheCanadianMalarticpropertyin2004.BasedonafeasibilitystudycompletedinDecember2008,Osiskocompletedconstructionofa55,000tonneperdaymillcomplex,tailingsimpoundmentarea,5millioncubicmetrepolishingpondandroadnetworkbyFebruary2011andthemillwascommissionedinMarch2011.TheCanadianMalarticmineachievedcommercialproductiononMay19,2011.From2011untilDecember31,2015,theCanadianMalarticmineproduced2.17millionouncesofgoldand1.90millionouncesofsilverfrom78.4milliontonnesoforegrading0.97gramsofgoldpertonneand1.04gramsofsilverpertonne.
AsofDecember31,2010,theCanadianMalarticminehadreceivedallformalgovernmentpermitsrequiredforitsconstructionandrelatedactivities,withtheexceptionoftheauthorizationforthemillandmineoperations.TheofficialcertificateofauthorizationforthemillandoperationswasgrantedonMarch31,2011,atwhichpointtheCanadianMalarticminewasfullypermitted.
36 AGNICO EAGLE ANNUAL INFORMATION FORM
Mining and Milling Facilities
SurfacePlanoftheCanadianMalarticMine(asatDecember31,2015)
TheCanadianMalarticmineisalargeopenpitoperationcomprisingtheCanadianMalarticandBarnatpits.ThePartnershipcontinuestoworkwiththeQuebecMinistryofTransportandthetownofMalarticonthedeviationofQuebecprovincialhighwayNo.117togainaccesstothehighergradeBarnatdeposit.ThefinallayoutandtheenvironmentalimpactassessmentwerecompletedbytheendofJanuary2015.TheenvironmentalimpactassessmentisunderreviewbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).AnswerstothefirstsetofquestionsposedbytheMinistryweresubmittedinSeptember2015andanswerstothesecondsetofquestionsposedbytheMinistryweresubmittedinJanuary2016.
Mining Methods
MiningattheCanadianMalarticmineisdonebyopenpitmethodusingexcavatorsandtrucks.Inordertomaximizeproductivityandlimitthenumberofunitsoperatinginthepit,largescaleequipmentwasselectedforthemineoperation.Theprimaryloadingtoolsarehydraulicexcavators,withwheelloadersusedasasecondaryloadingtool.Themineproductionschedulewasdevelopedtofeedthemillatanominalrateof55,000tonnesperday.Thecontinuityandconsistencyofthemineralization,coupledwithtightdefinitiondrilling,andconfirmedbysixyearsofminingoperations,demonstratetheamenabilityofthemineralreservesandmineralresourcestotheselectedminingmethod.
ThethroughputattheCanadianMalarticminein2015averaged52,300tonnesperdaycomparedwith51,248tonnesperdayin2014.Theincreasedthroughputin2015waslargelyduetomilloptimization,additionalcrushedorefromtheportablecrusherandmillstability.
AGNICO EAGLE 37 ANNUAL INFORMATION FORM
Surface Facilities
SurfacefacilitiesattheCanadianMalarticmineincludetheadministration/warehousebuilding,themineoffice/truckshopbuilding,theprocessplantandthecrushingplant.Theprocessingplanthasadailycapacityof55,000tonnesofore.
Oreisprocessedthroughconventionalcyanidation.Oreblastedfromthepitisfirstcrushedbyagyratorycrusherfollowedbysecondarycrushingpriortogrinding.GroundorefeedssuccessivelyintoleachandCIPcircuits.
AZadraelutioncircuitisusedtoextractthegoldfromtheloadedcarbon.Pregnantsolutionisprocessedviaelectrowinningandtheresultingprecipitateissmeltedintogold/silverdorebars.
Milltailsarethickenedanddetoxified,reducingcyanidelevelsbelow20partspermillion.Followingastudysupportingthechange-overoftheexistingCombinox(sulfurdioxide–hydrogenperoxide)cyanidedetoxifyingprocessintoaCaro's(sulfuricacide–hydrogenperoxide)acidprocess,constructionwasinitiatedinthesecondhalfof2015andisexpectedtobecompletedinthesecondquarterof2016.Detoxifiedslurryissubsequentlypumpedtoaconventionaltailingsfacility.
Production and Mineral Recoveries
SincetheJune16,2014acquisitionofOsisko,AgnicoEagleandYamanahaveeachhelda50%interestintheCanadianMalarticmine.During2015,AgnicoEagle'sshareoftheCanadianMalarticmine'spayableproductionwas285,809ouncesofgoldand300,454ouncesofsilverfrom9,544,764tonnesoforegrading1.05gramsofgoldpertonneand1.27gramsofsilverpertonne.ThetotalcashcostsperounceofgoldproducedatCanadianMalarticin2015was$596onaby-productbasisandwas$613onaco-productbasisandtheCanadianMalarticprocessingfacilityaveraged52,300tonnesoforeperdayandoperated93.6%ofavailabletime.Goldandsilverrecoveryaveraged88.8%and77.0%,respectively.TheminesitecostspertonneatCanadianMalarticin2015wereC$20.
ThefollowingtablesetsoutthemetalrecoveriesattheCanadianMalarticmineona100%basisin2015.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 1.05g/t 88.8% 571,617ozSilver 1.27g/t 77.0% 600,908oz
TheCompany's50%shareofannualproductionattheCanadianMalarticminein2016isexpectedtoconsistofapproximately280,000ouncesofgoldand288,000ouncesofsilverfrom9.5milliontonnesoforegrading1.03gramsofgoldpertonneand1.20gramsofsilverpertonne.Thetotalcashcostsperouncein2016areexpectedtobeapproximately$593perounceonaby-productbasis,withestimatedgoldrecoveryof89.3%andsilverrecoveryof77.0%.MinesitecostspertonneofapproximatelyC$23areexpectedin2016.
Environmental, Permitting and Social Matters
Since2010,therehavebeen67non-conformanceblastnotices,65non-conformancenoisenotices,19non-conformancenoticesforairquality,6non-conformancenoticesforwaterquality(surfaceandfinaleffluent)and18othernon-conformancenotices.In2015,anactionplanwasdevelopedandimplementedbythePartnershiptomitigatenoise,vibrations,atmosphericemissionsandancillaryissues.Mitigationmeasureswereputinplacetoimprovetheprocessandavoidanynon-conformance.Themine'steamofon-siteenvironmentalexpertscontinuouslymonitorregulatorycomplianceintermsofapprovals,permitsandobservanceofdirectivesandrequirements.
Theoriginaldesignofthewasterockpilewasdevelopedtoaccommodateapproximately326milliontonnesofmechanicallyplacedwasterockrequiringatotalstoragevolumeofapproximately161millioncubicmetres.
Theexistingpolishingpondiscontainedwithinthecurrentauthorizedfootprintofthetailingsmanagementfacility.Thispondwillbeusedasacelltostoretailingsbeginninginmid-2016.InAugust2015,thePartnershipstartedtheconstructionofanewpolishingpondeastofdykeA.ThisnewpolishingpondisexpectedtobeoperationalinApril,2016.Theexistingpolishingpond,convertedintoatailingscell,willbetheeighthcellofthetailingsmanagementfacilitywithanestimatedcapacityof48milliontonnes,adding2.5yearsofoperationtothetailingsmanagementfacilitycapacityforatotalof148milliontonnesand7.5yearsofoperation.Thetotalcapacityofthecurrenttailingsmanagementfacilityisestimatedat198milliontonnes.Theexpansionoftheopenpit,withtheproductionfromtheBarnatpit,willincreasethe
38 AGNICO EAGLE ANNUAL INFORMATION FORM
totalamountoftailingsto342milliontonnes,requiringanadditional144milliontonnesintailingsstoragecapacity.ThePartnershipplanstostoretailingsinanextendedtailingsfacilityandintheCanadianMalarticpitattheendofitsoperations.Accordingtotheminingplan,attheendofminelife,50to100milliontonnesoftailingswillbedepositedinthepit.Therestofthetailings,aminimumof59andamaximumof109milliontonnes,willbedepositedintheextendedtailingsfacility.
RegulatoryapprovalfortheproposedtailingsdepositionintheCanadianMalarticpitandtheexpansionofthecurrentlyauthorizedtailingsareaarepartoftheapprovalprocessfortheCanadianMalarticpitextension(Barnatdeposit)subjecttotheenvironmentalimpactassessmentprocessoftheQuebecEnvironment Quality Act .TheenvironmentalimpactassessmenthasbeencompletedandisunderreviewbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).GolderAssociatesLtd.isdesigningthetailingsextensioncomponentandispreparingahydrogeologicalstudytodemonstratethattheCanadianMalarticpitwouldprovideahydraulictrapandcontainthetailingswithminimumenvironmentalrisk.DelayintheexpectedtimingofthepermitsrequiredfortheCanadianMalarticpitextensioncouldhaveanegativeimpactontheminingsequenceatCanadianMalartic.
AnannualhydrologicalsitebalanceismaintainedtoprovideayearlyestimateofwatervolumesthatmustbemanagedinthedifferentstructuresofthewatermanagementsystemoftheCanadianMalarticmineduringanaverageclimaticyear(intermsofprecipitation).ResultsofthishydrologicalbalanceindicatethatexcesswaterfromtheSoutheastPondwilleventuallyneedtobereleasedintotheenvironment.Awatertreatmentplantwascommissionedin2015toensurethatthewatertobereleasedtotheenvironmentmeetswaterqualityrequirements.Thiswatertreatmentplantreducestherisksassociatedwithsurfacewatermanagementandaddsflexibilitytothesystem.
Reclamationandclosurecostshavebeenestimatedforrehabilitatingthetailingsfacilityandwastedump,vegetatingthesurroundingarea,dismantlingtheplantandassociatedinfrastructure,andperformingenvironmentalinspectionandmonitoringforaperiodoftenyears.ThereclamationandclosurecostisestimatedtobeC$65.5million.Financialassurancehasbeenprovidedbasedontheclosureplan.
Capital Expenditures
CapitalexpendituresattheCanadianMalarticmineduring2015wereapproximately$43.4million,whichincludedsustainingcapitalexpendituresanddeferredexpense,butexcludedcapitalizeddrilling.Budgeted2016capitalexpendituresattheCanadianMalarticmineare$61million,excludingcapitalizeddrilling.
Development
DevelopmentactivitiesattheCanadianMalarticminein2015primarilyconsistedofstrippingactivities.Developmentactivitiesin2016areexpectedtoincludeadditionalstrippingactivities.
Geology, Mineralization and Exploration
Geology
TheCanadianMalarticpropertystraddlesthesouthernmarginoftheeasternportionoftheAbitibiSubprovince,anArcheangreenstonebeltsituatedinthesoutheasternpartoftheSuperiorProvinceoftheCanadianShield.TheAbitibiSubprovinceislimitedtothenorthbygneissesandplutonsoftheOpaticaSubprovince,andtothesouthbymetasedimentsandintrusiverocksofthePontiacSubprovince.ThecontactbetweenthePontiacSubprovinceandtherocksoftheAbitibigreenstonebeltischaracterizedbyamajorfaultcorridor,theeast-westtrendingLarderLake–CadillacFaultZone("LLCFZ").ThisstructurerunsfromLarderLake,OntariothroughRouyn-Noranda,Cadillac,Malartic,Val-d'OrandLouvicourt,Québec,atwhichpointitistruncatedbytheGrenvilleFront.
TheregionalstratigraphyofthesoutheasternAbitibiareaisdividedintogroupsofalternatingvolcanicandsedimentaryrocks,generallyorientedatN280°–N330°andseparatedbyfaultzones.Themainlithostratigraphicdivisionsinthisregionare,fromsouthtonorth,thePontiacGroupofthePontiacSubprovinceandthePiché,Cadillac,BlakeRiver,KewagamaandMalarticgroupsoftheAbitibiSubprovince.ThevariouslithologicalgroupswithintheAbitibiSubprovincearemetamorphosedtogreenschistfacies.MetamorphicgradeincreasestowardthesouthernlimitoftheAbitibibelt,whererocksofthePichéGroupandthenorthernpartofthePontiacGrouphavebeenmetamorphosedtouppergreenschistfacies.
ThemajorityoftheCanadianMalarticpropertyisunderlainbymetasedimentaryunitsofthePontiacGroup,lyingimmediatelysouthoftheLLCFZ.Thenorth-centralportionofthepropertycoversanapproximately9.5kilometresectionoftheLLCFZcorridorandisunderlainbymafic-ultramaficmetavolcanicrocksofthePichéGroupcutbyporphyriticand
AGNICO EAGLE 39 ANNUAL INFORMATION FORM
dioriticintrusions.TheCadillacGroupcoversthenorthernpartoftheproperty(northoftheLLCFZ).Itconsistsofgreywackecontaininglensesofconglomerate.
Mineralization
SurfacedrillingbyLacMineralsLtd.inthe1980sdefinedseveralnear-surfacemineralizedzonesnowincludedintheCanadianMalarticdeposit(theF,P,A,WolfeandGilbertzones),allexpressionsofalarger,continuousmineralizedsystemlocatedatdeptharoundthehistoricalundergroundworkingsoftheCanadianMalarticandSladenmines.Inadditiontothese,theWesternPorphyryZoneoccurs1kmnortheastofthemainCanadianMalarticdepositandtheGouldiemineralizedzoneoccursapproximately1.2kmsoutheastofthemainCanadianMalarticdeposit,althoughtherelationshipbetweenthesezonesandthemaindepositispresentlyunknown.
MineralizationintheCanadianMalarticdepositoccursasacontinuousshellof1to5%disseminatedpyriteassociatedwithfinenativegoldandtracesofchalcopyrite,sphaleriteandtellurides.ThegoldresourceismostlyhostedbyalteredclasticsedimentsofthePontiacGroup(70%)overlyinganepizonaldioriticporphyryintrusion.Aportionofthedepositalsooccursintheupperportionsoftheporphyrybody(30%).
TheSouthBarnatdepositislocatedtothenorthandsouthoftheoldSouthBarnatandEastMalarticmineworkings,largelyalongthesouthernedgeoftheLLCFZ.Thedisseminated/stockworkgoldmineralizationatSouthBarnatishostedbothinpotassic-altered,silicifiedgreywackesofthePontiacGroup(southofthefaultcontact)andinpotassic-alteredporphyrydykesandschistose,carbonatizedandbiotiticultramaficrocks(northofthefaultcontact).
SeveralmineralizedzoneshavebeendocumentedwithintheLLCFZ(SouthBarnat,Buckshot,EastMalartic,Jeffrey,Odyssey,EastAmphi,Fourax),allofwhicharegenerallyspatiallyassociatedwithstockworksanddisseminationswithindioriticorfelsicporphyriticintrusions.
Exploration and Drilling
GoldwasfirstdiscoveredintheMalarticareain1923bytheGouldieBrothersatwhatisnowdesignatedtheGouldieZone.Duringtheperiodfrom1935to1983,theCanadianMalartic,Barnat/SladenandEastMalarticminesproducedapproximately5.5millionouncesofgoldand1.9millionouncesofsilver,mostlyfromundergroundoperations.
ThecombinedamountofgoldinprovenandprobablemineralreservesattheCanadianMalarticmineattheendof2015was3.86millionounces(110.8milliontonnesoforegrading1.08gramspertonnegold),whichrepresentsadecreaseofapproximately466,000ouncesofgoldascomparedtotheendof2014,afterproducing285,809ouncesofgold(340,000ouncesin-situgoldmined).Thereductioninmineralreserveswasprincipallyassociatedwithoreminedduring2015.Theremainderofthedeclinewasduetoaslightreductioninthepitshellsrelatedtotheincorporationofthe5%netsmelterreturnroyaltypayabletoOsiskoGoldRoyaltiesLtd.,andtheterminationoftheGouldieopenpit.OpenpitmeasuredandindicatedmineralresourcesattheCanadianMalarticminedecreasedby22.7milliontonnesoforein2015to12.8milliontonnesoforegrading1.51gramsofgoldpertonne,duetoadjustingtheapproachtotheout-pitresourcesbyincreasingthecut-offgrade.Thesameapproachresultedinremoving18.2milliontonnesoforefromtheopenpitinferredmineralresourcesatCanadianMalartic,leaving4.5milliontonnesoforegrading1.47gramsofgoldpertonne.AllnumbersshownforCanadianMalarticreflectAgnicoEagle's50%ownershipinthemine.
DiamonddrillingisusedforexplorationontheCanadianMalarticproperty.In2015,noholesweredrilledfordefinition(conversion)drilling,but44holes(35,870metres)wereforexploration.ExpendituresondiamonddrillingattheCanadianMalarticmineduring2015wereapproximately$1.2million(50%basis).
Themainfocusofthe2015explorationprogramwasthePorphyry#12intrusion,hosttotheOdysseyNorthandSouthtargetsidentifiedin2014.Severalholesextendedmineralizationonthefootwall/northcontact(Northzone)andthehangingwall/southcontact(Southzone)ofPorphyry#12.
In2016,thePartnershipexpectstospend$7.7millionon60kilometresofexplorationdrillingattheCanadianMalarticmine.Explorationprogramsareplannedin2016toevaluateopenpitandundergroundtargetsandtofurtherdefinetheextentofmineralizationattheOdysseyzone.
KittilaMine
TheKittilamine,whichcommencedcommercialproductioninMay2009,islocatedinnorthernFinlandapproximately900kilometresnorthofHelsinkiand50kilometresnortheastofthetownofKittila.AtDecember31,2015,theKittilaminewasestimatedtocontainprovenandprobablemineralreservesof4.35millionouncesofgoldcomprisedof28.2million
40 AGNICO EAGLE ANNUAL INFORMATION FORM
tonnesoforegrading4.80gramsofgoldpertonne.TheKittilamineisaccessiblebypavedroadfromthevillageofKiistala,whichislocatedonthesouthernportionofthemainclaimblock.ThegolddepositislocatednearthesmallvillageofRouravaara,approximatelytenkilometresnorthofthevillageofKiistala.
ThetotallandholdingssurroundingandincludingtheKittilaminecomprisetwomininglicencesand187tenements.ThetenementsformacontinuousblockaroundtheKittilaandKuotkomininglicences.TheblockhasbeendividedintotheSuurikuusikkoarea(whichincludestheRouravaaraarea),theSuurikuusikkoWestarea,theSuurikuusikkoEastarea,andtheKittilaandKuotkomininglicences.TheKuotkomininglicenceislocatedapproximately15kilometersnorthoftheKittilämine.TheKuotkomininglicenceiscurrentlyintheenvironmentalreviewprocess.
Theboundaryofthemininglicenceisdeterminedbyground-surveyedpoints,whereastheboundariesofthetenementsarenotrequiredtobesurveyed.AllofthetenementsattheKittilamineareregisteredinthenameofAgnicoEagleFinlandOy,anindirect,wholly-ownedsubsidiaryoftheCompany.Theexpirydatesofthetenementsvary,withtheearliestexpirydatebeingMay2016.Tenementsareinitiallyvalidforfouryears,providedexplorationworkintheareaisreportedannuallyandasmallannualfeeispaidtomaintaintitle;extensionsoftitlescanbegrantedfor11additionalyearsuponpaymentofaslightlyhigherfeeandactiveexplorationinthearea.AgnicoEagleFinlandOyalsoholdsthemininglicenceinrespectoftheKittilamine.Themineissubjecttoa2.0%netsmelterreturnroyaltypayabletotheRepublicofFinland.
ThemineislocatedwithintheArcticCircle,buttheclimateismoderatedbytheGulfStreamoffthecoastofNorway,suchthatnorthernFinland'sclimateiscomparabletothatofeasternCanada.Wintertemperaturesrangefromminustentominus30degreesCelsius,whereassummertemperaturesrangefromtendegreesCelsiustothemid-20s.Explorationandminingworkcanbecarriedoutyear-round.Becauseofitsnorthernlatitude,winterdaysareextremelyshortwithabriefperiodof24-hourdarknessaroundthewintersolstice.Conversely,summerdaysareverylongwithabriefperiodof24-hourdaylightinearlysummeraroundthesummersolstice.
LocationMapoftheKittilaMine(asatDecember31,2015)
TheCompanyacquiredits100%,indirectinterestintheKittilaminethroughtheacquisitionoftheSwedishcompanyRiddarhyttanResourcesABinNovember2005.InJune2006,onthebasisofanindependentlyreviewedfeasibilitystudy,theCompanyapprovedconstructionoftheKittilamine.MiningatKittilastartedinitiallyasopenpitmining.OpenpitminingwascompletedinNovember2012andallminingiscurrentlycarriedoutfromtheundergroundviarampaccess.Theinitialundergroundstopewasminedinearly2010.Oreisprocessedina3,000-tonneperdaysurfaceprocessingplantthatwascommissionedinlate2008.LimitedgoldconcentrateproductionstartedinSeptember2008andgolddore
AGNICO EAGLE 41 ANNUAL INFORMATION FORM
barproductioncommencedinJanuary2009.AdecisiontoincreasethemineproductionwasmadeinFebruary2013andtheprocessingcapacitywasexpandedfrom3,000tonnesperdayto3,750tonnesperday.Theexpansionprojectwascompletedaheadofschedulein2014,andfinalexpansiontie-inswerecompletedduringascheduledmaintenanceshut-downinSeptember.Theramping-upofprocessingcapacitycontinuedtoyear-end,occasionallyreachingover4,000tonnesperday.
Mining and Milling Facilities
SurfacePlanoftheKittilaMine(asatDecember31,2015)
TheorebodiesatKittilawereinitiallyminedfromtwoopenpits,followedbyundergroundoperationstominethedepositsfurtherbeneaththesurface.Smalleradditionalopenpitswillbeusedtomineanyremainingmineralreservesclosetothesurfaceinthefuture.OpenpitminingstartedinMay2008andtheextractedorewasstockpiled.AsofDecember31,2015,atotalof7.7milliontonnesoforehavebeenprocessed,includingorefromtheopenpitsandunderground,0.51milliontonnesoforearecurrentlystockpiledand38.6milliontonnesofwasterockhavebeenexcavated,includingbothopenpitandundergroundexcavation.Workhascontinuedthroughout2015todeveloptheexplorationandRimpiramps,aswellasotherworktoaccesstheundergroundmineralreserves.Totalunderground(lateralandvertical)developmentattheendof2015wasapproximately65,700metres.Undergroundminingcommencedinthefourthquarterof2010and,attheendof2015,atotalof4.83milliontonnesoforehasbeenminedfromtheundergroundportionofthemine.
42 AGNICO EAGLE ANNUAL INFORMATION FORM
Mining Methods
AttheKittilamine,theSuurikuusikkoandtheRouravaaraorebodiesarecurrentlyminedbyundergroundminingmethodsandaccesstotheundergroundmineisviaramp.Approximately4,500tonnesoforeperdayarefedtotheconcentrator,exceedingthenominalcapacityof3,750tonnesperday.Theundergroundminingmethodisopenstopingwithdelayedbackfill.Stopesarebetween25and40metreshighandyieldbetween10,000and40,000tonnesoforeperstope.Toensuresufficientoreproductionisavailableinthefuturetosupplythemill,over11,000metresoftunnelswillbedevelopedeachyear.Afterextraction,stopesarefilledwithpastebackfillorcementedbackfilltoenablethesafeextractionoforeinadjacentstopes.Oreistruckedtothesurfacecrusherviatherampaccesssystem.
Surface Facilities
Constructionoftheprocessingplantandassociatedequipmentwascompletedin2008.FacilitiesattheKittilamineincludeofficebuildings,amaintenancefacilityforminingequipment,awarehouse,asecondmaintenanceshop,anoxygenplant,aprocessingplant,apastebackfillplant,atankfarm,acrusher,conveyorhousingsandanorebin.Inaddition,therearesometemporarystructuresforcontractorofficesandworkareas.
TheoreattheKittilamineistreatedbygrinding,flotation,pressureoxidationandCILcircuits.Aftergrinding,oreprocessingconsistsoftwostages.Inthefirststage,oreisenrichedbyflotationand,inthesecondstage,thegoldisextractedbypressureoxidationandCILprocesses.Attheendofthesecondstage,goldisrecoveredfromthecarboninaZadraelutioncircuitandrecoveredfromthesolutionusingelectrowinningandfinallypouredintodorebarsusinganelectricinductionfurnace.
During2015,flotationrecoveriesaveraged93.0%.Recoveriesinthesecondstageoftheprocessin2015averaged83.2%andglobalrecoverieswere84.8%.
Production and Mineral Recoveries
In2015,theKittilaminehadpayableproductionof177,374ouncesofgoldfrom1,464,038tonnesoforegrading4.44gramsofgoldpertonne.ThetotalcashcostsperounceofgoldproducedatKittilain2015was$709onaby-productbasisand$710onaco-productbasis.In2015,theKittilaprocessingfacilityaveraged5,156tonnesoforeperdayandoperatedapproximately78%ofavailabletime.Goldrecoveryaveraged84.8%.TheminesitecostspertonneatKittilawere€76in2015.
ThefollowingtablesetsoutthemetalrecoveriesattheKittilaminein2015.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 4.44g/t 84.8% 177,374oz
In2016,theKittilamineisexpectedtoproduceapproximately200,000ouncesofgoldfrom1.57milliontonnesoforegrading4.7gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$646onaby-productbasis,withestimatedgoldrecoveryof84.5%.Minesitecostspertonneofapproximately€75areexpectedin2016.
Environmental, Permitting and Social Matters
AgnicoEagleFinlandOycurrentlyholdsamininglicence,anenvironmentalpermitandoperationalpermitsinrespectoftheKittilamine.Allpermitsnecessarytobeginproductionwerereceivedduring2008.
Theconstructionofthefirstphaseofthetailingsdamwascompletedinthefallof2008.Workonthesecondphasewascompletedin2010andincludedtheexpansionofthetailingsarea.Workonthethirdphasebeganin2013andincludesworktoheightenthedam.Workonthethirdphaseisexpectedtocontinueforseveralyears.
OnSeptember14,2015,duringroutineinspectionsofthedam,waterseepagewasdiscoveredfromaholdingpond(NP3).TheseepagewasobservedatthetoeoftheNP3damandhassincebeenidentifiedtobeoccurringthroughthelineratthebottomoftheholdingpond.Theoriginalflowrateoftheseepagewasestimatedtobeapproximately350cubicmetersperhour(m3/hr),however,theflowratehasbeenreducedtoapproximately250m3/hrbythedepositionofmoraineontheaffectedpondbottom.Within36hoursoffirstdetectingtheseepage,dischargeofseepagewatertothe
AGNICO EAGLE 43 ANNUAL INFORMATION FORM
environmenthadstoppedasallwaterfromtheuncontrolleddischargewascollectedandpumpedbackintheholdingpondorthewatermanagementsystem.Theseepagewaterwasclearandwaterqualitywaswithintheparametersofthepermit.Mitigationmeasures,includingwatertransfertoarecentlyconstructedwaterreservoirandmorainedepositioninthepondintheareaoftheseepage,followedbytailingsdepositiontofurthersealthearea,wereappliedthroughoutthefallandweresuccessfulinreducingtheseepagetonearnormalseepagelevelsforsuchinfrastructure.Seepageisbeingmonitoredandpumpedbacktothepondonacontinuousbasis.Adetailedactionplanforapermanentsolutionwasdevelopedbyateamofinternalandexternalexpertsandthisplaniscurrentlybeingimplemented.
Waterfromdewateringthemineandwaterusedinthemineandmilliscollectedandtreatedbysedimentation.EmissionsandenvironmentalimpactaremonitoredinaccordancewiththecomprehensivemonitoringprogramthathasbeenapprovedbytheFinnishenvironmentalauthorities.Workonenhancingthescrubbingofmillgaseshasresultedinadesigntorecoverheatlossanduseittoheatbuildings,andthisworkiscontinuing.Financialassuranceisprovidedtotheenvironmentalauthoritiesonanannualbasisintheamountprescribedbytheenvironmentalpermit.
TheenvironmentalpermitrenewalwasreceivedinJuly2013.ThisrenewalcontainsadditionaleffluentcriteriaandtheCompanyhasappealedthetimingofcompliancewithsuchcriteriatoallowforstudiesanddesigntotakeplacefornewwatertreatmentasrequired.AdecisionbytheAdministrativeCourtreviewingtheappealwasreceivedinthefirstquarterof2015grantingtheCompany'sappealinpart.TheCompanyhasalsorespondedtoanotherappeallodgedbyathirdparty.Followingwatertreatmenttestsandpiloting,theCompanyiscurrentlydesigningawatertreatmentsystemtoensurecompliancewiththerequirementsofthenewpermit.Thiswatertreatmentsystemshouldbeconstructedandcommissionedin2016.ThefinaldecisionoftheAdministrativeCourtonthenewpermitisexpectedinmid-2016.
Capital Expenditures
CapitalexpendituresattheKittilamineduring2015totaledapproximately$56.4million,whichincludedmillexpansionconstruction,millmodification,undergrounddevelopmentandsustainingcapitalcosts,butexcludescapitalizeddrilling.
TheCompanyexpectscapitalexpendituresduring2016attheKittilaminetobeapproximately$66million,excludingcapitalizeddrilling.
Development
In2015,undergrounddevelopmentcontinuedinboththeSuurikuusikkoandRouravaaraminingareas.ThedrivingofarampfromsurfacetowardsthenewRimpizonewasalsoinitiatedin2014.Atotalof13,641metresoframpandsublevelaccessdevelopmentwerecompletedduringtheyear.Atotalof171,337tonnesoforefromdevelopmentand1,313,319tonnesofstopeorewereminedin2015.TheCompanyexpectstocompleteapproximately13,875metresoflateraldevelopmentand1,620metresofverticaldevelopmentduring2016.
Geology, Mineralization and Exploration
Geology
TheKittilamineissituatedwithintheKittilaGreenstonebelt,partoftheLaplandGreenstonebeltintheProterozoic-ageSvecofenniangeologicprovince.TheappearanceandgeologyoftheareaissimilartothatoftheAbitibiregionoftheCanadianShield.InnorthernFinland,thebedrockistypicallycoveredbyathinbutuniformblanketofunconsolidatedglacialtill.Bedrockexposuresarescarceandirregularlydistributed.
ThemineareaisunderlainbymaficvolcanicandsedimentaryrocksmetamorphosedtogreenschistassemblagesandassignedtotheKittilagroup.Themajorrockunitstrendnorthtonorth-northeastandarenear-vertical.Thevolcanicsarefurthersub-dividedintoiron-richtholeiiticbasaltslocatedtothewestandmagnesium-richtholeiiticbasalt,coarsevolcaniclasticunits,graphiticschistandminorchemicalsedimentaryrockslocatedtotheeast.Thecontactbetweenthesetworockunitsconsistsofatransitionalzone(the"PorkonenFormation")varyingbetween50and200metresinthickness.Thiszoneisstronglysheared,brecciatedandcharacterizedbyintensehydrothermalalterationandgoldmineralization,featuresconsistentwithmajorbrittle-ductiledeformationzones.Thezoneispartofamajornorth-northeast-orientedshearzone(the"SuurikuusikkoTrend").
Mineralization
ThePorkonenFormationhoststheKittilagolddeposit,whichcontainsmultiplemineralizedzonesstretchingoverastrikelengthofmorethan25kilometres.MostoftheworkattheKittilaminehasbeenfocusedonthe4.5-kilometrestretchthathoststheknowngoldinmineralreservesandmineralresources.Fromnorthtosouth,thezonesareRimminvuoma
44 AGNICO EAGLE ANNUAL INFORMATION FORM
("Rimpi-S"),thedeepextensionofRimminvuoma("RimpiDeep"),NorthRouravaara("Roura-N"),CentralRouravaara("Roura-C"),depthextensionofRouravaaraandSuurikuusikko("Suuri/RouraDeep"),Suurikuusikko("Suuri"),EtelaandKetola.TheSuuriandSuuri/RouraDeepzonesincludeseveralparallelsub-zonesthathavepreviouslybeenreferredtoasMainEast,MainCentralandMainWest.TheSuurizonehostsapproximately17%ofthecurrentprobablegoldreserveestimateonacontained-goldbasis,whileSuuriDeephasapproximately21%,Roura-Capproximately5%,RouraDeepapproximately27%,Roura-Napproximately0.1%,RimpiDeepapproximately23%,Rimpi-Sapproximately6%,Ketolaapproximately1%andEtelaapproximately0.1%.
Goldmineralizationinthesezonesisassociatedwithintensehydrothermalalteration(carbonate-albite-sulphide),andisalmostexclusivelyrefractory,lockedinsidefine-grainedsulphideminerals:arsenopyrite(approximately73%)orpyrite(approximately23%).Therestisfreegold,whichismanifestedasextremelysmallgrainsofgoldinpyrite.
Exploration and Drilling
In2015,provenandprobablegoldreservesdecreasedbyapproximately171,000ouncesto4.35millionouncesofgold(28.2milliontonnesoforegrading4.80gramspertonne),afterproducing177,374ouncesofgold(209,000ouncesin-situgoldmined).Thisdecreasewasprimarilyduetooremilledin2015,partiallyoffsetbysuccessfulconversionofmineralresourcestomineralreserves.MeasuredandindicatedmineralresourcesatDecember31,2015increasedby1.8milliontonnesfrom2014to15.9milliontonnesoforegrading3.02gramsofgoldpertonne.Inferredmineralresourcesincreasedby2.9milliontonnesfrom2014to11.8milliontonnesoforegrading4.64gramsofgoldpertonneduetosuccessfulexplorationdrillingintheRouraandRimpiDeepzones.ThisincludesinitialinferredmineralresourcesintheSisarZone,whichwasdiscoveredin2015.
DiamonddrillingisusedforexplorationontheKittilaproperty.In2015,mostoftheworkonthemininglicenceareafocusedontheRouraandRimpiareas.From1987throughtheendof2015,atotalof4,034drillholes,totaling835,029metres,havebeencompletedontheproperty.Atotalof604drillholeswerecompletedin2015foralengthof59,179metres.Ofthesedrillholes,499holes(33,577metres)werefordelineationdrilling,29holes(4,517metres)wereforconversiondrillingand34holes(19,039metres)wererelatedtomineexploration.Totalexpendituresfordiamonddrillingin2015were$6.9million,including$0.4millionfordefinition(conversion)drillingand$4.3millionforexploration.
In2015,atotalof56drillholes,totaling7,304metresweredrilledontheKuotkomininglicencearea.Ofthesedrillholes,16holes(1,354metres)wereforconversiondrillingand40holes(5,950metres)wereforexplorationdrilling.TotalexpendituresforthedrillingcarriedoutintheKuotkoareain2015were$0.7million,including$0.2millionfordefinition(conversion)drillingand$0.5millionforexploration.Attheendof2015,theKuotkodepositcontainedinferredmineralresourcesof1.8milliontonnesoforegrading2.9gramsofgoldpertonne.
OutsideoftheKittilaandKuotkomininglicenceareas,systematicdiamonddrillingandtarget-focusedgroundgeophysicscontinuedalongtheSuurikuusikkoTrend,andanumberofnewtargetsweretestedbydiamonddrillingin2015.Atotalof24diamonddrillholestotaling6,031metresweredrilledonexplorationtargetsoutsideofthemininglicenceareain2015,atacostof$2.5million.
The2016explorationbudgetfortheKittilamineisapproximately$8.1million($7.1millionfor36,000metresofminesiteexplorationdrillingand$0.9millionfor7,900metresofresourceconversiondrilling).ThisdrillingisplannedtofurtherexploretheKittilagoldreserveandresourcepotentialandtoevaluatethepotentialtodeveloptherecentlydiscoveredSisarZoneasanewmininghorizonatKittila.Inaddition,$1.0millionofexplorationexpenditures,including6,600metresofdiamonddrilling,isplannedin2016forfurtherexplorationontheKuotkoarea.Outsideofthemininglicenceareas,$2.5millionofexplorationexpenditures,including4,700metresofdiamonddrilling,isplannedin2016forexplorationalongtheSuurikuusikko,KapsaandHanhimaaTrends.
MeadowbankMine
TheMeadowbankmine,whichachievedcommercialproductioninMarch2010,islocatedintheThirdPortageLakeareaintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.AtDecember31,2015,theMeadowbankminewasestimatedtocontainprovenandprobablemineralreservesof0.94millionouncesofgoldcomprisedof10.8milliontonnesoforegradinganaverageof2.72gramsofgoldpertonne.TheCompanyacquiredits100%interestintheMeadowbankminein2007astheresultoftheacquisitionofCumberlandResourcesLtd.
AGNICO EAGLE 45 ANNUAL INFORMATION FORM
LocationMapoftheMeadowbankMine(asatDecember31,2015)
46 AGNICO EAGLE ANNUAL INFORMATION FORM
TheMeadowbankmineisheldundertenCrownminingleases,fourexplorationconcessionsand40Crownmineralclaims.TheCrownminingleases,whichcoverthePortage,GooseandGooseSouthdeposits,areadministeredunderfederallegislation.TheCrownminingleases,whichhaverenewableten-yearterms,havenoannualworkcommitmentsbutaresubjecttoannualrentfeesthatvaryaccordingtotheirrenewaldate.TheCrownminingleasesexpireineither2016or2019.TheproductionleasewiththeKivalliqInuitAssociation("KIA")isasurfaceleaseandrequiresthepaymentofC$158,865annually.Productionfromsubsurfaceleaseareasissubjecttoaroyaltyofupto14%oftheadjustednetprofits,asdefinedintheNorthwest Territories and Nunavut Mining Regulations .InordertoconductexplorationontheInuit-ownedlandsatMeadowbank,theCompanymustreceiveapprovalforanannualworkproposalfromtheKIA,thebodythatholdsthesurfacerightsintheKivalliqDistrictandadministerslanduseintheregionthroughvariousboards.TheNunavutWaterBoard(the"NWB"),onesuchboard,providedtherecommendationtotheDepartmentofAboriginalAffairsandNorthernDevelopmentCanadatogranttheMeadowbankmine'sconstructionandoperatinglicencesinJuly2008.TheCompanyhasobtainedalloftheapprovalsandlicencesrequiredtobuildandoperatetheMeadowbankmine.
ThefourMeadowbankexplorationconcessionsaregrantedbyNunavutTunngavikInc.("NTI"),thecorporationresponsibleforadministeringsubsurfacemineralrightsonInuit-ownedlandsinNunavut.In2016,explorationconcessionscoveringtheVaultdepositatMeadowbankwillrequireannualrentalfeesofapproximatelyC$57,000.Duringtheexplorationphase,theconcessionscanbeheldforupto20yearsandtheconcessionscanbeconvertedintoproductionleaseswithannualfeesofC$1perhectare,withnoannualworkcommitments.
In2012,theCompanysignedaproductionleasewithNTIcoveringtheextractionandprocessingofgoldfromtheVaultdeposit.ThisleaseauthorizestheCompanytomineandprocessgoldfromtheVaultdepositandsetsinplaceroyaltypaymentsthatareequivalenttothosebeingpaidbytheCompanyatthePortageandGoosepits.Productionfromtheconcessionsissubjecttoa12%netprofitsinterestroyaltyfromwhichannualdeductionsarelimitedto85%ofthegrossrevenue.
The40Crownmineralclaimsaresubjecttolandfeesandworkcommitments.Landfeesarepayableonlywhenworkisfiled.Themostrecentfilingwasin2012,whenapproximately$7,254inlandfeeswerepaidand$4,426,941inassessmentworkwassubmitted.
TheMeadowbankareaisconsideredtohaveanaridarcticclimatewithtemperaturesrangingfrom5tominus40degreesCelsiusinthewinter(fromOctobertoMay)andfromminus5to25degreesCelsiusthroughoutthesummer(fromJunetoSeptember).Surfacegeologicalworkcanbecarriedoutfrommid-Maytomid-October,whilemining,millingandexplorationdrillingcantakeplacethroughouttheyear,thoughoutdoorworkcanbehamperedinDecemberandJanuarybythecoldanddarkness.
TheMeadowbankmineisaccessiblefromBakerLake,located70kilometrestothesouth,overa110-kilometreall-weatherroadcompletedinMarch2008.BakerLakeprovides2.5monthsofsummershippingaccessviaHudsonBayandyear-roundairportfacilities.TheMeadowbankminealsohasa1,752-metrelonggravelairstrip,permittingaccessbyair.Fuel,equipment,bulkmaterialsandsuppliesareshippedbybargeandshipfromMontreal,Quebec(orHudsonBayportfacilities)intoBakerLakeduringthesummerportaccessperiodthatstartsattheendofJulyineachyear.Fuelandsuppliesaretransportedyear-roundtothesitefromBakerLakebyconventionaltractortrailerunits.Scheduledandcharteredflightsprovidetransportationforpersonnelandaircargo.
AGNICO EAGLE 47 ANNUAL INFORMATION FORM
Mining and Milling Facilities
SurfacePlanoftheMeadowbankMine(asatDecember31,2015)
SurfacePlanoftheVaultDeposit(asatDecember31,2015)
48 AGNICO EAGLE ANNUAL INFORMATION FORM
Meadowbankhasthreemajordepositsthathavesufficientdrillingdefinitiontosustainmineralreserves:Portage,GooseandVault.TheGoosepitwasdepletedinApril2015.TheareasurroundingtheVaultpithastwosmallerareasthatarebeingdevelopedasfuturepits:thePhaserandBBPhaserpits.Thesepitsareexpectedtobeginoperationattheendof2017.AllrequiredaggregatesusedintheminingprocessareproducedfromwastematerialtakenfromthePortageandVaultpits.In2008,adewateringdykewasconstructedinordertoaccessthenorthhalfofthePortagepitinpreparationforproductionin2010.ConstructionoftheBay-Goosedyke,amajordewateringdykerequiredtoaccessthesouthernportionofthePortageandtheGoosepits,commencedin2009andwascompletedin2011.Threetailingsimpoundmentdykes:SaddleDam1,SaddleDam2andStormwaterDyke,werebuiltin2009and2010.ThefinalelevationofStormwaterdykewascompletedin2014.Constructionofthemaintailingsimpoundmentdyke,CentralDyke,beganin2012.AdditionalphasesofconstructionontheCentralDykeareexpectedtocontinuethroughouttheminelife.Constructionoftheeight-kilometrelongaccessroadtotheVaultpitbeganin2012andwascompletedin2013.
Mining Methods
MiningattheMeadowbankmineisdonebyopenpitmethodusingexcavatorsandtrucks.Theoreisextractedconventionallyusingdrillingandblasting,thenhauledbytruckstoaprimarygyratorycrusheradjacenttothemill.Themarginal-gradematerial(materialgradingunderthecut-offgradeatagoldpriceof$1,100perounce,butwhichhasthepotentialtoincreasethemineralreservesattheendoftheminelifeifthethencurrentmetalpricesmakesitsprocessingeconomical)isstockpiledseparately.Also,stockpilesoflow-gradematerialcurrentlylowerthanthemillfeedgradehavebeencreated.Themajorityofthislow-gradematerialwasprocessedin2014.Theremainderwillbeprocessedattheendoftheminelife.Wasterockishauledtooneofthreewastestoragesareasontheproperty,usedfordykeconstructionmaterialorbackfilledintotheminedoutarea.
MiningfirstcommencedinthePortagepitin2010andintheGoosepitinMarch2012,andcommercialproductionattheVaultpitwasachievedinApril2014.MiningoperationsattheGoosepitceasedin2015.MiningoperationsattheVaultpitandPortagepitareexpectedtoceasein2018.
Surface Facilities
Sitefacilitiesincludeamillbuilding,amechanicalshop,apowerhousebuilding,anassaylabandaheavyvehiclemaintenanceshop.Astructurecomprisedoftwoseparatecrushersflankthemainprocesscomplex.Powerissuppliedbya26.4-megawattdieselelectricpowergenerationplantwithheatrecoveryandanonsitefuelstorage(5.6millionlitres)anddistributionsystem.Themill-service-powercomplexisconnectedtotheaccommodationscomplexbyenclosedcorridors.InJanuary2012,theCompanyidentifiednaturallyoccurringasbestosfibresindustsamplestakenfromthesecondarycrusherbuildingattheMeadowbankmineandsubsequentlyfoundsmallconcentrationsoffibresintheorecomingfromcertainareasoftheopenpitmines.TheCompanyhasinstitutedadditionalmonitoringandanasbestosmanagementprogramatthesite.
TheaccommodationscomplexattheMeadowbankmineconsistsofapermanentcampandatemporarycamptoaccommodateadditionalworkers.Thecampissupportedbyasewagetreatment,solidwastedisposalandpotablewaterplant.In2008,theexplorationgroupwasrelocatedeightkilometressouthoftheminesitelocationtoaseparatecampwithan80-personcapacity.
FacilitiesconstructedatBakerLakeincludeabargelandingsitelocatedthreekilometreseastofthecommunityandastoragecompound.Afuelstorageanddistributioncomplexwithcapacityfor60-millionlitresofdieselfueland2-millionlitresofjetfuelislocatednexttothebargelandingfacility.
In2013,newfacilitieswerebuiltneartheVaultdeposit,whichislocatedapproximatelyeightkilometresfromtheminecomplex.Thesefacilitiesincludeaheatedshelterforemployees,astoragearea,afuelfarm,anelectricalpowergenerationplantandawatertreatmentplant.
Theprocessdesignisbasedonaconventionalgoldplantflowsheetconsistingoftwo-stagecrushing,grinding,gravityconcentration,cyanideleachingandgoldrecoveryinaCIPcircuit.Themillwasdesignedtooperateyear-round,withanannualdesigncapacityof3.1milliontonnes(8,500tonnesperday).Theadditionofasecondarycrusherinearlysummer2011increasedtheoverallprocessedtonnescapacityinthemillto3.6milliontonnesperyear(9,840tonnesperday).SincetheinstallationofthepermanentsecondarycrusherinJune2011,theplanthasconsistentlyexceeded8,500tonnesperday.Basedonprojectionsfrommetallurgicaltestswork,theoverallgoldrecoveryisprojectedtobeapproximately91.2%forthelife-of-mine,withapproximately18%goldrecoveredfromthegravitycircuit.
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Therun-of-mineoreistransportedtothecrusherusingoff-roadtrucks.Theoreisdumpedintothegyratorycrusherorintostockpilesdesignatedbyore-type.Thefeedfromtheprimarycrusherisconveyedtotheconecrusherinclosedcircuitwithavibratingscreen.Thecrushedoreisdeliveredtothecoarseorestockpileandorefromthestockpileisconveyedtothemill.ThegrindingcircuitiscomprisedofaprimarySAGmilloperatedinopencircuitandasecondaryballmilloperatedinclosedcircuitwithcyclones.Aportionofthecycloneunderflowstreamissenttotheconcentrator,whichseparatestheheavymineralsfromtheore.Thegrindingcircuitincorporatesagravityprocesstorecoverfreegoldandthefreegoldconcentrateisleachedinanintensivecyanideleach-directelectrowinningrecoveryprocess.
Thecycloneoverflowissenttothegrindingthickener.Theclarifiedoverflowisrecycledtothegrindingcircuitandthickenedunderflowispumpedtoapre-aerationandleachcircuit.Thecyanidecircuitconsistsofseventanks,providingapproximately42hoursofretentiontime.TheleachedslurryflowstoatrainofsixCIPtanks.Goldinthesolutionflowingfromtheleachingcircuitisadsorbedintotheactivatedcarbon.GoldisrecoveredfromthecarboninaZadraelutioncircuitandisrecoveredfromthesolutionusinganelectrowinningrecoveryprocess.Thegoldsludgeisthenpouredintodorebarsusinganelectricinductionfurnace.
TheCIPtailingsaretreatedforthedestructionofcyanideusingthestandardsulphur-dioxide-airprocess.Thedetoxifiedtailingsarethenpumpedtothepermanenttailingsfacility.Thetailingsstorageisdesignedforzerodischarge,withallprocesswaterbeingreclaimedforre-useinthemilltominimizewaterrequirements.
Production and Mineral Recoveries
During2015,theMeadowbankminehadpayableproductionof381,804ouncesofgoldfrom4,032,851tonnesoforegrading3.16gramsofgoldpertonne.ThetotalcashcostsperounceofgoldproducedatMeadowbankin2015was$613onaby-productbasisand$623onaco-productbasis.In2015,theMeadowbankprocessingfacilityaveraged11,049tonnesoforeperdayandoperated94.96%ofavailabletimeandgoldrecoveryaveraged93.10%.TheminesitecostspertonneatMeadowbankwereC$70in2015.
ThefollowingtablesetsoutthemetalrecoveriesattheMeadowbankminein2015.Millprocessingexceededextractionfromtheminein2015;10,944tonnescamefromthemarginalstockpileand13,607tonnesfromthelow-gradestockpile.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 3.16g/t 93.10% 381,804oz
Goldproductionduring2016atMeadowbankisexpectedtobeapproximately305,000ouncesfrom3.9milliontonnesoforegrading2.73gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$750onaby-productbasis,withestimatedgoldrecoveryof90.0%.MinesitecostspertonneofapproximatelyC$77areexpectedin2016.
Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters
ThedevelopmentoftheMeadowbankminewassubjecttoanextensiveenvironmentalreviewprocessundertheNunavutLandClaimsAgreement(the"NLCA")administeredbytheNunavutImpactReviewBoard(the"NIRB").OnDecember30,2006,apredecessortotheCompanyreceivedtheProjectCertificatefromtheNIRB,whichincludedthetermsandconditionstoensuretheenvironmentalintegrityofthedevelopmentprocess.InJuly2008,theCompanyreceivedawaterlicencefromtheNWBforconstructionandoperationoftheminesubjecttoadditionaltermsandconditions.BothauthorizationswereapprovedbythethenMinisterofAboriginalAffairsandNorthernDevelopmentCanada.Thiswaterlicencewasrenewedin2015foraperiodoftenyears.
InFebruary2007,apredecessortotheCompanyandtheNunavutgovernmentsignedaDevelopmentPartnershipAgreement(the"DPA")withrespecttotheMeadowbankmine.TheDPAprovidesaframeworkforstakeholders,includingthefederalandmunicipalgovernmentsandtheKIA,tomaximizethelong-termsocio-economicbenefitsoftheMeadowbankminetoNunavut.
AnInuitImpactandBenefitAgreementfortheMeadowbankmine(the"MeadowbankIIBA")wassignedwiththeKIAinMarch2006.ThisagreementwasrenegotiatedandanamendedMeadowbankIIBAwassignedonOctober18,2011.TheMeadowbankIIBAensuresthatlocalemployment,trainingandbusinessopportunitiesarisingfromallphasesofthe
50 AGNICO EAGLE ANNUAL INFORMATION FORM
projectareaccessibletotheKivalliqInuit.TheMeadowbankIIBAalsooutlinesthespecialconsiderationsandcompensationthatmustbeprovidedtotheInuitregardingtraditional,socialandculturalmatters.
InJuly2008,theCompanysignedaproductionleasefortheconstructionandtheoperationofthemine,themillandallrelatedactivities.ThisproductionleasewasamendedonMay2,2013toexpandthesurfaceareagrantedunderthelease.InApril2008,theCompanyandtheKIAsignedawatercompensationagreementfortheMeadowbankmineaddressingInuitrightsundertheLandClaimsAgreementrespectingcompensationforwateruseandwaterimpactsassociatedwiththemine.
AseriesoffourdykeshavebeenbuilttoisolatetheminingactivitiesatthePortageandGoosedepositsfromneighbouringlakes.Anadditionaldykewasbuiltin2013toisolatetheminingactivitiesattheVaultdeposit.WasterockfromthePortage,GooseandVaultpitsisprimarilystoredinthePortageandVaultrockstoragefacilities,andaportionofthewasteisplacedinthePortagePit.Thecontrolstrategyforwasterockstorageincludesfreezecontrolofthewasterockthroughpermafrostencapsulationandcappingwithaninsulatingconvectivelayerofneutralizingrock(ultramaficandnon-acidgeneratingvolcanicrocks).TheVaultrockstoragefacilitydoesnotrequireaninsulatingconvectivelayerduetothenon-acidgeneratingnatureoftherockinthatarea.WasterockdepositedinthePortagepitwillbecoveredwithwaterduringtheclosurephaseofthepitwhichwillpreventanyacidgeneration.Becausethesiteisunderlainbygreaterthan400metresofpermafrost,thewasterockbelowthecappinglayerisexpectedtofreeze,resultinginlow(ifany)ratesofacidrockdrainagegenerationinthelongterm.
TailingsarestoredinthedewateredportionoftheSecondPortageLake.Thetailingsaredepositedontailingsbeacheswithinatwo-celltailingsstoragefacilityisolatedbythecentraldykeandaseriesoffivesaddledams.Areclamationpondislocatedwithinthetailingsstoragefacility.Depositionoftailingsbeganinthesouthcellinthefourthquarterof2014.TailingsdepositionwascompletedintheNorthCellin2015andreclamationcappinghascommenced.Thecontrolstrategytominimizewaterinfiltrationintothetailingsstoragefacilityandthemigrationofconstituentsoutofthefacilityincludesfreezecontrolofthetailingsthroughpermafrostencapsulationandthroughcomprehensive,engineereddykeliners.Aminimumtwo-metrethickdrycoverofacidneutralizingultramaficrockbackfillwillbeplacedoverthetailingsasaninsulatingconvectivelayertoconfinethepermafrostactivelayerwithinrelativelyinerttailingsmaterials.
Thewatermanagementobjectivefortheprojectistominimizethepotentialimpactonthequalityofsurfacewaterandgroundwaterresourcesatthesite.Diversionditcheswereconstructedin2012todivertcleanrunoffwaterawayfromareasaffectedbythemineorminingactivities.Followingafieldinvestigationin2014,acontactwaterinterceptiontrenchwasconstructedtocollectseepagewaterdowngradientfromthemillpriortoenteringintothenearbylake.Allcontactwateroriginatingfromtheminesiteormillisintercepted,collected,conveyedtothetailingsstoragefacilityforreuseinprocess.ThereisnodischargeofcontactwaterfromtheminesiteorthePortagepitareatooffsitereceivingwaterbodies.AllcontactwatergeneratedattheVaultpitarea,includingtheVaultWasteRockStorageFacility,isconveyedtotheVaultAttenuationPondanddischargedtonearbyWallyLake.Thereistreatmentforremovalofsolids(ifneeded)priortoreleasetoWallyLake.
Aninterimclosureandreclamationplanwassubmittedin2014asarequirementofpartoftheNWBTypeAwaterlicenceandfinancialassurancewasprovidedandupdatedinJuly2015aspartoftheWaterLicencerenewalprocess.In2013,theCompanyappliedtotheNWBforanincreaseinfreshwaterconsumptionandreceivedtheamendmenttotheTypeALicenceonJuly23,2014.In2015,totalfreshwaterusebytheMeadowbankminetotaled811,807cubicmetres,wellbelowtheapprovedlimitof2,350,000cubicmetresandthelowesttotalamountoffreshwaterusedsincethebeginningoftheminingoperationsin2010.
In2015,anamendmenttotheprojectcertificatewasrequestedfortheminingofthePhaserpit,asatellitepitintheVaultpitarea.Theamendmentandapprovalprocesswillcontinuein2016.AnamendmenttothepermitfromtheDepartmentofFisheriesandOceansCanadaisalsounderwayforthissatellitepit.
InNovember2013,MeadowbankreceivedacompliancedirectionandiscurrentlyunderinvestigationbyEnvironmentCanadaandAboriginalAffairsandNorthernDevelopmentCanadainrelationtoaseepageincidentthatwasidentifiedduringtheirJuly2013on-siteinspection.Monitoringdatain2014indicatedthatthe2013seepageeventdidnotaffectthewaterqualityofthedownstreampondsandSecondPortageLake.EnvironmentCanadachargedtheCompanywithtwoinfractionsundertheFisheries Act .Thehearinginrelationtothesechargesisexpectedin2016.
AGNICO EAGLE 51 ANNUAL INFORMATION FORM
Capital Expenditures/Development
In2015,theCompanyincurredapproximately$65.2millionincapitalexpendituresattheMeadowbankmine,including$36.7milliononVaultandPortagepitdeferredstrippingand$28.5milliononcapitalandequipment,butexcludingcapitalizeddrilling.
In2016,atotalof$53millionhasbeenbudgetedtobespentattheMeadowbankmine,excludingcapitalizeddrilling.
Geology, Mineralization and Exploration
Geology
TheMeadowbankminecomprisesanumberofArchean-agegolddepositshostedwithinpolydeformedvolcanicandsedimentaryrocksoftheWoodburnLakeGroup,partoftheWesternChurchillsupergroupinnorthernCanada.
Threemineablegolddeposits,Goose,PortageandVault,havebeendiscoveredalongthe25-kilometrelongMeadowbankgoldtrend,andthePDFdeposit(afourthdeposit)hasbeenoutlinedonthenortheastgoldtrend.Theseknowngoldresourcesarewithin225metresofthesurface,makingthedepositsattractiveforopenpitmining.Inaddition,theAmaruqproperty,located50kilometresnorthwestoftheMeadowbankmine,isbeingconsideredasapossiblesatelliteoperationtotheMeadowbankmine.
Mineralization
ThepredominantgoldmineralizationfoundinthePortageandGoosedepositsisassociatedwithironsulphides,mainlypyriteandpyrrhotite,whichoccurasareplacementofmagnetiteintheoxidefaciesironformationhostrock.Toalesserextent,pyriteandchalcopyritemaybefoundand,onrareoccasions,arsenopyritemaybeassociatedwiththeothersulphides.Goldismainlyobservedinnativeform(electrum),occurringinisolatedspecksorasplatingaroundsulphidegrains.Theorezonesaretypicallysixtosevenmetreswide,followingthecontactsbetweentheironformationunitsandthesurroundinghostrock.Zonesextenduptoseveralhundredmetresalongstrikeandatdepth.Thesulphidesprimarilyoccurasreplacementoftheprimarymagnetitelayers,aswellasnarrowstringersorbandsofdisseminatedsulphidesthatalmostalwayscrosscutthemainfoliationand/orbeddingwhichwouldimplyanepigeneticmodeofemplacement.Thepercentageofsulphidesisquitevariableandmayrangefromtracetosemi-massiveamountsoverseveralcentimetrestoseveralmetresinlength.Thehighergoldgradesandtheoccasionaloccurrenceofvisiblegoldarealmostalwaysassociatedwithgreaterthan20%sulphidecontent.
Themainmineralizedbandedironformationunitisboundedbyanultramaficunittothewestwhichlocallyoccursinterlayeredwiththebandedironformationandtotheeastbyanintermediatetofelsicmetavolcaniclasticunit.
IntheVaultdeposit,pyriteistheprincipalore-bearingsulphide.Thedisseminatedsulphidesoccuralongshearedhorizonsthathavebeensericitizedandsilicified.Thesezonesareseveralmetreswideandmaycontinueforhundredsofmetresalongstrikeanddowndip.
Threeofthefourknowngolddepositshavebeenorarebeingmined.TheGooseandPortagedepositsarehostedwithinhighlydeformed,magnetite-richironformationrocks,whileintermediatevolcanicrockassemblageshostthemajorityofthemineralizationatthemorenortherlyVaultdeposit.Thefourthdeposit,PDF,showsthesamecharacteristicsasVault,thoughitisnotcurrentlyanticipatedtobeamineabledeposit.
Definedovera1.85-kilometrestrikelengthandacrosslateralextentsrangingfrom100to230metres,thegeometryofthePortagedepositconsistsofgeneralnorth-northweststrikingorezonesthatarehighlyfolded.Themineralizationinthelowerlimbofthefoldistypicallysixtoeightmetresintruethickness,reachingupto20metresinthehingearea.
TheGoosedepositislocatedjustsouthofthePortagedepositandisalsoassociatedwithironformationbutexhibitsdifferentgeometry,withanorth-southtrendandasteepwesterlydip.Mineralizedzonestypicallyoccurasasingleunitnearsurface,splayingintoseverallimbsatdepth.Thedepositiscurrentlydefinedovera750-metrestrikelengthanddownto500metresatdepth(mainlyinthesouthernend),withtruethicknessesofthreeto12metres(reachingupto20metreslocally).TheGooseundergroundresource(100to500metresatdepth)extends700metrestothesouthoftheGoosepit.TheorezonesshowthesamecharacteristicsastheGoosepit,whichistwotofivemainzonessub-parallelandundulating.Theaveragethicknessrarelyexceedsthreetofivemetres.
TheVaultdepositislocatedsevenkilometresnortheastofthePortageandGoosedeposits.Itisplanarandshallow-dippingwithadefinedstrikeof1,100metres.Thedeposithasbeendisturbedbytwosetsofnormalfaultsstrikingeast-westandnorth-southanddippingmoderatelytothesoutheastandsteeplytotheeast,respectively.Themainlenshasanaverage
52 AGNICO EAGLE ANNUAL INFORMATION FORM
truethicknessofeightto12metres,reachingashighas18metreslocally.Thehangingwalllensesaretypicallythreetofivemetres,anduptosevenmetres,intruethickness.
Exploration and Drilling
ExplorationeffortsontheMeadowbankpropertyhavebeenextensivesince1985,includinggeophysics,prospecting,tillsamplinganddrilling,mainlybydiamonddrillbutalsoreversecirculation.From1985untilAgnicoEagleacquiredthepropertyin2007,126,796metresweredrilledin916diamondandreversecirculationdrillholesontheproperty.In2005,CumberlandResources(thepreviousowner)estimatedmineralresourcesinthePortage,GooseandVaultdepositscombinedasfollows:measuredandindicatedmineralresourcesof23.3milliontonnesoforegrading4.40gramspertonneofgold(containing3.3millionouncesofgold)andinferredmineralresourcesof3.5milliontonnesoforegrading4.20gramspertonneofgold(containing0.5millionouncesofgold).
In2015,theamountofgoldinprovenandprobablemineralreservesdecreasedbyapproximately225,000ouncesto943,000ouncesofgold(10.8milliontonnesoforegrading2.72gramspertonne)afterproducing381,804ouncesofgold(410,000ouncesofin-situgoldmined).Thenetdecreasewasprimarilyduetotheminedepletion,partiallyoffsetbytheconversionofmineralresourcestomineralreservesfortheVaultpitextension.MeasuredandindicatedmineralresourcesattheMeadowbankminedecreasedby0.55milliontonnesin2015to7.0milliontonnesoforegrading3.21gramsofgoldpertonne.Thisdecreasewasprimarilyduetothedecreaseincut-offgradeusedtoestimatethemineralreservesandmineralresources.Inferredmineralresourcesincreasedby0.12milliontonnesoforein2015to3.4milliontonnesoforegrading3.99gramsofgoldpertonne,mainlyduetoanincreaseintheresourcepitshellgoldprice.
In2015,diamonddrillingatMeadowbankwasconductedinboththeVaultandthePortagepits.IntheVaultpit,80holesweredrilledforatotallengthof9,075metresinordertocomplete25x25-metredrillspacingintheVaultExtensionareaaswellasinthePhaserandBBPhaserpits.Thisdrillingconfirmedthepreviousmineralresourceestimate.AtPortage,32holesweredrilledinPitE3foratotallengthof1,653metrestocomplete25x25-metredrillspacinginapreviouslyinaccessibleareaaswellastoconfirmhighgradegoldintersectionsatthebottomofthepit.Thetotalcostofdrillingin2015amountedto$1.2million.In2016,1,500metresofconversiondrillingisplannedattheVaultpittocompletethedelineationdrillingbetweentheVaultmainpitandPhaserpittothesouth.
MeliadineProject
TheMeliadineprojectisanadvancedexploration/developmentpropertylocatednearthewesternshoreofHudsonBayintheKivalliqregionofNunavut,about25kilometresnorthofthehamletofRankinInletand290kilometressoutheastoftheMeadowbankmine.TheclosestmajorcityisWinnipeg,Manitoba,about1,500kilometrestothesouth.
TheCompanyacquiredits100%interestintheMeliadineprojectthroughitsacquisitionofComaplexinJuly2010.
ThemineralreservesandmineralresourcesoftheMeliadineprojectareestimatedatDecember31,2015tocontainprovenandprobablemineralreservesof3.42millionouncesofgoldin14.5milliontonnesoforegrading7.32gramsofgoldpertonne.Inaddition,theprojecthas20.8milliontonnesofindicatedmineralresourcesgrading4.95gramsofgoldpertonneand14.7milliontonnesofinferredmineralresourcesgrading7.51gramsofgoldpertonne.
TheMeliadinepropertyisalargelandpackagethatisnearly80kilometreslong.Itconsistsofmineralrights,aportionofwhichareheldundertheNorthwest Territories and Nunavut Mining Regulations andadministeredbyAboriginalAffairsandNorthernDevelopmentCanadaandreferredtoasCrownLand.TheCrownLandismadeupofminingclaimsandmineralleases.TherearealsosubsurfaceNTIconcessionsadministeredbyadivisionoftheNunavutterritorialgovernment.In2015,C$126,758waspaidtoIndigenousandNorthernAffairsCanadaforthemininglease.NTIrequiresannualrentalfeesofC$63,482andexplorationexpendituresofatleastC$268,636.
TheKivalliqregionhasanaridarcticclimate.Surfacegeologicalworkcanbecarriedoutfrommid-Maytomid-October,whileexplorationdrillingcantakeplacethroughouttheyear,thoughisreducedinDecemberandJanuaryduetocoldanddarkness.
Equipment,fuelanddrygoodsaretransportedontheannualwarm-weathersealiftbybargetoRankinInletviaHudsonBay.Ocean-goingbargesfromChurchill,ManitobaoreasternCanadianportscanaccessthecommunityfromlateJunetoearlyOctober.Churchill,whichisapproximately470kilometressouthofRankinInlet,hasadeep-waterportfacilityandayear-roundraillinktolocationstothesouth.
AGNICO EAGLE 53 ANNUAL INFORMATION FORM
InOctober2013,theCompanycompletedconstructionofa23.8-kilometre-longall-weathergravelroadlinkingRankinInletwiththeprojectsite.ThisroadwasconstructedtosupportongoingexplorationactivitiesattheMeliadinepropertyandsignificantlyreducesthetransportationandlogisticalcostsforexplorationanddevelopmentwork.
LocationMapoftheMeliadineProject(asatDecember31,2015)
54 AGNICO EAGLE ANNUAL INFORMATION FORM
Facilities
SurfacePlanoftheMeliadineProject(asatDecember31,2015)
Thelatestplannedsurfaceinfrastructureisindicatedonthesurfaceplanmapaboveandconsistofmodularstructuresforthedormitories,kitchen,administrationofficeandtailingdrystacks,aswellasconventionalstructuresforthewarehouse,processplant,powerplant,metallurgicaltestlabandmobilemaintenanceshop.Thesurfaceplanalsoindicatestheplannedmineportals,ventilationraises,openpits,wastedumps,orepads,watermanagementstructures,attenuationpondandtailingsdrystacks.TheMeliadineprojecthasnotbeenapprovedforconstruction;theplannedinfrastructuredescribedhereincouldchangeduringtheprojectapprovalprocess.
Mining Methods
TheCompanycurrentlyanticipatesthatanyminingatMeliadinewouldbecarriedoutthroughtwoopenpitsandanundergroundmine.Itisestimatedthatapproximately3.4milliontonnesoforecouldbeextractedfromsurfaceminingand9.1milliontonnesoforecouldbeextractedbyundergroundminingoveranine-yearminelife.Itisexpectedthatanadditional1.4milliontonnesoflowergradematerialfromundergrounddevelopmentandopenpitmining(marginalore)wouldbestockpiledforprocessingattheendoftheminelife.
AGNICO EAGLE 55 ANNUAL INFORMATION FORM
TheCompanyiscurrentlyevaluatingaplanthecontemplatesanundergroundoperationthatwoulddeliver3,000tonnesoforeperdaytotheprocessplantoverapproximatelynineyears.Undergroundaccesswouldbebydecline,withlong-holeminingexpected.Eachstopewillbebackfilled,withcementedpastefillusedinprimarystopesanddryrockfillforthesecondarystopes.Beginningattheendofthesecondyearofproduction,thetwoopenpitswouldbedeveloped,adding2,000tonnesoforeperdaytothemillfeedstartinginthefourthyear.Aconventionaltruck/shoveloperationisanticipatedfortheopenpits.
Surface Facilities
CurrentfacilitiesattheMeliadineprojectincludetheexplorationcamplocatedontheshoreofMeliadineLake,approximately2.3kilometreseastoftheTiriganiaqdeposit.Theself-containedcampconsistsoffivewingsoftrailersthatcanaccommodateupto400personnelandincludeskitchenfacilities,completewithdieselgenerators.
Powerfortheexplorationcampiscurrentlyprovidedbydieselgenerators.PotablewaterfortheexplorationcampispumpedfromMeliadineLakeandwaterfortheundergroundoperationsandsurfacedrillprogramsispumpedfromPumpLake.Thecurrentwaterlicencesallowforamaximumdailywateruseof299cubicmetres.
Theexplorationcamphasanincineratoronsitetoburnallflammablematerials,suchascampandfoodwastes.Incineratorashes,plasticsandmetalobjects,alongwithallhazardoussolidandliquidwastesarecollectedattheMeliadineprojectsiteandthentransportedtoawastemanagementcompanyinsouthernCanada.
SewagehasbeentreatedthroughaBiodisktreatmentsystemsincethesummerof2010.Routinewatersamplingisconductedandreportedonamonthlybasistotheauthorities.
ThedecommissioningoftheMeliadineEastcamponAtulikLakebeganduringthesummerof2010,andwascompletedbyspring2011.Thecoreshackandstoragebuildingremainattheformercampsite.
AnundergroundportalallowingaccesstoanexplorationrampwasbuiltattheTiriganiaqdepositin2007and2008inordertoextractabulksampleforstudypurposes.Awasterockandorestoragepadwasbuiltduringexcavationoftherampandasamplingtowerwasinstalledforprocessingthebulksample.Thereisatwo-kilometre-longroadbetweentheMeliadineprojectexplorationcampandtheportalsite.Anotherundergroundbulksampleof4,600tonnesoforewastakenfromtheTiriganiaqdepositviathisportalin2011.
Production and Mineral Recoveries
Morethan39metallurgicaltestprogramshavebeenconductedattheMeliadineproject.Basedontheresultsofthesetestprograms,aconventionalgoldcircuithasbeenrecommended,comprisingcrushing,grinding,gravityseparationandcyanideleaching,withacarbon-in-leachcircuit(CIL),followedbycyanidedestructionandfiltrationofthetailingsfordrystacking.
GlobalgoldrecoveryattheMeliadineproject,shouldaminebeconstructed,isestimatedtobe94.7%,basedonthemineralresourcesandmineralreservesestimatesasofDecember31,2014.Thecurrentplanenvisionsaprocessingrateof3,000tonnesoforeperdayforthefirstthreeyearsofproduction,and5,000tonnesoforeperdayfortheremainderofthelifeofmine,withanestimatedplantavailabilityrateof92%.
Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters
LandandenvironmentalmanagementintheregionoftheMeliadineprojectisgovernedbytheprovisionsoftheNLCA.TheMeliadineprojectislocatedonInuit-ownedland,whereInuitownboththesub-surfacemineralrights(managedbyNTI)andthesurfacelandrights(managedbytheKIAonbehalfofInuitbeneficiariesundertheprovisionsoftheNLCA).Consequently,toexploreanddeveloptheproject,theCompanymustobtainlanduseleasesfromtheKIA.TheCompanyhasbeengrantedacommercialleasebytheKIAforexplorationandundergrounddevelopmentactivity,aprospectingandlanduseleaseforexplorationanddevelopmentactivities,anexplorationlanduseleaseforexplorationanddrillingontheInuit-ownedlandsofMeliadineEastandaparceldrillingpermitfordrillingactivityonInuit-ownedlands.Anumberofright-of-wayleasescoveringroadaccesstotheMeliadineprojectpropertyandeskerquarryingontheInuit-ownedlandswerealsograntedbytheKIA.
PursuanttotheNLCAandtheNunavut Waters and Nunavut Surface Rights Tribunal Act requirements,theCompanyobtainedseveralwateruselicencesfromtheNWB,coveringongoingwateruseforitsMeliadineprojectexplorationcamp,theundergroundbulksamplingprogramandforongoingexplorationdrillingactivities.
56 AGNICO EAGLE ANNUAL INFORMATION FORM
In2011,theCompanyinitiatedtheenvironmentalassessmentprocessfortheMeliadineprojectwiththeobjectiveofobtainingaprojectcertificatefromtheGovernmentofCanadafortheconstruction,operationandultimatedecommissioningofthefullproject.Theprojectcertificateisrequiredbeforeobtainingthepermitsrequiredtoconstruct,operateanddecommissionagoldmineatMeliadine.InMay2011,theKIAreferredtheMeliadineprojecttotheNIRBforscreeningundertheNLCA.OnMay4,2011,theNIRBreceivedtheMeliadineprojectproposalfromtheCompany.OnJune8,2011,theNIRBreceivedapositiveconformitydeterminationfromtheNunavutPlanningCommissionfortheMeliadineprojectinrelationtotheKeewatinRegionalLandUsePlan.
In2011,theNIRBissuedascreeningdecisionreporttothen-MinisterofIndianandNorthernAffairsCanada(nowMinisterofIndigenousandNorthernAffairsCanadaorthe"Minister"),recommendingareviewand,onSeptember14,2011,theMinisterreferredtheMeliadineprojectproposaltotheNIRBforareviewoftheecosystemicandsocio-economicimpactsoftheproject.TheNIRBfinalizedtermsofreferenceforthisreviewandtherequiredEnvironmentalImpactStatement("EIS")inearly2012.
InApril2013,theCompanysubmittedthedraftEISfortheMeliadineprojecttotheNIRB.TheNIRBapprovedtheprojectonOctober15,2014andrecommendedtotheMinistertoapprovetheproject.OnJanuary27,2015,theMinisterapprovedtheenvironmentalassessmentfindingsandrecommendationsmadebytheNIRB.TheMinisterdirectedtheNIRBtoissueAgnicoEagleaProjectCertificatefortheMeliadineprojectsettingoutthetermsandconditionsunderwhichtheMeliadineprojectcanproceed(asperconditionssetoutintheNIRBreportofOctober10,2014).TheProjectCertificatewasreceivedonFebruary26,2015.AnapplicationforaTypeAwaterlicencefromtheNWBwassubmittedin2015anditisexpectedtobedeliveredin2016.AcommercialproductionlanduseleasefromtheKIAisalsoexpectedin2016.ALicenceBforpre-developmentworkatMeliadinewasreceivedinOctober2015.
AnInuitImpactandBenefitAgreementfortheMeliadineproject(the"MeliadineIIBA")wassignedwiththeKIAinJuly2015.TheMeliadineIIBAaddressesprotectionofInuitvalues,cultureandlanguage,protectionoftheland,waterandwildlife,providesfinancialcompensationtoInuitovertheminelifeandcontainsprovisionfortraining,employmentandcontracting.AnInuitwatercompensationagreementinaccordancewiththeNLCAisbeingfinalized.
Capital Expenditures
TotalcapitalexpendituresattheMeliadineprojectin2015were$66.7million,includingcapitalizedsurfaceandundergrounddrilling,rampdevelopment,permitting,campoperationandtechnicalstudies.
Capitalexpendituresof$96.0millionhavebeenbudgetedfortheMeliadineprojectin2016,focusedondetailedengineeringandprocurement,constructionofessentialsurfaceinfrastructureandacquisitionofausedcamp.
AnupdatedtechnicalreportcompletedinMarch2015hasconfirmedtheeconomicviabilityoftheMeliadineprojectwithanapproximatenine-yearminelifeatanoperatingrateof3,000tonnesperdayinyearsonetothree,and5,000tonnesperdayinyearsfourtonine.Thefollowingtablesetsoutasummaryoftheapproximateforecastsforinitialcapitalcosts,sustainingcapitalcosts,minelife,annualcashflow,netpresentvalue,internalrateofreturnandpaybackperiod.
Initial capital costs $ 911million
Sustaining capital costs $ 357million
Mine life 9years
Annual cash flow $ 269.7million(1)
After-tax net present value (at a 5% discount rate) $ 267million
After tax internal rate of return 10.3%
Payback period 5.0years
Note:
(1) The"AnnualCashFlow"isbasedonthesimpleaverageoftheestimated(pre-tax)annualcashflowforeachofthenineyearsofminingoperations.
TheeconomicanalysisintheabovetableisbasedontheupdatedtechnicalreportcompletedinMarch2015andusesfollowingassumptions:priceofgoldof$1,300perounce;US$/C$exchangerateofC$1.15per$1.00;C$0.95perlitredieselcost;andstatutorytaxrateofapproximately26%.VariouspotentialscenariosarebeingevaluatedbeforetheCompanycandeterminewhethertobuildamineatMeliadine.
AGNICO EAGLE 57 ANNUAL INFORMATION FORM
Development
In2015,2,605metresofhorizontaldevelopmentand84metresofverticaldevelopmentwerecompletedattheMeliadineproject.For2016,theCompanyexpects3,723metresofhorizontaldevelopment(including1,393metresoftotalrampdevelopment)and503metresofverticaldevelopmenttobecompleted.
Geology, Mineralization and Exploration
Geology and Mineralization
ArcheanvolcanicandsedimentaryrocksoftheMeliadinegreenstonebeltunderlietheproperty,whichismainlycoveredbyglacialoverburdenwithdeep-seatedpermafrostandispartoftheWesternChurchillsupergroupinnorthernCanada.Therocklayershavebeenfolded,shearedandmetamorphosed,andhavebeentruncatedbythePykeFault,aregionalstructurethatextendstheentire80-kilometrelengthofthelargeproperty.
ThePykeFaultappearstocontrolgoldmineralizationontheMeliadineproperty.AtthesouthernedgeofthefaultisaseriesofoxideironformationsthathostthesevenMeliadineprojectdepositscurrentlyknown.Thedepositsconsistofmultiplelodesofmesothermalquartz-veinstockworks,laminatedveinsandsulphidizedironformationmineralizationwithstrikelengthsofuptothreekilometres.TheUpperOxideironformationhoststheTiriganiaqandWolfNorthzones.ThetwoLowerLeanironformationscontaintheFZone,Pump,WolfMainandWesmegdeposits.TheNormegzonewasdiscoveredin2011ontheeasternendoftheWesmegzone,nearTiriganiaq.TheWolf(NorthandMain),FZone,PumpandWesmeg/NormegdepositsareallwithinfivekilometresofTiriganiaq.TheDiscoverydepositis17kilometreseastsoutheastofTiriganiaqandishostedbytheUpperOxideironformation.Eachofthesedepositshasmineralizationwithin120metresofsurface,makingthempotentiallymineablebyopenpitmethods.Theyalsohavedeeperorethatcouldpotentiallybeminedwithundergroundmethods,whicharecurrentlybeingconsideredinvariousstudies.
Twobulksampleshavebeenextractedfromtheexplorationramp.Theresultsconfirmedtheresourceestimationmodelthathasbeendevelopedforthetwoprincipalzones(Zones1000and1100)atTiriganiaq,andindicatedapproximately6%moregoldthanhadbeenpredictedbytheblockmodelfortheseareas.The2011bulksampleprogramalsoconfirmedthepreviousassessmentoftheCompany'sblockmodelintermsofgradecontinuity,consistencyanddistribution,andtheevaluationofrelatedminingpropertiesthroughgeologicalmapping,undergroundchip,channelandmucksampling,andgeotechnicalobservations.
Exploration and Drilling
ThefirstmineralresourcesestimateatMeliadinewasmadebyStrathconaMineralServicesin2005forthen-ownerComaplex,andcomprisedindicatedmineralresourcesof2.5milliontonnesgrading10.8gramsofgoldpertonne(containing853,000ouncesofgold)andinferredmineralresourcesof1.1milliontonnesgrading13.2gramspertonneofgold(containing486,000ouncesofgold),withallresourcesintheTiriganiaqdeposit.Followingthis,therewereannualestimatesgraduallyincludingnewdeposits,suchasDiscovery,FZone,PumpandWolf.ThefinalmineralresourcesestimatemadebeforetheCompanyacquiredthepropertywasmadebySnowdenMiningIndustryConsultantsforComaplexinJanuary2010anditcomprisedmeasuredandindicatedmineralresourcesof12.9milliontonnesgrading7.9gramsofgoldpertonne(containing3.3millionouncesofgold)andinferredmineralresourcesof8.4milliontonnesgrading6.4gramsofgoldpertonne(containing1.7millionouncesofgold).
ProvenandprobablegoldreservesatMeliadineincreasedin2015byapproximately82,000ouncesto3.4millionouncesofgold(14.5milliontonnesoforegrading7.32gramspertonne).IndicatedmineralresourcesatMeliadineincreasedby0.5milliontonnesoforein2015to20.8milliontonnesoforegrading4.95gramsofgoldpertonne.Inferredmineralresourcesincreasedby0.6milliontonnesoforein2015to14.7milliontonnesoforegrading7.51gramsofgoldpertonne.Theincreasesinmineralreserves,indicatedmineralresourcesandinferredmineralresourceswereprimarilyduetochangesinmodelingparametersimplementedtobetterreconcilewiththetwopreviousbulksamples,aswellastheuseoflowercostsestablishedinrecentstudies.
In2015,theCompanyspent$2.0millionon36diamonddrillholes(5,700metres)atMeliadine.TherewasnoexplorationatMeliadinein2015otherthandrilling.The2016planincludesspending$1.7millionon53diamonddrillholes(9,300metres)atMeliadine.
58 AGNICO EAGLE ANNUAL INFORMATION FORM
Southern Business
PinosAltosMine
ThePinosAltosmineachievedcommercialproductioninNovember2009.ItislocatedintheSierraMadregoldbelt,285kilometreswestoftheCityofChihuahuaintheStateofChihuahuainnorthernMexico.AtDecember31,2015,thePinosAltosminewasestimatedtocontainprovenandprobablemineralreservesof1.46millionouncesofgoldand37.53millionouncesofsilvercomprisedof15.7milliontonnesoforegrading2.88gramsofgoldpertonneand74.18gramsofsilverpertonne.TheCrestonMascotadepositatPinosAltosachievedcommercialproductioninthefirstquarterof2011.AtDecember31,2015,theCrestonMascotadepositwasestimatedtocontainadditionalprovenandprobablemineralreservesof0.18millionouncesofgoldand1.63millionouncesofsilvercomprisedof4.2milliontonnesoforegrading1.30gramsofgoldpertonneand12.02gramsofsilverpertonne.ThePinosAltospropertyismadeupoftwoblocks:theAgnicoEagleMexicoConcessions(25concessions)andthePinosAltosConcessions(18concessions).
LocationMapofthePinosAltosMine(asatDecember31,2015)
Approximately74%ofthecurrentPinosAltosmineralreservesandmineralresources,including9%fortheCrestonMascotadepositatPinosAltos,aresubjecttoanetsmelterreturnroyaltyof3.5%payabletoPinosAltosExplotaciónyExploraciónS.A.deC.V.("PAEyE")andtheremaining26%ofthecurrentmineralreservesandresourcesatPinosAltosaresubjecttoa2.5%netsmelterreturnroyaltypayabletotheServicioGeológicoMexicano,aMexicanFederalGovernmentagency.After2029,thisportionofthepropertywillalsobesubjecttoa3.5%netsmelterreturnroyaltypayabletoPAEyE.
TheassetsacquiredbytheCompanyfromPAEyEandtheAsociacióndePequeñosPropietariosForestalesdePinosAltosSdeR.L.in2008includedtherighttouseupto400hectaresoflandformininginstallationsforaperiodof20yearsafterformalminingoperationshavebeeninitiated.TheCompanyalsoobtainedsoleownershipoftheAgnicoEagleMexicoConcessionspreviouslyownedbyCompaniaMineraLaParreñaS.A.deC.V.During2008,theCompanyandPAEyEenteredintoanagreementunderwhichtheCompanyacquiredfurthersurfacerightsforopenpitminingoperationsandadditionalfacilities.Infrastructurepayments,surfacerightspaymentsandadvanceroyaltypaymentstotaling$35.5millionweremadetoPAEyEandtheAsociacióndePequeñosPropietariosForestalesdePinosAltosSdeR.L.in2008asaresultofthisagreement.
AGNICO EAGLE 59 ANNUAL INFORMATION FORM
Between2006and2008,theCompanyconcludednegotiationswithcommunallandowners(ejidos)andothersfortheacquisitionof6,238hectaresoflandcontainedwithintheAgnicoEagleMexicoandPinosAltosConcessions.Inaddition,atemporaryoccupationagreementwitha30-yeartermexpiringin2036wasnegotiatedwithejidoJesusdelMontefor1,470hectaresoflandcoveredbythesesameconcessionblocks.TheacquisitionofthesesurfacerightsforthegeologicallyprospectivelandswithinthedistrictsurroundingthePinosAltospropertywillfacilitatefutureexplorationandminingdevelopmentintheseareas.ThePinosAltosmineisdirectlyaccessiblebyapavedinterstatehighwaythatlinksthecitiesofChihuahuaandHermosillo.
InAugust2007,onthebasisofanindependentlyreviewedfeasibilitystudy,theCompanyapprovedconstructionofamineatPinosAltos.ThemineachievedcommercialproductioninNovember2009.
Basedonafeasibilitystudypreparedin2009,theCompanydecidedtobuildastand-aloneheapleachoperationattheCrestonMascotadepositatPinosAltos.ThefirstgoldpourfromtheCrestonMascotadepositoccurredonDecember28,2010andcommercialproductionfromtheCrestonMascotadepositwasachievedinthefirstquarterof2011.
TheCompanycontinuestoevaluateopportunitiestodevelopothermineralresourcesthathavebeenidentifiedinthePinosAltosareaassatelliteoperations.
TheCompanyhasengagedthelocalcommunitiesintheareawithhiring,localcontracts,educationsupportandmedicalsupportprogramstoensurethatthemineprovideslong-termbenefitstotheresidentslivingandworkingintheregion.Approximately70%oftheoperatingworkforceatPinosAltosarelocallyhiredand100%ofthepermanentworkforceattheCompanyoperationsinMexicoareMexicannationals.
Mining and Milling Facilities
SurfacePlanofthePinosAltosMine(asatDecember31,2015)
60 AGNICO EAGLE ANNUAL INFORMATION FORM
SurfacePlanoftheCrestonMascotaDepositatPinosAltos(asatDecember31,2015)
Millingoperationsduring2015atPinosAltosprocessedanaverageof5,462tonnesoforeperdayascomparedtotheoriginaldesignrateof4,000tonnesperday.TheundergroundmineatPinosAltosproducedanaverageof2,834tonnesoforeperdayascomparedtoitsdesignedrateof3,000tonnesperday.TheopenpitminesatPinosAltosandtheCrestonMascotadepositproduced19.0milliontonnesofore,overburdenandwastein2015,comparedto21.7milliontonnesin2014.
Mining Methods
ThesurfaceoperationsatthePinosAltosmineusetraditionalopenpitminingtechniqueswithbenchheightsofsevenmetresanddoublebenchesonthefootwallandsinglebenchingonthehangingwall.Miningisaccomplishedwithfrontendloaders,trucks,trackdrillsandvarioussupportequipment.Basedupongeotechnicalevaluations,thefinalpitslopesvarybetween45degreesand50degrees.PerformanceattheopenpitminingoperationatPinosAltosduring2015continuestoindicatethattheequipment,miningmethodsandpersonnelselectedfortheprojectaresatisfactoryforfutureproductionphases.9.6milliontonnesofore,overburdenandwastewereminedduring2015.
Theundergroundmine,whichcommencedoperationsinthesecondquarterof2010,usesthelongholesublevelstopingmethodtoextractore.Thestopeheightis30metresandthestopewidthis15metres.Oreishauledtothesurfaceutilizingundergroundtrucksviaarampsystem.Thepastebackfillsystemandventilationsystemwerecommissionedinthefourthquarterof2010.During2015,approximately1.0milliontonnesoforewereproducedfromtheundergroundportionofthemine,averaging2,834tonnesperday.Currently,theplannedcapacityoftheundergroundmineis3,000tonnesoforeperday.Constructionofashafthoistingfacilitytoincreasetheminingcapacityto4,500tonnesoforeperdaywasinitiatedin2012,withcommissioningexpectedtobecompletedin2016.Theshafthoistingcapacityshouldreducetheneedforadditionalundergroundtrucksrequiredastheminedepthincreasesandisexpectedtocontinuetomaintainmillfeedratesat4,500tonnesoforeperdayinfutureyearsastheopenpitminesatPinosAltosbecomedepleted.Approximately50.8kilometresoftotallateraldevelopmenthavebeencompletedasofDecember31,2015.
AGNICO EAGLE 61 ANNUAL INFORMATION FORM
Surface Facilities
TheprincipalmineralprocessingfacilitiesatthePinosAltosmineweredesignedtoprocess4,000tonnesoforeperdayinaconventionalprocessplantcircuitwhichincludessinglestagecrushing,grindinginaSAGandballmillinclosedloop,gravityseparationfollowedbyagitatedleaching,counter-currentdecantationandmetalsrecoveryintheMerrill-Croweprocess.Tailingsaredetoxifiedandfilteredandthenusedforpastebackfillintheundergroundmineordepositedasdrytailingsinanengineeredtailingsimpoundmentarea.ThePinosAltosmillprocessedanaverageof5,462tonnesoforeperdayduring2015.LowgradeoreatPinosAltosisprocessedinaheapleachsystemdesignedtoaccommodateapproximatelyfivemilliontonnesofmineralizedmaterialoverthelifeofthemine.Theproductionfromheapleachoperationsisexpectedtoberelativelyminor,contributingabout1%oftotalmetalproductionplannedfortheremaininglifeofthemine(notincludingproductionfromtheCrestonMascotaheapleachoperation).
OthersurfacefacilitiesatthePinosAltosmineinclude:aheadframeandhoistroom,aheapleachpad,pond,linerandpumpingsystem;administrativesupportoffices;campfacilities;alaboratory;aprocessplantshop;amaintenanceshop;apowergeneratingstation;surfacepowertransmissionlinesandsubstations;anengineeredtailingsmanagementsystem;andawarehouse.
AseparateheapleachoperationandancillarysupportfacilitieswerebuiltattheCrestonMascotadeposit,whichisdesignedtoprocessapproximately4,000tonnesoforeperdayinathreestagecrushing,agglomerationandheapleachcircuitwithcarbonadsorption.Thisprojectwascommissionedinthelatterpartof2010,withcommercialproductionachievedinthefirstquarterof2011.During2015,atotalof2.0milliontonnesoforewasminedfromtheCrestonMascotadeposit,averaging5,554tonnesperday.BasedonperformanceofthemineandprocessfacilitiesattheCrestonMascotadeposittodate,theequipment,miningmethodsandpersonnelaresatisfactoryforcompletionoftheplannedproductionphases.TheCrestonMascotadepositisexpectedtoproduceapproximately45,000ouncesofgoldin2016.
Overtheremaininglifeofthemine,recoveriesofgoldandsilverinthemillingcircuitatPinosAltos(otherthanfromtheCrestonMascotadeposit)areexpectedtoaverageapproximately93%and43%,respectively.TheCompanyanticipatespreciousmetalsrecoveryfromlowgradeoreprocessedinthePinosAltosheapleachfacilitywillaverage68%forgoldand12%forsilver.HeapleachrecoveriesfororefromtheCrestonMascotadepositareexpectedtoaverage63%forgoldand8%forsilver.
Production and Mineral Recoveries
During2015,thePinosAltosmine,includingtheCrestonMascotadeposit,hadtotalpayableproductionof247,677ouncesofgoldandapproximately2.5millionouncesofsilverfromthePinosAltosmillandtheheapleachpadsatthePinosAltosmineandtheCrestonMascotadeposit.ThetotalcashcostsperounceofgoldproducedatPinosAltosin2015was$387onaby-productbasis.TheaverageminesitecostspertonneforalloreatPinosAltoswere$45.
Ofthetotalin2015,thePinosAltosmillhadpayableproductionof185,269ouncesofgoldand2,329,993ouncesofsilverfrom1.99milliontonnesoforegrading3.05gramsofgoldpertonneand79.9gramsofsilverpertonne.In2015,thetotalcashcostsperounceofgoldproducedfromoretreatedatPinosAltoswas$387onaby-productbasisand$578onaco-productbasisandtheprocessingfacilityaveraged5,462tonnesoforeperdayandoperated93.1%ofavailabletime.Inthemill,goldrecoveryaveraged94%andsilverrecoveryaveraged43%andtheminesitecostspertonnefororetreatedatPinosAltoswere$45in2015.
ThefollowingtablesetsoutthemetalrecoveriesatthePinosAltosmillin2015.
Head Grade
Overall Metal
RecoveryPayable
Production
Gold 3.05g/t 94% 185,269oz
Silver 79.9g/t 43% 2,329,993oz
Ofthe2015total,thePinosAltosheapleachhadpayableproductionof7,705ouncesofgoldand55,000ouncesofsilverfrom0.39milliontonnesoforegrading0.75gramsofgoldpertonneand21.0gramsofsilverpertonne.
62 AGNICO EAGLE ANNUAL INFORMATION FORM
ThecumulativerecoveryforgoldandsilverontheheapleachpadatPinosAltosareapproximately72%and15%,respectively.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimaterecoveryof68%forgoldand12%forsilverwillbeachievedwhenleachingiscompleted.
Ofthe2015total,theheapleachattheCrestonMascotadeposithadpayableproductionof54,702ouncesofgoldand159,000ouncesofsilverfrom2.1milliontonnesoforegrading1.34gramsofgoldpertonneand16.9gramsofsilverpertonne.In2015,thetotalcashcostsperounceofgoldproducedfromthisorewas$430onaby-productbasisand$474onaco-productbasis.Theminesitecostspertonneforthisorewere$12in2015.
ThecumulativemetalsrecoveryforgoldandsilverontheheapleachpadattheCrestonMascotadepositareapproximately58%and11%,respectively.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimaterecoveryof63%forgoldand11%forsilverwillbeachievedwhenleachingiscompleted.
Productionduring2016atthePinosAltosmine,includingtheCrestonMascotadeposit,isexpectedtobeapproximately220,000ouncesofgoldand2,331,000ouncesofsilverfrom4.21milliontonnesoforegrading2.06gramsofgoldpertonneand44.7gramsofsilverpertonne,atestimatedtotalcashcostsperounceofgoldofapproximately$480onaby-productbasis,withestimatedgoldrecoveryof78.6%andsilverrecoveryof28.1%.Minesitecostspertonneofapproximately$34foralloreareexpectedin2016.
Ofthistotal,in2016PinosAltos(excludingCrestonMascota)isexpectedtoproduceapproximately175,000ouncesofgoldand2,218,000ouncesofsilverfrom2.1milliontonnesoforegrading2.77gramsofgoldpertonneand74.1gramsofsilverpertonne,atestimatedtotalcashcostsperounceofgoldofapproximately$443onaby-productbasis,withestimatedgoldrecoveryof95.5%andsilverrecoveryof74.1%.Minesitecostspertonneofapproximately$54formilledoreareexpectedin2016.TheheapleachattheCrestonMascotadepositisexpectedtoproduceapproximately45,000ouncesofgoldand113,000ouncesofsilverfrom2.0milliontonnesoforegrading1.17gramsofgoldpertonneand12.5gramsofsilverpertonne,atestimatedtotalcashcostsperounceofgoldofapproximately$604onaby-productbasis,withestimatedgoldrecoveryof60.0%andsilverrecoveryof13.4%.Minesitecostspertonneofapproximately$15forCrestonMascotaheapleachoreareexpectedin2016.
Environmental, Permitting and Social Matters
ThePinosAltosminehasreceivedthenecessarypermitauthorizationsforconstructionandoperationofamine,includingaChangeofLandUsepermitandanEnvironmentalImpactStudyapprovalfromtheapplicableMexicanenvironmentalagency.AsofDecember31,2015,allpermitsnecessaryfortheoperationofthePinosAltosmine,includingtheoperationsattheCrestonMascotadeposit,hadbeenreceived.PinosAltosusesthedrystacktailingstechnologytominimizethegeotechnicalandenvironmentalriskthatcanbeassociatedwiththerainfallintensitiesandtopographicreliefintheSierraMadreregionofMexico.
Followinganauditprocessbyanindependentthirdparty,theoperationsatboththePinosAltosmineandtheCrestonMascotadeposithavereceivedthe"IndustriaLimpia"certificationfromtheMexicanenvironmentalauthorities.Thiscertificationisbasedoncompliancewithenvironmentalrequirements.
Asthedrytailingsstackapproachedfullcapacity,aplanwaspreparedtodeposittailingsinthedepletedOberonWeberpit.Geotechnicalstudieswereperformed,anartificialcrownpillarwasconstructedatthebottomofthepitandwaterdrainageinfrastructurewasconstructedtoevacuatewateroutofthepitasrequired.Tailingsweredepositedinthepitbeginninginthefourthquarterof2015.
Capital Expenditures
CombinedcapitalexpendituresatthePinosAltosandCrestonMascotadepositduring2015wereapproximately$71.6million,excludingcapitalizeddrilling.Combinedcapitalexpendituresincludedsustainingcapitalforshaftconstructionandcommissioning,undergroundequipmentmajorcomponents,silverflotationplant,CrestonMascotaphase4leachpadandpondandOberondeWebertailingsdam.
In2016,theCompanyexpectscapitalexpendituresatPinosAltos,includingtheCrestonMascotadeposit,tobeapproximately$61million,excludingcapitalizeddrilling.Capitalexpendituresin2016areprimarilybeingusedforundergroundminedevelopment,shaftconstruction,tailingsmanagementandgeneralsustainingactivities.
AGNICO EAGLE 63 ANNUAL INFORMATION FORM
Development
AsofDecember31,2015,fortheminelifetodate,morethan127milliontonnesofore,overburdenandwastehadbeenremovedfromtheopenpitmineatPinosAltosandapproximately51kilometresoflateraldevelopmenthadbeencompletedintheundergroundmine.AttheCrestonMascotadeposit,approximately44milliontonnesofore,overburden,andwastehadbeenremovedfromtheopenpitmineasofDecember31,2015.
A$106.0millionshaftsinkingprojectremainsonscheduleforcompletionin2016atPinosAltos.Uponcompletion,itisexpectedthatthisnewshaftwillfacilitateimprovedmatchingofminingandmillcapacityastheopenpitminingoperationwindsdown.
Geology, Mineralization and Exploration
Geology
ThePinosAltosmineisinthenorthernpartoftheSierraMadregeologicprovince,onthenortheastmarginoftheOcampoCaldera,whichhostsmanyepithermalgoldandsilveroccurrences,includingthenearbyOcampoandMorismines.
ThepropertyisunderlainbyTertiary-age(lessthan45millionyearsold)volcanicandintrusiverocksthathavebeendisturbedbyfaulting.Thevolcanicrocksbelongtothelowervolcaniccomplexandthediscordantoverlyinguppervolcanicsupergroup.ThelowervolcaniccomplexisrepresentedonthepropertybytheNavosaigameconglomerates(includingthinly-beddedsandstoneandsiltstone)andtheElMadronovolcanics(felsictuffsandlavasintercalatedwithrhyolitictuffs,sandyvolcanoclasticsandsediments).TheuppervolcanicgroupismadeupoftheVictoriaignimbrites(explosivefelsicvolcanics),theFrijolarandesites(massivetoflow-banded,porphyriticflows)andtheBuenavistaignimbrites(dacitictorhyoliticpyroclastics).
Intermediateandfelsicdykesaswellasrhyoliticdomesintrudealloftheseunits.TheSantoNinoandesiteisadykethatintrudesalongtheSantoNinofaultzone.
Structureonthepropertyisdominatedbyaten-kilometrebythree-kilometrehorst,afault-upliftedblockstructureorientedwest-northwest,thatisboundedonthesouthbythesouth-dippingSantoNinofaultandonthenorthbythenorth-dippingReynadePlatafault.Quartz-goldveindepositsareemplacedalongthesefaultsandalongtransferfaultsthatsplayoutwardsfromtheSantoNinofault.
Mineralization
GoldandsilvermineralizationatthePinosAltosmineconsistsoflowsulphidationtypeepithermal-typehydrothermalveins,brecciasandbodies.TheSantoNinostructureoutcropsoveradistanceofroughlysixkilometres.Itstrikesat60degreesazimuthonitseasternportionandturnstostrikeroughly90degreesazimuthonitswesternfringe.Thestructuredipsat70degreestowardsthesouth.ThefourmineralizedsectorshostedbytheSantoNinostructureconsistofdiscontinuousquartzrichlensesnamedfromeasttowest:ElApache,OberondeWeber,SantoNinoandCerroColorado.
TheElApachelensisthemostweaklymineralized.Theareahostsaweaklydevelopedwhitequartzdominatedbreccia.Goldvaluesarelowanderraticoveritsroughly750metrestrikelength.Pastdrillingsuggeststhatthiszoneisoflimitedextentatdepth.
TheOberondeWeberlenshasbeenfollowedonsurfaceandbydiamonddrillingoveranextentofroughly500metres.ShallowholesdrilledbytheCompanyshowgoodcontinuitybothintermsofgradeandthicknessoverroughly550metres.FromthepreviousdrillingdonebyPenoles,continuityatdepthappearstobeerraticwithaweaklydefinedwesternrake.
TheSantoNinolensisthemostverticallyextensiveoftheselenses.Ithasbeentracedtoadepthofapproximately750metresbelowthesurface.Theveinisfollowedcontinuouslyonsurfaceoveradistanceof550metresanddiscontinuouslyupto650metres.Beyonditswesternandeasternextents,theSantoNinoandesiteismassiveandonlyweaklyaltered.Goldgradesfoundaresystematicallyassociatedwithgreenquartzbrecciatedandesite.
TheCerroColoradolensisstructurallymorecomplexthanthethreedescribedabove.Nearthesurface,itismarkedbyacomplexsuperpositionofbrittlefaultswithmineralizedzoneswhicharedifficulttocorrelatefromholetohole.ItsrelationtotheSantoNinofaultzoneisnotclearlydefined.TwodeeperholesdrilledbytheCompanysuggestbettergradecontinuityispossibleatdepth.
TheSanEligiozoneislocatedapproximately250metresnorthofSantoNino.ThehostrockisbrecciatedVictoriaIgnimbrite,occasionallywithastockworkstyleofmineralization.Thereisnoandesiteinthissector.Unliketheotherlenses,theSanEligiolensdipstowardsthenorth.Thelateralextentofthezoneseemstobecontinuousfor950metres.Its
64 AGNICO EAGLE ANNUAL INFORMATION FORM
averagewidthisfivemetresandneverexceeds15metres.Surfacemappingandprospectinghassuggestedthatthereisgoodpotentialforadditionalmineralizationonstrikeandatdepthsbelow150metres.Visiblegoldhasbeenseeninthedrillcore.
TheCrestonMascotadepositissevenkilometresnorthwestoftheSantoNinodeposit,andissimilar,butdipsshallowlytothewest.TheCrestonMascotadepositisabout1,000metreslongand4to40metreswide,andextendsfromsurfacetomorethan200metresdepth.
Severalotherpromisingzonesareassociatedwiththehorstfeatureinthenorthwestpartoftheproperty.TheCubirodepositisanear-surfacedepositlocatedtwokilometreswestoftheCrestonMascotadeposit.Cubirostrikesnorthwest,hasasteepdipandhasbeenfollowedalongstrikeforapproximately850metres.Drillinghasintersectedsignificantgoldandsilvermineralizationupto30metresinwidth.TheCubirodepositissplitbyafaultthatresultedin200metresofdisplacementtothewest,asdefinedbydrillingtodate.Thezoneisstillopentothesoutheastandpossiblyatdepth.
TheSinterzoneis1,500metresnorth-northeastoftheSantoNinozoneandispartoftheReynadePlatagoldstructure.Thesteeplydippingmineralizationrangesfromfourto35metresinwidthandalmost900metreslong,withover350metresofverticaldepth.Sinterisbeingevaluatedforitsopenpitandundergroundminingpotential.
OtheridentifiedmineralresourcesinthePinosAltosregionincludetheBravoandCarolazonesadjacenttotheCrestonMascotadepositandtheReynadelaPlataprospectfurthertotheeast.ExplorationeffortswillbeallocatedtothesezonesasdevelopmentcontinuesatPinosAltosandtheCrestonMascotadeposit.
Exploration and Drilling
In2015,provenandprobablemineralreservesatPinosAltos(excludingCrestonMascota)decreasedbyapproximately304,000ouncesofgoldand9.15millionouncesofsilverto1.46millionouncesofgoldand37.53millionouncesofsilver(15.7milliontonnesoforegrading2.88gramsofgoldpertonneand74.18gramsofsilverpertonne)afterproducing192,974ouncesofgold(205,000ouncesofin-situgoldmined)and2.38millionouncesofsilver.ThenetdecreasewasaresultofminedepletionaswellasachangetotheCerroColoradoblockmodelbasedoninformationgainedfromgeologicalmappingandminingdevelopment.IndicatedmineralresourcesatPinosAltosdecreasedby0.8milliontonnesoforein2015to11.1milliontonnesoforegrading1.83gramsofgoldpertonneand42.43gramsofsilverpertonneduetoamoreconservativeapproachattheCerroColorado,OberondeWeberandSinterdeposits.Inferredmineralresourcesdecreasedby0.1milliontonnesoforein2015to12.6milliontonnesoforegrading1.25gramsofgoldpertonneand29.33gramsofsilverpertonne.
In2015,provenandprobablemineralreservesattheCrestonMascotadepositdecreasedbyapproximately59,000ouncesofgoldand0.90millionouncesofsilverto0.18millionouncesofgoldand1.63millionouncesofsilver(4.2milliontonnesoforegrading1.30gramsofgoldpertonneand12.02gramsofsilverpertonne)afterproducing54,703ouncesofgold(90,000ouncesofin-situgoldmined)and0.16millionouncesofsilver.Thenetdecreasewasaresultofminedepletion.IndicatedmineralresourcesattheCrestonMascotadepositincreasedby2.0milliontonnesoforein2015to4.3milliontonnesoforegrading0.51gramsofgoldpertonneand5.14gramsofsilverpertonneduetowireframemodificationsandreclassificationofsomeindicatedmineralresourcestoprobablemineralreserves.TheinferredmineralresourcesattheCrestonMascotadepositdecreasedby0.2milliontonnesoforein2015to4.3milliontonnesoforegrading1.06gramsofgoldpertonneand14.16gramsofsilverpertonne.Drillingandevaluationwillcontinuein2016.
In2015,minesiteexplorationactivitieswereprimarilyfocusedonconversion,infillandexplorationofthemineralresourcesattheCrestonMascota,Sinter,BravoandReynadePlatadeposits.Atotalof8,960metresofminesiteexplorationdrillingand3,540metresofdefinition(conversion)drillingwerecompletedduringtheyear.
In2016,theCompanyexpectstospendapproximately$3.1milliononexplorationatthePinosAltosmineandtheCrestonMascotadeposit,including$0.9millionon3,500metresofconversiondrillingand$2.2millionon7,500metresofexplorationdrilling.
LaIndiaMine
ConstructionbeganatLaIndiainSeptember2012andcommercialproductionwasachievedonFebruary1,2014.AtDecember31,2015,theLaIndiaminewasestimatedtocontainprovenandprobablemineralreservesof0.87millionouncesofgoldand4.08millionouncesofsilvercomprisedof30.0milliontonnesoforegrading0.90gramsofgoldpertonneand4.23gramsofsilverpertonne.
AGNICO EAGLE 65 ANNUAL INFORMATION FORM
TheLaIndiapropertyconsistsof39wholly-ownedand18optionedminingconcessionsintheMulatosGoldBeltinSonora,Mexico.TheLaIndiapropertyincludestheTarachidepositandseveralotherprospectivetargetsintheMulatosGoldBelt.AttheTarachideposit,indicatedmineralresourcesare47.2milliontonnesoforegrading0.39gramsofgoldpertonneandinferredmineralresourcesare81.7milliontonnesoforegrading0.36gramsofgoldpertonne.ApreliminarymetallurgicaltestingprogramonTarachicompositesampleshasbeencompletedandnegotiationsforlandaccessareongoing.
LocationMapoftheLaIndiaMine(asatDecember31,2015)
TheMulatosGoldBeltispartoftheSierraMadregoldandsilverbeltthatalsohoststheoperatingMulatosgoldmineimmediatelysoutheastoftheLaIndiapropertyandthePinosAltosmineandtheCrestonMascotadeposit70kilometrestothesoutheast.
TheLaIndiamineislocatedinthemunicipalityofSahuaripa,southeasternSonoraState,betweenthesmallruraltownsofTarachiandMatarachi.TheclosestmajorcitywithaninternationalairportisHermosillo,thecapitalofSonora,located210kilometreswest-northwestoftheLaIndiamine.RoadtravelfromHermosillotothesitetakesapproximatelysevenhours.Alternatively,theminecanbeaccessedbysmallaircraft.ThepowersupplyattheLaIndiamineisprovidedbydieselgenerators.
TheCompanyacquiredtheLaIndiapropertyinNovember2011aspartofitsacquisitionofGrayd.Graydhadexploredthepropertysince2004andhadpreparedapreliminaryeconomicassessmentoftheprojectinDecember2010basedonaJune2010NI43-101-compliantresourceestimate.
InfilldrillingatLaIndiafromNovember2011toMay2012allowedtheCompanytoconfirmandexpandthemineralresourcesreportedintheDecember2010preliminaryeconomicassessment.InSeptember2012,followingthecompletionofafeasibilitystudy,theCompanyapprovedtheconstructionofamineatLaIndia.Themineachieved
66 AGNICO EAGLE ANNUAL INFORMATION FORM
commercialproductioninFebruary2014.TheCompanycontinuestoevaluateopportunitiestodevelopothermineralresourcesthathavebeenidentifiedintheLaIndiaarea.
TheCompanyhasengagedthelocalcommunitiesintheareawithlocalhiring,contractswithlocalbusinesses,educationsupportandmedicalsupportprogramstoensurethattheLaIndiamineprovideslongtermbenefitstotheresidentslivingandworkingintheregion.Approximately50%oftheoperatingworkforceatLaIndiaislocallyhiredand100%ofthepermanentworkforceareMexicannationals.
AttheTarachideposit,thesurfacerightsintheprojectareaareownedbytheTarachiEjido(agrariancommunity)andprivateparties.Allmeasured,indicatedandinferredmineralresourcesliewithinprivatelyownedorejidopossessedland.Surfaceaccessleaseagreementshavebeenexecutedwiththepropertyownersorpossessorsforapproximately50%oftheidentifiedtargetareas.Theexistingagreementspermitexplorationanddrillingactivities;ifminingactivityiscontemplatedinthisexplorationareatheCompanywillberequiredtonegotiatefurthertoacquirethesurfacerightsneededforprojectdevelopment.
Mining and Milling Facilities
Mining Methods
OperationsattheLaIndiamineusetraditionalopenpitminingtechniqueswithbenchheightsofsixmetresandutilizefrontendloaders,trucks,trackdrillsandvarioussupportequipment.Basedupongeotechnicalevaluations,thefinalpitslopesvarybetween45degreesand50degrees.
Surface Facilities
Thefollowingsurfaceplandetailstheplannedminelayoutshowingprojectedpitsandwasterockdumplocations,roads,theleachpadandotherinfrastructure.
SurfacePlanoftheLaIndiaMine(asatDecember31,2015)
AGNICO EAGLE 67 ANNUAL INFORMATION FORM
SurfacefacilitiesattheLaIndiamineincludeathree-stageorecrushingfacility,a35milliontonnecapacitylinedheapleachpadwithprocesspondsandpumpingsystem,acarbonadsorptionplant,alaboratory,aprocessplantshop,aminingequipmentmaintenanceshop,ageneratedpowerstation,surfacepowertransmissionlinesandsubstations,awarehouse,administrativesupportofficesandcampfacilities.Thepowerforthefacilitiesissuppliedbydieselgeneratorsandwaterissuppliedbyasystemofwellsandcatchmentfacilities.Septicdischargesaremanagedintheirrespectiveleachfields.
Production and Mineral Recoveries
During2015,theLaIndiaminehadpayableproductionof104,362ouncesofgoldfromapproximately5,310,000tonnesoforestackedontheheapleachpadgrading0.95gramsofgoldpertonne.ThetotalcashcostsperounceofgoldproducedatLaIndiain2015was$436onaby-productbasisand$475onaco-productbasis.Stackingratesaveraged14,715tonnesoforeperday.TheminesitecostspertonneatLaIndiawere$9in2015.
ThecumulativerecoveryforgoldontheheapleachpadatLaIndiaisapproximately55%.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimategoldrecoveryof77%willbeachievedwhenleachingiscompleted.
ThefollowingtablesetsoutthemetalrecoveriesatLaIndiain2015.
Head Grade
Cumulative Metal
RecoveryPayable
Production
Gold(includingpriortocommercialproduction) 0.95g/t 55% 104,362oz
Goldproductionduring2016attheLaIndiamineisexpectedtobeapproximately100,000ouncesfrom5.3milliontonnesoforegrading0.92gramsofgoldpertonne,atestimatedtotalcashcostsperounceofapproximately$470onaby-productbasis,withestimatedcumulativegoldrecoveryof63.4%.Minesitecostspertonneofapproximately$9areexpectedin2016.
Environmental, Permitting and Social Matters
TheLaIndiamineisnotlocatedinanareawithaspecialfederalenvironmentalprotectiondesignation.AsofDecember31,2015,allpermitsnecessaryfortheoperationoftheLaIndiaminehadbeenreceived.
Capital Expenditures
CapitalexpendituresattheLaIndiamineduring2015wereapproximately$19.8million,excludingcapitalizeddrilling,whichwasspentonheapleachexpansionandgeneralsustainingactivities.TheCompanyexpectscapitalexpenditurestobeapproximately$8.0millionin2016,excludingcapitalizeddrilling.Thecapitalexpendituresin2016aretobeusedforgeneralsustainingactivities.
Development
AsofDecember31,2015,fortheminelifetodate,morethan23.0milliontonnesofore,overburdenandwastehadbeenremovedfromtheopenpitmineatLaIndia.
Agreements & Licences
TheminingconcessionsfortheLaIndiamineandTarachidepositarecontrolledbyanindirect,wholly-ownedsubsidiaryoftheCompanybymeansofdirectownershipandbyfiveseparateagreementswherebytheCompanycanearna100%interestincertainconcessionsbymakingcashandsharepayments.Paymenthasbeenmadeinfullfortheclaimsthathostallofthemeasured,indicatedandinferredmineralresources.Someconcessionsaresubjecttounderlyingnetsmelterreturnroyaltiesvaryingbetween1%and3%,certainofwhichmaybepurchasedbytheCompanywhichwouldresultinnetsmelterreturnroyaltiesofupto2%remaining.
FortheTarachideposit,paymentstotaling$0.75millionoverafiveyearperiodarerequiredfortheCompanytoearna100%interestintherelevantconcessions.Todate,$0.42millionhasbeenpaidtowardtheseconcessions.Some
68 AGNICO EAGLE ANNUAL INFORMATION FORM
concessionsaresubjecttoanunderlyingnetsmelterreturnroyaltyof2%,someofwhichmaybepurchasedbytheCompany,whichwouldresultinnetsmelterreturnroyaltiesofupto1%remaining.
Inthefirstquarterof2015,theElRealitoconcession,whichliestothewestoftheMainzoneandcontainsaninlierthatextendedbetweentheMainandLaIndiazones,wasacquiredfromAlamosGoldInc.ThedefinedmineralreserveandmineralresourceandalllandsrequiredforinfrastructurefortheLaIndiaminearewholly-containedwithinthreeprivately-heldpropertieswhichtheCompanyhasacquiredinordertopermitexploration,constructionandminedevelopmentactivities.
Geology, Mineralization and Exploration
Geology and Mineralization
TheLaIndiaminelieswithintheSierraMadreOccidental("SMO")province,anextensiveEocenetoMiocenevolcanicfieldextendingfromtheUnitedStates-MexicobordertocentralMexico.TheLaIndiaminelieswithinthewesternlimitsoftheSMOinanareadominatedbyoutcropsofandesiteanddacitictuffs,overlainbyrhyolitesandrhyolitictuffsthatwereaffectedbylarge-scalenorth-northwest-strikingnormalfaultsandintrudedbygranodioriteanddioritestocks.IncisedfluvialcanyonscuttheuppermoststrataandexposetheLowerSeriesvolcanicstrata.
Themineareaispredominantlyunderlainbyavolcanicsequencecomprisedofandesiticandfelsicextrusivevolcanicstratawithinterbeddedepiclasticstrataofsimilarcomposition.Themineraloccurrencespresentintheminearea,andthedeposittypebeingsought,arevolcanic-hostedhigh-sulphidationepithermalhydrothermalgold,silverandporphyry-relatedgolddeposits.Suchdepositsmaybepresentasveinsand/ordisseminateddepositsand/orbreccias.TheLaIndiaminedepositareaisoneofseveralhigh-sulphidationepithermalmineralizationcentresrecognizedintheregion.
Epithermalhigh-sulphidationmineralizationattheLaIndiaminedevelopedasaclusterofgoldzones(MainandNorth)alignednorth-southwithinaspatiallyrelatedzoneofhydrothermalalterationinexcessof20squarekilometresinarea.GoldmineralizationisconfinedtotheLateEocenerockswithinzonesofintermediateandadvancedargilliticalterationoriginallycontainingsulphides,andsubsequentlyoxidizedbysupergeneprocesses.TheNorthandMainzonesarewithintwokilometresofeachother.
Surfaceoutcropmappinganddrill-holedatasofarindicatethatthegoldsystemattheTarachidepositislikelybestclassifiedasagoldporphyrydeposit.
Exploration and Drilling
In2015,provenandprobablemineralreservesatLaIndiaincreasedbyapproximately188,000ouncesofgoldto0.87millionouncesofgold(30.0milliontonnesoforegrading0.90gramsofgoldpertonne)afterproducing104,362ouncesofgold(164,000ouncesofin-situgoldmined).Thenetincreasewasaresultoftheadditionofnewoxidereservesandtherecognitionofanewstyleoflow-grademineralizationintheMainpitthatisamenabletoheapleaching,whichmorethanoffsettheminedepletion.Thereservegoldgradeincreased6%from0.85gramsofgoldpertonneto0.90gramsofgoldpertonne.MeasuredandindicatedmineralresourcesattheLaIndiamineincreasedby15.8milliontonnesoforein2015to70.3milliontonnesoforegrading0.37gramsofgoldpertonne,largelyduetorelogging,reinterpretationandnewestimationdomains.Inferredmineralresourcesincreasedby8.3milliontonnesoforein2015to90.9milliontonnesoforegrading0.37gramsofgoldpertonneduetonewestimationdomains.
In2015,theCompanycompleted26,512metresofdrillingthrough237diamonddrillholesattheLaIndiamine.Thisincluded15,279metresofminesiteexplorationdrillingatacostof$2.47millionattheMainZoneand11,233metresofdefinition(conversion)drillingatacostof$2.9millionattheNorth,MainandLaIndiaZones.In2015,therewasalsoregionalexploration,mappingandsamplingattheArroyoHondo-KM15corridorandtheSanJavierandLasChivitasareasatacostof$0.8million.Near-mineandregionalexplorationcompletedin2015expandedthecurrentmineralresourceestimate,allowedresourceareasthathadpreviouslybeenclassifiedasinferredorindicatedmineralresourcestobeupgradedtohigherconfidenceclassificationsandprovidedseveralfollow-uptargetsfor2016exploration.
TheCompanyexpectstospendapproximately$1.97millionon7,000metresofconversiondrillingand$1.52millionon5,600metresofexplorationdrillingattheLaIndiaminein2016.Anadditional$1.3millionisplannedfor3,000metresofexplorationdrillingintheKM15area.
AGNICO EAGLE 69 ANNUAL INFORMATION FORM
Regional Exploration Activities
During2015,theCompanycontinuedtoactivelyexploreinQuebec,Nunavut,Nevada,Finland,SwedenandMexico.TheCanadianregionalexplorationactivitieswerefocusedontheAmaruqandMeliadinepropertiesinNunavut.IntheUnitedStates,explorationactivitiesduring2015wereconcentratedontheWestPequopandSummitprojectslocatedinnortheastNevada.InMexico,regionalexplorationwasfocusedontheElBarqueñoproperty.InFinland,regionalexplorationwasfocusedtothenorthoftheKittilaminealongtheKiistalafaultincludingtheKuotkodeposit.InSweden,theCompanyexploredtheSolvikprojectandthenewlyacquiredBarseleproject.CanadianMalarticCorporationfocusedexplorationontheAmalgamatedKirklandandUpperBeaverprojectsnearKirklandLake,Ontario,aswellasthePandorapropertyadjacenttotheLapamine,andtheOdysseyprojectnexttotheCanadianMalarticmineinQuebec.AttheLaRonde,Goldex,Lapa,Meadowbank,Kittila,PinosAltos(includingtheCrestonMascotadeposit)andLaIndiamines,andtheCanadianMalarticmine,theCompanycontinuedexplorationprogramsaroundthemines.Mostoftheexplorationbudgetwasspentondrillingprogramsnearmineinfrastructurealongpreviouslyrecognizedgoldtrends.
Attheendof2015,theCompany'slandholdingsinCanadaconsistedof70projectscomprisedof3,839mineraltitlescoveringanaggregateof531,137hectares(ofthistotalinCanada,7projectscomprisedof1,782mineraltitlescoveringanaggregateof69,067hectaresareheldasa50%interestwithYamana,includingtheCanadianMalarticmine).LandholdingsintheUnitedStatesconsistedof5propertiescomprisedof2,494mineraltitlescoveringanaggregateof35,859hectares.LandholdingsinFinlandconsistedof3groupsofpropertiescomprisedof216mineraltitlescoveringanaggregateof27,903hectares.LandholdingsinSwedenconsistedof2projectscomprisedof29mineraltitlescoveringanaggregateof37,361hectares.LandholdingsinMexicoconsistedof18projectscomprisedof160miningconcessiontitlescoveringanaggregateof237,586hectares.
ThetotalamountofexpendituresincurredonregionalexplorationactivitiesattheCompany'sexplorationpropertiesplusheadofficeoverheadandcorporatedevelopmentactivitiesin2015was$100.2million.Thisincludeddrilling775holesforanaggregateofapproximately212kilometreson100%-ownedproperties.ItalsoincludedtheCompany's50%portionofthecostofdrilling156holesforanaggregateofapproximately82kilometresonCanadianMalarticCorporationexplorationproperties.
ThebudgetforexpendituresonregionalexplorationactivitiesattheCompany'sexplorationpropertiesplusheadofficeoverhead,projectevaluationandcorporatedevelopmentactivitiesin2016isapproximately$153million,includingapproximately345kilometresofdrillingon100%-ownedproperties,and50%ofthecostofdrilling80kilometresonCanadianMalarticCorporationexplorationproperties.Forfurtherdetailsofthecomponentsofthe2016explorationbudget,seetheCompany'snewsreleasedatedFebruary10,2016.
Mineral Reserves and Mineral Resources
InformationonMineralReservesandMineralResourcesoftheCompany
ThescientificandtechnicalinformationsetoutinthisAIFhasbeenapprovedbythefollowing"qualifiedpersons"asdefinedbyNI43-101:mineralreservesandmineralresources(otherthanfortheCanadianMalarticmine)–DanielDoucet,Eng.,SeniorCorporateDirector,ReserveDevelopment;mineralreservesandmineralresources(fortheCanadianMalarticmine)–DonaldGervais,P.Geo.,DirectorofTechnicalServicesatCanadianMalarticCorporation;environmental–LouiseGrondinP.Eng.,SeniorVice-President,Environment,SustainableDevelopmentandPeople;miningoperations,SouthernBusiness–TimHaldaneP.Eng.,SeniorVice-President,Operations–USA&LatinAmerica;metallurgy–PaulCousin,Eng.,Vice-President,Metallurgy;miningoperations,Kittilamine–FrancisBrunet,Eng.,CorporateDirectorMining;miningoperations,Nunavut–DominiqueGirard,Eng.,Vice-PresidentTechnicalServicesandNunavutOperations;andminingoperations,Quebecmines–ChristianProvencher,Eng.,Vice-President,Canada.TheCompany'smineralreservesestimatewasderivedfrominternallygenerateddataorgeologyreports.FiveoftheCompany'smineralreserveandmineralresourceestimates(Akasaba,Goldex,LaRonde,PinosAltosandLaIndia)havebeenauditedbyindependentconsultants.
70 AGNICO EAGLE ANNUAL INFORMATION FORM
Historically,mineralreservesandmineralresourcesforallpropertiesweretypicallyestimatedusinghistoricthree-yearaveragemetalspricesandforeignexchangeratesinaccordancewithSECguidelines.Theseguidelinesrequiretheuseofpricesthatreflectcurrenteconomicconditionsatthetimeofreservedetermination,whichtheStaffoftheSEChasinterpretedtomeanhistoricthree-yearaverageprices.Giventhecurrentcommoditypriceenvironment,theCompanydecidedtousepriceassumptionsthatarebelowthethree-yearaveragesforits2013,2014and2015mineralreserveandmineralresourceestimates.Theassumptionsusedforthe2015mineralreservesandmineralresourcesestimateatallminesandadvancedprojectsreportedbytheCompany(otherthantheCanadianMalarticmine)were$1,100perouncegold,$16.00perouncesilver,$0.90perpoundzinc,$2.50perpoundcopper,andexchangeratesofC$1.16per$1.00,$1.20per€1.00and14.00Mexicanpesosper$1.00forallminesandprojects(otherthantheLapaandMeadowbankminesandtheCrestonMascotadepositandSantoNiñoopenpitatPinosAltos).Duetoshorterminelife,theassumptionsusedforthemineralreserveestimatesattheshort-lifemines(theLapaandMeadowbankminesandtheCrestonMascotadepositandSantoNiñoopenpit)asofDecember31,2015,includethesamemetalpriceassumptions,andexchangeratesofC$1.30per$1.00and16.00Mexicanpesosper$1.00,respectively.Theassumptionsusedforthe2015mineralreservesandmineralresourcesestimateattheCanadianMalarticminewere$1,150perouncegold,acut-offgradebetween0.34gramspertonneand0.40gramspertonneofgold(dependingonthedeposit)andanexchangerateofC$1.24per$1.00.Theassumptionsusedforthe2014mineralreservesandmineralresourcesestimateatallminesandadvancedprojectsreportedbytheCompanyinthisAIF(otherthantheCanadianMalarticmine)were$1,150perouncegold,$18perouncesilver,$1.00perpoundzinc,$3.00perpoundcopperandexchangeratesofC$1.08per$1.00,13.00Mexicanpesosper$1.00and$1.30per€1.00.TheassumptionsusedattheCanadianMalarticminewere$1,300perouncegold,acut-offgradebetween0.28gramspertonneand0.35gramspertonneofgold(dependingonthedeposit)andanexchangerateofC$1.10per$1.00.Theassumptionsusedforthe2013mineralreservesandresourcesestimateatallminesandadvancedprojectsreportedbytheCompanywere$1,200perouncegold,$18.00perouncesilver,$0.82perpoundzinc,$3.00perpoundcopperandexchangeratesofC$1.03per$1.00,12.75Mexicanpesosper$1.00and$1.32per€1.00.Otherassumptionsusedforestimating2014and2013mineralreserveandmineralresourceinformationmaybefoundintheCompany'sannualfilingsinrespectoftheyearsendedDecember31,2014andDecember31,2013,respectively.
SetoutbelowarethemineralreserveestimatesasofDecember31,2015,ascalculatedinaccordancewithNI43-101(tonnagesandcontainedgoldquantitiesareroundedtothenearestthousand):
Property Tonnes
Gold Grade
(g/t)
Contained Gold (oz)
Proven Reserves
NorthernBusiness
LaRondemine(underground) 3,455,000 4.09 454,000
CanadianMalarticmine(openpit)(50%) 27,446,000 0.97 860,000
Lapamine(underground) 444,000 5.49 78,000
Goldexmine(underground) 300,000 1.54 15,000
Kittilamine(openpit) 176,000 3.52 20,000
Kittilamine(underground) 883,000 4.43 126,000
Kittilaminetotalproven 1,059,000 4.28 146,000
Meadowbankmine(openpit) 1,203,000 1.51 58,000
Meliadineproject(openpit) 34,000 7.31 8,000
SouthernBusiness
PinosAltosmine(openpit) 164,000 2.07 11,000
PinosAltosmine(underground) 2,605,000 3.14 263,000
PinosAltosminetotalproven 2,769,000 3.08 274,000
CrestonMascotadepositatPinosAltos(openpit) 187,000 0.68 4,000
LaIndiamine(openpit) 244,000 0.68 5,000
Total Proven Reserves 37,141,000 1.59 1,903,000
AGNICO EAGLE 71 ANNUAL INFORMATION FORM
Probable Reserves
NorthernBusiness
LaRondemine(underground) 14,765,000 5.59 2,654,000
CanadianMalarticmine(openpit)(50%) 83,320,000 1.12 3,002,000
Lapamine(underground) – –
Goldexmine(underground) 12,644,000 1.61 653,000
Akasabaproject(openpit) 4,759,000 0.92 141,000
Kittilamine(openpit) 157,000 3.64 18,000
Kittilamine(underground) 26,979,000 4.83 4,189,000
Kittilaminetotalprobable 27,136,000 4.82 4,208,000
Meadowbankmine(openpit) 9,586,000 2.87 885,000
Meliadineproject(openpit) 4,001,000 5.00 644,000
Meliadineproject(underground) 10,494,000 8.20 2,766,000
Meliadineprojecttotalprobable 14,495,000 7.32 3,410,000
SouthernBusiness
PinosAltosmine(openpit) 3,440,000 2.54 281,000
PinosAltosmine(underground) 9,527,000 2.95 904,000
PinosAltosminetotalprobable 12,967,000 2.84 1,185,000
CrestonMascotadepositatPinosAltos(openpit) 4,026,000 1.33 172,000
LaIndiamine(openpit) 29,743,000 0.90 862,000
Total Probable Reserves 213,442,000 2.50 17,172,000
North total proven and probable reserves 200,646,000 2.57 16,572,000
South total proven and probable reserves 49,937,000 1.56 2,502,000
Total Proven and Probable Reserves 250,583,000 2.37 19,075,000
InthetablesaboveandbelowsettingoutmineralreserveinformationabouttheCompany'smineralprojects,andelsewhereinthisAIF,thetotalcontainedgoldouncesstateddonotincludeequivalentgoldouncesforby-productmetalscontainedinthemineralreserve.Mineralreservesarenotasubsetofmineralresources.Tonnageamountsandcontainedmetalamountspresentedinthesetableshavebeenroundedtothenearestthousand,soaggregateamountsmaydifferfromcolumntotals.TheCanadianMalarticmineralreserveandmineralresourceamountsrepresentAgnicoEagle's50%interestintheproperty.ForallmineralreservesandmineralresourcesotherthaninferredmineralresourcesandmineralreservesandmineralresourcesheldbyCanadianMalarticCorporationandthePartnership,thereportedmetalgradesintheestimatesreflectdilutionafterminingrecovery.ForthemineralreservesandmineralresourcesattheCanadianMalarticmine,thereportedmetalgradesintheestimatesofthemeasuredandindicatedmineralresourcesdonotreflectdilutionafterminingrecovery.ThemineralreserveandmineralresourcefigurespresentedinthisAIFareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoverywillberealized.
TheintegrityandvalidityofthescientificandtechnicalinformationinthisAIFhasbeenverifiedbyQualifiedPersonsasdefinedbyNI43-101.Thisincludesthesamplingmethods,qualitycontrolmeasures,securitymeasurestakentoensure
72 AGNICO EAGLE ANNUAL INFORMATION FORM
thevalidityandintegrityofsamplestaken,assayingandanalyticalproceduresandqualitycontrolmeasuresanddataverificationprocedures.ThemethodsusedbytheCompanyfollowtheCanadianInstituteofMining,MetallurgyandPetroleum("CIM")BestPracticeGuidelinesforExplorationandforEstimationofMineralResourcesandMineralReservesandindustrypractices.SamplepreparationandanalysesareconductedbyexternallaboratoriesthatareindependentoftheCompany.
TheCompanycarriesoutmineralprocessingandmetallurgicaltestingateachofitsminesandexplorationprojects.ThetestingisdoneinaccordancewithinternalCompanyprotocolsandgoodmineralprocessingpractices.Therearenoknownprocessingfactorsordeleteriouselementsthatareexpectedtohaveasignificanteffectontheeconomicextraction,orpotentialeconomicextraction,ofgoldattheCompany'sminesoradvancedexplorationprojects.
MineralReservesandMineralResources
NorthernBusiness
LaRonde Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
LaRonde Extension Orebody (below Level 245)
Provenmineralreserves–tonnes 2,845,000 3,600,000 4,600,000
Averagegrade–goldgramspertonne 4.43 4.03 3.79
Probablemineralreserves–tonnes 14,706,000 16,000,000 17,800,000
Averagegrade–goldgramspertonne 5.61 5.61 5.56
LaRonde Orebody (above Level 245)
Provenmineralreserves–tonnes 610,000 900,000 1,400,000
Averagegrade–goldgramspertonne 2.50 2.65 2.43
Probablemineralreserves–tonnes 59,000 100,000 300,000
Averagegrade–goldgramspertonne 1.77 1.84 2.75
Total proven and probable mineral reserves – tonnes 18,220,000 20,532,000 24,100,000
Average grade – gold grams per tonne 5.31 5.20 5.00
Total contained gold ounces 3,109,000 3,432,000 3,880,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovearebasedonanetsmelterreturncut-offvalueoftheorethatvariesbetweenC$104pertonneandC$115pertonnedependingonthedeposit.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.TheCompany'shistoricalmetallurgicalrecoveryratesattheLaRondeminefromJanuary1,2010toDecember31,2015averaged91.8%forgold,86.7%forsilver,81.5%forzincand80.8%forcopper.SinceMay2013,whenthepreciousmetalscircuitwasupgradedtocarbon-in-pulptechnology,themetallurgicalrecoveryratestoDecember31,2015haveaveraged94.5%forgold,86.0%forsilver,73.3%forzinc,84.0%forcopper,and0%forlead(leadhasnotbeenrecoveredsinceMay2013).ThehistoricalmetallurgicalrecoveryrateforleadfromJanuary1,2010toDecember31,2015was12.63%.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate1%changeinmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theLaRondeminecontainedindicatedmineralresourcesof6,842,000tonnesoforegrading3.49gramsofgoldpertonneandinferredmineralresourcesof9,142,000tonnesoforegrading4.26gramsofgoldpertonne.
AGNICO EAGLE 73 ANNUAL INFORMATION FORM
(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLaRondeminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 4,460 16,072 20,532
Processedin2015 2,241 – 2,241
Revision 1,236 (1,307) (71)
December 31, 2015 3,455 14,765 18,220
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLaRondeminemaybefoundintheTechnicalReportonthe2005LaRondeMineralResource&MineralReserveEstimatefiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2005andauthoredbyGuyGosselin,Eng.
Lapa Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 444,000 832,000 1,011,000
Averagegrade–goldgramspertonne 5.49 5.87 5.99
Probablemineralreserves–tonnes – 74,000 456,000
Averagegrade–goldgramspertonne – 5.50 5.92
Total proven and probable mineral reserves – tonnes 444,000 907,000 1,466,000
Average grade – gold grams per tonne 5.49 5.84 5.97
Total contained gold ounces 78,000 170,000 281,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovewerecalculatedusinganassumedmetallurgicalgoldrecoveryof80.50%andacut-offgradeof3.6gramsofgoldpertonne,andtheresourceestimateswerecalculatedusinganassumedmetallurgicalgoldrecoveryof73.4%andacut-offgradeof3.0gramsofgoldpertonne.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.TheoperatingcostpertonneestimatefortheLapaminein2015wasC$133.05.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate10%increaseor0%decrease,respectively,inmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theLapaminecontainedmeasuredmineralresourcesof49,000tonnesoforegrading5.33gramsofgoldpertonne,indicatedmineralresourcesof1,086,000tonnesoforegrading4.21gramsofgoldpertonneandinferredmineralresourcesof1,440,000tonnesoforegrading6.52gramsofgoldpertonne.
(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLapaminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 832 74 907
Processedin2015 560 – 560
Revision 172 (74) 98
December 31, 2015 444 – 444
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLapaminemaybefoundintheTechnicalReportontheLapaGoldProject,CadillacTownship,Quebec,CanadafiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonJune8,2006.
74 AGNICO EAGLE ANNUAL INFORMATION FORM
Goldex Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 300,000 203,000 119,000
Averagegrade–goldgramspertonne 1.54 1.70 1.52
Probablemineralreserves–tonnes 12,644,000 6,893,000 7,485,000
Averagegrade–goldgramspertonne 1.61 1.49 1.52
Total proven and probable mineral reserves – tonnes 12,944,000 7,096,000 7,605,000
Average grade – gold grams per tonne 1.61 1.49 1.52
Total contained gold ounces 668,000 340,000 372,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovewereestimatedusinganassumedmetallurgicalgoldrecoveryof89.40%.In2015,theminesitecostspertonnewereestimatedtobeC$36.00fortheEandMZones.Thecut-offgradeusedformineralreserveswas1.04gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate0%increaseor4%decrease,respectively,inmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theGoldexminecontainedmeasuredmineralresourcesof12,360,000tonnesoforegrading1.86gramsofgoldpertonne,indicatedmineralresourcesof22,069,000tonnesoforegrading1.88gramsofgoldpertonneandinferredmineralresourcesof24,630,000tonnesoforegrading1.53gramsofgoldpertonne.
(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheGoldexminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreserves,anupdatetomineralreservesbasedonchangedmineplansandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 203 6,893 7,096
Processedin2015 2,313 – 2,313
Revision 2,410 5,751 8,161
December 31, 2015 300 12,644 12,944
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheGoldexminemaybefoundintheTechnicalReportonProductionoftheMandEZonesatGoldexMinedatedOctober14,2012filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonNovember1,2012,authoredbyRichardGenest,P.Geo.,ing.,Jean-FrançoisLagueux,ing.,FrançoisRobichaud,ing.andSylvainBoily,ing.
AGNICO EAGLE 75 ANNUAL INFORMATION FORM
Canadian Malartic Mineral Reserves and Mineral Resources (Agnico Eagle's 50% Interest)
As at December 31, 2015 2014
Gold
Provenmineralreserves–tonnes 27,446,000 24,969,000
Averagegrade–goldgramspertonne 0.97 0.92
Probablemineralreserves–tonnes 83,320,000 101,978,000
Averagegrade–goldgramspertonne 1.12 1.10
Total proven and probable mineral reserves – tonnes 110,766,000 126,947,000
Average grade – gold grams per tonne 1.08 1.06
Total contained gold ounces 3,863,000 4,329,000
Notes:
(1) TheCanadianMalarticpropertyisownedbythePartnership,inwhichtheCompanyholdsanindirect50%interest,withtheremaining50%interestheldindirectlybyYamana.The2015provenandprobablemineralreserveestimatessetoutinthetableabovewerecalculatedusinganassumedmetallurgicalgoldrecoveryofbetween82.0%and90.1%andacut-offgradefrom0.34to0.40gramsofgoldpertonne,dependingonthedeposit.Goldcut-offgradesusedforresourceestimateswerefixedat100%oftheapplicablereservecut-offgradeinpitand1.0gramsofgoldpertonneforresourcesbelowpit.TheoperatingcostpertonnemilledestimatefortheCanadianMalarticminein2015wasC$20.24.TheCompanyestimatesthata$150decreaseinthegoldpriceto$1,000perouncewouldresultinanapproximate9%decreaseinmineralreserves,whilea$50increaseinthegoldpriceto$1,200perouncewouldresultinanapproximate2%increaseinmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theCanadianMalarticmine(AgnicoEagle's50%interest)containedmeasuredmineralresourcesof1,752,000tonnesoforegrading1.32gramsofgoldpertonne,indicatedmineralresourcesof11,079,000tonnesoforegrading1.55gramsofgoldpertonneandinferredmineralresourcesof4,494,000tonnesoforegrading1.47gramsofgoldpertonne.
(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)attheCanadianMalarticminebycategoryatDecember31,2015withthoseatDecember31,2014,statingAgnicoEagle's50%interest.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesduring2015.
Proven Probable Total
December31,2014 24,969 101,978 126,947
Processedin2015 9,545 – 9,545
Revision 12,022 (18,658) (6,636)
December 31, 2015 27,446 83,320 110,766
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheCanadianMalarticminemaybefoundintheTechnicalReportontheMineralResourceandMineralReserveEstimatesfortheCanadianMalarticPropertydatedJune16,2014,filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonAugust13,2014,authoredbyDonaldGervais,P.Geo.,ChristianRoy,Eng.,AlainThibault,Eng.,CarlPednault,Eng.andDanielDoucet,Eng.
76 AGNICO EAGLE ANNUAL INFORMATION FORM
Kittila Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 1,059,000 921,000 1,104,000
Averagegrade–goldgramspertonne 4.28 4.41 4.27
Probablemineralreserves–tonnes 27,136,000 27,614,000 30,520,000
Averagegrade–goldgramspertonne 4.82 4.95 4.65
Total proven and probable mineral reserves – tonnes 28,195,000 28,535,000 31,624,000
Average grade – gold grams per tonne 4.80 4.93 4.64
Total contained gold ounces 4,353,000 4,524,000 4,714,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovewerecalculatedusingametallurgicalgoldrecoveryof87.1%.Goldcut-offgradesusedwere2.22gramspertonne,undiluted(1.97gramspertonne,diluted)foropenpitmineralreservesandbetween3.39gramspertonneand3.71gramspertonne,undiluted(between2.87gramspertonneand3.18gramspertonne,diluted),dependingonthedeposit,forundergroundmineralreserves.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.Theopenpitoperatingcostwasestimatedtobe€49.41pertonnein2015,whiletheundergroundcostaveraged€75.88pertonnein2015.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate14%increaseor5%decrease,respectively,inmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theKittilaminecontainedmeasuredmineralresourcesof991,000tonnesoforegrading2.58gramsofgoldpertonne,indicatedmineralresourcesof14,935,000tonnesoforegrading3.05gramsofgoldpertonneandinferredmineralresourcesof11,833,000tonnesoforegrading4.64gramsofgoldpertonne.
(3) ThebreakdownofprovenandprobablemineralreservesbetweenplannedopenpitoperationsandundergroundoperationsattheKittilamine(withtonnageandcontainedouncesroundedtothenearestthousand)atDecember31,2015is:
Category Mining Method Tonnes
Gold Grade
(g/t)
Contained Gold (oz)
Provenmineralreserves Openpit 176,000 3.52 20,000
Provenmineralreserves Underground 883,000 4.43 126,000
Total proven mineral reserves 1,059,000 4.28 146,000
Probablemineralreserves Openpit 157,000 3.64 18,000
Probablemineralreserves Underground 26,979,000 4.83 4,189,000
Total probable mineral reserves 27,136,000 4.82 4,208,000
(4) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)attheKittilaminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 921 27,614 28,535
Processedin2015 1,464 – 1,464
Revision 1,602 (478) 1,124
December 31, 2015 1,059 27,136 28,195
(5) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheKittilaminemaybefoundintheTechnicalReportontheDecember31,2009,MineralResourceandMineralReserveEstimateandtheSuuriExtensionProject,KittilaMine,Finland,filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch4,2010,authoredbyDanielDoucet,Ing.,DominiqueGirard,Ing.,LouiseGrondin,P.Eng.,Ing.andPierreMatte,Ing.
AGNICO EAGLE 77 ANNUAL INFORMATION FORM
Meadowbank Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 1,203,000 1,090,000 1,128,000
Averagegrade–goldgramspertonne 1.51 1.50 2.88
Probablemineralreserves–tonnes 9,586,000 10,705,000 15,692,000
Averagegrade–goldgramspertonne 2.87 3.24 3.26
Total proven and probable mineral reserves – tonnes 10,789,000 11,795,000 16,819,000
Average grade – gold grams per tonne 2.72 3.08 3.24
Total contained gold ounces 943,000 1,168,000 1,751,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovewerecalculatedusingacut-offgradethatusedametallurgicalgoldrecoveryof95.5%or90.5%,dependingonthedeposit.Theeconomiccut-offgradeusedtodeterminemineralreservesvariedfrom1.27gramsofgoldpertonneto1.38gramsofgoldpertonne,dependingonthedeposit,andis0.94to1.15gramsofgoldpertonneasamarginalcut-offgrade,dependingonthedeposit.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.Theestimatedorebasedoperatingcostsusedforthe2015mineralreserveestimatevariedbetweenC$55.72pertonneandC$56.60pertonne,dependingonthedeposit,withanadditionalhaulagecostofC$0.88pertonneforVaultdepositmineralreserves.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate2%changeinmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theMeadowbankminecontainedmeasuredmineralresourcesof0.74milliontonnesoforegrading1.01gramsofgoldpertonne,indicatedmineralresourcesof6.2milliontonnesoforegrading3.48gramsofgoldpertonneandinferredmineralresourcesof3.4milliontonnesoforegrading3.99gramsofgoldpertonne.
(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheMeadowbankminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreserves,anupdatetomineralreservesbasedonchangedmineplans,andmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 1,090 10,705 11,795
Processedin2015 4,033 – 4,033
Revision 4,146 (1,119) 3,027
December 31, 2015 1,203 9,586 10,789
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheMeadowbankminemaybefoundintheTechnicalReportontheMineralResourcesandMineralReservesatMeadowbankGoldMine,Nunavut,CanadaasatDecember31,2011filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2012,authoredbyMarcRuel,P.Geo.,AlexProulx,ing.,PathiesNawejMuteb,ing.andLarryConnell,P.Eng.
78 AGNICO EAGLE ANNUAL INFORMATION FORM
Meliadine Project Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 34,000 34,000 34,000
Averagegrade–goldgramspertonne 7.31 7.31 7.31
Probablemineralreserves–tonnes 14,495,000 13,910,000 11,943,000
Averagegrade–goldgramspertonne 7.32 7.44 7.38
Total proven and probable mineral reserves – tonnes 14,529,000 13,944,000 11,977,000
Average grade – gold grams per tonne 7.32 7.44 7.38
Total contained gold ounces 3,417,000 3,335,000 2,841,000
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovewerecalculatedusingmetallurgicalgoldrecoverycurvesfortheTiriganiaqandWesmegdeposits.Thecurvesgiveamaximumrecoveryof96.5%forTiriganiaqandWesmeg.The2015mineralresourceestimatesforTiriganiaq-Normeg-Wesmeg,FZone,Pump,DiscoveryandWolfdepositswerecalculatedusingafixedmetallurgicalgoldrecoveryof91.1%,91.0%,86.9%,93.5%and94.3%,respectively,foropenpitresources,and93.37%,91.67%,90.0%,95.46%and95.7%,respectively,forundergroundresources.FortheTiriganiaqandWesmegdeposits,thecut-offgradeusedtodeterminetheopenpitmineralreserveswas2.50gramsofgoldpertonne,undiluted(1.76gramsofgoldpertonne,diluted),andthecut-offgradeusedtodeterminetheundergroundmineralreserveswas6.07gramsofgoldpertonne,undiluted(4.67gramsofgoldpertonne,diluted).Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablereservecut-offgradeforundergroundresourceestimatesandat100%oftheapplicablereservemarginalcut-offgradeforopenpitmineralresourceestimates.Theestimatedoperatingcostusedforthe2015mineralreserveestimatewasC$81.97pertonneforopenpitandC$176.44pertonneforunderground.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate5%increaseor7%decrease,respectively,inmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theMeliadineprojectcontainedindicatedmineralresourcesof20,778,000tonnesoforegrading4.95gramsofgoldpertonneandinferredmineralresourcesof14,710,000tonnesoforegrading7.51gramsofgoldpertonne.
(3) ThebreakdownofmineralreservesbetweencontemplatedopenpitoperationsandundergroundoperationsattheMeliadineproject(withtonnageandcontainedouncesroundedtothenearestthousand)atDecember31,2015is:
Category Mining Method Tonnes
Gold Grade
(g/t)
Contained Gold (oz)
Provenmineralreserves Openpitstockpile 34,000 7.31 8,000
Probablemineralreserves Openpit 4,001,000 5.00 644,000
Probablemineralreserves Underground 10,494,000 8.20 2,766,000
Total probable mineral reserves 14,495,000 7.32 3,410,000
Total proven and probable mineral reserves 14,529,000 7.32 3,417,000
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheMeliadineprojectmaybefoundintheUpdatedTechnicalReportontheMeliadineGoldProject,Nunavut,CanadadatedFebruary11,2015,filedwithCanadiansecuritiesregulatoryauthoritiesonMarch12,2015,authoredbyJulieLarouche,P.Geo.,DenisCaron,ing.,LarryConnell,P.Eng.,DanyLaflamme,ing.,FrançoisRobichaud,ing.,FrançoisPetrucci,ing.P.Eng.andAlexandreProulx,ing.
AGNICO EAGLE 79 ANNUAL INFORMATION FORM
SouthernBusiness
Pinos Altos Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold and Silver Provenmineralreserves–tonnes 2,769,000 2,441,000 1,966,000
Averagegoldgrade–gramspertonne 3.08 3.27 2.54
Averagesilvergrade–gramspertonne 82.51 86.27 82.17
Probablemineralreserves–tonnes 12,967,000 15,788,000 26,738,000
Averagegoldgrade–gramspertonne 2.84 2.97 2.45
Averagesilvergrade–gramspertonne 72.40 78.63 63.00
Total proven and probable mineral reserves – tonnes 15,736,000 18,230,000 28,703,000
Average gold grade – grams per tonne 2.88 3.01 2.46
Average silver grade – grams per tonne 74.18 79.65 64.32
Total contained gold ounces 1,459,000 1,763,000 2,266,000
Total contained silver ounces 37,531,000 46,682,000 59,354,000
Notes:
(1) Themineralreservesintheabovetablefor2013includebothPinosAltosandtheCrestonMascotadepositatPinosAltos.Themineralreservesfor2014and2015includeonlythePinosAltosmine.TheCrestonMascotadepositatPinosAltosmineralreservesarenowshownseparately,immediatelyfollowingthissection.
(2) The2015provenandprobablemineralreserveestimatessetoutinthetableaboveatthePinosAltosmine(excludingtheCrestonMascotadeposit)arebasedonanetsmelterreturncut-offvalueoftheopenpitorebetween$12.50pertonneand$31.24pertonne,dependingontheprocessingmethod,andanetsmelterreturncut-offvalueoftheundergroundoreof$60.44pertonne.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.Theestimatedoperatingcostusedforthe2015mineralreserveestimatewas$55.42pertonne.Themetallurgicalgoldrecoveryusedinthereserveestimatesvariedbetween72%and95.6%,dependingonthedepositandtheprocessingmethod.Themetallurgicalsilverrecoveryusedinthereserveestimatesvariedbetween14%and44.6%,dependingonthedepositandtheprocessingmethod.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate3%changeinmineralreserves.
(3) Inadditiontothemineralreservessetoutabove,atDecember31,2015,thePinosAltosminecontainedindicatedmineralresourcesof11,141,000tonnesoforegrading1.83gramsofgoldpertonneand42.43gramsofsilverpertonneandinferredmineralresourcesof12,580,000tonnesoforegrading1.25gramsofgoldpertonneand29.33gramsofsilverpertonne.
(4) ThebreakdownofmineralreservesbetweenplannedopenpitoperationsandundergroundoperationsatthePinosAltosmine(withtonnageandcontainedouncesroundedtothenearestthousand)atDecember31,2015is:
Category Mining Method Tonnes
Gold Grade
(g/t)
Silver Grade
(g/t)
Contained Gold (oz)
Contained Silver
(oz)
Provenmineralreserves Openpitstockpile 164,000 2.07 67.48 11,000 355,000
Provenmineralreserves Underground 2,605,000 3.14 83.46 263,000 6,991,000
Total proven mineral reserves 2,769,000 3.08 82.51 274,000 7,345,000
Probablemineralreserves Openpit 3,440,000 2.54 71.21 281,000 7,875,000
Probablemineralreserves Underground 9,527,000 2.95 72.83 904,000 22,310,000
Total probable mineral reserves 12,967,000 2.84 72.40 1,185,000 30,186,000
Total proven and probable mineral reserves 15,736,000 2.88 74.18 1,459,000 37,531,000
80 AGNICO EAGLE ANNUAL INFORMATION FORM
(5) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)atthePinosAltosmine(excludingtheCrestonMascotadeposit)bycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 2,441 15,788 18,230
Processedin2015 2,378 – 2,378
Revision 2,706 (2,821) (116)
December 31, 2015 2,769 12,967 15,736
(6) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtothePinosAltosminemaybefoundinthePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportontheMineralResourcesandReservesasofDecember31,2008filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch25,2009,authoredbyDyaneDuquette,Geo.,LouiseGrondin,P.Eng.,PierreMatte,Eng.andCamilPrince,Eng.
Creston Mascota Deposit at Pinos Altos Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold and Silver Provenmineralreserves–tonnes 187,000 187,000 –
Averagegoldgrade–gramspertonne 0.68 0.76 –
Averagesilvergrade–gramspertonne 8.05 8.60 –
Probablemineralreserves–tonnes 4,026,000 5,657,000 –
Averagegoldgrade–gramspertonne 1.33 1.27 –
Averagesilvergrade–gramspertonne 12.21 13.63 –
Total proven and probable mineral reserves – tonnes 4,213,000 5,844,000 –
Average gold grade – grams per tonne 1.30 1.25 –
Average silver grade – grams per tonne 12.02 13.47 –
Total contained gold ounces 176,000 236,000 –
Total contained silver ounces 1,628,000 2,530,000 –
Notes:
(1) Themineralreservesintheabovetablefor2014and2015includeonlytheCrestonMascotadepositatPinosAltos.Priorto2014theCrestonMascotadepositatPinosAltosmineralreserveswereshowncombinedwiththemineralreservesfromthePinosAltosmine,immediatelyprecedingthissection.
(2) The2015provenandprobablemineralreserveestimatessetoutinthetableaboveattheCrestonMascotadepositatPinosAltosarebasedonanetsmelterreturncut-offvalueoftheopenpitoreof$9.95pertonne.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.TheoperatingcostpertonneestimatefortheCrestonMascotadepositatPinosAltosin2015was$12.16actualversus$15.09budgeted.Themetallurgicalgoldrecoveryusedinthereserveestimateswas65%.Themetallurgicalsilverrecoveryusedinthereserveestimateswas16%.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultin0%changeinmineralreserves.
(3) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theCrestonMascotadepositatPinosAltoscontainedindicatedmineralresourcesof4,264,000tonnesoforegrading0.51gramsofgoldpertonneand5.14gramsofsilverpertonneandinferredmineralresourcesof4,263,000tonnesoforegrading1.06gramsofgoldpertonneand14.16gramsofsilverpertonne.
(4) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)atthetheCrestonMascotadeposit)bycategoryatDecember31,2015withthoseatDecember31,2014.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2015.
Proven Probable Total
December31,2014 187 5,657 5,844
Processedin2015 2,099 – 2,099
Revision 2,099 (1,631) 468
December 31, 2015 187 4,026 4,213
AGNICO EAGLE 81 ANNUAL INFORMATION FORM
(5) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheCrestonMascotadepositatPinosAltosmaybefoundinthePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportontheMineralResourcesandReservesasofDecember31,2008filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch25,2009,authoredbyDyaneDuquette,Geo.,LouiseGrondin,P.Eng.,PierreMatte,Eng.andCamilPrince,Eng.
La India Mine Mineral Reserves and Mineral Resources
As at December 31, 2015 2014 2013
Gold
Provenmineralreserves–tonnes 244,000 99,000 228,000
Averagegoldgrade–gramspertonne 0.68 0.53 0.64
Averagesilvergrade–gramspertonne 12.69 8.62 –
Probablemineralreserves–tonnes 29,743,000 24,783,000 26,868,000
Averagegoldgrade–gramspertonne 0.90 0.85 0.87
Averagesilvergrade–gramspertonne 4.16 6.06 –
Total proven and probable mineral reserves – tonnes 29,987,000 24,882,000 27,096,000
Average gold grade – grams per tonne 0.90 0.85 0.87
Average silver grade – grams per tonne 4.23 6.07 –
Total contained gold ounces 867,000 679,000 758,000
Total contained silver ounces 4,081,000 4,859,000 –
Notes:
(1) The2015provenandprobablemineralreserveestimatessetoutinthetableabovefortheLaIndiamine(includingtheTarachideposit)werecalculatedusinganaveragemetallurgicalgoldrecoveryof40%to92%dependingonthezone.Theeconomiccut-offgradeusedtodeterminemineralreservesvarieddependingondomainfrom0.27gramsofgoldpertonneto0.62gramsofgoldpertonne.Marginalcut-offgradesvarieddependingondomainfrom0.15gramsofgoldpertonneto0.34gramsofgoldpertonne.Goldcut-offgradesusedforresourceestimateswerefixedat75%oftheapplicablereservecut-offgrade.Theestimatedoperatingcostusedforthe2015mineralreserveestimatewas$8.44pertonne.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate8%increaseor7%decrease,respectively,inmineralreserves.
(2) Inadditiontothemineralreservessetoutabove,atDecember31,2015,theLaIndiamine(includingtheTarachideposit)containedmeasuredmineralresourcesof8,339,000tonnesoforegrading0.25gramsofgoldpertonneand2.48gramsofsilverpertonne,indicatedmineralresourcesof61,950,000tonnesoforegrading0.38gramsofgoldpertonne,andinferredmineralresourcesof90,868,000tonnesoforegrading0.37gramsofgoldpertonne.
(3) Thefollowingtableshowsthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLaIndiaminebycategoryatDecember31,2015withthoseatDecember31,2014.Revisionmeansadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesandmetallurgicaltestingduring2015.
Proven Probable Total
December31,2014 99 24,783 24,882
Processedin2015 5,371 – 5,371
Revision 5,516 4,960 10,476
December 31, 2015 244 29,743 29,987
(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLaIndiamineprojectmaybefoundintheTechnicalReportontheJune30,2012UpdateoftheMineralResourcesandMineralReserves,LaIndiaGoldProject,MunicipalityofSahuaripa,Sonora,Mexico,datedAugust31,2012,filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonOctober12,2012,authoredbyDanielDoucet,ing.,TimHaldane,P.Eng.andMichelJulien,P.Eng.
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Principal Products and Distribution
TheCompanyearnssubstantiallyallofitsrevenueandcashflowfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedfromtheproductionandsaleofby-productmetals,namelysilver,zincandcopper.ThegoldproducedbytheCompanyissoldinrefinedform,primarilyintheLondonspotmarket.TheCompanyisnotdependentonanyparticularpurchaserofitsprincipalproduct.
Employees
AsofDecember31,2015,theCompanyhad7,588employeescomprisedof5,093permanentemployees,1,824contractors,599temporaryemployeesand72students.Ofthepermanentemployees,842wereemployedattheLaRondemine,165attheLapamine,283attheGoldexmine,687attheCanadianMalarticmine(withanadditional48intheCanadianMalarticoffice),371attheKittilamine(withanadditional10attheFinnishexplorationgroup),689attheMeadowbankmine(with2attheBakerLakeofficeand12inQuebec),17attheMeliadineproject,988atthePinosAltosmine,257attheCrestonMascotadepositatPinosAltos,368attheLaIndiamine,18intheexplorationgroupinCanadaandtheUnitedStates,67intheexplorationgroupinMexico,133attheregionaltechnicalofficeinAbitibi,6attheregionalofficeinTucsonand130atthecorporateheadofficeinToronto.ThenumberofpermanentemployeesoftheCompanyattheendof2015,2014and2013was5,093,5,187and4,259,respectively.
Competitive Conditions
Thepreciousmetalexplorationandminingbusinessisahighlycompetitivebusiness.TheCompanycompeteswithotherminingandexplorationcompaniesinconnectionwiththeacquisitionofminingclaimsandleases,thesourcingofrawmaterialsandsuppliesusedinconnectionwithminingoperationsandtherecruitmentandretentionofqualifiedemployees.
TheabilityoftheCompanytocontinueitsminingbusinessinthefuturewilldependnotonlyonitsabilitytodevelopitscurrentproperties,butalsoonitsabilitytoselectandacquiresuitableproducingpropertiesorprospectsforpreciousmetaldevelopmentorexploration.See"RiskFactors"foradescriptionofadditionalcompetitiveriskstheCompanyfaces.
Sustainable Development
In2015,theCompanycontinuedtheprocessofincorporatinghealth,safetyandenvironmentalsustainabilityintoallaspectsandstagesofitsbusiness,fromthecorporateobjectivesandexecutiveresponsibilityof'maintaininghighstandardsinsustainability'toexplorationandacquisitionactivities,daytodayoperatingandsiteclosure.Thisintegrationbeganin2012withtheadoptionofanintegratedHealth,Safety,EnvironmentandSocialAcceptabilityPolicy(the"SustainableDevelopmentPolicy")thatreflectstheCompany'scommitmenttoresponsibleminingpractices.TheSustainableDevelopmentPolicyreplacedtheCompany'spreviousenvironmentalandhealthandsafetypolicies.TheCompanybelievesthattheSustainableDevelopmentPolicywillleadtotheachievementofmoresustainablepracticesthroughoversightandaccountability.
TheSustainableDevelopmentPolicyoperatesthroughthedevelopmentandimplementationofaformalandintegratedHealth,SafetyandEnvironmentalManagementSystem,termedtheResponsibleMiningManagementSystem(the"RMMS"),acrossalldivisionsoftheCompany.ThePartnershiphascommittedtoimplementingtheRMMSatCanadianMalarticinthefuture.TheaimoftheRMMSistofurtherpromoteacultureofaccountabilityandleadershipinmanaginghealth,safety,environmentalandsocialacceptabilitymatters.RMMSimplementationissupportedbysoftwarewidelyusedintheCanadianminingindustrythatisconsistentwiththeISO14001EnvironmentalManagementSystemandtheOHSAS18001HealthandSafetyManagementSystem.
TheRMMSincorporatestheCompany'scommitmentsasasignatorytotheInternationalCyanideManagementCode(the"CyanideCode"),avoluntaryprogramthataddressesthesafeproduction,transport,storage,handlinganddisposalofcyanide.TheCompanybecameasignatorytotheCyanideCodeinSeptember2011.Externalauditswereperformedin2014byanindependentthirdpartyandcertificationwasreceivedforKittila,PinosAltosandMeadowbank.
TheRMMSalsointegratestherequirementsoftheMiningAssociationofCanada'sindustry-leadingTowardsSustainableMiningInitiative(the"TSMInitiative"),aswellastheGlobalReportingInitiative'ssustainabilityreportingguidelinesfortheminingindustry.InDecember2010,theCompanybecameamemberoftheMiningAssociationofCanadaandendorsedtheTSMInitiative.TheTSMInitiativewasdevelopedtohelpminingcompaniesevaluatethequality,comprehensivenessandrobustnessoftheirmanagementsystemsundersixperformanceelements:crisismanagement;energyandgreenhousegasemissionsmanagement;tailingsmanagement;biodiversityconservationmanagement;healthandsafety;
AGNICO EAGLE 83 ANNUAL INFORMATION FORM
andaboriginalrelationsandcommunityoutreach.AgapanalysisauditoftheTSMInitiativewascarriedoutin2014.Anexternalauditwascompletedinthefirstquarterof2015andasaresultofthisaudit,theKittila,GoldexandLarondeminesreceivedTSMawardsforhavingachieved"A"levelperformanceinallprotocols.
TheCompanyhasadoptedandimplementedtheWorldGoldCouncil'sConflict-FreeGoldStandard.ThisimplementationwasinitiatedonJanuary1,2013.
TheCompany'sSustainableDevelopmentPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com. TheCanadianMalarticmine'ssustainabledevelopmentreportisavailableatitswebsite,www.canadianmalartic.com .
Employee Health and Safety
TheCompany'soverallhealthandsafetyperformance,asmeasuredbyaccidentfrequency,improvedduring2015.Acombinedlost-timeandrestrictedworkaccidentfrequencyrate(excludingtheCanadianMalarticmine)of1.23wasachieved,a17%reductionfromthe2014rateof1.48andsubstantiallybelowthetargetrateof1.50.ThisisthebestcombinedaccidentfrequencyrateeverrecordedbytheCompany.Extensivehealthandsafetytrainingwasalsoprovidedtoallemployeesduring2015.
OneofthemeasuresimplementedbytheCompanytoimprovesafetyperformanceistheworkplacesafetycardsystem.ThissystemwasimplementedacrossalloftheCompany'soperations,inCanadaandabroad,tostrengthentherisk-basedtrainingprogram.DevelopedbytheQuebecMiningAssociation(the"AMQ"),thesafetycardsystemteachesworkersandsupervisorstouserisk-basedthinkingintheirduties.Workersandtheirsupervisorsmustmeeteverydaytodiscusson-the-jobhealthandsafetymatters.ThesafetycardsystemalsoallowstheCompany'sworkersandsupervisorstodocumentdailyinspectionsandrecordobservationsonconditionsintheworkplace,aswellasthenatureofrisks,issuesandotherrelevantinformation.Inaddition,itallowssupervisorstoexchangeandanalyzeallrelevantinformationbetweenshiftsandvarioustechnicalservicestoimproveefficiencyandsafety.
In2015,theAMQacknowledgedtheCompany'sstrongperformanceintheareaofhealthandsafety,recognizing23oftheCompany'ssupervisorsfromtheLaRonde,LapaandGoldexminesforkeepingtheirworkerssafe.ThesupervisorsreceivedAMQsecuritytrophyawardsfor50,000ormorehourssupervisedwithoutalost-timeaccident.
EachoftheCompany'sminingoperationshasitsownEmergencyResponsePlanandhaspersonneltrainedtorespondtosafety,fireandenvironmentalemergencies.Eachminealsomaintainstheappropriateresponseequipment.In2014,thecorporatecrisismanagementplanwasupdatedtoalignwithindustrybestpracticesandtheTSMInitiativerequirements.Emergencyresponsesimulationswerealsoperformedatalldivisions.TheTSMInitiativealsocontainsaHealthandSafetyprotocol.Agapanalysisofcompliancewiththeprotocolwasconductedin2014andanexternalauditwaspartoftheexternalTSMInitiativeauditcarriedoutatthebeginningof2015.
TheCanadianMalarticmine'scombinedaccidentfrequencyratein2015was1.28,comparedtoanobjectiveof1.45,anddecreasedfromthe2014rateof1.52.
Community
TheCompany'sgoal,ateachofitsoperationsworldwide,istohireasmuchofitsworkforceaspossible,includingmanagementteams,directlyfromthelocalregioninwhichtheoperationislocated.In2015,theoverallcompanyaverageforlocalhiringwas80%.TheCompanybelievesthatprovidingemploymentisoneofthemostsignificantcontributionsitcanmaketothecommunitiesinwhichitoperates.
TheCompanycontinueditseffortsincommunitydevelopmentagreementsinNunavut.In2015,theMeadowbankIIBAwasrenewedandtheMeliadineIIBAwassigned.In2015,theCompanyalsocontinueditsdialoguewithFirstNationsintheAbitibiregion.ThePartnershiphasenteredintonegotiationswithFirstNationsaroundtheKirklandLakeprojectandhasalsoinitiatedadialoguewithFirstNationsintheAbitibiregion.
In2015,theCompanycontinuedtoworkcloselywithneighboringcommunitiestodevelopalternativeemploymentandbusinessopportunitiestohelpdiversifylocaleconomies.
TheCanadianMalarticminecontinueditscontributiontotheeconomicdevelopmentfund(FEMO)whichwasestablishedpriortominedevelopmenttodiversifythelocaleconomythroughouttheminelifesothatthetownofMalarticiswellequippedtofacetheeventualmineclosure.TheCanadianMalarticminehasalsoparticipatedinforumsinitiatedbythetowncouncilonthefutureofthetownofMalartic.Approximately90%ofthehiringin2015attheCanadianMalarticminewasfromthelocalarea.
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Stakeholdermappingexerciseswereperformedatalldivisionstosupportthedevelopmentoflocalcommunityengagementplans.Aswell,communityliaisoncommitteeswereactivein2015.
In2015,theCompanycontinueditssupportoftheKivalliqMineTrainingSocietyandfortheuniqueupwardmobilitytrainingprogramforInuitemployeesdevelopedatMeadowbank.ThisprogramprovidestrainingandcareerpathopportunitiesforInuitwithlimitededucationandworkexperienceintheareaofheavyequipmentoperations,milloperationsandsiteservices.SkillsacquiredthroughtheprogramareeasilytransferabletoothersectorsoftheNunavuteconomy.
Fortheeighthyearinarow,thePinosAltosminewascertifiedasaSociallyResponsibleCompanybytheMexicanCentreforPhilanthropy(CentroMexicanoparalaFilantropía)andtheAllianceforSocialResponsibilityofEnterprises(AlianzaporlaResponsabilidadSocialEmpresarialenMéxico).ThiscertificationrecognizestheexcellenceofthesocialresponsibilitypracticesatthePinosAltosmine.
TheCompanycontinuestosupportanumberofcommunityhealthandeducationalinitiativesintheregionsurroundingthePinosAltosmine,includingtheestablishmentofalocalsewingcooperativeanddonatingmaterialfortheconstructionofnewclassroomsorfortherepairofexistingclassrooms.
TheCompany'sCodeofBusinessConductandEthicsPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com .
Environmental Protection
TheCompany'sexplorationactivitiesandminingandprocessingoperationsaresubjecttothefederal,state,provincial,territorial,regionalandlocalenvironmentallawsandregulationsinthejurisdictionsinwhichtheCompany'sactivitiesandfacilitiesarelocated.Theseincluderequirementsforplanningandimplementingtheclosureandreclamationofminingpropertiesandrelatedfinancialassurance.Eachmineissubjecttoenvironmentalassessmentandpermittingprocessesduringdevelopmentand,inoperation,hasanenvironmentalmanagementsystemconsistentwithISO140001aswellasaninternalauditprogram.TheCompanyworkscloselywithregulatoryauthoritiesineachjurisdictionwhereitoperatestoensureongoingcompliance.
TheCompanyhasreportedgreenhousegasemissionsandclimatechangeriskfactorsannuallytotheCarbonDisclosureProjectsince2007.
TheMeadowbankminewasunderinvestigationin2014byEnvironmentCanadaandAboriginalAffairsandNorthernDevelopmentCanadaforaseepageeventthatoccurredin2013.EnvironmentCanadachargedtheCompanywithtwoinfractionsundertheFisheries Act .Thehearinginrelationtothesechargesisexpectedin2016.
TheCanadianMalarticminereceived25infractionsin2015,mostlyrelatedtonoise,blastingfumesandoverpressure,adecreasefromthe33infractionsreceivedin2014.Actionplanshavebeenestablishedtoimprovecompliance.
TheCompany'stotalliabilityforreclamationandclosurecostobligationsatDecember31,2015was$260millionandtheCompany'sreclamationexpensesfortheyearendedDecember31,2015were$0.6million.Formoreinformationpleaseseenote13totheAnnualFinancialStatements.
TheCompany'sEnvironmentalPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com .
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RISK FACTORS TheoperationsoftheCompanyarespeculativeduetothehigh-risknatureofitsbusiness,whichistheacquisition,financing,exploration,developmentandoperationofminingproperties.TheseriskfactorscouldmateriallyaffecttheCompany'sfinancialconditionand/orfutureoperatingresultsandcouldcauseactualeventstodiffermateriallyfromthosedescribedinforward-lookingstatementsrelatingtotheCompany.ThesearenottheonlyrisksanduncertaintiesthattheCompanyfaces.AdditionalrisksanduncertaintiesnotpresentlyknowntotheCompanyorthattheCompanycurrentlyconsidersimmaterialmayalsoimpairitsbusinessoperations.
TheCompany'sfinancialperformanceandresultsmayfluctuatewidelyduetovolatileandunpredictablecommodityprices.
TheCompany'searningsaredirectlyrelatedtocommodityprices,asrevenuesarederivedfromthesaleofgold,silver,zincandcopper.Goldprices,whichhavethegreatestimpactontheCompany'sfinancialperformance,fluctuatewidelyandareaffectedbynumerousfactors,includingcentralbankpurchasesandsales,producerhedgingandde-hedgingactivities,expectationsofinflation,investmentdemand,therelativeexchangerateoftheU.S.dollarwithothermajorcurrencies,interestrates,globalandregionaldemand,politicalandeconomicconditions,productioncostsinmajorgold-producingregions,speculativepositionstakenbyinvestorsortradersingoldandchangesinsupply,includingworldwideproductionlevels,allofwhicharebeyondtheCompany'scontrol.Theaggregateeffectofthesefactorsisimpossibletopredictwithaccuracy.Inaddition,thepriceofgoldhasonoccasionbeensubjecttoveryrapidshort-termchangesbecauseofspeculativeactivitiesorworldevents.FluctuationsingoldpricesmaymateriallyadverselyaffecttheCompany'sfinancialperformanceorresultsofoperations.IfthemarketpriceofgoldfallsbelowtheCompany'sall-insustainingcostsperounceofproductionatoneormoreofitsminesorprojectsatthattimeandremainssoforanysustainedperiod,theCompanymayexperiencelossesand/ormaycurtailorsuspendsomeorallofitsexploration,developmentandminingactivitiesatsuchminesorprojectsoratotherminesorprojects.Inaddition,suchfluctuationsmayrequirechangestothemineplans.TheCompany'scurrentmineplansandmineralreserveandmineralresourceestimatesarebasedonagoldpriceof$1,100perounce,otherthantheCanadianMalarticmine,wheremineralreservesandmineralresourcesarebasedonagoldpriceof$1,150perounce(see"OperationsandProduction–MineralReservesandMineralResources–InformationonMineralReservesandMineralResourcesoftheCompany");ifthepriceofgoldfallsbelowsuchlevels,theminesmayberendereduneconomicandproductionmaybesuspended.Inaddition,lowergoldpricesmayrequirethemineplanstobechanged,whichmayresultinreducedproduction,highercoststhananticipated,orboth,andestimatesofmineralreservesandmineralresourcesmaybereduced.Further,thepricesreceivedfromthesaleoftheCompany'sby-productmetalsproducedatitsLaRondemine(silver,zincandcopper)anditsPinosAltos,LaIndiaandCanadianMalarticmines(silver)affecttheCompany'sabilitytomeetitstargetsfortotalcashcostsperounceorall-insustainingcostsperounceofgoldproducedwhensuchmeasuresarecalculatedonaby-productbasis.Theseby-productmetalpricesfluctuatewidelyandarealsoaffectedbynumerousfactorsbeyondtheCompany'scontrol.TheCompany'spolicyandpracticeisnottosellforwarditsfuturegoldproduction;however,undertheCompany'sBoard-approvedpriceriskmanagementpolicy,theCompanymayreviewthispracticeonaprojectbyprojectbasis.See"RiskProfile–CommodityPricesandForeignCurrencies"and"RiskProfile–FinancialInstruments"intheAnnualMD&AformoredetailsontheCompany'suseofderivativeinstruments.TheCompanyoccasionallyusesderivativeinstrumentstomitigatetheeffectsoffluctuatingby-productmetalprices;however,thesemeasuresmaynotbesuccessful.
Thevolatilityofgoldpricesisillustratedinthefollowingtablewhichsetsout,fortheperiodsindicated,thehigh,lowandaverageafternoonfixingpricesforgoldontheLondonBullionMarket(the"LondonP.M.Fix").
2016
(to March 15) 2015 2014 2013 2012 2011
Highprice($perounce) 1,278 1,296 1,385 1,694 1,792 1,895
Lowprice($perounce) 1,077 1,049 1,142 1,192 1,540 1,319
Averageprice($perounce) 1,172 1,160 1,266 1,411 1,669 1,572
OnMarch15,2016,theLondonP.M.Fixwas$1,232perounceofgold.
Theassumptionsthatunderlietheestimatesoffutureoperatingresultsandthestrategiesusedtomitigatetheeffectsofrisksofmetalpricesaresetoutin"OperationsandProduction–MineralReservesandMineralResources–Information
86 AGNICO EAGLE ANNUAL INFORMATION FORM
onMineralReservesandMineralResourcesoftheCompany"inthisAIFandundertheheading"RiskProfile"intheAnnualMD&A.
Basedon2016productionestimates,theapproximatesensitivitiesoftheCompany'safter-taxincometoa10%changeincertainmetalpricesfrom2015marketaveragepricesareasfollows:
Income
per share
Gold $0.84
Silver $0.02
Zinc $0.01
Copper $0.02
SensitivitiesoftheCompany'safter-taxincometochangesinmetalpriceswillincreasewithincreasedproduction.
TheCompanyislargelydependentuponitsminingandmillingoperationsatitsMeadowbankmineinNunavutanditsLaRondemineandCanadianMalarticminesinQuebec,andanyadverseconditionaffectingthoseoperationsmayhaveamaterialadverseeffectontheCompany.
TheCompany'soperationsattheMeadowbankmineinNunavutandattheLaRondemineandCanadianMalarticminesinQuebecaccountedforapproximately23%,16%and17%,respectively,oftheCompany'sgoldproductionin2015andareexpectedtoaccountforapproximately20%,18%and18%,respectively,oftheCompany'sgoldproductionin2016.Also,in2015theMeadowbank,LaRondeandCanadianMalarticminesaccountedforapproximately22%,15%and16%,respectively,oftheCompany'soperatingmargin.AnyadverseconditionaffectingminingormillingconditionsattheseminescouldbeexpectedtohaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations(see"–IftheCompanyexperiencesminingaccidentsorotheradverseconditions,theCompany'sminingoperationsmayyieldlessgoldthanindicatedbyitsestimatedgoldproduction"below).GoldproductionattheMeadowbankmineisalsosubjecttorisksrelatingtooperatinginaremotelocation(see"–TheCompanymayexperiencedifficultiesoperatingitsMeadowbankmineanddevelopingtheMeliadineprojectasaresultoftheirremotelocation"below).
UnlesstheCompanyacquiresordevelopsothersignificantgold-producingassets,theCompanywillcontinuetobedependentonitsoperationsattheMeadowbank,LaRondeandCanadianMalarticminesforasubstantialportionofitsgoldproductionandcashflowprovidedbyoperatingactivities.TheCompany'scurrentlifeofmineplansfortheMeadowbankminecontemplatesthefinalyearofgoldproductionin2018,andtherecanbenoassurancethattheCompany'scurrentexplorationanddevelopmentprogramsatMeadowbank(includingattheAmaruqproperty)oritsotherminingprojectswillresultinanyneweconomicallyviableminingoperationsoryieldnewmineralreservestoreplaceandexpandcurrentproductionandmineralreserves.
TheCompanymayexperiencedifficultiesoperatingitsMeadowbankmineanddevelopingtheMeliadineprojectasaresultoftheirremotelocation.
TheMeadowbankmine,whichistheCompany'slargestmineintermsofproductionandoperatingmargin,islocatedintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.Inaddition,theAmaruqproperty,located50kilometresnorthwestoftheMeadowbankmine,isbeingconsideredasapossiblesatelliteoperationtotheMeadowbankmine.TheclosestmajorcitytotheMeadowbankmineisWinnipeg,Manitoba,approximately1,500kilometrestothesouth.TheCompanybuilta110-kilometreall-weatherroadfromBakerLake,whichprovidessummershippingaccessviaHudsonBaytotheMeadowbankmineandtheCompanyplanstobuildanall-weatherroadbetweenMeadowbankandtheAmaruqproperty.However,theCompany'soperationsareconstrainedbytheremotenessofthemine,particularlyastheportofBakerLakeisonlyaccessibleapproximatelytenweeksperyear.MostofthematerialsthattheCompanyrequiresfortheoperationoftheMeadowbankminemustbetransportedthroughtheportofBakerLakeduringthisshippingseason,whichmaybefurthertruncatedduetoweatherconditions.IftheCompanyisunabletoacquireandtransportnecessarysuppliesduringthistime,itmayresultinaslowdownorstoppageofoperationsattheMeadowbankmine.Furthermore,ifmajorequipmentfails,itemsnecessarytoreplaceorrepairsuchequipmentmayhavetobeshippedthroughBakerLakeduringthiswindow.Failuretohaveavailablethenecessary
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materialsrequiredforoperationsortorepairorreplacemalfunctioningequipmentattheMeadowbankmine(includingattheAmaruqproperty)mayrequiretheslowdownorstoppageofoperations.Forexample,aMarch2011fireatthekitchenfacilitiesoftheMeadowbankminerequiredoperationstobereducedatthemine,whichresultedingoldproductionattheminebeingbelowexpectedlevelsin2011.
TheCompany'sMeliadineproject,290kilometressoutheastoftheMeadowbankmine,isalsolocatedintheKivalliqDistrictofNunavut,approximately25kilometresnorthwestofthehamletofRankinInletonthewestcoastofHudsonBay.MostofthematerialsthattheCompanyrequirestooperatetheadvancedexplorationprogram,andmayrequireifitdeterminestobuildamineinthefuture,mustbetransportedthroughtheportofRankinInletduringitsapproximately14-weekshippingseason.IftheCompanycannotidentifyandprocuresuitableequipmentandmaterialswithinatimeframethatpermitstransportingthemtotheprojectwithinthisshippingseason,itcouldresultindelaysand/orcostincreasesintheexplorationprogramand,iftheCompanydeterminestobuildamine,anyconstructionordevelopmentontheproperty.
TheremotenessoftheMeadowbankmine,theAmaruqpropertyandMeliadineprojectalsonecessitatestheuseoffly-in/fly-outcampsfortheaccommodationofsiteemployeesandcontractors,whichmayhaveanimpactontheCompany'sabilitytoattractandretainqualifiedmining,explorationandconstructionpersonnel.IftheCompanyisunabletoattractandretainsufficientpersonnelorcontractorsonatimelybasis,theCompany'soperationsattheMeadowbankmine(includingattheAmaruqproperty)andfuturedevelopmentplansattheMeliadineprojectmaybeadverselyaffected.
IftheCompanyexperiencesminingaccidentsorotheradverseconditions,theCompany'sminingoperationsmayyieldlessgoldthanindicatedbyitsestimatedgoldproduction.
TheCompany'sgoldproductionmayfallbelowestimatedlevelsasaresultofminingaccidentssuchascave-ins,rockfalls,rockbursts,pitwallfailures,firesorfloodingorasaresultofotheroperationalproblemssuchasafailureofaproductionhoist,autoclave,filterpressorsemi-autogenousgrindingmill.Inaddition,productionmaybereducedif,duringthecourseofminingorprocessing,unfavourableweatherconditions,groundconditions,highgeomechanicalstressareasorseismicactivityareencountered,oregradesarelowerthanexpected,thephysicalormetallurgicalcharacteristicsoftheorearelessamenablethanexpectedtominingortreatment,dilutionincreases,electricalpowerisinterruptedorheapleachprocessingresultsincontainmentdischarge.WhiletheCompanyhasmetorexceededproductionforecastssince2012,itfailedtodosoinfiveoftheprevioustenyearsprimarilydueto:increasedstresslevelsinasillpillarrequiringthetemporaryclosureofproductionsublevelsin2005atLaRonde;delaysinthecommissioningoftheGoldexproductionhoistandtheKittilaautoclavein2008;andautoclaveissuesatKittila,filteringissuesatPinosAltosanddilutionissuesatLapain2009.In2010,goldproductionwasbelowtheinitialanticipatedrangeprimarilyasaresultoflowerthroughputattheMeadowbankminemillduetoabottleneckinthecrushingcircuitandcontinuedautoclaveissuesattheKittilamineinthefirsthalfoftheyear.In2011,goldproductionwasbelowtheinitialanticipatedrangeprimarilyasaresultofsuspensionofminingoperationsattheGoldexmineduetogeotechnicalconcernswiththerockabovethemininghorizon,afireintheMeadowbankminekitchencomplexthatnegativelyimpactedproduction,andlowerthanexpectedgradesattheMeadowbankandLaRondemines.In2012,goldproductionwasnegativelyaffectedbythetemporarysuspensionofheapleachoperationsattheCrestonMascotadepositatPinosAltosasaresultofissueswiththephaseoneleachpadliner.In2013,goldproductionwasnegativelyaffectedbyanextendedmaintenanceshutdownatKittiladuringthesecondquarter,duringwhichthemineonlyoperatedfor14days,anda16-dayunplannedshutdownrelatedtotheLaRondehoistdrive.In2014,goldproductionwasnegativelyaffectedbytendaysofdowntimeresultingfromaproductionhoistdrivefailureatLaRonde.In2015,goldproductionwasnegativelyaffectedbylowerthanexpectedgradesatKittilaandadecisionduringtheyeartoextendtheVaultpitatMeadowbankresultinginlowerthanexpected2015production.Occurrencesofthisnatureandotheraccidents,adverseconditionsoroperationalproblemsinfutureyearsmayresultintheCompany'sfailuretoachievecurrentorfutureproductionestimates.
TheCompany'stotalcashcostsperounceandall-insustainingcostsperounceofgoldproductiondepend,inpart,onexternalfactorsthataresubjecttofluctuationand,ifsuchcostsincrease,someoralloftheCompany'sactivitiesmaybecomeunprofitable.
TheCompany'stotalcashcostsperounceandall-insustainingcostsperounceofgoldaredependentonanumberoffactors,includingtheexchangeratebetweentheU.S.dollarandtheCanadiandollar,EuroandMexicanpeso,smeltingandrefiningcharges,productionroyalties,thepriceofgoldandby-productmetals(whencalculatedonaby-productbasis)andthecostofinputsusedinminingoperations.AttheLaRondemine,theCompany'stotalcashcostsperounceandall-insustainingcostsperounceofproduction(whencalculatedonaby-productbasis)areaffectedbythepricesand
88 AGNICO EAGLE ANNUAL INFORMATION FORM
productionlevelsofby-productzinc,silverandcopper,therevenuefromwhichisoffsetagainstthecostofgoldproduction.AttheCanadianMalarticmine,theCompany'stotalcashcostsperounceandall-insustainingcostsperounceofproduction(whencalculatedonaby-productbasis)areaffectedbythepricesandproductionlevelsofby-productsilver,therevenuefromwhichisoffsetagainstthecostofgoldproduction.Totalcashcostsperounceandall-insustainingcostsperouncefromtheCompany'soperationsatthePinosAltosandLaIndiaminesareaffectedbytheexchangeratebetweentheU.S.dollarandtheMexicanpesoandthepriceand(whencalculatedonaby-productbasis)productionlevelofby-productsilver,therevenuefromwhichisoffsetagainstthecostofgoldproduction.Totalcashcostsperounceandall-insustainingcostsperouncefromtheCompany'soperationsatitsminesinCanadaandtheKittilamineinFinlandareaffectedbychangesintheexchangeratesbetweentheU.S.dollarandtheCanadiandollarandtheEuro,respectively.Totalcashcostsperounceandall-insustainingcostsperounceatalloftheCompany'sminesarealsoaffectedbythecostsofinputsusedinminingoperations,includinglabour(includingcontractors),steel,chemicalreagentsandenergy.AllofthesefactorsarebeyondtheCompany'scontrol.IftheCompany'stotalcashcostsperounceorall-insustainingcostsperounceofgoldriseabovethemarketpriceofgoldandremainsoforanysustainedperiod,theCompanymayexperiencelossesandmaycurtailorsuspendsomeorallofitsexploration,developmentand/orminingactivities.
Totalcashcostsperounceandall-insustainingcostsperouncearenotrecognizedmeasuresunderUSGAAPorIFRS,andthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.SeetheAnnualMD&Aforreconciliationoftotalcashcostsperounceandall-insustainingcostsperounceandminesitecostspertonnetotheirclosestIFRSmeasureand"IntroductoryNotes–NotetoInvestorsConcerningCertainMeasuresofPerformance"inthisAIFforadiscussionofnon-GAAPmeasures.
TheCompany'smineconstructionprojectsandexpansionprojectsaresubjecttorisksassociatedwithminedevelopment,whichmayresultindelaysintheoptimizationofminingoperations,delaysinexistingoperationsandunanticipatedcosts.
TheCompany'sproductionforecastsarebasedonfullproductionbeingachievedatallofitsmines,andtheCompany'sabilitytoachieveandmaintainfullproductionratesattheseminesissubjecttoanumberofrisksanduncertainties.Productionfromtheseminesin2016maybelowerthananticipatediftheanticipatedfullproductionratecannotbeachieved.
TheLaRondemineextension,whichcommencedoperationinlate2011,isoneofthedeepestoperationsintheWesternHemispherewithacurrentlyexpectedmaximumdepthof3,110metresbelowthesurfaceand,in2016,89%oftheLaRondemine'sproductionisanticipatedtobefromtheLaRondemineextension.TheLaRondemineextensionhasnotyetbeguntooperateatexpectedsteady-statelevels.TheCompany'soperationsattheLaRondemineextensionrelyoninfrastructureinstalledinconnectionwiththeextensionforhaulingoreandmaterialstothesurface,includingawinze(orinternalshaft)andaseriesoframpslinkingminingdepositstothePennaShaftthatserviceshistoricoperationsattheLaRondemine.ThedepthoftheoperationsposessignificantchallengestotheCompany,suchasgeomechanicalandseismicrisksandventilationandairconditioningrequirements,whichmayresultindifficultiesanddelaysinachievinggoldproductionobjectives.OperationsatthelowerleveloftheLaRondeminearesubjecttohighlevelsofgeomechanicalstressandtherearefewresourcesavailabletoassisttheCompanyinmodellingthegeomechanicalconditionsatthesedepths,whichmayresultintheCompanynotbeingabletoextracttheoreattheselevelsascurrentlycontemplated.In2012,challengesassociatedwithexcessheatandcongestionatthelowerpartsoftheminedelayedtherampupofproductionandin2013,throughputattheLaRondeminewasreducedasaresultof16daysofunplannedshutdowntothehoistdrive.In2014,tendaysofdowntimeresultingfromaproductionhoistdrivefailureresultedinannualproductionatLaRondebeingapproximately10,000ouncesbelowtheCompany`sexpectations.
ThefurtherdevelopmentoftheKittilaandPinosAltosmines,aswellasthedevelopmentofthenewminingzonesattheGoldexmine,requirestheconstructionandoperationofnewundergroundmininginfrastructureand,atKittila,millingoperationswererequiredtobeexpanded.Theconstructionandoperationofundergroundminingfacilitiesandtheexpansionofmillingfacilitiesaresubjecttoanumberofrisks,includingunforeseengeologicalformations,implementationofnewminingormillingprocesses,delaysinobtainingrequiredconstruction,environmentaloroperatingpermitsandengineeringandmineormilldesignadjustments.
Mineralreserveandmineralresourceestimatesareonlyestimatesandsuchestimatesmaynotaccuratelyreflectfuturemineralrecovery.
ThefiguresformineralreservesandmineralresourcespublishedbytheCompanyareestimatesandnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoveryofgoldwillbe
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realized.MineralreserveandmineralresourceestimatesarebasedongoldrecoveriesinsmallscalelaboratorytestsandmaynotbeindicativeofthemineralizationintheentireorebodyandtheCompanymaynotbeabletoachievesimilarresultsinlargerscaletestsunderon-siteconditionsorduringproduction.TheoregradeactuallyrecoveredbytheCompanymaydifferfromtheestimatedgradesofthemineralreservesandmineralresources.Theestimatesofmineralreservesandmineralresourceshavebeendeterminedbasedonassumedmetalprices,foreignexchangeratesandoperatingcosts.Forexample,theCompanyhasestimatedprovenandprobablemineralreservesbasedon,amongotherthings,a$1,100perouncegoldprice($1,150forCanadianMalartic).Theyearlyaveragegoldpricehasbeenabove$1,100perouncesince2010;however,priortothattime,yearlyaveragegoldpriceswerebelow$1,100perounce.Prolongeddeclinesinthemarketpriceofgold(orapplicableby-productmetalprices)mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandcouldmateriallyreducetheCompany'smineralreserves.Shouldsuchreductionsoccur,theCompanymayberequiredtotakeamaterialwrite-downofitsinvestmentinminingproperties,reducethecarryingvalueofoneormoreofitsassetsordelayordiscontinueproductionorthedevelopmentofnewprojects,resultinginincreasednetlossesandreducedcashflow.TheCompanyusedanassumed$1,250long-termgoldpricetotestforimpairmentofitsminesandconcludednoimpairmentsexistedasatDecember31,2015.Marketpricefluctuationsofgold(orapplicableby-productmetalprices),aswellasincreasedproductioncostsorreducedrecoveryrates,mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandmayultimatelyresultinarestatementofmineralresources.Short-termfactorsrelatingtothemineralreserve,suchastheneedfororderlydevelopmentoforebodiesortheprocessingofnewordifferentgrades,mayimpairtheprofitabilityofamineinanyparticularaccountingperiod.
Mineralresourceestimatesforpropertiesthathavenotcommencedproductionoratdepositsthathavenotyetbeenexploitedarebased,inmostinstances,onverylimitedandwidelyspaceddrillholeinformation,whichisnotnecessarilyindicativeofconditionsbetweenandaroundthedrillholes.Accordingly,suchmineralresourceestimatesmayrequirerevisionasmoredrillinginformationbecomesavailableorasproductionexperienceisgained.
TheCompanymayexperienceproblemsinexecutingacquisitionsormanagingandintegratinganycompletedacquisitionswithitsexistingoperations.
TheCompanyregularlyevaluatesopportunitiestoacquiresecuritiesorassetsofotherminingbusinesses.Suchacquisitionsmaybesignificantinsize,maychangethescaleoftheCompany'sbusinessandmayexposetheCompanytonewgeographic,political,operating,financialorgeologicalrisks.TheCompany'ssuccessinitsacquisitionactivitiesdependsonitsabilitytoidentifysuitableacquisitioncandidates,acquirethemonacceptabletermsandintegratetheiroperationssuccessfullywiththoseoftheCompany.Anyacquisitionwouldbeaccompaniedbyrisks,suchas:duediligencefailures;thedifficultyofassimilatingtheoperationsandpersonnelofanyacquiredbusinesses;thepotentialdisruptionoftheCompany'songoingbusiness;theinabilityofmanagementtomaximizethefinancialandstrategicpositionoftheCompanythroughthesuccessfulintegrationofacquiredassetsandbusinesses;themaintenanceofuniformstandards,controls,proceduresandpolicies;theimpairmentofrelationshipswithemployees,customers,suppliersandcontractorsasaresultofanyintegrationofnewmanagementpersonnel;andthepotentialunknownliabilities(includingpotentialenvironmentalliabilitiesoranypriorbriberyorcorruptionactivities)associatedwithacquiredassetsandbusinesses.Inaddition,theCompanymayneedadditionalcapitaltofinanceanacquisition.PotentialacquisitiontargetsmayoperateinjurisdictionsinwhichtheCompanydoesnotoperateandthatmayhaveadifferentriskprofilethanthejurisdictionsinwhichtheCompanycurrentlyoperates(see"–TheCompanymayexperienceoperationaldifficultiesatitsforeignoperations").DebtfinancingrelatedtoanyacquisitionmayexposetheCompanytotherisksrelatedtoincreasedleverage,whileequityfinancingmaycauseexistingshareholderstosufferdilution.TheCompanyispermittedunderthetermsofitsunsecuredrevolvingbankcreditfacilityanditsguaranteedseniorunsecurednotesreferredtounder"MaterialContracts"belowtoincuradditionalunsecuredindebtedness,providedthatitmaintainscertainfinancialratiosandmeetsfinancialconditioncovenantsand,inthecaseofthebankcreditfacility,thatnoeventofdefaultunderthebankcreditfacilityhasoccurredandiscontinuing,orwouldoccurasaresultoftheincurrenceorassumptionofsuchindebtedness.TherecanbenoassurancethattheCompanywouldbesuccessfulinovercomingtheseoranyotherproblemsencounteredinconnectionwithsuchacquisitions.
TheCompanymayexperienceoperationaldifficultiesatitsforeignoperations.
TheCompany'soperationsincludeamineinFinlandandtwominesinnorthernMexico.Collectively,theseminesaccountedforapproximately32%oftheCompany'sgoldproductionin2015andareexpectedtoaccountforapproximately34%oftheCompany'sgoldproductionin2016.Theseoperationsaresubjecttovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadianproperties.Theserisksanduncertaintiesvaryfromcountrytocountryandmayinclude:extremefluctuationsincurrency
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exchangerates;highratesofinflation;labourunrest;risksofwarorcivilunrest;expropriationandnationalization;renegotiationornullificationofexistingconcessions,licences,permitsandcontracts;illegalmining;corruption;restrictionsonforeignexchangeandrepatriation;hostagetaking;changingpoliticalconditions;andcurrencycontrols.Inaddition,theCompanymustcomplywithmultipleandpotentiallyconflictingregulationsinCanada,theUnitedStates,FinlandandMexico,includingexportrequirements,taxes,tariffs,importdutiesandothertradebarriers,aswellashealth,safetyandenvironmentalrequirements.
Changes,ifany,inminingorinvestmentpoliciesorshiftsinpoliticalattitudeinFinlandorMexicomayadverselyaffecttheCompany'soperationsorprofitability.Operationsmaybeaffectedinvaryingdegreesbygovernmentregulationswithrespecttomattersincludingrestrictionsonproduction,pricecontrols,exportcontrols,currencycontrolsorrestrictions,currencyremittance,incomeandothertaxes,expropriationofproperty,foreigninvestment,maintenanceofclaims,environmentallegislation,landuse,landclaimsoflocalpeople,wateruseandminesafety.Failuretocomplystrictlywithapplicablelaws,regulationsandlocalpracticesrelatingtomineralrightsapplicationsandtenurecouldresultinloss,reductionorexpropriationofentitlementsortheimpositionofadditionallocalorforeignpartiesasjointventurepartnerswithcarriedorotherinterests.
Inaddition,FinlandandMexicohavesignificantlydifferentlawsandregulationsthanCanadaandthereareculturalandlanguagedifferencesbetweenthesecountriesandCanada.Also,theCompanyfaceschallengesinherentinefficientlymanagingemployeesoverlargegeographicaldistances,includingthechallengesofstaffingandmanagingoperationsinseveralinternationallocationsandimplementingappropriatesystems,policies,benefitsandcomplianceprograms.Thesechallengesmaydivertmanagement'sattentiontothedetrimentoftheCompany'sotheroperations.TherecanbenoassurancethatdifficultiesassociatedwiththeCompany'sforeignoperationscanbesuccessfullymanaged.
Inthefuture,theCompanymaychoosetooperateinforeignjurisdictionsotherthanFinlandandMexico.Forexample,theCompanycurrentlyhasexplorationpropertiesineachoftheUnitedStatesandSweden,aswellasstrategicinvestmentsincompaniesholdingpropertiesinBrazilandPanama.Suchoperationswouldinherentlybesubjecttovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadian,FinnishandMexicanproperties.
TheCompanyissubjecttotherisksnormallyassociatedwiththeconductofjointoperations.
TheCompanyholdsanindirect50%interestintheCanadianMalarticminethroughthePartnership,withtheremaininginterestinthispropertybeingheldindirectlybyYamana.TheCompany'sinterestintheCanadianMalarticmineissubjecttotherisksnormallyassociatedwiththeconductofpartnershipsandotherjointoperations.TheexistenceoroccurrenceofoneormoreofthefollowingcircumstancesandeventscouldhaveamaterialadverseeffectonCompany'sprofitabilityortheviabilityofitsinterestsheldthroughjointoperations,whichcouldhaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations:(i)lackofcontroloverthejointoperationsanddisagreementwithpartnersonhowtoexplore,developoroperateminesefficiently;(ii)inabilitytoexertinfluenceovercertainstrategicdecisionsmadeinrespectofjointlyheldproperties;(iii)inabilityofpartnerstomeettheirobligationstothejointoperationorthirdparties;(iv)litigationbetweenjointventurepartnersregardingjointoperationmatters;and(v)liabilitythatmightaccruetopartnersasaresultofthefailureofthejointventureorgeneralpartnershiptosatisfytheirobligations.TheCompanymayenterintoadditionaljointventuresorpartnershipsinthefuture.In2015,theCompanyenteredintoajointventurewithOrexMineralsInc.withrespecttotheBarseleprojectinSweden.
TotheextentthattheCompanyisnottheoperatorofitsjointventureproperties,theCompanywillbedependentontheoperatorsforthetimingofactivitiesrelatedtothesepropertiesandtheCompanywillbelargelyunabletodirectorcontroltheactivitiesoftheoperators.TheCompanyalsowillbesubjecttothedecisionsmadebytheoperatorsregardingactivitiesattheproperties,andwillhavetorelyontheoperatorsforaccurateinformationabouttheproperties.AlthoughtheCompanyexpectsthattheoperatorsofthepropertiesinwhichitownsajointventureinterestwilloperatethesepropertiesinaccordancewithindustrystandardsandinaccordancewithanyapplicableoperatingagreements,therecanbenoassurancethatalldecisionsoftheoperatorswillachievetheexpectedgoals.
FluctuationsinforeigncurrencyexchangeratesinrelationtotheU.S.dollarmayadverselyaffecttheCompany'sresultsofoperations.
TheCompany'soperatingresultsandcashflowaresignificantlyaffectedbychangesintheU.S.dollar/Canadiandollarexchangerate.AlloftheCompany'srevenuesareearnedinU.S.dollarsbutthemajorityofitsoperatingcostsattheLaRonde,Lapa,Goldex,CanadianMalarticandMeadowbankmines,aswellastheMeliadineproject,areincurredinCanadiandollars.TheU.S.dollar/Canadiandollarexchangeratehasfluctuatedsignificantlyoverthelastseveralyears.
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FromJanuary1,2011toJanuary1,2016,theNoonBuyingRatefluctuatedfromahighofC$1.0583per$1.00toalowofC$0.7148per$1.00.HistoricalfluctuationsintheU.S.dollar/Canadiandollarexchangeratearenotnecessarilyindicativeoffutureexchangeratefluctuations.BasedontheCompany'santicipated2016after-taxoperatingresults,a10%changeintheU.S.dollar/Canadiandollarexchangeratefromthe2015marketaverageexchangeratewouldaffectnetincomebyapproximately$0.26pershare.Toattempttomitigateitsforeignexchangeriskandminimizetheimpactofexchangeratemovementsonoperatingresultsandcashflow,theCompanyhasperiodicallyusedforeigncurrencyoptionsandforwardforeignexchangecontractstopurchaseCanadiandollars;however,therecanbenoassurancethatthesestrategieswillbeeffective.See"RiskProfile–CommodityPricesandForeignCurrencies"intheAnnualMD&Aforadescriptionoftheassumptionsunderlyingthesensitivitycalculations.Inaddition,themajorityoftheCompany'soperatingcostsattheKittilamineareincurredinEurosandasignificantportionofoperatingcostsatthePinosAltosandLaIndiaminesareincurredinMexicanpesos.EachofthesecurrencieshasalsofluctuatedsignificantlyagainsttheU.S.dollaroverthepastseveralyears.TherecanbenoassurancethattheCompany'sforeignexchangederivativesstrategieswillbesuccessfulorthatforeignexchangefluctuationswillnotmateriallyadverselyaffecttheCompany'sfinancialperformanceandresultsofoperations.
TheCompanyestimatestherecoverableamountoflong-livedassetsandgoodwillusingassumptionsandifthecarryingvalueofanassetorgoodwillisthendeterminedtobegreaterthanitsactualrecoverableamount,animpairmentisrecognizedreducingtheCompany'searnings.
TheCompanyconductsannualimpairmentassessmentsofgoodwillandattheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassets(suchasminingpropertiesandplantandequipment)maybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Testingforimpairmentinvolvesacomparisonoftherecoverableamountofthecashgeneratingunittoitscarryingvalue.Animpairmentchargeisrecognizedforanyexcessofthecarryingamountoftheassetgrouporreportingunitoveritsrecoverableamount.AsatDecember31,2015,theCompanytestedforimpairmentofitsminesandprojectsandconcludednoimpairmentsexisted.
Theassessmentforimpairmentissubjectiveandrequiresmanagementtomakeestimatesandassumptionsforanumberoffactorsincludingestimatesofproductionlevels,mineralresourcesandmineralreserves,operatingcostsandcapitalexpendituresreflectedintheCompany'slife-of-mineplans,aswellaseconomicfactorsbeyondmanagement'scontrol,suchasgoldprices,discountratesandobservablenetassetvaluemultiples.Shouldmanagement'sestimatesandassumptionsregardingthesefactorsbeincorrect,theCompanymayberequiredtorealizeimpairmentcharges,whichwillreducetheCompany'searnings.Thetimingandamountofsuchimpairmentchargesisdifficulttopredict.
TheCompany'stransitiontoreportingitsfinancialresultsunderIFRSmayalsohaveaneffectonthefrequencyandamountofimpairmentcharges.UnderUSGAAP,atwo-stepapproachisusedforlong-livedassetimpairmenttestingwherebylong-livedassetsarefirsttestedforrecoverabilitybasedontheirexpectedundiscountedcashflows.Ifalong-livedasset'sexpectedundiscountedcashflowexceedstherecordedcarryingamount,noimpairmentchargeisrequired.Iftheexpectedundiscountedcashflowislowerthantherecordedcarryingamount,thelong-livedassetsarewrittendowntotheirestimatedfairvalue.IFRSprescribesaone-stepapproachforassetimpairmenttestingandmeasurementwherebyanasset'srecoverableamountiscompareddirectlyagainstitsrecordedcarryingamount.UnderIFRS,anasset'srecoverableamountisdeterminedasthehigheroftheestimatedfairvaluelesscoststosellorvalueinuse(whichismeasuredusingdiscountedcashflows).Ifanasset'srecoverableamountislessthantherecordedcarryingamount,animpairmentchargeisrequired.ThedifferenceintheapproachtoassetimpairmenttestingandmeasurementmayresultinmorefrequentimpairmentchargesunderIFRS,whereassetcarryingvaluespreviouslysupportedunderUSGAAPonanundiscountedcashflowbasiscannotbesupportedonadiscountedcashflowbasis.
IftheCompanyfailstocomplywithrestrictivecovenantsinitsdebtinstruments,theCompany'sabilitytoborrowunderitsunsecuredrevolvingbankcreditfacilitycouldbelimitedandtheCompanymaythendefaultunderotherdebtagreements,whichcouldharmtheCompany'sbusiness.
TheCompany'sunsecuredrevolvingbankcreditfacilitylimits,amongotherthings,theCompany'sabilitytopermitthecreationofcertainliens,makeinvestmentsotherthaninvestmentsinbusinessesrelatedtominingorabusinessancillaryorcomplementarytomining,disposeoftheCompany'smaterialassetsor,incertaincircumstances,paydividends.Inaddition,theCompany'sguaranteedseniorunsecurednoteslimit,amongotherthings,theCompany'sabilitytopermitthecreationofcertainliens,carryonbusinessunrelatedtominingordisposeoftheCompany'smaterialassets.ThebankcreditfacilityandtheguaranteedseniorunsecurednotesalsorequiretheCompanytomaintainspecifiedfinancialratiosandmeetfinancialconditioncovenants.EventsbeyondtheCompany'scontrol,includingchangesingeneraleconomic
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andbusinessconditions,mayaffecttheCompany'sabilitytosatisfythesecovenants,whichcouldresultinadefaultunderthebankcreditfacilityortheguaranteedseniorunsecurednotesand,byextension,theBNSLetterofCreditFacility(asdefinedbelow).AtMarch15,2016,therewasapproximately$266milliondrawnunderthebankcreditfacility(includingoutstandinglettersofcredit),approximatelyC$239milliondrawnundertheBNSLetterofCreditFacilityandapproximatelyC$97milliondrawnundertheTDLetterofCreditFacility(asdefinedbelow).Ifaneventofdefaultundertheunsecuredrevolvingbankcreditfacilityortheguaranteedseniorunsecurednotesoccurs,theCompanywouldbeunabletodrawdownfurtheronthebankcreditfacilityandthelenderscouldelecttodeclareallprincipalamountsoutstandingthereunderatsuchtime,togetherwithaccruedinterest,tobeimmediatelydueanditcouldcauseaneventofdefaultundertheCompany'sguaranteedseniorunsecurednotesandtheBNSLetterofCreditFacility.Aneventofdefaultundertheunsecuredrevolvingbankcreditfacility,theguaranteedseniorunsecurednotesortheuncommittedletterofcreditfacilitiesmayalsogiverisetoaneventofdefaultunderotherexistingandfuturedebtagreementsand,insuchevent,theCompanymaynothavesufficientfundstorepayamountsowingundersuchagreements.
Theexplorationofmineralpropertiesishighlyspeculative,involvessubstantialexpendituresandisfrequentlyunsuccessful.
TheCompany'sprofitabilityissignificantlyaffectedbythecostsandresultsofitsexplorationanddevelopmentprograms.Asmineshavelimitedlivesbasedonprovenandprobablemineralreserves,theCompanyactivelyseekstoreplaceandexpanditsmineralreserves,primarilythroughexplorationanddevelopmentaswellasthroughstrategicacquisitions.Explorationformineralsishighlyspeculativeinnature,involvesmanyrisksandisfrequentlyunsuccessful.Amongthemanyuncertaintiesinherentinanygoldexplorationanddevelopmentprogramarethelocationofeconomicorebodies,thedevelopmentofappropriatemetallurgicalprocesses,thereceiptofnecessarygovernmentalpermits,theacceptanceorsupportoflocalstakeholdersandtheconstructionofminingandprocessingfacilities.Substantialexpendituresarerequiredtopursuesuchexplorationanddevelopmentactivities.Assumingdiscoveryofaneconomicorebody,dependingonthetypeofminingoperationinvolved,severalyearsmayelapsefromtheinitialphasesofdrillinguntilcommercialoperationsarecommencedandduringsuchtimetheeconomicfeasibilityofproductionmaychange.Accordingly,therecanbenoassurancethattheCompany'scurrentorfutureexplorationanddevelopmentprogramswillresultinanyneweconomicallyviableminingoperationsoryieldnewmineralreservestoreplaceandexpandcurrentmineralreserves.
Theminingindustryishighlycompetitive,andtheCompanymaynotbesuccessfulincompetingfornewminingproperties.
Thereisalimitedsupplyofdesirablemineralpropertiesavailableforclaimstaking,leasing,explorationoracquisitionintheareaswheretheCompanycontemplatesconductingactivities.Manycompaniesandindividualsareengagedintheminingbusiness,includinglarge,establishedminingcompanieswithsubstantialcapabilitiesandlongearningsrecords.TheCompanymaybeatacompetitivedisadvantageinacquiringminingproperties,asitmustcompetewiththesecompaniesandindividuals,someofwhichhavegreaterfinancialresourcesandlargertechnicalstaffthantheCompany.Accordingly,therecanbenoassurancethattheCompanywillbeabletocompetesuccessfullyfornewminingproperties.
ThesuccessoftheCompanyisdependentongoodrelationswithitsemployeesandonitsabilitytoattractandretainemployeesandkeypersonnel.
ProductionattheCompany'sminesandmineprojectsisdependentontheeffortsoftheCompany'semployeesandcontractors.TheCompanycompeteswithminingandothercompaniesonaglobalbasistoattractandretainemployeesatalllevelswithappropriatetechnicalskillsandoperatingexperiencenecessarytooperateitsmines.RelationshipsbetweentheCompanyanditsemployeesmaybeaffectedbychangesintheschemeoflabourrelationsthatmaybeintroducedbyrelevantgovernmentauthoritiesinthejurisdictionsthattheCompanyoperates.ChangesinapplicablelegislationorintherelationshipbetweentheCompanyanditsemployeesorcontractorsmayhaveamaterialadverseeffectontheCompany'sbusiness,resultsofoperationsandfinancialcondition.
TheCompanyisalsodependentonanumberofkeymanagementpersonnel.ThelossoftheservicesofoneormoreofsuchkeymanagementpersonnelcouldhaveamaterialadverseeffectontheCompany.TheCompany'sabilitytomanageitsoperating,development,explorationandfinancingactivitieswilldependinlargepartontheeffortsoftheseindividuals.
TheCompanyfacessignificantcompetitiontoattractandretainqualifiedpersonnelandtherecanbenoassurancethattheCompanywillbeabletoattractandretainsuchpersonnel.
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TheCompanymayhavedifficultyfinancingitsadditionalcapitalrequirementsforitsplannedmineconstruction,explorationanddevelopment.
Thecapitalrequiredforoperations(includingpotentialexpansions)andthedevelopmentoftheMeliadineprojectandtheexplorationanddevelopmentoftheCompany'sproperties,includingcontinuingexplorationanddevelopmentprojectsinQuebec,Nunavut,Finland,Sweden,MexicoandNevada,willrequiresubstantialexpenditures.TheCompanyexpectsthatcapitalexpenditureswillbeapproximately$491millionin2016.AsatMarch15,2016,theCompanyhadapproximately$934millionavailabletobedrawndownunderitsbankcreditfacility.BasedoncurrentfundingavailabletotheCompanyandexpectedcashfromoperations,theCompanybelievesithassufficientfundsavailabletofunditsprojected2016capitalexpendituresforallofitscurrentproperties.However,ifcashfromoperationsislowerthanexpectedorcapitalcostsattheCompany'sminesorprojectsexceedcurrentestimates,iftheCompanyincursmajorunanticipatedexpensesrelatedtoexploration,developmentormaintenanceofitsproperties,orforotherpurposesorifadvancesfromthebankcreditfacilityareunavailable,theCompanymayberequiredtoseekadditionalfinancingtomaintainitscapitalexpendituresatplannedlevels.Inaddition,theCompanywillhaveadditionalcapitalrequirementstotheextentthatitdecidestoexpanditspresentoperationsandexplorationactivities,constructadditionalminingandprocessingoperationsatanyofitspropertiesortakeadvantageofopportunitiesforacquisitions,jointventuresorotherbusinessopportunitiesthatmayarise.Additionalfinancingmaynotbeavailablewhenneededor,ifavailable,thetermsofsuchfinancingmaynotbefavourabletotheCompanyand,ifraisedbyofferingequitysecurities,orsecuritiesconvertibleintoequitysecurities,anyadditionalfinancingmayinvolvesubstantialdilutiontoexistingshareholders.FailuretoobtainanyfinancingnecessaryfortheCompany'scapitalexpenditureplansmayresultinadelayorindefinitepostponementofexploration,developmentorproductiononanyoralloftheCompany'sproperties,whichmayhaveamaterialadverseeffectontheCompany'sbusiness,financialconditionandresultsofoperations.
ThecontinuingweaknessintheglobalcreditandcapitalmarketscouldhaveamaterialadverseeffectontheCompany'sliquidityandcapitalresources.
Since2008,thecreditandcapitalmarketshaveexperiencedweaknessandvolatility.Thesecreditandcapitalmarketsconditionscontinuetohaveanegativeimpactontheavailabilityandtermsofcreditandcapital.Ifuncertaintiesinthesemarketscontinue,orthesemarketsdeterioratefurther,itcouldhaveamaterialadverseeffectontheCompany'sliquidity,abilitytoraisecapitalandcostsofcapital.IftheCompanyexperiencesdifficultyaccessingthecreditand/orcapitalmarkets,theCompanymayseekalternativefinancingoptions,including,butnotlimitedto,streamingtransactions,royaltytransactionsorthesaleofnon-coreassets.FailuretoraisecapitalwhenneededoronreasonabletermsmayhaveamaterialadverseeffectontheCompany'sbusiness,financialconditionandresultsofoperations.
TheCompany'spropertiesandminingoperationsmaybesubjecttorightsorclaimsofindigenousgroupsandtheassertionofsuchrightsorclaimsmayimpacttheCompany'sabilitytodeveloporoperateitsminingproperties.
TheCompanyoperatesin,andinthefuturemayoperateinorexploreadditional,areascurrentlyortraditionallyinhabitedorusedbyindigenouspeoplesandsubjecttoindigenousrightsorclaims.Accordingly,theCompanyissubjecttotheriskthatoneormoregroupsmayopposethecontinuedoperation,furtherdevelopmentornewdevelopmentoftheCompany'scurrentorfutureproperties.Suchoppositionmaybedirectedthroughlegaloradministrativeproceedings,orthoughprotestsorothercampaignsagainsttheCompany'sactivities.AnysuchactionsmayhaveanadverseimpactontheCompany'soperations.AlthoughtheCompanyattemptstodevelopandmaintaingoodworkingrelationshipswithallstakeholders,therecanbenoassurancethattheserelationshipscanbesuccessfullymanaged.
TheCompany'soperationsaresubjecttonumerouslawsandextensivegovernmentregulationswhichmayrequiresignificantexpendituresorcauseareductioninlevelsofproduction,delaysinproductionorthepreventionofthedevelopmentofnewminingpropertiesorotherwisecausetheCompanytoincurcoststhatadverselyaffecttheCompany'sresultsofoperations.
TheCompany'sminingandmineralprocessingoperations,explorationactivitiesandpropertiesaresubjecttothelawsandregulationsoffederal,provincial,territorial,stateandlocalgovernmentsinthejurisdictionsinwhichtheCompanyoperates.Theselawsandregulationsareextensiveandgovernprospecting,exploration,development,production,exports,taxes,labourstandards,occupationalhealthandsafety,wastedisposalandtailingsmanagement,toxicsubstances,environmentalprotection,minesafety,reportingofpaymentstogovernmentsandothermatters.Compliancewithsuchlawsandregulationsincreasesthecostsofplanning,designing,drilling,developing,constructing,operating,managing,closing,reclaimingandrehabilitatingminesandotherfacilities.Newlawsorregulations,amendmentstocurrentlawsandregulationsgoverningoperationsandactivitiesonminingpropertiesormorestringentimplementationor
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interpretationthereofcouldhaveamaterialadverseeffectontheCompany,increasecosts,causeareductioninlevelsofproductionanddelayorpreventthedevelopmentofnewminingproperties.Regulatoryenforcement,intheformofinfractionorcompliancenotices,hasoccurredatsomeoftheCompany'sminesand,whilethecurrentrisksrelatedtosuchenforcementarenotexpectedtobematerial,theriskofmaterialfinesorcorrectiveactioncannotberuledoutinthefuture.
DuetothenatureoftheCompany'sminingoperations,theCompanymayfaceliability,delaysandincreasedproductioncostsfromenvironmentalandindustrialaccidentsandpollution,andtheCompany'sinsurancecoveragemayproveinadequatetosatisfyfutureclaimsagainsttheCompany.
Thebusinessofgoldminingisgenerallysubjecttorisksandhazards,includingenvironmentalhazards(includinghazardoussubstances,suchascyanide),industrialaccidents,unusualorunexpectedrockformations,changesintheregulatoryenvironment,cave-ins,rockbursts,rockfalls,pitwallfailuresandfloodingandgoldbullionlosses.Suchoccurrencescouldresultin,amongotherthings,damageto,ordestructionof,mineralpropertiesorproductionfacilities,personalinjuryordeath,environmentaldamage,delaysinmining,monetarylossesandpossiblelegalliability.Aswell,risksmayarisewithrespecttothemanagementoftailings,wasterock,mineclosureandmanagementofclosedminesites(whethertheCompanyoperatedtheminesiteoracquireditafteroperationswereconductedbyothers).TheCompanycarriesinsurancetoprotectitselfagainstcertainrisksofminingandprocessinginamountsthatitconsiderstobeadequatebutwhichmaynotprovideadequatecoverageincertainunforeseencircumstances.TheCompanymayalsobecomesubjecttoliabilityfor,amongotherthings,pollution,cave-insorotherhazardsagainstwhichitcannotinsureoragainstwhichithaselectednottoinsurebecauseofhighpremiumcostsorotherreasons,ortheCompanymaybecomesubjecttoliabilitieswhichexceedpolicylimits.Inthesecircumstances,theCompanymayincursignificantcoststhatcouldhaveamaterialadverseeffectonitsfinancialperformanceandresultsofoperations.Financialassurancesmayalsoberequiredwithrespecttoclosureandrehabilitationcosts.
IncreasedregulationofgreenhousegasemissionsandclimatechangeissuesmayadverselyaffecttheCompany'soperations.
TheCompanyoperatesinjurisdictionswhereregulatoryrequirementshavetakeneffect,orareproposed,tomonitor,reportand/orreducegreenhousegasemissions.IncreasedregulationofgreenhousegasemissionsandclimatechangeissuesmayadverselyaffecttheCompany'soperations.In2015,Canadaestablishedagreenhousegasesreductiontargetof30%from2005levelsby2030.InDecember2015,CanadasignedtheParisAgreementtolimittheglobalaveragetemperaturerisebelow2oCandpursueeffortstolimittheincreaseto1.5oC.Bythefallof2016,theprovincesandthefederalgovernmenthavecommittedtoagreeonapan-Canadianframeworkoncleangrowthandclimatechange.Canada'sfederalandprovincialregulationsalsoimposemandatorygreenhousegasemissionsreportingrequirementsandtheCompany'sQuebecminesaresubjecttocapandtraderegulation.Similarly,FinlandwasasignatorytotheParisAgreementandparticipatesintheEuropeanUnion'scapandtradesystem.Mexicohasenactedclimatechangelegislationwithagreenhousegasemissionreductiontargetof30%(frombusinessasusuallevels)by2020.
TheCompanymonitorsandreportsannuallyitsdirectandindirectgreenhousegasemissionstotheinternationalCarbonDisclosureProject.InQuebec,theCompanyprimarilyuseshydroelectricpowerandisnotalargeproducerofgreenhousegases.Asaresult,Quebec'sregulatoryrequirementsarenotexpectedtohaveamaterialadverseeffectontheCompany.In2015,theMeadowbankmineproducedapproximately190,000tonnesofgreenhousegases(directandindirect)mostlyfromtheproductionofelectricityfromdieselpowergeneration,whichisapproximately47%oftheCompany'stotalgreenhousegasemissions(withoutaccountingfortheCanadianMalarticmine).ItisexpectedthatanyminingoperationattheMeliadineprojectwillalsoprimarilyusedieselpowergeneration.ThePinosAltosandLaIndiaminespurchaseelectricitythatislargelyfossil-fuelgeneratedand,asaresult,aretheCompany'ssecondandthirdhighestgreenhousegasproducers(approximately105,000tonnesand40,000tonnes,respectively,ofgreenhousegasesin2015),whichcombinedareapproximately35%oftheCompany'stotaldirectandindirectgreenhousegasemissions(withoutaccountingfortheCanadianMalarticmine).In2015,theCanadianMalarticmine'sgreenhousegasproductionwasapproximately155,000tonnes(directandindirect).WhiletheseevolvingregulatoryrequirementsinrespectofgreenhousegasesandtheadditionalcostsrequiredtocomplyarenotexpectedtohaveamaterialadverseeffectontheCompany'soperations,suchrequirementsmaynotbeadoptedascurrentlyproposed,maybeamendedormayhaveunexpectedeffectsontheCompanyand,asaresult,mayhaveamaterialadverseeffectontheCompany'sfinancialperformanceanditsresultsofoperations.
AGNICO EAGLE 95 ANNUAL INFORMATION FORM
TitletotheCompany'spropertiesmaybeuncertainandsubjecttorisks.
Theacquisitionoftitletomineralpropertiesisaverydetailedandtime-consumingprocess.Titleto,andtheareaof,mineralconcessionsmaybedisputed.AlthoughtheCompanybelievesithastakenreasonablemeasurestoensurepropertitletoitsproperties,thereisnoguaranteethattitletoanyofitspropertieswillnotbechallengedorimpaired.ThirdpartiesmayhavevalidclaimsonunderlyingportionsoftheCompany'sinterests,includingpriorunregisteredliens,agreements,transfersorclaims,includinglandclaimsbyindigenousgroups,andtitlemaybeaffectedby,amongotherthings,undetecteddefects.Inaddition,althoughtheCompanybelievesthatithassufficientsurfacerightsforitsoperations,theCompanymaybeunabletooperateitspropertiesaspermittedortoenforceitsrightsinrespectofitsproperties.
TheCompanyissubjecttotheriskoflitigation,thecausesandcostsofwhichcannotbeknown.
TheCompanyissubjecttolitigationarisinginthenormalcourseofbusinessandmaybeinvolvedindisputeswithotherpartiesinthefuturewhichmayresultinlitigation.Thecausesofpotentialfuturelitigationcannotbeknownandmayarisefrom,amongotherthings,businessactivities,environmentallaws,volatilityinstockpriceorfailureorallegedfailuretocomplywithdisclosureobligations.Forexample,theCompanywasrecentlythesubjectofcertainclassactionlawsuitsrelatingtotheCompany'sdisclosurepriortothesuspensionofminingoperationsattheGoldexmineinOctober2011.See"LegalProceedingsandRegulatoryActions".Theresultsoflitigationcannotbepredictedwithcertainty.IftheCompanyisunabletoresolvelitigationfavourably,eitherbyjudicialdeterminationorsettlement,itmayhaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations.
IntheeventofadisputeinvolvingtheforeignoperationsoftheCompany,theCompanymaybesubjecttotheexclusivejurisdictionofforeigncourtsormaynotbesuccessfulinsubjectingforeignpersonstothejurisdictionofcourtsinCanada.TheCompany'sabilitytoenforceitsrightscouldhaveanadverseeffectonitsfuturecashflows,earnings,resultsofoperationsandfinancialcondition.
TheuseofderivativeinstrumentsfortheCompany'sby-productmetalproductionmaypreventgainsfrombeingrealizedfromsubsequentby-productmetalpriceincreases.
WhiletheCompany'sgeneralpolicyisnottosellforwarditsfuturegoldproduction,theCompanyhasused,andmayinthefutureuse,variousby-productmetalderivativestrategies,suchassellingfuturecontractsorpurchasingputoptions.TheCompanycontinuallyevaluatesthepotentialshortandlongtermbenefitsofengaginginsuchderivativestrategiesbaseduponcurrentmarketconditions.Noassurancecanbegiven,however,thattheuseofby-productmetalderivativestrategieswillbenefittheCompanyinthefuture.ThereisapossibilitythattheCompanycouldlockinforwarddeliveriesatpriceslowerthanthemarketpriceatthetimeofdelivery.Inaddition,theCompanycouldfailtoproduceenoughby-productmetalstooffsetitsforwarddeliveryobligations,requiringtheCompanytopurchasethemetalinthespotmarketathigherpricestofulfillitsdeliveryobligationsor,forcashsettledcontracts,makecashpaymentstocounterpartiesinexcessofby-productrevenue.IftheCompanyislockedintoalowerthanmarketpriceforwardcontractorhastobuyadditionalquantitiesathigherprices,itsnetincomecouldbeadverselyaffected.Noneofthecurrentcontractsestablishingtheby-productmetalderivativespositionsqualifyforhedgeaccountingtreatmentunderIFRSandthereforeanyyear-endmark-to-marketadjustmentsarerecognizedinthe"Lossonderivativefinancialinstruments"lineitemoftheconsolidatedstatementsofincome(loss)andcomprehensiveincome.See"RiskProfile–FinancialInstruments"intheAnnualMD&Aforadditionalinformation.
ThetradingpricefortheCompany'ssecuritiesisvolatile.
ThetradingpriceoftheCompany'scommonshareshasbeenandmaycontinuetobesubjecttolargefluctuationswhichmayresultinlossestoinvestors.ThetradingpriceoftheCompany'scommonsharesmayincreaseordecreaseinresponsetoanumberofeventsandfactors,including:
• changesinthemarketpriceofgoldorotherby-productmetalstheCompanysells;
• eventsaffectingeconomiccircumstancesinCanada,theUnitedStatesandelsewhere;
• trendsintheminingindustryandthemarketsinwhichtheCompanyoperates;
• changesinfinancialestimatesandrecommendationsbysecuritiesanalysts;
• acquisitions,divestituresandfinancings;
• quarterlyvariationsinoperatingresults;
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• compliancewithnewandexistingregulations,includingwithrespecttotailingsmanagementandgreenhousegasemissions;
• theoperatingandsharepriceperformanceofothercompaniesthatinvestorsmaydeemcomparable;and
• purchasesorsalesoflargeblocksoftheCompany'scommonsharesorsecuritiesconvertibleintoorexchangeablefortheCompany'scommonshares.
WidepriceswingsarecurrentlycommoninthemarketsonwhichtheCompany'ssecuritiestrade.ThisvolatilitymayadverselyaffectthepricesoftheCompany'scommonsharesregardlessoftheCompany'soperatingperformance.
TheCompanyissubjecttoanti-corruptionandanti-briberylaws.
TheCompany'soperationsaregovernedby,andinvolveinteractionswith,variouslevelsofgovernmentinnumerouscountries.TheCompanyisrequiredtocomplywithanti-corruptionandanti-briberylaws,includingtheCorruption of Foreign Public Officials Act (Canada)andtheU.S.ForeignCorruptPracticesAct,aswellassimilarlawsinthecountriesinwhichtheCorporationconductsitsbusiness.Recently,therehasbeenageneralincreaseinthefrequencyofenforcementandtheseverityofpenaltiesundersuchlaws,resultingingreaterscrutinyandpunishmenttocompaniesconvictedofviolatinganti-corruptionandanti-briberylaws.TheCompanymaybefoundliableforviolationsbynotonlyitsemployees,butalsobyitsthirdpartyagents.AlthoughtheCompanyhasadoptedarisk-basedapproachtomitigatesuchrisks,includingtheimplementationofpoliciesandprogramstoensurecompliancewithsuchlaws,suchmeasuresarenotalwayseffectiveinensuringthattheCompany,itsemployeesorthirdpartyagentswillcomplystrictlywithsuchlaws.IftheCompanyfindsitselfsubjecttoanenforcementactionorisfoundtobeinviolationofsuchlaws,thismayresultinsignificantpenalties,finesand/orsanctionsimposedontheCompanywhichcouldresultinamaterialadverseeffectontheCompany'sreputation,financialperformanceandresultsofoperations.
TheCompanyisdependentoninformationtechnologysystems.
TheCompany'soperationsdepend,inpart,uponinformationtechnologysystems.TheCompany`sinformationtechnologysystemsaresubjecttodisruption,damageorfailurefromanumberofsources,including,butnotlimitedto,computerviruses,securitybreaches,naturaldisasters,powerlossanddefectsindesign.AlthoughtodatetheCompanyhasnotexperiencedanymateriallossesrelatingtoinformationtechnologysystemdisruptions,damageorfailure,therecanbenoassurancethatitwillnotincursuchlossesinfuture.Anyoftheseandothereventscouldresultininformationtechnologysystemsfailures,operationaldelays,productiondowntimes,destructionorcorruptionofdata,securitybreachesorothermanipulationorimproperuseoftheCompany`ssystemsandnetworks,anyofwhichcouldhaveadverseeffectsontheCompany`sreputation,resultsofoperationsandfinancialperformance.
TheCompanymaynotbeabletocomplywiththerequirementsofSection404oftheSarbanes-OxleyAct.
Section404oftheSarbanes-OxleyActof2002("SOX")requiresanannualassessmentbymanagementoftheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.Section404ofSOXalsorequiresanannualattestationreportbytheCompany'sindependentauditorsaddressingtheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.TheCompanyhascompleteditsSection404assessmentandreceivedtheauditors'attestationasofDecember31,2015.
IftheCompanyfailstomaintaintheadequacyofitsinternalcontroloverfinancialreporting,assuchstandardsaremodified,supplementedoramendedfromtimetotime,theCompanymaynotbeabletoconcludethatithaseffectiveinternalcontroloverfinancialreportinginaccordancewithSection404ofSOX.TheCompany'sfailuretosatisfytherequirementsofSection404ofSOXonanongoing,timelybasiscouldresultinthelossofinvestorconfidenceinthereliabilityofitsfinancialstatements,whichinturncouldharmtheCompany'sbusinessandnegativelyimpactthetradingpriceofitscommonsharesormarketvalueofitsothersecurities.Inaddition,anyfailuretoimplementrequiredneworimprovedcontrols,ordifficultiesencounteredintheirimplementation,couldharmtheCompany'soperatingresultsorcauseittofailtomeetitsreportingobligations.FutureacquisitionsofcompaniesmayprovidetheCompanywithchallengesinimplementingtherequiredprocesses,proceduresandcontrolsinitsacquiredoperations.AcquiredcompaniesmaynothavedisclosurecontrolsandproceduresorinternalcontroloverfinancialreportingthatareasthoroughoreffectiveasthoserequiredbysecuritieslawscurrentlyapplicabletotheCompany.
AGNICO EAGLE 97 ANNUAL INFORMATION FORM
NoevaluationcanprovidecompleteassurancethattheCompany'sinternalcontroloverfinancialreportingwillpreventmisstatementduetoerrororfraudorwilldetectoruncoverallcontrolissuesorinstancesoffraud,ifany.TheeffectivenessoftheCompany'scontrolsandprocedurescouldalsobelimitedbysimpleerrorsorfaultyjudgments.Inaddition,astheCompanycontinuestoexpand,thechallengesinvolvedinmaintainingadequateinternalcontroloverfinancialreportingwillincreaseandwillrequirethattheCompanycontinuetoimproveitsinternalcontroloverfinancialreporting.TheCompanycannotbecertainthatitwillbesuccessfulincontinuingtocomplywithSection404ofSOX.
DIVIDENDS TheCompany'scurrentpolicyistopayquarterlydividendsonitscommonsharesand,onFebruary10,2016,theCompanydeclaredaquarterlydividendof$0.08percommonshare,payableonMarch15,2016.In2015,thedividendpaidwas$0.32percommonshare(quarterlypaymentsof$0.08percommonshare).In2014,thedividendpaidwas$0.32percommonshare(quarterlypaymentsof$0.08percommonshare).In2013,thedividendpaidwas$0.88percommonshare(quarterlypaymentsof$0.22percommonshare).AlthoughtheCompanyexpectstocontinuepayingacashdividend,futuredividendswillbeatthediscretionoftheBoardandwillbesubjecttofactorssuchastheCompany'searnings,financialconditionandcapitalrequirements.TheCompany'sbankcreditfacilitycontainsacovenantthatrestrictstheCompany'sabilitytodeclareorpaydividendsifcertaineventsofdefaultunderthebankcreditfacilityhaveoccurredandarecontinuing.
DESCRIPTION OF CAPITAL STRUCTURE TheCompany'sauthorizedcapitalconsistsofanunlimitednumberofsharesofoneclassdesignatedascommonshares.AlloutstandingcommonsharesoftheCompanyarefullypaidandnon-assessable.Theholdersofthecommonsharesareentitledtoonevotepershareatmeetingsofshareholdersandtoreceivedividendsif,asandwhendeclaredbythedirectorsoftheCompany.Intheeventofvoluntaryorinvoluntaryliquidation,dissolutionorwinding-upoftheCompany,afterpaymentofalloutstandingdebts,theremainingassetsoftheCompanyavailablefordistributionwouldbedistributedrateablytotheholdersofthecommonshares.HoldersofthecommonsharesoftheCompanyhavenopre-emptive,redemption,exchangeorconversionrights.TheCompanymaynotcreateanyclassorseriesofsharesormakeanymodificationtotheprovisionsattachingtotheCompany'scommonshareswithouttheaffirmativevoteoftwo-thirdsofthevotescastbytheholdersofthecommonshares.
RATINGS TheratingoftheCompany'snotes(the"Notes")issuedundertheNotePurchaseAgreements(asdefinedunder"MaterialContracts–NotePurchaseAgreements")bytheratingagencyDominionBondRatingService("DBRS")asatDecember31,2015isBBB(low)withastableoutlook.
DBRS'slong-termcreditratingsareonaratingscalethatrangesfromAAAtoD,whichrepresentstherangefromhighesttolowestqualityofsecuritiesrated.DBRS'sBBBratingassignedtotheCompany'sNotesisthefourthhighestofthetenratingcategoriesforlong-termdebt.Debtsecuritiesrated"BBB"areofadequatecreditquality,andthecapacityforthepaymentoffinancialobligationsisconsideredacceptable.However,theobligorisfairlysusceptibletoadversechangesinfinancialandeconomicconditions,ortheremaybeotheradverseconditionspresentwhichreducethestrengthoftheobligor.Areferenceto"high"or"low"reflectstherelativestrengthwithintheratingcategory.DBRShasalsoassignedastableoutlooktotherating,whichindicatesthedirectionDBRSconsiderstheratingisheadedshouldpresenttrendscontinue.
TheCompanyunderstandsthattheratingisbasedon,amongotherthings,informationfurnishedtoDBRSbytheCompanyandinformationobtainedbyDBRSfrompubliclyavailablesources.ThecreditratinggiventotheCompany'sNotesbyDBRSisnotarecommendationtobuy,holdorselldebtinstrumentssincesuchratingdoesnotcommentastomarketpriceorsuitabilityforaparticularinvestor.Thereisnoassurancethatanyratingwillremainineffectforanygivenperiodoftimeorthatanyratingwillnotberevisedorwithdrawnentirelybyaratingagencyinthefutureif,initsjudgment,circumstancessowarrant.Creditratingsareintendedtoprovideinvestorswith:(i)anindependentmeasureofthecreditqualityofanissueofsecurities;(ii)anindicationofthelikelihoodofrepaymentforanissueofsecurities;and(iii)anindicationofthecapacityandwillingnessoftheissuertomeetitsfinancialobligationsinaccordancewiththetermsofthosesecurities.ThecreditratingaccordedtotheNotesmaynotreflectthepotentialimpactofallrisksonthevalueofdebtinstruments,includingrisksrelatedtomarketorotherfactorsdiscussedinthisAIF.IfDBRSlowersthecreditratingonthe
98 AGNICO EAGLE ANNUAL INFORMATION FORM
Notes,particularlyadowngradebelowinvestmentgrade,itcouldadverselyaffecttheCompany'scostoffinancingandaccesstoliquidityandcapital.Seealso"RiskFactors".
MARKET FOR SECURITIES Common Shares
TheCompany'scommonsharesarelistedandtradedontheTSXandontheNewYorkStockExchange(the"NYSE")underthesymbol"AEM".OnMarch15,2016theclosingpriceofthecommonshareswasC$47.84ontheTSXand$35.77ontheNYSE.
ThefollowingtablesetsforththehighandlowsalepricesandtheaveragedailytradingvolumefortheCompany'scommonsharesontheTSXandtheNYSEsinceJanuary1,2015.
TSX NYSE
High (C$)
Low (C$)
Average Daily
VolumeHigh
($)Low ($)
Average Daily Volume
2015 January 43.33 28.32 1,388,630 34.36 24.19 3,678,679
February 43.70 37.70 882,847 34.78 29.95 2,560,368
March 41.07 34.30 783,142 33.00 26.90 2,213,522
April 38.98 35.40 843,464 32.24 28.18 2,106,896
May 41.69 36.36 905,772 34.89 30.08 2,054,470
June 40.95 35.08 727,489 32.82 28.15 1,621,640
July 38.07 27.86 920,818 30.10 21.40 2,785,944
August 36.54 27.63 1,146,806 27.91 21.00 3,970,144
September 34.82 28.15 1,054,256 26.14 21.22 3,757,598
October 39.57 32.48 1,176,610 30.69 24.47 3,449,670
November 37.28 33.00 756,635 28.39 24.80 2,278,844
December 39.08 34.80 779,011 29.15 24.93 2,057,544
2016 January 42.67 37.07 1,133,064 30.29 26.10 2,994,987
February 51.49 40.68 1,248,981 37.24 28.95 3,523,566
March(toMarch15) 48.78 44.07 1,330,000 36.79 32.87 3,156,848
AGNICO EAGLE 99 ANNUAL INFORMATION FORM
DIRECTORS AND OFFICERS OF THE COMPANY Directors
ThefollowingisabriefbiographyofeachoftheCompany'sdirectors:
Dr.LeanneM.Baker,ofSebastopol,California,isanindependentdirectorofAgnicoEagle.FromNovember2011untilJune2013,Dr.BakerwasthePresidentandChiefExecutiveOfficerofSutterGoldMiningInc.Previously,Dr.BakerwasemployedbySalomonSmithBarneywhereshewasoneofthetop-rankedminingsectorequityanalystsintheUnitedStates.Dr.BakerisagraduateoftheColoradoSchoolofMines(M.S.andPh.D.inmineraleconomics).Dr.BakerhasbeenadirectorofAgnicoEaglesinceJanuary1,2003,andisalsoadirectorofSutterGoldMiningInc.(aminingexplorationcompanytradedontheTSX-VandtheOTCQX),ReunionGoldCorporation(aminingexplorationcompanytradedontheTSX-V)andMcEwenMiningInc.(agoldandsilverproducingcompanytradedontheNYSEArcaandtheTSX).Area of expertise: CorporateFinanceandMineralEconomics.
SeanBoyd,CPA,CA,ofToronto,Ontario,istheVice-ChairmanandChiefExecutiveOfficerandadirectorofAgnicoEagle.Mr.BoydhasbeenwithAgnicoEaglesince1985.PriortohisappointmentasVice-ChairmanandChiefExecutiveOfficerinApril2015,Mr.BoydservedasVice-Chairman,PresidentandChiefExecutiveOfficerfrom2012to2015,Vice-ChairmanandChiefExecutiveOfficerfrom2005to2012andasPresidentandChiefExecutiveOfficerfrom1998to2005,Vice-PresidentandChiefFinancialOfficerfrom1996to1998,TreasurerandChiefFinancialOfficerfrom1990to1996,SecretaryTreasurerduringaportionof1990andComptrollerfrom1985to1990.PriortojoiningAgnicoEaglein1985,hewasastaffaccountantwithClarksonGordon(Ernst&Young).Mr.BoydisaCharteredAccountantandagraduateoftheUniversityofToronto(B.Comm.).Mr.BoydhasbeenadirectorofAgnicoEaglesinceApril14,1998.Area of expertise: ExecutiveManagementandFinance.
MartineA.Celej,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Ms.CelejiscurrentlyaVice-President,InvestmentAdvisorwithRBCDominionSecuritiesandhasbeenintheinvestmentindustrysince1989.SheisagraduateofVictoriaCollegeattheUniversityofToronto(B.A.(Honours)).Ms.CelejhasbeenadirectorofAgnicoEaglesinceFebruary14,2011.Area of expertise: InvestmentManagement.
RobertJ.Gemmell,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Gemmellspent25yearsasaninvestmentbankerintheUnitedStatesandinCanada.Mostrecently,hewasPresidentandChiefExecutiveOfficerofCitigroupGlobalMarketsCanadaanditspredecessorcompanies(SalomonBrothersCanadaandSalomonSmithBarneyCanada)from1996to2008.Inaddition,hewasamemberoftheGlobalOperatingCommitteeofCitigroupGlobalMarketsfrom2006to2008.Mr.GemmellisagraduateofCornellUniversity(B.A.),OsgoodeHallLawSchool(LL.B.)andtheSchulichSchoolofBusiness(M.B.A.).Mr.GemmellhasbeenadirectorofAgnicoEaglesinceJanuary1,2011.Area ofexpertise: CorporateFinanceandBusinessStrategy.
MelLeiderman,FCPA,FCA,TEP,ICD.D,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Mr.LeidermanistheseniorpartneroftheTorontoaccountingfirmLiptonLLP,CharteredAccountants.HeisagraduateoftheUniversityofWindsor(B.A.)andisacertifieddirectoroftheInstituteofCorporateDirectors(ICD.D).HehasbeenadirectorofAgnicoEaglesinceJanuary1,2003andisalsoadirectorandachairmanoftheAuditCommitteeofMorguardNorthAmericanResidentialREIT.Area of expertise: AuditandAccounting.
DeborahMcCombe,P.Geo.ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Mrs.McCombeisthePresidentandCEOofRoscoePostleAssociatesInc.,aminingconsultantfirm("RPA").Shehasover30years'ofinternationalexperienceinexplorationprojectmanagement,feasibilitystudies,reserveestimation,duediligencestudiesandvaluationstudies.PriortojoiningRPA,Ms.McCombewasChiefMiningConsultantfortheOntarioSecuritiesCommissionandwasinvolvedinthedevelopmentandimplementationofNI43-101.SheisactivelyinvolvedinindustryassociationsasamemberoftheCommitteeforMineralReservesInternationalReportingStandards–(CIM);PresidentoftheAssociationofProfessionalGeoscientistsofOntario(2010–2011);aDirectoroftheProspectorsandDevelopersAssociationofCanada(1999–2011);aCIMDistinguishedLectureronNI43-101;amemberoftheCIMStandingCommitteeonReserveDefinitions;amemberoftheCanadianSecuritiesAdministratorsMiningTechnicalAdvisoryandMonitoringCommittee;andaGuestLecturerattheSchulichSchoolofBusiness(M.B.A.)inGlobalMineManagementatYorkUniversity.Ms.McCombeholdsadegreeinGeologyfromtheUniversityofWesternOntario.Ms.McCombehasbeenadirectorofAgnicoEaglesinceFebruary12,2014.Area of expertise: ExecutiveManagementandMining.
JamesD.Nasso,ICD.D,ofToronto,Ontario,isChairmanoftheBoardofDirectorsandanindependentdirectorofAgnicoEagle.Mr.Nassoisnowretired.Mr.NassoisagraduateofSt.FrancisXavierUniversity(B.Comm.)andisacertifieddirectoroftheInstituteofCorporateDirectors(ICD.D).Mr.NassohasbeenadirectorofAgnicoEaglesinceJune27,1986.Area of expertise: ManagementandBusinessStrategy.
100 AGNICO EAGLE ANNUAL INFORMATION FORM
Dr.SeanRiley,ofAntigonish,NovaScotia,isanindependentdirectorofAgnicoEagle.Nowretired,Dr.RileyservedasPresidentofSt.FrancisXavierUniversityfrom1996to2014.Priorto1996,hiscareerwasinfinanceandmanagement,firstincorporatebankingandlaterinmanufacturing.Dr.RileyisagraduateofSt.FrancisXavierUniversity(B.A.(Honours))andofOxfordUniversity(M.Phil,D.Phil,InternationalRelations).Dr.RileyhasbeenadirectorofAgnicoEaglesinceJanuary1,2011.Area of expertise :ManagementandBusinessStrategy.
J.MerfynRoberts,CA,ofLondon,England,isanindependentdirectorofAgnicoEagle.Mr.Roberts,nowretired,wasafundmanagerandinvestmentadvisorformorethan25yearsandhasbeencloselyassociatedwiththeminingindustry.From2007untilhisretirementin2011,hewasaseniorfundmanagerwithCQSManagementLtd.inLondon.Mr.RobertsisagraduateofLiverpoolUniversity(B.Sc.,Geology)andOxfordUniversity(M.Sc.,Geochemistry)andisamemberoftheInstituteofCharteredAccountantsinEnglandandWales.Mr.RobertshasbeenadirectorofAgnicoEaglesinceJune17,2008,andisalsoadirectorandamemberoftheAuditCommitteeofEasternPlatinumLimitedandNewportExplorationLimitedandadirectorofBlackheathResourcesInc.Area of expertise: InvestmentManagement.
JamieSokalsky,CPA,CA,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Sokalskyhasover20years'experienceasaseniorexecutiveintheminingindustry,mostrecentlyasChiefExecutiveOfficerandPresidentofBarrickGoldCorporation("Barrick")fromJune2012toSeptember2014,andasChiefFinancialOfficerofBarrickfrom1999toJune2012andExecutiveVicePresidentofBarrickfromApril2004toJune2012.Priortoenteringtheminingindustry,Mr.Sokalskyservedfor10yearsatGeorgeWestonLimitedandbeganhisprofessionalcareeratErnst&WhinneyCharteredAccountants(KPMG).Mr.SokalskyisgraduateofLakeheadUniversity(B.Comm.(Honours)).Mr.SokalskyhasbeenadirectorofAgnicoEaglesinceJune2,2015,andisalsotheChairmanoftheBoardofDirectorsofProbeMetalsInc.andadirectorofPengrowthEnergyCorporationandRoyalGold,Inc.Area of expertise: ExecutiveManagement,FinanceandAccounting.
HowardR.Stockford,P.Eng.,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Mr.Stockfordisaretiredminingexecutivewith50yearsofexperienceintheindustry.Mostrecently,hewasExecutiveVice-PresidentofAurResourcesInc.("Aur")andadirectorofAurfrom1984untilAugust2007,whenitwastakenoverbyTeckComincoLimited.Mr.StockfordhaspreviouslyservedasPresidentoftheCIMandisamemberoftheAssociationofProfessionalEngineersofOntario,theProspectorsandDevelopersAssociationofCanadaandtheSocietyofEconomicGeologists.Mr.StockfordisagraduateoftheRoyalSchoolofMines,ImperialCollege,LondonUniversity,U.K.(B.Sc.,MiningGeology).Mr.StockfordhasbeenadirectorofAgnicoEaglesinceMay6,2005.Area of expertise: ExecutiveManagementandMining.
PerttiVoutilainen,M.Sc.,M.Eng.,ofEspoo,Finland,isanindependentdirectorofAgnicoEagle.Mr.Voutilainenisaminingindustryveteran.Until2005,hewastheChairmanoftheboardofdirectorsofRiddarhyttanResourcesAB.Previously,Mr.VoutilainenwastheChairmanoftheboardofdirectorsandChiefExecutiveOfficerofKansallisBankingGroupandPresidentafteritsmergerwithUnionBankofFinlanduntilhisretirementin2000.HewasalsoemployedbyOutokumpuCorp.,Finland'slargestminingandmetalscompany,for26years,includingasChiefExecutiveOfficerfor11years.Mr.VoutilainenholdsthehonorarytitleofMiningCounselor(Bergsrad),whichwasawardedtohimbythePresidentoftheRepublicofFinlandin2003.Mr.VoutilainenisagraduateofHelsinkiUniversityofTechnology(M.Sc.),HelsinkiUniversityofBusinessAdministration(M.Sc.)andPennsylvaniaStateUniversity(M.Eng.).HehasbeenadirectorofAgnicoEaglesinceDecember13,2005.Area of expertise: MiningandFinance.
Theby-lawsofAgnicoEagleprovidethatdirectorswillholdofficeforatermexpiringatthenextannualmeetingofshareholdersofAgnicoEagleoruntiltheirsuccessorsareelectedorappointedorthepositionisvacated.TheBoardannuallyappointstheofficersofAgnicoEagle,whoaresubjecttoremovalbyresolutionoftheBoardatanytime,withorwithoutcause(intheabsenceofawrittenagreementtothecontrary).
Committees
ThemembersoftheAuditCommitteeareDr.LeanneM.Baker(Chair),MelLeiderman,Dr.SeanRileyandMr.JamieSokalsky.
ThemembersoftheCompensationCommitteeareRobertJ.Gemmell(Chair),MartineA.Celej,J.MerfynRobertsandHowardR.Stockford.
ThemembersoftheCorporateGovernanceCommitteearePerttiVoutilainen(Chair),JamesD.NassoandJ.MerfynRoberts.
ThemembersoftheHealth,Safety,EnvironmentalandSustainableDevelopmentCommitteeareDeborahMcCombe(Chair),JamesD.NassoandHowardR.Stockford.
AGNICO EAGLE 101 ANNUAL INFORMATION FORM
Officers
ThefollowingisabriefbiographyofeachoftheCompany'sofficers(forMr.Boyd,see"DirectorsandOfficersoftheCompany–Directors"):
AmmarAl-Joundi,ofToronto,Ontario,isPresidentofAgnicoEagle,apositionhehasheldsinceApril6,2015.FromSeptember2010toJune2012,Mr.Al-JoundiwasSeniorVice-PresidentandChiefFinancialOfficerofAgnicoEagle.PriortoreturningtoAgnicoEaglein2015,Mr.Al-JoundiservedinvariousrolesatBarrick,includingasChiefFinancialOfficerfromJuly2012toFebruary2015,SeniorExecutiveVicePresidentfromJuly2014toFebruary2015andExecutiveVicePresidentfromJuly2012toJuly2014.PriortojoiningAgnicoEaglein2010,Mr.Al-Joundispent11yearsatBarrickservinginvariousseniorfinancialroles,includingSeniorVicePresidentofCapitalAllocationandBusinessStrategy,SeniorVicePresidentofFinance,andExecutiveDirectorandChiefFinancialOfficerofBarrickSouthAmerica.Priortojoiningtheminingindustry,Mr.Al-JoundiservedasVicePresident,StructuredFinanceatCitibank,Canada.Mr.Al-JoundiisagraduateofWesternUniversity(M.B.A.(Honours))andtheUniversityofToronto(BASc(MechanicalEngineering)).
DonaldG.Allan,CPA,CA, ofToronto,Ontario,isSeniorVice-President,CorporateDevelopmentofAgnicoEagle,apositionhehasheldsinceDecember14,2006.Priortothat,Mr.AllanhadbeenVice-President,CorporateDevelopmentsinceMay6,2002.Priortothat,Mr.Allanspent16yearsasaninvestmentbankercoveringtheminingandnaturalresourcessectorswiththefirmsSalomonSmithBarneyandMerrillLynch.Mr.AllanisagraduateoftheAmosTuckSchool,DartmouthCollege(M.B.A.)andtheUniversityofToronto(B.Comm.).Mr.AllanisalsoqualifiedasaCharteredAccountant.
AlainBlackburn,P.Eng.,ofOakville,Ontario,isSeniorVice-President,ExplorationofAgnicoEagle,apositionhehasheldsinceDecember14,2006.Priortothat,Mr.BlackburnhadbeenVice-President,ExplorationsinceOctober1,2002.Priortothat,Mr.BlackburnservedasAgnicoEagle'sManager,CorporateDevelopmentfromJanuary1999andExplorationManagerfromSeptember1996toJanuary1999.Mr.BlackburnjoinedAgnicoEaglein1988asChiefGeologistattheLaRondemine.Mr.BlackburnisagraduateofUniversitéduQuebecdeChicoutimi(P.Eng.)andUniversitéduQuebecenAbitibi-Temiscamingue(M.Sc.).
PickluDatta,CPA,CA,ofToronto,OntarioisSeniorVice-President,TreasuryandFinanceofAgnicoEagle,apositionhehasheldsinceOctober24,2012.Mr.DattawaspreviouslyVice-President,Treasurerandpriortothat,hewasVice-President,ControllerofAgnicoEagle.PriortojoiningAgnicoEaglein2005,Mr.DattaworkedatPhilipMorrisCompaniesinNewYorkCityforapproximatelyeightyearsandthetechnologyindustryforthreeyearsinvariousfinancialmanagementroles.Mr.DattaisagraduateoftheUniversityofToronto(B.Comm.)andacquiredhisCharteredAccountancydesignationbyarticlingwithPricewaterhouseCoopers.
LouiseGrondin,Ing.P.Eng.,ofToronto,Ontario,isSeniorVice-President,Environment,SustainableDevelopmentandPeopleofAgnicoEagle,apositionshehasheldsinceFebruary2015.Priortothat,Ms.GrondinwasSeniorVice-President,EnvironmentandSustainableDevelopmentandbeforethatshewasVice-President,EnvironmentandSustainableDevelopment.PriortoheremploymentwithAgnicoEagle,Ms.GrondinworkedforBillitonCanadaLtd.asManagerEnvironment,HumanResourcesandSafety.Ms.GrondinisagraduateoftheUniversityofOttawa(B.Sc.)andMcGillUniversity(M.Sc.).Ms.GrondinisamemberoftheProfessionalEngineersofOntariosince1984andoftheOrdredesIngénieursduQuébecsince2001.
TimHaldane,P.Eng.,ofTucson,Arizona,isSeniorVice-President,Operations–USA&LatinAmericaofAgnicoEagle,apositionhehasheldsinceFebruary15,2014.Priortothat,Mr.HaldanewasSeniorVice-President,LatinAmerica.PriortojoiningAgnicoEagleinMay2006,hewasVicePresident,DevelopmentforGlamisGoldInc.Mr.HaldanehasparticipatedinnumerousacquisitionanddevelopmentactivitiesinNorthAmericaandCentralAmerica,mostrecentlyincludingthePinosAltos,CrestonMascotaandLaIndiapropertiesforAgnicoEagle.HeisagraduateoftheMontanaSchoolofMinesandTechnology(B.S.MetallurgicalEngineering)andhas35yearsofexperienceinthepreciousmetalsandbasemetalsindustries.
R.GregoryLaing, ofOakville,Ontario,isGeneralCounsel,SeniorVice-President,LegalandCorporateSecretaryofAgnicoEagle,apositionhehasheldsinceDecember14,2006,priortowhich,Mr.LainghadbeenGeneralCounsel,Vice-President,LegalandCorporateSecretarysinceSeptember19,2005.Priortothat,hewasVicePresident,LegalofGoldcorpInc.fromOctober2003toJune2005andGeneralCounsel,VicePresident,LegalandCorporateSecretaryofTVXGoldInc.fromOctober1995toJanuary2003.HeworkedasacorporatesecuritieslawyerfortwoprominentTorontolawfirmspriortothat.Mr.LaingisagraduateoftheUniversityofWindsor(LL.B.)andQueen'sUniversity(B.A.).
MarcHubertLegault,P.Eng,ofMississauga,Ontario,isSeniorVice-President,ProjectEvaluationsofAgnicoEagle,apositionhehasheldsinceFebruary2012.Priortothat,hewasVice-President,ProjectDevelopmentsince2007.Mr.LegaulthasbeenwithAgnicoEaglesince1988,whenhewashiredasanexplorationgeologistinVald'Or,Quebec.
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Sincethen,hehastakenonsuccessivelyincreasingresponsibilitiesintheCompany'sexploration,minegeologyandprojectevaluationactivities.Mr.LegaultisagraduateofCarletonUniversity(M.Sc.inGeology)andQueen'sUniversity(B.Sc.H.inGeologicalEngineering).Mr.LegaultisaregisteredProfessionalEngineer.
JeanRobitaille,ofOakville,Ontario,isSeniorVice-President,BusinessStrategyandTechnicalServicesofAgnicoEagle,apositionhehasheldsinceFebruary2014.Priortothat,heheldvariouspositionswithAgnicoEaglesince1988,mostrecentlyasSeniorVice-President,TechnicalServicesandProjectDevelopment,Vice-President,Metallurgy&Marketing,GeneralManager,Metallurgy&MarketingandMillSuperintendentandProjectManagerfortheexpansionoftheLaRondemill.PriortojoiningAgnicoEagle,Mr.RobitailleworkedasametallurgistwithTeckMiningGroup.Mr.RobitailleisadirectorofPershimcoResourcesInc.(aminingexplorationcompany)tradedontheTSX-VandhasservedontheboardofdirectorsoftheCanadaMiningInnovationCouncilsinceMay2014.Mr.RobitailleisamininggraduateoftheCollegedel'AbitibiTémiscaminguewithaspecialtyinmineralprocessing.
DavidSmith,P.Eng.,ofToronto,Ontario,isSeniorVice-President,FinanceandChiefFinancialOfficerofAgnicoEagle,apositionhehasheldsinceOctober24,2012.Priortothat,hewasSeniorVice-President,StrategicPlanningandInvestorRelations,apositionheheldsinceJanuary1,2011,priortothathewasSeniorVice-President,InvestorRelationsandpriortothathewasVice-President,InvestorRelations.HestartedworkininvestorrelationsatAgnicoEagleinFebruary2005.Priortothat,Mr.Smithwasamininganalystformorethanfiveyearsandheldavarietyofminingengineeringpositions,bothinCanadaandabroad.Mr.SmithisaCharteredDirector,amemberoftheBoardofDirectorsoftheDenverGoldGroupandanalternateDirectoroftheWorldGoldCouncil.HeisagraduateofQueen'sUniversity(B.Sc.)andtheUniversityofArizona(M.Sc.).Mr.SmithisalsoaProfessionalEngineer.
YvonSylvestre,ofMississauga,Ontario,isSeniorVice-President,Operations–Canada&Europe,apositionhehasheldsinceFebruary2014.Priortothat,hewasSeniorVice-President,Operations,Vice-President,Construction,MineGeneralManagerattheGoldexdivisionofAgnicoEagleand,previously,MillSuperintendentattheLaRondedivision.Mr.SylvestreisaMetallurgicalEngineeringTechnologygraduatefromCambrianCollegeinSudbury.Followinggraduation,heservedasMetallurgistandMillSuperintendentattheJouteldivisionofAgnicoEagleandalsoheldthepositionofMillSuperintendentattheTrollusdivisionofInmetMiningCorporation.
Shareholdings of Directors and Officers
AsatMarch15,2016,thedirectorsandofficersofAgnicoEagle,asagroup,beneficiallyowned,orcontrolledordirected,directlyorindirectly,anaggregateof427,077commonsharesorapproximately0.2%ofthe220,993,605issuedandoutstandingcommonshares.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
NodirectororofficeroftheCompanyis,orwithintenyearspriortothedatehereofhasbeen,adirector,chiefexecutiveofficerorchieffinancialofficerofanycompany(includingtheCompany)that:(i)wassubjecttoaceasetradeorder,anordersimilartoaceasetradeorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecuritieslegislation,thatwasineffectforaperiodofmorethan30consecutivedays,thatwasissuedwhilethedirectororofficerwasactinginthecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer;or(ii)wassubjecttoaceasetradeorder,anordersimilartoaceasetradeorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecuritieslegislation,thatwasineffectforaperiodofmorethan30consecutivedays,thatwasissuedafterthedirectororofficerceasedtobeadirector,chiefexecutiveofficerorchieffinancialofficerandwhichresultedfromaneventthatoccurredwhilethatpersonwasactinginthecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer.
Exceptasdescribedbelow,nodirectororofficeroftheCompany,orashareholderholdingasufficientnumberofsecuritiesoftheCompanytoaffectmateriallythecontroloftheCompany:(i)is,orwithintenyearspriortothedatehereofhasbeen,adirectororofficerofanycompany(includingtheCompany)that,whilethatpersonwasactinginthatcapacity,orwithinayearofthatpersonceasingtoactinthatcapacity,becamebankrupt,madeaproposalunderanylegislationrelatingtobankruptcyorinsolvencyorwassubjecttoorinstitutedanyproceedings,arrangementorcompromisewithcreditorsorhadareceiver,receivermanagerortrusteeappointedtoholditsassets;or(ii)has,withintenyearspriortothedatehereof,becomebankrupt,madeaproposalunderanylegislationrelatingtobankruptcyorinsolvency,orbecomesubjecttoorinstitutedanyproceedings,arrangementorcompromisewithcreditors,orhadareceiver,receivermanagerortrusteeappointedtoholdtheassetsofthedirector,officerorshareholder.
NodirectororofficeroftheCompany,orashareholderholdingasufficientnumberofsecuritiesoftheCompanytoaffectmateriallythecontroloftheCompany,hasbeensubjectto:(i)anypenaltiesorsanctionsimposedbyacourtrelatingtosecuritieslegislationorbyasecuritiesregulatoryauthorityorhasenteredintoasettlementagreementwithasecurities
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regulatoryauthority;or(ii)anyotherpenaltiesorsanctionsimposedbyacourtorregulatorybodythatwouldlikelybeconsideredimportanttoareasonableinvestorinmakinganinvestmentdecision.
Mr.Leiderman,adirectoroftheCompany,wasadirectorofColossusMineralsInc.("Colossus")fromAugust1,2011untilhisresignationonNovember13,2013.OnFebruary7,2014,ColossusfiledaproposaltoitscreditorsundertheBankruptcy and Insolvency Act (Canada).OnFebruary25,2014,theresolutionapprovinganamendedproposalwasapprovedbytherequisitemajorityofColossus'creditors.OnApril30,2014,Colossusannouncedthatithadcompletedtheimplementationofthecourt-approvedproposal.
Conflicts of Interest
TothebestoftheCompany'sknowledge,andotherthanasdisclosedinthisAIF,therearenoknownexistingorpotentialconflictsofinterestbetweentheCompanyandanydirectororofficeroftheCompany,exceptthatcertainofthedirectorsandofficersoftheCompanyserveasdirectorsandofficersofotherpubliccompaniesandthereforeitispossiblethataconflictmayarisebetweentheirdutiesasadirectororofficeroftheCompanyandtheirdutiesasadirectororofficerofsuchothercompany.
AUDIT COMMITTEE TheAuditCommitteehastwoprimaryobjectives.ThefirstistoadvisetheBoardofDirectorsinitsoversightresponsibilitiesregarding:
• thequalityandintegrityoftheCompany'sfinancialreportsandinformation;
• theCompany'scompliancewithlegalandregulatoryrequirements;
• theeffectivenessoftheCompany'sinternalcontrolsforfinance,accounting,internalaudit,ethicsandlegalandregulatorycompliance;
• theperformanceoftheCompany'sauditing,accountingandfinancialreportingfunctions;
• thefairnessofrelatedpartyagreementsandarrangementsbetweentheCompanyandrelatedparties;and
• theindependentauditors'performance,qualificationsandindependence.
ThesecondprimaryobjectiveoftheAuditCommitteeistopreparethereportsrequiredtobeincludedinmanagementinformationcircularsoftheCompanyinaccordancewithapplicablelawsortherulesofapplicablesecuritiesregulatoryauthorities.
TheBoardhasadoptedanAuditCommitteecharter,whichprovidesthateachmemberoftheAuditCommitteemustbeunrelatedtoandindependentfromtheCompanyasdeterminedbytheBoardinaccordancewiththeapplicablerequirementsofthelawsgoverningtheCompany,thestockexchangesonwhichtheCompany'ssecuritiesarelistedandapplicablesecuritiesregulatoryauthorities.Inaddition,eachmembermustbefinanciallyliterateandatleastonememberoftheAuditCommitteemustbeanauditcommitteefinancialexpert,asthetermisdefinedintherulesoftheSEC.TheAuditCommitteecharterisattachedasScheduleAtothisAIF.
Composition of the Audit Committee
TheAuditCommitteeiscomposedentirelyofdirectorswhoareunrelatedtoandindependentfromtheCompany(currently,Dr.Baker(Chair),Mr.Leiderman,Dr.RileyandMr.Sokalsky),eachofwhomisfinanciallyliterate,asthetermisusedintheCSA'sMultilateralInstrument52-110–Audit Committees .Inaddition,Mr.LeidermanandMr.SokalskyareCharteredAccountants;theBoardhasdeterminedthatbothofthemqualifyasanauditcommitteefinancialexperts,asthetermisdefinedintherulesoftheSEC.
Relevant Education and Experience
TheeducationandexperienceofeachmemberoftheAuditCommitteeissetoutunder"DirectorsandOfficersoftheCompany–Directors"above.
Pre-Approval Policies and Procedures
In2003,theAuditCommitteeestablishedapolicytopre-approveallservicesprovidedbytheCompany'sindependentpublicauditor,Ernst&YoungLLP.TheAuditCommitteedetermineswhichnon-auditservicestheindependentauditorsareprohibitedfromprovidingandauthorizespermittednon-auditservicestobeperformedbytheindependentauditorsto
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theextentthoseservicesarepermittedbySOXandotherapplicablelegislationandregulations.AllfeespaidtoErnst&YoungLLPin2015werepre-approvedbytheAuditCommittee.
External Auditor Service Fees
Ernst&YoungLLPhasservedastheCompany'sindependentpublicauditorforeachofthefiscalyearsendedDecember31,2015and2014.FeespaidtoErnst&YoungLLPin2015and2014aresetoutbelow.
Year Ended December 31,
2015 2014 (C$ thousands) Auditfees 2,305 2,489
Audit-relatedfees(1) 222 23
Taxfees(2) 308 1,475
Allotherfees(3) 214 752
Total (4) 3,049 4,739
Notes:
(1) AuditrelatedfeesconsistoffeespaidforassuranceandrelatedservicesperformedbytheauditorsthatarereasonablyrelatedtotheperformanceoftheauditoftheCompany'sfinancialstatements.Thisincludesconsultationwithrespecttofinancialreporting,accountingstandardsandcompliancewithSection404ofSOX.
(2) Taxfeeswerepaidforprofessionalservicesrelatingtotaxcompliance,taxadviceandtaxplanning.Theseservicesincludedthereviewoftaxreturnsandtaxplanningandadvisoryservicesinconnectionwithinternationalanddomestictaxationissues.
(3) AllotherfeeswerepaidforservicesotherthantheservicesdescribedaboveandincludefeesforprofessionalservicesrenderedbytheauditorsinconnectionwiththeconversiontoIFRSaswellthetranslationofsecuritiesregulatoryfilingsrequiredtocomplywithsecuritieslawsincertainCanadianjurisdictions.
(4) Nootherfeeswerepaidtoauditorsintheprevioustwoyears.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS OnMarch8,2012andApril10,2012,aNoticeofActionandStatementofClaim(collectively,the"OntarioClaim")wereissuedbyWilliamLeslie,AFALivforsakringsaktiebolagandcertainotherentitiesagainsttheCompanyandcertainofitscurrentandformerofficersanddirectors.OnSeptember27,2012,theplaintiffsissuedaFreshasAmendedStatementofClaim.TheFreshasAmendedStatementofClaimallegedthattheCompany'spublicdisclosureconcerningwaterflowissuesattheGoldexminewasmisleading.TheOntarioClaimwasissuedbytheplaintiffsonbehalfofallpersonsandentitieswhoacquiredsecuritiesoftheCompanyduringtheperiodMarch26,2010toOctober19,2011,excludingpersonsresidentordomiciledintheProvinceofQuebecatthetimetheypurchasedoracquiredsuchsecurities.Theplaintiffssought,amongotherthings,damagesofC$250million.OnApril17,2013anOrderwasgrantedonconsentcertifyingtheactionandgrantingleavefortheclaimsunderSection138oftheSecurities Act (Ontario)toproceed.
OnMarch28,2012,theCompanyandcertainofitscurrentandformerofficers,someofwhomalsoareorweredirectorsoftheCompany,werenamedasrespondentsinaMotionforLeavetoInstituteaClassActionandfortheAppointmentofaRepresentativePlaintiff(the"QuebecMotion").Theactionwasonbehalfofallpersonsandentitieswithfewerthan50employeesresidentinQuebecwhoacquiredsecuritiesoftheCompanybetweenMarch26,2010andOctober19,2011.TheproposedclassactionwasfordamagesofC$100millionarisingasaresultofallegedlymisleadingdisclosurebytheCompanyconcerningitsoperationsattheGoldexmine.OnOctober15,2012,theplaintiffsservedanamendedQuebecMotionseekingleavetocommenceanactionundertheSecurities Act (Quebec)inadditiontoseekingauthorizationtoinstituteaclassaction.OnOctober1,2013,theQuebeccourtcertifiedtheclassactionontermsidenticaltothosesetoutintheconsentOrdergrantedinOntarioonApril17,2013.
InSeptember2015,theCompanyparticipatedinamediationwiththeplaintiffsinrespectofboththeOntarioandQuebecactionsandreachedanagreementinprincipletosettletheOntarioandQuebecactionsforC$17.0millionwithoutanyadmissionofliability.Aspartofthesettlement,theproceedingsagainsttheCompanyandtheindividualdefendantshavebeendismissed.ThesettlementwasapprovedbytheOntarioandQuebeccourtsonFebruary11,2016andFebruary1,2016,respectively.TheamountofthesettlementhasbeencoveredbytheinsurerstotheCompany.
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INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS OtherthanasdescribedinthisAIF,sinceJanuary1,2014,nodirector,officeror10%shareholderoftheCompanyoranyassociateoraffiliateofanysuchpersonorshareholder,hasorhadanymaterialinterest,directorindirect,inanytransactionthathasmateriallyaffectedorwillmateriallyaffecttheCompanyoranyofitssubsidiaries.
TRANSFER AGENT AND REGISTRAR TheregistrarandtransferagentfortheCompany'scommonsharesisComputershareTrustCompanyofCanada,Toronto,Ontario.
MATERIAL CONTRACTS TheCompanybelievesthefollowingcontractsconstitutetheonlymaterialcontractstowhichitisaparty.
Credit Facility
OnAugust4,2011,theCompanyamendedandrestateditscreditfacilitywithagroupoffinancialinstitutionsthatprovidesa$1.2billionunsecuredrevolvingbankcreditfacility(the"CreditFacility").TheCreditFacilitywassubsequentlyamendedonJuly20,2012,September8,2014andSeptember30,2015.TheCreditFacilitymaturesandallindebtednessthereunderisdueandpayableonJune22,2020.TheCompany,withtheconsentoflendersrepresentingatleast662/3%oftheaggregatecommitmentsundertheCreditFacility,mayextendthetermoftheCreditFacilityforadditionalone-yearterms.TheCreditFacilityisavailableinmultiplecurrenciesthroughprimerateandbaserateadvances,pricedattheapplicablerateplusamarginthatrangesfrom0.45%to1.75%,dependingontheCompany`screditrating,andthroughLIBORadvances,bankers'acceptancesandlettersofcredit,pricedattheapplicablerateplusamarginthatrangesfrom1.45%to2.75%dependingontheCompany'screditrating.ThelendersundertheCreditFacilityareeachpaidastandbyfeeataratethatrangesfrom0.29%to0.55%oftheundrawnportionofthefacility,dependingontheCompany`screditrating.TheCreditFacilityprovidesforanuncommittedaccordionfeaturewhichpermitstheCompanytorequestanincreaseintheprincipalamountofthefacilitybyupto$300million.NoincreasetotheprincipalamountofthefacilitywilloccurpursuanttotheaccordionfeatureunlessoneormorelendersagreetoincreasetheircommitmentsoranewlenderagreestocommitmentsundertheCreditFacility.PaymentandperformanceoftheCompany'sobligationsundertheCreditFacilityareguaranteedbyeachofitsmaterialsubsidiariesandcertainofitsothersubsidiaries(the"Guarantors"and,togetherwiththeCompany,eachan"Obligor").
TheCreditFacilitycontainscovenantsthatlimit,amongotherthings,theabilityofanObligorto:
• incuradditionalindebtedness;
• payordeclaredividendsormakeotherrestricteddistributionsorpaymentsinrespectoftheCompany'sequitysecuritiesifaneventofdefaulthasoccurredandiscontinuing;
• makesalesorotherdispositionsofmaterialassets;
• createliensonitsexistingorfutureassets,otherthanpermittedliens;
• enterintotransactionswithaffiliatesotherthantheObligors,exceptonacommerciallyreasonablebasisasifitweredealingwithsuchpersonatarm'slength;
• makeanyinvestmentorloanotherthan:investmentsinorloanstobusinessesrelatedtominingorabusinessancillaryorcomplementarytomining;investmentsincashequivalents;orcertaininter-companyinvestmentsorloans;
• enterintoormaintaincertainderivativeinstruments;and
• amalgamateorotherwisetransferitsassets.
TheCompanyisalsorequiredtomaintainatotalnetdebttoEBITDAratiobelowaspecifiedmaximumvalueaswellasaminimumtangiblenetworth.EventsofdefaultundertheCreditFacilityinclude,amongotherthings:
• thefailuretopayprincipalwhendueandpayableorinterest,feesorotheramountspayablewithinfivebusinessdaysofsuchamountsbecomingdueandpayable;
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• thebreachbytheCompanyofanyfinancialcovenant;
• thebreachbyanyObligorofanyofitsobligationsorundertakingsundertheCreditFacilityorrelatedagreementsordocumentsthatisnotcuredwithin30daysafterwrittennoticeofthebreachhasbeengiventotheCompany;
• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$50millionormore;
• achangeofcontroloftheCompanywhichisdefinedtooccurupon(a)theacquisition,directlyorindirectly,byanymeanswhatsoever,byanyperson,orgroupofpersonsactingjointlyorinconcert,(collectively,an"offeror")ofbeneficialownershipof,orthepowertoexercisecontrolordirectionover,orsecuritiesconvertibleorexchangeableinto,anysecuritiesoftheCompanycarryinginaggregate(assumingtheexerciseofallsuchconversionorexchangerightsinfavouroftheofferor)morethan50%oftheaggregatevotesrepresentedbythevotingstockthenissuedandoutstandingorotherwiseentitlingtheofferortoelectamajorityoftheboardofdirectorsoftheCompany,or(b)thereplacementbywayofelectionorappointmentatanytimeofone-halformoreofthetotalnumberofthethenincumbentmembersoftheboardofdirectorsoftheCompany,ortheelectionorappointmentofnewdirectorscomprisingone-halformoreofthetotalnumberofmembersoftheboardofdirectorsinofficeimmediatelyfollowingsuchelectionorappointment;unless,inanysuchcase,thenominationofsuchdirectorsforelectionortheirappointmentisapprovedbytheboardofdirectorsoftheCompanyinofficeimmediatelyprecedingsuchnominationorappointmentincircumstanceswheresuchnominationorappointmentismadeotherthanasaresultofadissidentpublicproxysolicitation,whetheractualorthreatened(a"ChangeofControl");and
• variouseventsrelatingtothebankruptcyorinsolvencyorwinding-up,liquidationordissolutionorcessationofbusinessofanyObligor.
AsatMarch15,2016,therewasapproximately$266millionintheaggregatedrawnundertheCreditFacility(includingoutstandinglettersofcredit).
Letter of Credit Facilities
BNS Letter of Credit Facility
OnJune26,2012,theCompanyenteredintoaletterofcreditfacilitywithTheBankofNovaScotia,aslender,providingforaC$150millionuncommittedletterofcreditfacility(the"BNSLetterofCreditFacility").ThroughaseriesofamendmentstotheBNSLetterofCreditFacilityfromNovember5,2013toOctober28,2015,theCompanyandthelenderincreasedthemaximumaggregateamountthatmaybeoutstandingundertheBNSLetterofCreditFacilitytoC$250million.
UnderthetermsoftheBNSLetterofCreditFacility,theCompanymayrequesttobeissuedoneormorelettersofcreditinamaximumaggregateamountoutstandingatanytimenotexceedingC$250million.TheBNSLetterofCreditFacilitymaybeusedbytheCompanytosupport(a)reclamationobligationsoftheCompanyoritssubsidiariesor(b)non-financialorperformanceobligationsoftheCompanyoritssubsidiariesthatarenotdirectlyrelatedtoreclamationobligations.IftheCompanyfailstopayanyamountofareimbursementobligationundertheBNSLetterofCreditFacility,includinganyinterestthereon,onthedatesuchamountisdue,theoverdueamountwillbearinterestatequalto2%greaterthantheprimerate(ascalculatedundertheBNSLetterofCreditFacility).PaymentandperformanceoftheCompany'sobligationsundertheBNSLetterofCreditFacilityareguaranteedbytheGuarantors.
EventsofdefaultundertheBNSLetterofCreditFacilityinclude,amongotherthings:
• thefailuretopayanyamountdrawnundertheBNSLetterofCreditFacilitywithinthreebusinessdaysofwhennotifiedordemandedbythelender;
• thebreachbyanyObligorofanyobligationorundertakingundertheLetterofCreditFacilityorguaranteeprovidedpursuanttotheBNSLetterofCreditFacility;
• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$50millionormore;and
• aChangeofControl.
TheBNSLetterofCreditFacilityprovidesthatuponaneventofdefault,TheBankofNovaScotiamaydeclareimmediatelydueandpayableallamountsdrawnundertheBNSLetterofCreditFacility.
AsatMarch15,2016,therewasapproximatelyC$239millionintheaggregatedrawnundertheBNSLetterofCreditFacility.
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TD Letter of Credit Facility
OnSeptember23,2015,theCompanyenteredintoastandbyletterofcreditfacilitywithTheToronto-DominionBank,aslender,providingforaC$150millionuncommittedletterofcreditfacility(asamended,the"TDLetterofCreditFacility").
UnderthetermsoftheTDLetterofCreditFacility,theCompanymayrequesttobeissuedoneormorelettersofcreditinamaximumaggregateamountoutstandingatanytimenotexceedingC$150million.TheTDLetterofCreditFacilitymaybeusedbytheCompanytosupport(a)thereclamationobligationsoftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestor(b)theperformanceobligations(otherthanwithrespecttoindebtednessforborrowedmoney)oftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestthatarenotdirectlyrelatedtoreclamationobligations.
PaymentandperformanceoftheCompany'sobligationsundertheTDLetterofCreditFacilityaresupportedbyanaccountperformancesecurityguaranteeissuedbyExportDevelopmentCanada("EDC")infavourofthelender.EDCissuedtheguaranteeinconnectionwithadeclarationandindemnitydatedSeptember23,2015betweenEDCandtheObligors(assupplemented,the"EDCIndemnity").PursuanttotheEDCIndemnity,eachoftheObligorshasagreedtoindemnifyEDCagainstallclaimsanddemandsmadeinrespectofanyindemnitybondingproductissuedbyEDCpursuanttotheEDCIndemnity.
AsatMarch15,2016,therewasapproximatelyC$97millionintheaggregatedrawnundertheTDLetterofCreditFacility.
Note Purchase Agreements
OnApril7,2010,theCompanyenteredintoanotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$115million6.13%SeriesAseniornotesdue2017,$360million6.67%SeriesBseniornotesdue2020and$125million6.77%SeriesCseniornotesdue2022(the"2010NotePurchaseAgreement").OnJuly24,2012,theCompanyenteredintoanothernotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$100million4.87%SeriesAseniornotesdue2022and$100million5.02%SeriesBseniornotesdue2024(the"2012NotePurchaseAgreement").OnSeptember30,2015,theCompanyenteredintothe2015NotePurchaseAgreement,providingfortheissuanceof$50million4.15%seniornotesdue2025(togetherwiththe2010NotePurchaseAgreementandthe2012NotePurchaseAgreement,the"NotePurchaseAgreements").
PaymentandperformanceoftheCompany'sobligationsundertheNotePurchaseAgreements,thenotesissuedpursuanttheretoandtheobligationsoftheGuarantorsundertheguaranteesareguaranteedbytheGuarantors.
TheNotePurchaseAgreementscontainrestrictivecovenantsthatlimit,amongotherthings,theabilityofanObligorto:
• enterintotransactionswithaffiliatesotherthantheObligors,exceptonacommerciallyreasonablebasisupontermsnolessfavourabletotheObligorthanwouldbeobtainableinacomparablearm'slengthtransaction;
• amalgamateorotherwisetransferitsassets;
• carryonbusinessotherthanthoserelatedtominingorabusinessancillaryorcomplementarytomining;
• engageinanydealingsortransactionswithanypersonorentityidentifiedundercertainanti-terrorismregulations;
• createliensonitsexistingorfutureassets,otherthanpermittedliens;
• incursubsidiaryindebtednesswheretheObligorisasubsidiaryoftheCompany;and
• makesalesorotherdispositionsofmaterialassets.
TheCompanyisalsorequiredtomaintainthesamefinancialratiosandthesameminimumtangiblenetworthundertheNotePurchaseAgreementsasundertheCreditFacility.EventsofdefaultundertheNotePurchaseAgreementsinclude,amongotherthings:
• thefailuretopayprincipalormakewholeamountswhendueandpayableorinterest,feesorotheramountspayablewithinfivebusinessdaysofsuchamountsbecomingdueandpayable;
• thebreachbyanyObligorofanyothertermorcovenantthatisnotcuredwithin30businessdaysaftertheearlierofwrittennoticeofthebreachhavingbeengiventotheCompanyoractualknowledgeofthebreachisobtained;
• thefindingthatanyrepresentationorwarrantymadebyanObligorwasfalseorincorrectinanymaterialrespectonthedateasofwhichitwasmade;
108 AGNICO EAGLE ANNUAL INFORMATION FORM
• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$50millionormore;and
• variouseventsrelatingtothebankruptcyorinsolvencyorwinding-up,liquidationordissolutionorcessationofbusinessofanyObligor.
TheNotePurchaseAgreementsprovidethat,uponcertaineventsofdefault,thenotesautomaticallybecomedueandpayablewithoutanyfurtheraction.Inaddition,theNotePurchaseAgreementscontaina"MostFavoredLender"clausewhichactstoincorporateintotheNotePurchaseAgreementsanygraceperiodsuponaneventofdefaultthatareshorterintheCreditFacilitythanintheNotePurchaseAgreements.
INTERESTS OF EXPERTS Ernst&YoungLLP,theauditorsoftheCompany,hasadvisedtheCompanythatitisindependentoftheCompanyinaccordancewiththeRulesofProfessionalConductoftheInstituteofCharteredAccountantsofOntarioandhascompliedwiththeSEC'srulesonauditorindependence.
ADDITIONAL INFORMATION AdditionalinformationrelatingtotheCompanycanbefoundonSEDARatwww.sedar.com ,ontheSEC'swebsiteatwww.sec.gov andontheCompany'swebsiteatwww.agnicoeagle.com .Additionalinformation,includingdirectors'andofficers'remunerationandindebtedness,principalholdersoftheCompany'ssecuritiesandsecuritiesauthorizedforissuanceunderequitycompensationplans,iscontainedintheCompany'smanagementinformationcirculardatedMarch11,2016relatingtotheannualandspecialmeetingofshareholdersoftheCompanyscheduledforApril29,2016.AdditionalfinancialinformationisprovidedintheAnnualFinancialStatementsandAnnualMD&A.
AGNICO EAGLE 109 ANNUAL INFORMATION FORM
SCHEDULE "A" AUDIT COMMITTEE CHARTER OF THE COMPANY
ThisChartershallgoverntheactivitiesoftheauditcommittee(the"AuditCommittee")oftheboardofdirectors(the"BoardofDirectors")ofAgnicoEagleMinesLimited(the"Corporation").
I. PURPOSE OF THE AUDIT COMMITTEE
TheAuditCommitteeshall:(a)assisttheBoardofDirectorsinitsoversightresponsibilitieswithrespectto:(i)theintegrityoftheCorporation'sandit'ssubsidiaries'financialstatements,(ii)theCorporation'scompliancewithlegalandregulatoryrequirements,(iii)theexternalauditor'squalificationsandindependence,and(iv)theperformanceoftheCorporation'sinternalandexternalauditfunctions;and(b)prepareanyreportoftheAuditCommitteerequiredtobeincludedintheCorporation'sannualreportorproxymaterial.TheheadoftheCorporation'sinternalauditfunctionandtheexternalauditorsshallhavedirectandreadyaccesstothechairoftheAuditCommittee(the"Chair").
TheAuditCommitteeshallhavetheauthoritytodelegatetooneormoreofitsmembers,responsibilityfordevelopingrecommendationsforconsiderationbytheAuditCommitteewithrespecttoanyofthemattersreferredtointhisCharter.
II. COMPOSITION
TheAuditCommitteeshallbecomprisedofaminimumofthreedirectors.NomemberoftheAuditCommitteeshallbeanofficeroremployeeoftheCorporationoranyofitsaffiliatesforthepurposesoftheapplicablecorporatestatute.EachmemberoftheAuditCommitteeshallbeanunrelatedandindependentdirectorasdeterminedbytheBoardofDirectorsinaccordancewiththeapplicablerequirementsofthelawsgoverningtheCorporation,theapplicablestockexchangesonwhichtheCorporation'ssecuritiesarelistedandapplicablesecuritiesregulatoryauthorities.(SeeScheduleAforrequirements.)
EachmemberoftheAuditCommitteeshallbefinanciallyliterate.UnlesstheAuditCommitteeshallotherwisedetermine,amemberoftheAuditCommitteeshallbeconsideredtobefinanciallyliterateifheorshehastheabilitytoreadandunderstandasetoffinancialstatementsthatpresentabreadthandlevelofcomplexityofaccountingissuesthataregenerallycomparabletothebreadthandcomplexityoftheissuesthatcanreasonablybeexpectedtoberaisedbytheCorporation'sfinancialstatements.
AtleastonememberoftheAuditCommitteeshallbeafinancialexpert.(SeeScheduleBfordefinition.)
ThemembersoftheAuditCommitteeshallbeappointedbytheBoardofDirectorsannuallyatthefirstmeetingoftheBoardofDirectorsafterameetingoftheshareholdersatwhichdirectorsareelectedandshallserveuntil:thenextannualmeetingoftheshareholders;theyresign;theirsuccessorsaredulyappointed;orsuchmemberisremovedfromtheAuditCommitteebytheBoardofDirectors.TheBoardofDirectorsshalldesignateonememberoftheAuditCommitteeastheChairor,ifitfailstodoso,themembersoftheAuditCommitteeshallappointtheChairfromamongitsmembers.
NomemberoftheAuditCommitteemayearnfeesfromtheCorporationoranyofitssubsidiariesotherthandirectorsfees(whichfeesmayincludecash,shares,restrictedshareunitsand/orotherin-kindconsiderationordinarilyavailabletodirectors,aswellasalloftheregularbenefitsthatotherdirectorsreceive).Forgreatercertainty,nomemberoftheAuditCommitteeshallacceptanyconsulting,advisoryorothercompensatoryfeefromtheCorporation.
III. MEETINGS
TheAuditCommitteeshallmeetatleastquarterlyormorefrequentlyasrequired.
AsapartofeachmeetingoftheAuditCommitteeatwhichtheAuditCommitteerecommendsthattheBoardofDirectorsapprovetheannualauditedfinancialstatementsoratwhichtheAuditCommitteereviewsthequarterlyfinancialstatements,theAuditCommitteeshallmeetinaseparatesessionwiththeexternalauditorand,ifdesired,withmanagementand/ortheinternalauditor.Inaddition,theAuditCommitteeortheChairshallmeetwithmanagementquarterlytoreviewtheCorporation'sfinancialstatementsasdescribedinSectionIV.5belowandtheAuditCommitteeoradesignatedmemberoftheAuditCommitteeshallmeetwiththeexternalauditorstoreviewtheCorporation'sfinancialstatementsonaquarterlyorotherregularbasisastheAuditCommitteemaydeemappropriate.
TheAuditCommitteeshallseektoactonthebasisofconsensus,butanaffirmativevoteofamajorityofmembersoftheAuditCommitteeparticipatinginanymeetingoftheAuditCommitteeshallbesufficientfortheadoptionofanyresolution.
AGNICO EAGLE A-1 ANNUAL INFORMATION FORM
IV. RESPONSIBILITIES AND DUTIES
TheAuditCommittee'sprimaryresponsibilitiesareto:
General
1. reviewandassesstheadequacyofthisCharteratleastannuallyand,wherenecessaryordesirable,recommendchangestotheBoardofDirectors;
2. reporttotheBoardofDirectorsregularlyatsuchtimesastheChairmaydeterminetobeappropriatebutnotlessfrequentlythanfourtimesperyear;
3. followtheprocessestablishedforallcommitteesoftheBoardofDirectorsforassessingtheAuditCommittee'sperformance;
Documents/ReportsReview
4. reviewtheCorporation'sfinancialstatementsandrelatedmanagement'sdiscussionandanalysis,AnnualInformationForm("AIF")andrelatedForm40-F,AnnualReportandanyotherannualreportsorotherfinancialinformationtobesubmittedtoanygovernmentalbodyorthepublic,includinganycertification,report,opinionorreviewrenderedbytheexternalauditorsbeforetheyareapprovedbytheBoardofDirectorsandpubliclydisclosed;
5. reviewwiththeCorporation'smanagementandtheexternalauditors,theCorporation'squarterlyfinancialstatementsandrelatedmanagement'sdiscussionandanalysis,beforetheyarereleased;
6. ensurethatadequateproceduresareinplaceforthereviewoftheCorporation'sdisclosureoffinancialinformationextractedorderivedfromtheCorporation'sfinancialstatementsotherthanthedisclosurereferredtointhetwoimmediatelyprecedingparagraphsandperiodicallyassesstheadequacyofsuchprocedures;
7. reviewtheeffectsofregulatoryandaccountinginitiatives,aswellasoff-balancesheetstructures,onthefinancialstatementsoftheCorporation;
8. reviewwiththeCorporation'smanagementanypressreleaseoftheCorporationwhichcontainsfinancialinformation(payingparticularattentiontotheuseofany"proforma"or"adjusted"non-GAAPinformation);
9. reviewandassess,onaquarterlybasis,management'sriskassessmentandriskmanagementstrategiesincludinghedgingandderivativestrategies;
ExternalAuditors
10. recommendexternalauditorsnominationstotheBoardofDirectorstobeputbeforetheshareholdersforappointmentand,asnecessary,theremovalofanyexternalauditorinofficefromtimetotime;
11. approvethefeesandothercompensationtobepaidtotheexternalauditors;
12. pre-approveallsignificantnon-auditengagementstobeprovidedtotheCorporationwiththeexternalauditors;
13. requiretheexternalauditorstosubmittotheAuditCommittee,onaregularbasis(atleastannually),aformalwrittenstatementdelineatingallrelationshipsbetweentheexternalauditorsandtheCorporationanddiscusswiththeexternalauditorsanyrelationshipsthatmightaffecttheexternalauditors'objectivityandindependence;
14. recommendtotheBoardofDirectorsanyactionrequiredtoensuretheindependenceoftheexternalauditors;
15. advisetheexternalauditorsoftheirultimateaccountabilitytotheBoardofDirectorsandtheAuditCommittee;
16. overseetheworkoftheexternalauditorsengagedforthepurposeofpreparinganauditreportorperformingotheraudit,reviewandattestationservicesfortheCorporation;
17. evaluatethequalifications,performanceandindependenceoftheexternalauditorswhicharetoreportdirectlytotheAuditCommittee,including(i)reviewingandevaluatingtheleadpartnerontheexternalauditors'engagementwiththeCorporation,(ii)consideringwhethertheexternalauditors'qualitycontrolsareadequateandtheprovisionofpermittednon-auditservicesiscompatiblewithmaintainingtheexternalauditors'independence,(iii)determinetherotationoftheleadexternalauditpartnerandtheexternalauditfirm,and
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(iv)takeintoaccounttheopinionsofmanagementandtheinternalauditfunctioninassessingtheexternalauditors'qualifications,independenceandperformance;
18. presenttheAuditCommittee'sconclusionswithrespecttoitsevaluationofexternalauditorstotheBoardofDirectorsandtakesuchadditionalactiontosatisfyitselfofthequalifications,performanceandindependenceofexternalauditorsandmakefurtherrecommendationstotheBoardofDirectorsasitconsidersnecessary;
19. obtainandreviewareportfromtheexternalauditorsatleastannuallyregarding:theexternalauditors'internalquality-controlprocedures;materialissuesraisedbythemostrecentinternalquality-controlreview,orpeerreview,ofthefirm,orbyanyinquiryorinvestigationbygovernmentalorprofessionalauthoritieswithintheprecedingfiveyearsrespectingoneormoreexternalauditscarriedoutbythefirm;anystepstakentodealwithanysuchissues;andallrelationshipsbetweentheexternalauditorsandtheCorporation;
20. establishpoliciesfortheCorporation'shiringofemployeesorformeremployeesoftheexternalauditors;
InternalAuditor
21. receiveregularquarterlyreportsfromtheCorporation'sinternalauditoronthescopeandmaterialresultsofitsinternalauditactivities,basedontheInternalAuditCharter;
22. reviewanddiscusstheCorporation'sCodeofBusinessConductandEthicsandfraudpolicyandtheactionstakentomonitorandenforcecompliancewiththeCorporation'sCodeofBusinessConductandEthicsandfraudpolicy;
23. establishproceduresfor:
i) thereceipt,retentionandtreatmentofcomplaintsregardingaccounting,internalcontrolsorauditingmatters;
ii) theconfidential,anonymoussubmissionofconcernsregardingquestionableaccounting,internalcontrolandauditingmatters;and
iii) compliancewithapplicableforeigncorruptpracticeslegislation,guidelinesandpractices.
FraudPreventionandDetection
24. overseeandassessmanagement'scontrolsandprocessestopreventanddetectfraud;
25. receiveperiodicreportsfromtheinternalauditoronfindingsoffraudaswellassignificantfindingsregardingthedesignand/oroperationofinternalcontrolsandmanagementresponses;
FinancialReportingProcess
26. periodicallydiscusstheintegrity,completenessandaccuracyoftheCorporation'sinternalcontrolsandthefinancialstatementswiththeexternalauditorsintheabsenceoftheCorporation'smanagement;
27. inconsultationwiththeexternalauditors,reviewtheintegrityoftheCorporation'sfinancialinternalandexternalreportingprocesses;
28. considertheexternalauditors'assessmentoftheappropriatenessoftheCorporation'sauditingandaccountingprinciplesasappliedinitsfinancialreporting;
29. reviewanddiscusswithmanagementandtheexternalauditorsatleastannuallyandapprove,ifappropriate,anymaterialchangestotheCorporation'sauditingandaccountingprinciplesandpracticessuggestedbytheexternalauditors,internalauditpersonnelormanagement;
30. reviewanddiscusswiththeChiefExecutiveOfficer("CEO")andtheChiefFinancialOfficer("CFO")theproceduresundertakeninconnectionwiththeCEOandCFOcertificationsfortheinterimandannualfilingswithapplicablesecuritiesregulatoryauthorities;
31. reviewdisclosuresmadebytheCEOandCFOduringtheircertificationprocessfortheannualandinterimfilingswithapplicablesecuritiesregulatoryauthoritiesaboutanysignificantdeficienciesinthedesignoroperationof
AGNICO EAGLE A-3 ANNUAL INFORMATION FORM
internalcontrolswhichcouldadverselyaffecttheCorporation'sabilitytorecord,process,summarizeandreportfinancialdataoranymaterialweaknessesintheinternalcontrols,andanyfraudinvolvingmanagementorotheremployeeswhohaveasignificantroleintheCorporation'sinternalcontrols;
32. establishregularandseparatesystemsofreportingtotheAuditCommitteebymanagementandtheexternalauditorsofanysignificantdecisionmadeinmanagement'spreparationofthefinancialstatements,includingthereportingoftheviewofmanagementandtheexternalauditorsastotheappropriatenessofsuchdecisions;
33. discussduringtheannualaudit,andreviewseparatelywitheachofmanagementandtheexternalauditors,anysignificantmattersarisingfromthecourseofanyaudit,includinganyrestrictionsonthescopeofworkoraccesstorequiredinformation;whetherraisedbymanagement,theheadofinternalauditortheexternalauditors;
34. resolveanydisagreementsbetweenmanagementandtheexternalauditorsregardingfinancialreporting;
35. reviewwiththeexternalauditorsandmanagementtheextenttowhichchangesorimprovementsinfinancialoraccountingpractices,asapprovedbytheAuditCommittee,havebeenimplementedatanappropriatetimesubsequenttotheimplementationofsuchchangesorimprovements;
36. retainanddeterminethecompensationofanyindependentcounsel,accountantsorotheradvisorstoassistinitsoversightresponsibilities(theAuditCommitteeshallnotberequiredtoobtaintheapprovaloftheBoardofDirectorsforsuchpurposes);
37. discussanymanagementorinternalcontrollettersorproposalstobeissuedbytheexternalauditorsoftheCorporation;
DisclosureControlsandProcedures
38. obtainandreviewthestatementofCorporateDisclosureControls,ProceduresandPoliciespreparedbythedisclosurecommitteeoftheBoardofDirectorsand,ifappropriate,approvethedisclosurecontrolsandproceduressetoutinsuchstatementandanychangesmadethereto;
39. receiveconfirmationfromtheCEOandCFOthatreportstobefiledwithCanadiansecuritiesregulatoryauthorities,theheUnitedStatesSecuritiesandExchangeCommissionandanyotherapplicableregulatoryagency:
(a) havebeenpreparedinaccordancewiththeCorporation'sdisclosurecontrolsandprocedures;and
(b) containnomaterialmisrepresentationsoromissionsandfairlypresents,inallmaterialrespects,thefinancialcondition,resultsofoperationsandcashflowasofandfortheperiodcoveredbysuchreports;
40. receiveconfirmationfromtheCEOandCFOthattheyhaveconcludedthatthedisclosurecontrolsandproceduresareeffectiveasoftheendoftheperiodcoveredbythereports;
41. discusswiththeCEOandCFOanyreasonsforwhichanyoftheconfirmationsreferredtointhetwoprecedingparagraphscannotbegivenbytheCEOandCFO;
LegalCompliance
42. confirmthattheCorporation'smanagementhastheproperreviewsysteminplacetoensurethattheCorporation'sfinancialstatements,reports,pressreleasesandotherfinancialinformationsatisfylegalrequirements;
43. reviewlegalcompliancematterswiththeCorporation'slegalcounsel;
44. reviewwiththeCorporation'slegalcounselanylegalmatterthattheAuditCommitteeunderstandscouldhaveasignificantimpactontheCorporation'sfinancialstatements;
45. conductorauthorizeinvestigationsintomatterswithintheAuditCommittee'sscopeofresponsibilities;
46. performanyotheractivitiesinaccordancewiththisCharter,theCorporation'sby-lawsandgoverninglawthattheAuditCommitteeortheBoardofDirectorsdeemsnecessaryorappropriate;
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RelatedPartyTransactions
47. reviewthefinancialreportingofanytransactionbetweentheCorporationandanyofficer,directororother"relatedparty"asdefinedwithintheCorporation'sAccountingPolicy(includinganyshareholderholdinganinterestgreaterthan5%intheCorporation)oranyentityinwhichanysuchpersonhasafinancialinterest;
ReportingandPowers
48. reporttotheBoardofDirectorsfollowingeachmeetingoftheAuditCommitteeandatsuchothertimesastheBoardofDirectorsmayconsiderappropriate;and
49. exercisesuchotherpowersandperformsuchotherdutiesandresponsibilitiesasareincidentaltothepurposes,dutiesandresponsibilitiesspecifiedhereinandasmayfromtimetotimebedelegatedtotheAuditCommitteebytheBoardofDirectors.
V. LIMITATION OF RESPONSIBILITY
WhiletheAuditCommitteehastheresponsibilitiesandpowersprovidedbythisCharter,itisnotthedutyoftheAuditCommitteetoplanorconductauditsortodeterminethattheCorporation'sfinancialstatementsarecompleteandaccurateandareinaccordancewithinternationalfinancialreportingstandards.Thisistheresponsibilityofmanagement(withrespecttowhomtheAuditCommitteeperformsanoversightfunction)andtheexternalauditors.
AGNICO EAGLE A-5 ANNUAL INFORMATION FORM
SCHEDULE A TO THE AUDIT COMMITTEE CHARTER OF THE CORPORATION
UnrelatedDirector
UndertheTorontoStockExchangerules,"independentdirector"meansadirectorwho:
(a) isnotamemberofmanagementandisfreefromanyinterestandanybusinessorotherrelationshipwhichintheopinionoftheExchangecouldreasonablybeperceivedtomateriallyinterferewiththedirector'sabilitytoactinthebestinterestofthecompany;and
(b) isabeneficialholder,directlyorindirectly,orisanomineeorassociateofabeneficialholder,collectivelyof10%orlessofthevotesattachingtoallissuedandoutstandingsecuritiesoftheapplicant.
TheExchangewillconsiderallrelevantfactorsinassessingtheindependenceofthedirector.Asageneralrule,thefollowingpersonswouldnotbeconsideredanindependentdirector:
i) apersonwhoiscurrently,orhasbeenwithinthepastthreeyears,anofficer,employeeoforserviceprovidertothecompanyoranyofitssubsidiariesoraffiliates;or
ii) apersonwhoisanofficer,employeeorcontrollingshareholderofacompanythathasamaterialbusinessrelationshipwiththeapplicant.
IndependentDirector
NationalInstrument–52-110
Adirectoris"independent"ifheorshehasnodirectorindirectmaterialrelationshipwiththeissuer.ThefollowingsummarizesthemajoraspectsofNationalInstrument52-110–Audit Committees ("NI52-110")relatingtotheindependenceofadirector.
Certain Relationships Automatically Exclude a Director From Serving on the Audit Committee
Ifadirector(oramemberofthedirector'simmediatefamily)hasaspecifiedtypeofrelationshipwiththeissuer(whichincludestheissuer'sparentandsubsidiaryentities),thenthatdirectorwillnotbeconsideredindependent.NI52-110assumesthatthefollowingpersonshaveamaterialrelationshipwiththeissuer(andarethereforeprecludedfromsittingontheauditcommittee):
Employment Relationships
• anindividualwhois,orhasbeenwithinthelastthreeyears,employeeorexecutiveofficeroftheissueroranindividualwhoseimmediatefamilymemberis,orhasbeenwithinthelastthreeyears,anexecutiveofficeroftheissuer;
• anindividualwho,orwhoseimmediatefamilymember,is,orhasbeenwithinthelastthreeyears,anexecutiveofficerofanotherentityifanyoftheissuer'scurrentexecutiveofficersservesorservedatthatsametimeonthecompensationcommitteeofthatentity;
• anindividualwhoreceived,orwhoseimmediatefamilymemberwhoisemployedasanexecutiveofficeroftheissuerwhoreceived,morethanC$75,000indirectcompensationfromtheissuerduringany12monthperiodwithinthelastthreeyears(otherthanremunerationforactingasamemberoftheboardofdirectorsoranyboardcommitteeoftheissuerandfixedamountsreceivedunderaretirementplanforpriorservicewiththeissuerthatisnotcontingentoncontinuedservice);
Relationships with Internal or External Auditors
• anindividualwhoisapartneroremployeeoftheissuer'sinternalorexternalauditororanindividualwhowaswithinthelastthreeyearsapartneroremployeeoftheissuer'sinternalorexternalauditorandpersonallyworkedontheissuer'sauditwithinthattime;
• anindividualwhosespouse,minorchildorstepchild,orchildorstepchildwhosharesahomewiththeindividual,is(i)apartneroftheissuer'sinternalorexternalauditor,(ii)anemployeeoftheissuer'sinternalorexternalauditorandparticipatesinitsaudit,assuranceortaxcompliance(butnottaxplanning)practice,(iii)oranindividualwho
A-6 AGNICO EAGLE ANNUAL INFORMATION FORM
waswithinthelastthreeyearsapartneroremployeeoftheissuer'sinternalorexternalauditorandpersonallyworkedontheissuer'sauditwithinthattime;
Advisory or Consulting Relationships
• anindividualwhoaccepts,directlyorindirectly,anyconsulting,advisoryorothercompensatoryfeefromtheissueroranysubsidiaryentityoftheissuer,otherthanremunerationforactingasamemberoftheboardoranyboardcommitteeorasapart-timechairorvice-chairoftheboardoranyboardcommittee,includingtheindirectacceptanceofafeebyanindividual'sspouse,minorchildorstepchild,orchildorstepchildwhosharestheindividual'shomeorbyanentityinwhichsuchindividualisapartner,member,officersuchasamanagingdirectororexecutiveofficerandwhichprovidesaccounting,consulting,legal,investmentbankingorfinancialadvisoryservicestotheissueroranysubsidiaryentityoftheissuer;and
Relationships with Affiliated Entities
• anindividualwhoisanaffiliatedentityoftheissueroranyofitssubsidiaryentities,whereaffiliatedentitymeansapersonthathasthedirectorindirectpowertodirectorcausethedirectionofmanagementandthepoliciesoftheissueroranyofitssubsidiaryentities,whetherthroughownershipofvotingsecuritiesorotherwise(otherthananindividualwhoowns,directlyorindirectly,tenpercentoflessofanyclassofvotingsecuritiesoftheissuerandisnotanexecutiveofficeroftheissuer)oranindividualwhoisbothadirectorandanemployeeofanaffiliatedentityoranexecutiveofficer,generalpartnerormanagingmemberofanaffiliatedentity.
The Materiality of Other Relationships is for the Board to Determine
Ifadirectorhasadirectorindirectrelationshipwiththeissuer,thenitwillbematerialif,intheviewoftheissuer'sboardofdirectors,therelationshipcouldreasonablyinterferewiththeexerciseofthedirector'sindependentjudgement.Theserelationshipsmayincludecommercial,charitable,industrial,banking,consulting,legal,accountingorfamilialrelationshipsoranyotherrelationshipthattheboardconsiderstobematerial.
Exceptions to the Independence Requirement
NI52-110providesexemptionsfromtheindependencerequirementsfor:
• auditcommitteememberswhoceasetobeindependentforreasonsoutsidetheircontrol(butonlyforalimitedperiodoftime);
• directorsappointedtotheauditcommitteetofillavacancyresultingfromthedeath,disabilityorresignationofamemberoftheauditcommittee(butonlyforalimitedperiodoftime).Thedirectorappointedtofillthevacancyisalsotemporarilyexemptfromthefinancialliteracyrequirements;
• auditcommitteemembers,underexceptionalandlimitedcircumstancesasdeterminedbytheboardinitsreasonablyjudgment,whoarenotconsultantsoradvisors,notanaffiliatedentityoftheissueroranyofitssubsidiaryentities,notanemployeeorofficeroftheissueroranimmediatefamilymemberofsuchanddonotactaschairoftheauditcommittee(butonlyforamaximumperiodoftwoyears);and
• U.S.listedissuerscomplyingwiththeauditcommitteerequirementsoftheirU.S.exchangeorquotationsystem(providedtheymakethenecessarydisclosureintheirAIF(AnnualInformationForm).
NewYorkStockExchangeRules
UndertheNewYorkStockExchangerules,thefollowingrequirementsmustbemettoqualifyasan"IndependentDirector":
(a) nodirectorqualifiesas"independent"unlesstheboardofdirectorsaffirmativelydeterminesthatthedirectorhasnomaterialrelationshipwiththelistedcompany(eitherdirectlyorasapartner,shareholderorofficerofanorganizationthathasarelationshipwiththecompany).Companiesmustdisclosethesedeterminations.
(b) inaddition,thefollowingpersonsarenotindependent:
• anydirectorwhois(orwhohasanimmediatefamilymemberwhois)anexecutiveofficer,otherthanonaninterimbasis,ofthelistedcompany;
AGNICO EAGLE A-7 ANNUAL INFORMATION FORM
• anydirectorwhoreceives(orwhohasanimmediatefamilymemberwhoreceives)morethan$120,000peryearindirectcompensationfromthelistedcompany;
• anydirectorwhois(orwhohasanimmediatefamilymemberwhois,inaprofessionalcapacity)apartneroremployeeofthelistedcompany'sinternalorexternalauditor;
• anydirectorwhois(orwhohasanimmediatefamilymemberwhois)employedasanexecutiveofficerofanothercompanywhereanyoftheexecutivesofthelistedcompanyalsoservesorservedonthatothercompany'scompensationcommittee;and
• anydirectorwhoisanemployee(orwhohasanimmediatefamilymemberwhoisanexecutiveofficer)ofanothercompanythathasmadepaymentsto,orreceivedpaymentsfrom,thelistedcompanyforpropertyorserviceswhichexceedsthegreaterof$1millionor2%ofsuchothercompany'sconsolidatedgrossrevenues.
Three Year "Cooling Off" Period. Foreachofthecategoriesabovewhereadirectorisnot(orispresumednottobe)independent,thereisathree-year"coolingoff"period.Accordingly,theexistenceoftheprohibitedrelationshipatanytimeduringtheprecedingthreeyearsispresumedtoimpairindependence.
Sarbanes-OxleyAct
(a) In General .Eachmemberoftheauditcommitteeoftheissuershallbeamemberoftheboardofdirectorsoftheissuer,andshallotherwisebeindependent.
(b) Criteria .Inordertobeconsideredtobeindependentforpurposesofthisparagraph,amemberofanauditcommitteeofanissuermaynot,otherthaninhisorhercapacityasamemberoftheauditcommittee,theboardofdirectorsoranyotherboardcommittee:
• acceptanyconsulting,advisoryorothercompensatoryfeefromtheissuer;or
• beanaffiliatedpersonoftheissueroranysubsidiarythereof.
Exemption Authority. TheCommissionmayexemptfromtherequirementsofsubparagraph(b)aparticularrelationshipwithrespecttoauditcommitteemembers,astheCommissiondeterminesappropriateinlightofthecircumstances.
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SCHEDULE B TO THE AUDIT COMMITTEE CHARTER OF THE CORPORATION
AuditCommitteeFinancialExpert
An"auditcommitteefinancialexpert"mustpossessallofthefollowingattributes:
(a) anunderstandingofgenerallyacceptedaccountingprinciplesandfinancialstatements;
(b) theabilitytoassessthegeneralapplicationofsuchprinciplesinconnectionwiththeaccountingforestimates,accruals,andreserves;
(c) experiencepreparing,auditing,analyzingorevaluatingfinancialstatementsthatpresentabreadthandlevelofcomplexityofaccountingissuesthataregenerallycomparabletothebreathandcomplexityofissuesthatcanreasonablybeexpectedtoberaisedbytheissuer'sfinancialstatements,orexperienceactivelysupervisingoneormorepersonsengagedinsuchactivities;
(d) anunderstandingofinternalcontroloverandproceduresforfinancialreporting;and
(e) anunderstandingofauditcommitteefunctions.
Theauditcommitteefinancialexpertmustalsohaveacquiredthoseattributesthrough:
(a) educationandexperienceasaprincipalfinancialofficer,principalaccountingofficer,controller,publicaccountant,auditororexperienceinoneormorepositionsthatinvolvetheperformanceofsimilarfunctions;
(b) experienceactivelysupervisingaprincipalfinancialofficer,principalaccountingofficer,controller,publicaccountantorauditororpersonperformingsimilarfunctions;
(c) experienceoverseeingorassessingtheperformanceofcompaniesorpublicaccountantsforthepreparation,auditingorevaluationoffinancialstatements;or
(d) otherrelevantexperience.
"Activesupervision"meansthesupervisorparticipatedin,andcontributedto,theprocessofaddressingthesametypesofissuesrelatingtothepreparation,auditing,analysisandevaluationoffinancialstatementsasthepersonactuallyperformingthework.
AGNICO EAGLE B-1 ANNUAL INFORMATION FORM
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Exhibit99.1
AGNICOEAGLEMINESLIMITEDANNUALINFORMATIONFORMINTRODUCTORYNOTESNotetoInvestorsConcerningEstimatesofMineralReservesandMineralResourcesNotetoInvestorsConcerningCertainMeasuresofPerformanceSELECTEDFINANCIALDATAGLOSSARYOFSELECTEDMININGTERMSCORPORATESTRUCTUREDESCRIPTIONOFTHEBUSINESSGENERALDEVELOPMENTOFTHEBUSINESSOPERATIONSANDPRODUCTIONRISKFACTORSDIVIDENDSDESCRIPTIONOFCAPITALSTRUCTURERATINGSMARKETFORSECURITIESDIRECTORSANDOFFICERSOFTHECOMPANYAUDITCOMMITTEELEGALPROCEEDINGSANDREGULATORYACTIONSINTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONSTRANSFERAGENTANDREGISTRARMATERIALCONTRACTSINTERESTSOFEXPERTSADDITIONALINFORMATIONSCHEDULE"A"AUDITCOMMITTEECHARTEROFTHECOMPANYSCHEDULEATOTHEAUDITCOMMITTEECHARTEROFTHECORPORATIONSCHEDULEBTOTHEAUDITCOMMITTEECHARTEROFTHECORPORATION
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Exhibit 99.2
Annual Audited Consolidated Financial Statements(PREPAREDINACCORDANCEWITHINTERNATIONALFINANCIALREPORTINGSTANDARDS)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING TotheBoardofDirectors(the"Board")andShareholdersofAgnicoEagleMinesLimited:
WehaveauditedAgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingasofDecember31,2015,basedoncriteriaestablishedinInternal Control – Integrated Framework issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionin2013(the"COSOcriteria").AgnicoEagleMinesLimited'smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedintheaccompanyingmanagementcertificationreportoninternalcontroloverfinancialreporting.OurresponsibilityistoexpressanopiniononAgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingbasedonouraudit.
WeconductedourauditinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.
Acompany'sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatrevenuesandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany'sassetsthatcouldhaveamaterialeffectonthefinancialstatements.
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditionsorthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
Inouropinion,AgnicoEagleMinesLimitedmaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2015basedontheCOSOcriteria.
Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheetsofAgnicoEagleMinesLimitedasofDecember31,2015andDecember31,2014,andtheconsolidatedstatementsofincomeandcomprehensiveincome,equityandcashflowsforeachoftheyearsendedDecember31,2015andDecember31,2014,andourreportdatedMarch23,2016expressedanunqualifiedopinionthereon.
/s/ERNST&YOUNGLLPToronto,Canada CharteredProfessionalAccountantsMarch23,2016 LicensedPublicAccountants
2 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
MANAGEMENT CERTIFICATION ManagementofAgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.Internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,theCompany'sChiefExecutiveOfficerandChiefFinancialOfficerandeffectedbytheCompany'sBoard,managementandotherpersonnel,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
TheCompany'smanagement,includingtheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,assessedtheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember31,2015.Inmakingthisassessment,theCompany'smanagementusedthecriteriaoutlinedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissioninInternal Control – Integrated Framework issuedin2013.Basedonitsassessment,managementconcludedthat,asofDecember31,2015,theCompany'sinternalcontroloverfinancialreportingwaseffective.
TheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember31,2015hasbeenauditedbyErnst&YoungLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreportthatappearsherein.
Toronto,CanadaMarch23,2016
By /s/SEANBOYD
SeanBoydVice-Chairman and Chief Executive Officer
By /s/DAVIDSMITH
DavidSmithSenior Vice-President, Finance and Chief Financial Officer
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TotheBoardandShareholdersofAgnicoEagleMinesLimited:
WehaveauditedtheaccompanyingconsolidatedbalancesheetsofAgnicoEagleMinesLimitedasofDecember31,2015andDecember31,2014,andtherelatedconsolidatedstatementsofincomeandcomprehensiveincome,equityandcashflowsforeachoftheyearsendedDecember31,2015andDecember31,2014.ThesefinancialstatementsaretheresponsibilityoftheCompany'smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.
WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.
Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionofAgnicoEagleMinesLimitedatDecember31,2015andDecember31,2014andtheconsolidatedresultsofitsoperationsanditscashflowsforeachoftheyearsendedDecember31,2015andDecember31,2014inconformitywithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.
Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),AgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingasofDecember31,2015,basedoncriteriaestablishedinInternal Control – Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionin2013,andourreportdatedMarch23,2016expressedanunqualifiedopinionthereon.
/s/ERNST&YOUNGLLPToronto,Canada CharteredProfessionalAccountantsMarch23,2016 LicensedPublicAccountants
4 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
AGNICO EAGLE MINES LIMITED CONSOLIDATED BALANCE SHEETS (thousands of United States dollars, except share amounts)
As at December 31,
2015
As at December 31,
2014
ASSETS
Currentassets:
Cashandcashequivalents $ 124,150 $ 177,537
Short-terminvestments 7,444 4,621
Restrictedcash(note7) 685 33,122
Tradereceivables(notes6and18) 7,714 59,716
Inventories(note8) 461,976 446,660
Incometaxesrecoverable(note24) 817 1,658
Available-for-salesecurities(notes6and9) 31,863 56,468
Fairvalueofderivativefinancialinstruments(notes6and21) 87 4,877
Othercurrentassets(note10(a)) 194,689 123,401
Totalcurrentassets 829,425 908,060
Non-currentassets:
Restrictedcash(note7) 741 20,899
Goodwill(note5) 696,809 696,809
Property,plantandminedevelopment(note11) 5,088,967 5,155,865
Otherassets(note10(b)) 67,238 27,622
Totalassets $ 6,683,180 $ 6,809,255
LIABILITIES AND EQUITY
Currentliabilities:
Accountspayableandaccruedliabilities(note12) $ 243,786 $ 209,906
Reclamationprovision(note13) 6,245 6,769
Interestpayable(note15) 14,526 13,816
Incometaxespayable(note24) 14,852 19,328
Financeleaseobligations(note14(a)) 9,589 22,142
Currentportionoflong-termdebt(note15) 14,451 52,182
Fairvalueofderivativefinancialinstruments(notes6and21) 8,073 8,249
Totalcurrentliabilities 311,522 332,392
Non-currentliabilities:
Long-termdebt(note15) 1,118,187 1,322,461
Reclamationprovision(note13) 276,299 249,917
(i)
Deferredincomeandminingtaxliabilities(note24) 802,114 797,192
Otherliabilities(note16) 34,038 38,803
Totalliabilities 2,542,160 2,740,765
EQUITY
Commonshares(note17):
Outstanding–218,028,368commonsharesissued,less377,573sharesheldintrust 4,707,940 4,599,788
Stockoptions(notes17and19) 216,232 200,830
Contributedsurplus 37,254 37,254
Deficit (823,734) (779,382)
Accumulatedothercomprehensiveincome 3,328 10,000
Totalequity 4,141,020 4,068,490
Totalliabilitiesandequity $ 6,683,180 $ 6,809,255
Commitmentsandcontingencies(note26)
Note:
(i) AssetoutinNote5,certainpreviouslyreportedDecember31,2014consolidatedbalancesheetlineitemshavebeenupdatedtoreflectadjustedfinalestimatesoffairvaluerelatedtotheJune16,2014jointacquisitionofOsiskoMiningCorporation("Osisko"),nowCanadianMalarticCorporation.
OnbehalfoftheBoard:
SeanBoydCPA,CA,Director Dr.LeanneM.Baker,Director
See accompanying notes
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 5
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(thousands of United States dollars, except per share amounts)
Year Ended December 31,
2015 2014 REVENUES
Revenuesfromminingoperations(note18) $ 1,985,432 $ 1,896,766
COSTS, EXPENSES AND OTHER INCOME
Production(i) 995,295 1,004,559
Explorationandcorporatedevelopment 110,353 56,002
Amortizationofproperty,plantandminedevelopment(note11) 608,609 433,628
Generalandadministrative 96,973 118,771
Impairmentlossonavailable-for-salesecurities(note9) 12,035 15,763
Financecosts(note15) 75,228 73,393
Lossonderivativefinancialinstruments(note21) 19,608 6,156
Gainonsaleofavailable-for-salesecurities(note9) (24,600) (5,635)
Environmentalremediation(note13) 2,003 8,214
Foreigncurrencytranslation(gain)loss (4,728) 3,781
Otherexpenses(income) 12,028 (7,004)
Incomebeforeincomeandminingtaxes 82,628 189,138
Incomeandminingtaxesexpense(note24) 58,045 106,168
Netincomefortheyear $ 24,583 $ 82,970
Netincomepershare–basic(note17) $ 0.11 $ 0.43
Netincomepershare–diluted(note17) $ 0.11 $ 0.39
Cashdividendsdeclaredpercommonshare $ 0.32 $ 0.32
COMPREHENSIVE INCOME
Netincomefortheyear $ 24,583 $ 82,970
Othercomprehensiveincome(loss):
Itemsthatmaybesubsequentlyreclassifiedtonetincome:
Available-for-salesecuritiesandotherinvestments:
Unrealizedchangeinfairvalueofavailable-for-salesecurities 4,822 (720)
Reclassificationtoimpairmentlossonavailable-for-salesecurities(note9) 12,035 15,763
Reclassificationtogainonsaleofavailable-for-salesecurities(note9) (24,600) (5,635)
Incometaximpactofreclassificationitems(note24) 1,684 (1,668)
Incometaximpactofothercomprehensiveincome(loss)items(note24) (613) 119
(6,672) 7,859
Itemsthatwillnotbesubsequentlyreclassifiedtonetincome:
Pensionbenefitobligations:
Remeasurementlossesofpensionbenefitobligations(note16(a)) (205) (858)
Incometaximpact(note24) 32 233
(173) (625)
Othercomprehensiveincome(loss)fortheyear (6,845) 7,234
Comprehensiveincomefortheyear $ 17,738 $ 90,204
Note:
(i) Exclusiveofamortization,whichisshownseparately.
See accompanying notes
6 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF EQUITY (thousands of United States dollars, except share and per share amounts)
Common Shares Outstanding
Shares
Amount
Stock Options
Contributed Surplus
Deficit
Accumulated Other
Comprehensive Income
Total Equity
Balance December 31, 2013 173,953,975 $3,294,007 $ 184,078 $ 37,254 $ (800,074) $ 2,141 $ 2,717,406
Netincome – – – – 82,970 – 82,970
Othercomprehensiveincome(loss) – – – – (625) 7,859 7,234
Totalcomprehensiveincome – – – – 82,345 7,859 90,204
Transactionswithowners:
Sharesissuedunderemployeestockoptionplan(notes17and19(a)) 582,925 21,083 (4,089) – – – 16,994
Stockoptions(notes17and19(a)) – – 20,841 – – – 20,841
Sharesissuedunderincentivesharepurchaseplan(note19(b)) 517,721 15,543 – – – – 15,543
Sharesissuedunderdividendreinvestmentplan 262,360 7,654 – – – – 7,654
SharesissuedforjointacquisitionofOsisko(note5) 34,794,843 1,164,237 – – – – 1,164,237
CommonsharesheldbyadepositoryrelatingtoCMGPConvertibleDebenturespreviouslyissuedbyOsisko(notes5and15) (871,680) (29,166) – – – – (29,166)
SharesissuedforCaydenacquisition(note5) 4,853,875 121,655 – – – – 121,655
Dividendsdeclared($0.32pershare) – – – – (61,653) – (61,653)
RestrictedShareUnitplan(notes17and19(c)) 142,215 4,775 – – – – 4,775
Balance December 31, 2014 214,236,234 $4,599,788 $ 200,830 $ 37,254 $ (779,382) $ 10,000 $ 4,068,490
Netincome – – – – 24,583 – 24,583
Othercomprehensiveloss – – – – (173) (6,672) (6,845)
Totalcomprehensiveincome(loss) – – – – 24,410 (6,672) 17,738
Transactionswithowners:
Sharesissuedunderemployeestockoptionplan(notes17and19(a)) 747,683 22,326 (4,654) – – – 17,672
Stockoptions(notes17and19(a)) – – 20,056 – – – 20,056
Sharesissuedunderincentivesharepurchaseplan(note19(b)) 512,438 14,033 – – – – 14,033
Sharesissuedunderdividendreinvestmentplan 345,734 9,305 – – – – 9,305
SharesissuedforjointacquisitionofMalarticCHLproperty(note5) 459,197 13,441 – – – – 13,441
SharesissuedforacquisitionofSoltoroLtd.(note5) 770,429 24,351 – – – – 24,351
SharesissuedtosettleCMGPConvertibleDebenturespreviouslyissuedbyOsisko(note15) 871,680 24,779 – – – – 24,779
Dividendsdeclared($0.32pershare) – – – – (68,762) – (68,762)
RestrictedShareUnitplanandLongTermIncentivePlan("LTIP")(notes17and19(c)) (292,600) (83) – – – – (83)
Balance December 31, 2015 217,650,795 $4,707,940 $ 216,232 $ 37,254 $ (823,734) $ 3,328 $ 4,141,020
See accompanying notes
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 7
AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of United States dollars)
Year Ended December 31,
2015 2014 OPERATING ACTIVITIES
Netincomefortheyear $ 24,583 $ 82,970
Add(deduct)itemsnotaffectingcash:
Amortizationofproperty,plantandminedevelopment(note11) 608,609 433,628
Deferredincomeandminingtaxes(note24) 6,550 37,058
Gainonsaleofavailable-for-salesecurities(note9) (24,600) (5,635)
Stock-basedcompensation(note19) 35,822 37,565
Impairmentlossonavailable-for-salesecurities(note9) 12,035 15,763
Foreigncurrencytranslation(gain)loss (4,728) 3,781
Other 3,145 23,430
Adjustmentforsettlementofreclamationprovision (1,385) (4,160)
Changesinnon-cashworkingcapitalbalances:
Tradereceivables 52,019 17,237
Incometaxes (2,333) 30,771
Inventories (40,547) (1,354)
Othercurrentassets (74,106) 787
Accountspayableandaccruedliabilities 20,464 (3,391)
Interestpayable 710 (126)
Cashprovidedbyoperatingactivities 616,238 668,324
INVESTING ACTIVITIES
Additionstoproperty,plantandminedevelopment(note11) (449,758) (475,412)
Acquisitions,netofcashandcashequivalentsacquired(note5) (12,983) (400,032)
Netpurchasesofshort-terminvestments (2,823) (2,404)
Netproceedsfromsaleofavailable-for-salesecuritiesandwarrants(note9) 61,075 44,692
Purchaseofavailable-for-salesecuritiesandwarrants(note9) (19,815) (27,246)
Decreaseinrestrictedcash(note7) 49,785 8,783
Cashusedininvestingactivities (374,519) (851,619)
FINANCING ACTIVITIES
Dividendspaid (59,512) (54,065)
Repaymentoffinanceleaseobligations(note14(a)) (23,657) (21,453)
Sale-leasebackfinancing(note14(a)) – 1,027
Proceedsfromlong-termdebt 436,000 1,010,000
Repaymentoflong-termdebt (697,086) (724,050)
Noteissuance(note15) 50,000 –
Long-termdebtfinancing(note15) (1,689) (2,127)
RepurchaseofcommonsharesforRestrictedShareUnitplan(notes17and19(c)) (11,899) (7,518)
Proceedsonexerciseofstockoptions(note19(a)) 17,672 16,994
Commonsharesissued(note17) 9,411 10,428
Cash(usedin)providedbyfinancingactivities (280,760) 229,236
Effect of exchange rate changes on cash and cash equivalents (14,346) (7,505)
Net (decrease) increase in cash and cash equivalents during the year (53,387) 38,436
Cash and cash equivalents, beginning of year 177,537 139,101
Cash and cash equivalents, end of year $ 124,150 $ 177,537
SUPPLEMENTAL CASH FLOW INFORMATION
Interestpaid(note15) $ 69,414 $ 67,632
Incomeandminingtaxespaid $ 81,112 $ 51,302
See accompanying notes
8 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
AGNICO EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2015
1. CORPORATE INFORMATION
AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isprincipallyengagedintheproductionandsaleofgold,aswellasrelatedactivitiessuchasexplorationandminedevelopment.TheCompany'sminingoperationsarelocatedinCanada,MexicoandFinlandandtheCompanyhasexplorationactivitiesinCanada,Europe,LatinAmericaandtheUnitedStates.AgnicoEagleisapubliccompanyincorporatedunderthelawsoftheProvinceofOntario,Canadawithitsheadandregisteredofficelocatedat145KingStreetEast,Suite400,Toronto,Ontario,M5C2Y7.TheCompanyislistedontheTorontoStockExchangeandtheNewYorkStockExchange.AgnicoEaglesellsitsgoldproductionintotheworldmarket.
TheseconsolidatedfinancialstatementswereauthorizedforissuancebytheBoardofDirectorsoftheCompany(the"Board")onMarch23,2016.
2. BASIS OF PRESENTATION
A) StatementofCompliance
TheaccompanyingconsolidatedfinancialstatementsofAgnicoEaglehavebeenpreparedinaccordancewithInternationalFinancialReportingStandards("IFRS")asissuedbytheInternationalAccountingStandardsBoard("IASB")inUnitedStates("US")dollars.
Theseconsolidatedfinancialstatementswerepreparedonagoingconcernbasisunderthehistoricalcostmethodexceptforcertainfinancialassetsandliabilitieswhicharemeasuredatfairvalue.Significantaccountingpoliciesarepresentedinnote3totheseconsolidatedfinancialstatementsandhavebeenconsistentlyappliedineachoftheperiodspresented.
B) BasisofPresentation
Subsidiaries
TheseconsolidatedfinancialstatementsincludetheaccountsofAgnicoEagleanditsconsolidatedsubsidiaries.Allintercompanybalances,transactions,incomeandexpensesandgainsorlosseshavebeeneliminatedonconsolidation.SubsidiariesareconsolidatedwhereAgnicoEaglehastheabilitytoexercisecontrol.ControlofaninvesteeexistswhenAgnicoEagleisexposedtovariablereturnsfromtheCompany'sinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TheCompanyreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreoftheelementsofcontrol.
Joint Arrangements
Ajointarrangementisdefinedasanarrangementinwhichtwoormorepartieshavejointcontrol.Jointcontrolisthecontractuallyagreedsharingofcontroloveranarrangementbetweentwoormoreparties.Thisexistsonlywhenthedecisionsabouttherelevantactivitiesthatsignificantlyaffectthereturnsofthearrangementrequiretheunanimousconsentofthepartiessharingcontrol.
Ajointoperationisajointarrangementwherebythepartieshavejointcontrolofthearrangementandhaverightstotheassetsandobligationsfortheliabilitiesrelatingtothearrangement.TheseconsolidatedfinancialstatementsincludetheCompany'sinterestsintheassets,liabilities,revenuesandexpensesofthejointoperations,fromthedatethatjointcontrolcommenced.AgnicoEagle's50%interestinCanadianMalarticCorporationandCanadianMalarticGP,thegeneralpartnershipthatholdstheCanadianMalarticminelocatedinQuebec,hasbeenaccountedforasajointoperation.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 9
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BusinessCombinations
Inabusinesscombination,theacquisitionmethodofaccountingisused,wherebythepurchaseconsiderationisallocatedtothefairvalueofidentifiableassetsacquiredandliabilitiesassumedatthedateofacquisition.Preliminaryfairvaluesallocatedatareportingdatearefinalizedassoonastherelevantinformationisavailable,withinaperiodnottoexceedtwelvemonthsfromtheacquisitiondatewithretroactiverestatementoftheimpactofadjustmentstothosepreliminaryfairvalueseffectiveasattheacquisitiondate.AssetoutinNote5totheseconsolidatedfinancialstatements,certainpreviouslyreportedDecember31,2014consolidatedbalancesheetlineitemshavebeenupdatedtoreflectfinalestimatesoffairvaluerelatedtotheJune16,2014jointacquisitionofOsisko.Acquisitionrelatedcostsareexpensedasincurred.
Purchaseconsiderationmayalsoincludeamountspayableiffutureeventsoccurorconditionsaremet.Anysuchcontingentconsiderationismeasuredatfairvalueandincludedinthepurchaseconsiderationattheacquisitiondate.Subsequentchangestotheestimatedfairvalueofcontingentconsiderationarerecordedthroughtheconsolidatedstatementsofincome,unlessthepreliminaryfairvalueofcontingentconsiderationasattheacquisitiondateisfinalizedbeforethetwelvemonthmeasurementperiodinwhichcasetheadjustmentisallocatedtotheidentifiableassetsacquiredandliabilitiesassumedretrospectivelytotheacquisitiondate.
Wherethecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired,thedifferenceisrecordedasgoodwill.Againisrecordedthroughtheconsolidatedstatementsofincomeifthecostoftheacquisitionislessthanthefairvaluesoftheidentifiablenetassetsacquired.
Non-controllinginterestsrepresentthefairvalueofnetassetsinsubsidiariesthatarenotheldbytheCompanyasatthedateofacquisition.Non-controllinginterestsarepresentedintheequitysectionoftheconsolidatedbalancesheets.
Inabusinesscombinationachievedinstages,theCompanyremeasuresanypreviouslyheldequityinterestatitsacquisitiondatefairvalueandrecognizesanygainorlossintheconsolidatedstatementsofincome.
B) Non-currentAssetsandDisposalGroupsHeldForSaleandDiscontinuedOperations
TheCompanyclassifiesanon-currentassetordisposalgroupasheldforsaleifitishighlyprobablethattheywillbesoldintheircurrentconditionwithinoneyearfromthedateofclassification.AssetsanddisposalgroupsthatmeetthecriteriatobeclassifiedasanassetheldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststodisposeandtheCompanystopsamortizingsuchassetsfromthedatetheyareclassifiedasheldforsale.Assetsanddisposalgroupsthatmeetthecriteriatobeclassifiedasheldforsalearepresentedseparatelyintheconsolidatedbalancesheets.
Ifthecarryingamountoftheassetpriortobeingclassifiedasheldforsaleisgreaterthanthefairvaluelesscoststodispose,theCompanyrecognizesanimpairmentloss.Anysubsequentchangeinthemeasurementamountofitemsclassifiedasheldforsaleisrecognizedasagain,totheextentofanycumulativeimpairmentchargespreviouslyrecognizedtotherelatedassetordisposalgroup,orasafurtherimpairmentloss.
AdiscontinuedoperationisacomponentoftheCompanythatcanbeclearlydistinguishedfromtherestoftheentity,bothoperationallyandforfinancialreportingpurposes,thathasbeendisposedoforisclassifiedasheldforsaleandrepresents:a)aseparatesignificantlineofbusinessorgeographicalareaofoperations;b)apartofasingleco-ordinatedplantodisposeofanareaofoperations;orc)asubsidiaryacquiredexclusivelyforresale.Theresultsofthedisposalgroupsorregionswhicharediscontinuedoperationsarepresentedseparatelyintheconsolidatedstatementsofcomprehensiveincome.
10 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
C) ForeignCurrencyTranslation
ThefunctionalcurrencyoftheCompany,foreachsubsidiaryandforjointarrangements,isthecurrencyoftheprimaryeconomicenvironmentinwhichitoperates.ThefunctionalcurrencyofalloftheCompany'soperationsistheUSdollar.
OncetheCompanydeterminesthefunctionalcurrencyofanentity,itisnotchangedunlessthereisachangeintherelevantunderlyingtransactions,eventsandcircumstances.Anychangeinanentity'sfunctionalcurrencyisaccountedforprospectivelyfromthedateofthechange,andtheconsolidatedbalancesheetsaretranslatedusingtheexchangerateatthatdate.
Attheendofeachreportingperiod,theCompanytranslatesforeigncurrencybalancesasfollows:
• Monetaryitemsaretranslatedattheclosingrateineffectattheconsolidatedbalancesheetdate;
• Non-monetaryitemsthataremeasuredintermsofhistoricalcostaretranslatedusingtheexchangerateatthedateofthetransaction.Itemsmeasuredatfairvaluearetranslatedattheexchangerateineffectatthedatethefairvaluewasmeasured;and
• Revenueandexpenseitemsaretranslatedusingtheaverageexchangerateduringtheperiod.
D) CashandCashEquivalents
TheCompany'scashandcashequivalentsincludecashonhandandshort-terminvestmentsinmoneymarketinstrumentswithremainingmaturitiesofthreemonthsorlessatthedateofpurchase.TheCompanyplacesitscashandcashequivalentsandshort-terminvestmentsinhighqualitysecuritiesissuedbygovernmentagencies,financialinstitutionsandmajorcorporationsandlimitstheamountofcreditexposurebydiversifyingitsholdings.
E) Short-termInvestments
TheCompany'sshort-terminvestmentsincludefinancialinstrumentswithremainingmaturitiesofgreaterthanthreemonthsbutlessthanoneyearatthedateofpurchase.Short-terminvestmentsaredesignatedasheldtomaturityforaccountingpurposesandarecarriedatamortizedcost,whichapproximatesmarketvaluegiventheshort-termnatureoftheseinvestments.
F) Inventories
Inventoriesconsistoforestockpiles,concentrates,dorebarsandsupplies.Inventoriesarecarriedatthelowerofcostandnetrealizablevalue("NRV").Costisdeterminedusingtheweightedaveragebasisandincludesallcostsofpurchase,costsofconversionandothercostsincurredinbringingtheinventoriestotheirpresentlocationandcondition.Costofinventoriesincludesdirectcostsofmaterialsandlabourrelateddirectlytominingandprocessingactivities,includingproductionphasestrippingcosts,amortizationofproperty,plantandminedevelopmentdirectlyinvolvedintherelatedminingandproductionprocess,amortizationofanystrippingcostspreviouslycapitalizedanddirectlyattributableoverheadcosts.Wheninterruptionstoproductionoccur,anadjustmentismadetothecostsincludedininventories,suchthattheyreflectnormalcapacity.Abnormalcostsareexpensedintheperiodtheyareincurred.
Thecurrentportionoforestockpiles,oreinleachpadsandinventoriesisdeterminedbasedontheexpectedamountstobeprocessedwithinthenexttwelvemonths.Orestockpiles,oreonleachpadsandinventoriesnotexpectedtobeprocessedorusedwithinthenexttwelvemonthsareclassifiedaslong-term.
NRVisestimatedbycalculatingthenetsellingpricelesscoststobeincurredinconvertingtherelevantinventoriestosaleableproductanddeliveringittoacustomer.Coststocompletearebasedonmanagement'sbestestimateas
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 11
attheconsolidatedbalancesheetdate.AnNRVimpairmentmaybereversedinasubsequentperiodifthecircumstancesthattriggeredtheimpairmentnolongerexist.
G) FinancialInstruments
TheCompany'sfinancialassetsandliabilities(financialinstruments)includecashandcashequivalents,short-terminvestments,restrictedcash,tradereceivables,available-for-salesecurities,accountspayableandaccruedliabilities,long-termdebt(includingconvertibledebentures)andderivativefinancialinstruments.Allfinancialinstrumentsarerecordedatfairvalueatrecognition.Subsequenttoinitialrecognition,financialinstrumentsclassifiedastradereceivables,accountspayableandaccruedliabilitiesandlong-termdebt(excludingconvertibledebentures)aremeasuredatamortizedcostusingtheeffectiveinterestmethod.Otherfinancialassetsandliabilitiesarerecordedatfairvaluethroughtheconsolidatedstatementsofincome.
Available-for-sale Securities
TheCompany'sinvestmentsinavailable-for-salesecuritiesconsistprimarilyofinvestmentsincommonsharesofentitiesintheminingindustryrecordedusingtradedateaccounting.Investmentsaredesignatedasavailable-for-salebasedonthecriteriathattheCompanydoesnotholdthesefortradingpurposes.Thecostbasisofavailable-for-salesecuritiesisdeterminedusingtheaveragecostmethodandtheyarecarriedatfairvalue.Unrealizedgainsandlossesrecordedtomeasureavailable-for-salesecuritiesatfairvaluearerecognizedinothercomprehensiveincome.
Intheeventthatadeclineinthefairvalueofaninvestmentinavailable-for-salesecuritiesoccursandthedeclineinvalueisconsideredtobesignificantorprolonged,animpairmentchargeisrecordedintheconsolidatedstatementsofincomeandcomprehensiveincome.TheCompanyassesseswhetheradeclineinvalueisconsideredtobesignificantorprolongedbyconsideringavailableevidence,includingchangesingeneralmarketconditions,specificindustryandinvesteedata,thelengthoftimeandtheextenttowhichthefairvaluehasbeenlessthancostandthefinancialconditionoftheinvestee.
Derivative Instruments and Hedge Accounting
TheCompanyusesderivativefinancialinstruments(primarilyoptionandforwardcontracts)tomanageexposuretofluctuationsinby-productmetalprices,interestratesandforeigncurrencyexchangeratesandmayusesuchmeanstomanageexposuretocertaininputcosts.TheCompanydoesnotholdfinancialinstrumentsorderivativefinancialinstrumentsfortradingpurposes.
TheCompanyrecognizesallderivativefinancialinstrumentsintheconsolidatedfinancialstatementsatfairvalueregardlessofthepurposeorintentforholdingtheinstrument.Changesinthefairvalueofderivativefinancialinstrumentsareeitherrecognizedperiodicallyintheconsolidatedstatementsofincomeandcomprehensiveincomeorinequityasacomponentofaccumulatedothercomprehensiveincome,dependingonthenatureofthederivativefinancialinstrumentandwhetheritqualifiesforhedgeaccounting.Financialinstrumentsdesignatedashedgesaretestedforeffectivenessateachreportingperiod.Realizedgainsandlossesonthosecontractsthatareproventobeeffectivearereportedasacomponentoftherelatedtransaction.
H) Goodwill
Goodwillisrecognizedinabusinesscombinationifthecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired.Goodwillisthenallocatedtothecashgeneratingunit("CGU")orgroupofCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.ACGUisthesmallestidentifiablegroupofassetsthatgeneratescashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.
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TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendand,ifanindicatorofimpairmentisidentified,goodwillistestedforimpairmentatthattime.IfthecarryingvalueoftheCGUorgroupofCGUstowhichgoodwillisassignedexceedsitsrecoverableamount,animpairmentlossisrecognized.Goodwillimpairmentlossesarenotreversed.
TherecoverableamountofaCGUorgroupofCGUsismeasuredasthehigherofvalueinuseandfairvaluelesscostsofdisposal.
I) MiningProperties,PlantandEquipmentandMineDevelopmentCosts
Miningproperties,plantandequipmentandminedevelopmentcostsarerecordedatcost,lessaccumulatedamortizationandaccumulatedimpairmentlosses.
Mining Properties
Thecostofminingpropertiesincludesthefairvalueattributabletoprovenandprobablemineralreservesandmineralresourcesacquiredinabusinesscombinationorassetacquisition,undergroundminedevelopmentcosts,deferredstripping,capitalizedexplorationandevaluationcostsandcapitalizedborrowingcosts.
Significantpaymentsrelatedtotheacquisitionoflandandmineralrightsarecapitalizedasminingpropertiesatcost.Ifamineableorebodyisdiscovered,suchcostsareamortizedtoincomewhencommercialproductioncommences,usingtheunits-of-productionmethod,basedonestimatedprovenandprobablemineralreserves.Ifnomineableorebodyisdiscovered,suchcostsareexpensedintheperiodinwhichitisdeterminedthatthepropertyhasnofutureeconomicvalue.Costcomponentsofaspecificprojectthatareincludedinthecapitalcostoftheassetincludesalariesandwagesdirectlyattributabletotheproject,suppliesandmaterialsusedintheproject,andincrementaloverheadcoststhatcanbedirectlyattributabletotheproject.
Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiodoroncecommercialproductionisachieved.Uponachievingtheproductionstage,thecapitalizedconstructioncostsaretransferredtotheappropriatecategoryofplantandequipment.
Plant and Equipment
Expendituresfornewfacilitiesandimprovementsthatcanextendtheusefullivesofexistingfacilitiesarecapitalizedasplantandequipmentatcost.Thecostofanitemofplantandequipmentincludes:itspurchaseprice,includingimportdutiesandnon-refundablepurchasetaxes,afterdeductingtradediscountsandrebates;anycostsdirectlyattributabletobringingtheassettothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement;andtheestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichitislocatedotherthancoststhatariseasaconsequenceofhavingusedtheitemtoproduceinventoriesduringtheperiod.
Amortizationofanassetbeginswhentheassetisinthelocationandconditionnecessaryforittooperateinthemannerintendedbymanagement.Amortizationceasesattheearlierofthedatetheassetisclassifiedasheldforsaleorthedatetheassetisderecognized.Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiod.Amortizationischargedaccordingtoeithertheunits-of-productionmethodoronastraight-linebasis,accordingtothepatterninwhichtheasset'sfutureeconomicbenefitsareexpectedtobeconsumed.Theamortizationmethodappliedtoanassetisreviewedatleastannually.
Usefullivesofproperty,plantandequipmentarebasedonestimatedminelivesasdeterminedbyprovenandprobablemineralreserves.RemainingminelivesatDecember31,2015rangefrom1to20years.
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Mine Development Costs
Minedevelopmentcostsincurredafterthecommencementofcommercialproductionarecapitalizedwhentheyareexpectedtohaveafutureeconomicbenefit.Activitiesthataretypicallycapitalizedincludecostsincurredtobuildshafts,drifts,rampsandaccesscorridorswhichenablestheCompanytoextractoreunderground.
TheCompanyrecordsamortizationonundergroundminedevelopmentcostsonaunits-of-productionbasisbasedontheestimatedtonnageofprovenandprobablemineralreservesoftheidentifiedcomponentoftheorebody.Theunits-of-productionmethoddefinesthedenominatorasthetotaltonnageofprovenandprobablemineralreserves.
Deferred Stripping
Inopenpitminingoperations,itisnecessarytoremoveoverburdenandotherwastematerialstoaccessorefromwhichmineralscanbeextractedeconomically.Theprocessofminingoverburdenandwastematerialsisreferredtoasstripping.
Duringthedevelopmentstageofthemine,strippingcostsarecapitalizedaspartofthecostofbuilding,developingandconstructingthemineandareamortizedoncetheminehasenteredtheproductionstage.
Duringtheproductionstageofamine,strippingcostsarerecordedasapartofthecostofinventoriesunlessthesecostsareexpectedtoprovideafutureeconomicbenefitand,insuchcases,arecapitalizedtoproperty,plantandminedevelopment.
Productionstagestrippingcostsprovideafutureeconomicbenefitwhen:
• Itisprobablethatthefutureeconomicbenefit(e.g. ,improvedaccesstotheorebody)associatedwiththestrippingactivitywillflowtotheCompany;
• TheCompanycanidentifythecomponentoftheorebodyforwhichaccesshasbeenimproved;and
• Thecostsrelatingtothestrippingactivityassociatedwiththatcomponentcanbemeasuredreliably.
Capitalizedproductionstagestrippingcostsareamortizedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatbecomesmoreaccessibleasaresultofthestrippingactivity.
Borrowing Costs
Borrowingcostsarecapitalizedtoqualifyingassets.QualifyingassetsareassetsthattakeasubstantialperiodoftimetopreparefortheCompany'sintendeduse,whichincludesprojectsthatareintheexplorationandevaluation,developmentorconstructionstages.
Borrowingcostsattributabletotheacquisition,constructionorproductionofqualifyingassetsareaddedtothecostofthoseassetsuntilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduse.Allotherborrowingcostsarerecognizedasfinancecostsintheperiodinwhichtheyareincurred.Wherethefundsusedtofinanceaqualifyingassetformpartofgeneralborrowings,theamountcapitalizediscalculatedusingaweightedaverageofratesapplicabletotherelevantborrowingsduringtheperiod.
Leases
Thedeterminationofwhetheranarrangementis,orcontains,aleaseisbasedonthesubstanceofthearrangementattheinceptiondate,includingwhetherthefulfillmentofthearrangementisdependentontheuseofaspecificassetorassetsorwhetherthearrangementconveysarighttousetheasset.
LeasingarrangementsthattransfersubstantiallyalltherisksandrewardsofownershipoftheassettotheCompanyareclassifiedasfinanceleases.Financeleasesarerecordedasanassetwithacorrespondingliabilityatanamount
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equaltothelowerofthefairvalueoftheleasedassetsandthepresentvalueoftheminimumleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancecostsusingtheeffectiveinterestratemethod,wherebyaconstantrateofinterestexpenseisrecognizedonthebalanceoftheliabilityoutstanding.Theinterestelementoftheleaseischargedtotheconsolidatedstatementofincomeasafinancecost.Anassetleasedunderafinanceleaseisamortizedovertheshorteroftheleasetermanditsusefullife.
Allotherleasesarerecognizedasoperatingleases.Operatingleasepaymentsarerecognizedasanoperatingexpenseintheconsolidatedstatementsofincomeonastraight-linebasisovertheleaseterm.
J) DevelopmentStageExpenditures
Developmentstageexpendituresarecostsincurredtoobtainaccesstoprovenandprobablemineralreservesandprovidefacilitiesforextracting,treating,gathering,transportingandstoringtheminerals.Thedevelopmentstageofaminecommenceswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralresourcehasbeendetermined.Coststhataredirectlyattributabletominedevelopmentarecapitalizedasproperty,plantandminedevelopmenttotheextentthattheyarenecessarytobringthepropertytocommercialproduction.
Abnormalcostsareexpensedasincurred.Indirectcostsareincludedonlyiftheycanbedirectlyattributedtotheareaofinterest.Generalandadministrativecostsarecapitalizedaspartofthedevelopmentexpenditureswhenthecostsaredirectlyattributedtoaspecificminingdevelopmentproject.
Commercial Production
Amineconstructionprojectisconsideredtohaveenteredtheproductionstagewhenthemineconstructionassetsareavailableforuse.Indeterminingwhethermineconstructionassetsareconsideredavailableforuse,thecriteriaconsideredinclude,butarenotlimitedto,thefollowing:
• Completionofareasonableperiodoftestingmineplantandequipment;
• Abilitytoproducemineralsinsaleableform(withinspecifications);and
• Abilitytosustainongoingproductionofminerals.
Whenamineconstructionprojectmovesintotheproductionstage,amortizationcommences,thecapitalizationofcertainmineconstructioncostsceasesandexpendituresareeithercapitalizedtoinventoriesorexpensedasincurred.Exceptionsincludecostsincurredforadditionsorimprovementstoproperty,plantandminedevelopmentandopen-pitstrippingactivities.
K) ImpairmentofLong-livedAssets
AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,assetsaregroupedattheCGUlevelforthepurposeofassessingtherecoverableamount.AnimpairmentlossisrecognizedforanyexcessofthecarryingamountoftheCGUoveritsrecoverableamount.TheimpairmentlossrelatedtoaCGUisfirstallocatedtogoodwillandtheremaininglossisallocatedonapro-ratabasistotheremaininglong-livedassetsoftheCGUbasedontheircarryingamounts.
Anyimpairmentchargethatistakenonalong-livedassetexceptgoodwillisreversediftherearesubsequentchangesintheestimatesorsignificantassumptionsthatwereusedtorecognizetheimpairmentlossthatresultinanincreaseintherecoverableamountoftheCGU.Ifanindicatorofimpairmentreversalhasbeenidentified,arecoveryshouldberecognizedtotheextenttherecoverableamountoftheassetexceedsitscarryingamount.Theamountofthereversalislimitedtothedifferencebetweenthecurrentcarryingamountandtheamountwhich
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 15
wouldhavebeenthecarryingamounthadtheearlierimpairmentnotbeenrecognizedandamortizationofthatcarryingamounthadcontinued.Impairmentsandsubsequentreversalsarerecordedintheconsolidatedstatementofincomeintheperiodinwhichtheyoccur.
L) Debt
Debtisinitiallyrecordedatfairvalue,netoffinancingcostsincurred.Debtissubsequentlymeasuredatamortizedcost.Anydifferencebetweentheamountsreceivedandtheredemptionvalueofthedebtisrecognizedintheconsolidatedstatementsofincomeovertheperiodtomaturityusingtheeffectiveinterestratemethod.Convertibledebenturesareaccountedforasafinancialliabilitymeasuredatfairvalueintheconsolidatedstatementsofincome.
M) ReclamationProvisions
Assetretirementobligations("AROs")arisefromtheacquisition,developmentandconstructionofminingpropertiesandplantandequipmentduetogovernmentcontrolsandregulationsthatprotecttheenvironmentontheclosureandreclamationofminingproperties.ThemajorpartsofthecarryingamountofAROsrelatetotailingsandheapleachpadclosureandrehabilitation,demolitionofbuildingsandminefacilities,ongoingwatertreatmentandongoingcareandmaintenanceofclosedmines.TheCompanyrecognizesanAROatthetimetheenvironmentaldisturbanceoccursoraconstructiveobligationisdeterminedtoexistbasedontheCompany'sbestestimateofthetimingandamountofexpectedcashflowsexpectedtobeincurred.WhentheAROprovisionisrecognized,thecorrespondingcostiscapitalizedtotherelateditemofproperty,plantandminedevelopment.Reclamationprovisionsthatresultfromdisturbanceinthelandtoextractoreinthecurrentperiodisincludedinthecostofinventories.
Thetimingoftheactualenvironmentalremediationexpendituresisdependentonanumberoffactorssuchasthelifeandnatureoftheasset,theoperatinglicenceconditionsandtheenvironmentinwhichthemineoperates.Reclamationprovisionsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.AROsareadjustedeachperiodtoreflectthepassageoftime(accretion).Accretionexpenseisrecordedinfinancingcostseachperiod.UponsettlementofanARO,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheARO.Settlementgainsorlossesarerecordedintheconsolidatedstatementsofincome.
Expectedcashflowsareupdatedtoreflectchangesinfactsandcircumstances.Theprincipalfactorsthatcancauseexpectedcashflowstochangearetheconstructionofnewprocessingfacilities,changesinthequantitiesofmaterialinprovenandprobablemineralreservesandacorrespondingchangeinthelife-of-mineplan,changingorecharacteristicsthatimpactrequiredenvironmentalprotectionmeasuresandrelatedcosts,changesinwaterqualitythatimpacttheextentofwatertreatmentrequiredandchangesinlawsandregulationsgoverningtheprotectionoftheenvironment.
Eachreportingperiod,provisionsforAROsareremeasuredtoreflectanychangestosignificantassumptions,includingtheamountandtimingofexpectedcashflowsandrisk-freeinterestrates.Changestothereclamationprovisionresultingfromchangesinestimateareaddedtoordeductedfromthecostoftherelatedasset,exceptwherethereductionofthereclamationprovisionexceedsthecarryingvalueoftherelatedassetsinwhichcasetheassetisreducedtonilandtheremainingadjustmentisrecognizedintheconsolidatedstatementsofincome.
Environmentalremediationliabilities("ERLs")aredifferentiatedfromAROsinthatERLsdonotarisefromenvironmentalcontaminationinthenormaloperationofalong-livedassetorfromalegalorconstructiveobligationtotreatenvironmentalcontaminationresultingfromtheacquisition,constructionordevelopmentofalong-livedasset.TheCompanyisrequiredtorecognizealiabilityforobligationsassociatedwithERLsarisingfrompastacts.
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ERLsaremeasuredbydiscountingtheexpectedrelatedcashflowsusingarisk-freeinterestrate.TheCompanypreparesestimatesofthetimingandamountofexpectedcashflowswhenanERLisincurred.Eachreportingperiod,theCompanyassessescostestimatesandotherassumptionsusedinthevaluationofERLstoreflectevents,changesincircumstancesandnewinformationavailable.ChangesinthesecostestimatesandassumptionshaveacorrespondingimpactonthevalueoftheERL.AnychangeinthevalueofERLsresultsinacorrespondingchargeorcredittotheconsolidatedstatementsofincome.UponsettlementofanERL,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheERLintheconsolidatedstatementsofincome.
N) Post-employmentBenefits
InCanada,theCompanymaintainsadefinedcontributionplancoveringallofitsemployees(the"BasicPlan").TheBasicPlanisfundedbyCompanycontributionsbasedonapercentageofincomeforservicesrenderedbyemployees.Inaddition,theCompanyhasasupplementalplanfordesignatedexecutivesatthelevelofVice-Presidentorabove(the"SupplementalPlan").UndertheSupplementalPlan,anadditional10.0%ofthedesignatedexecutives'incomeiscontributedbytheCompany.TheCompanydoesnotofferanyotherpost-retirementbenefitstoitsemployees.
TheCompanyalsoprovidesanon-registeredsupplementaryexecutiveretirementdefinedbenefitplanforcertaincurrentandformerseniorofficers(the"ExecutivesPlan").TheExecutivesPlanbenefitsaregenerallybasedontheemployee'syearsofserviceandlevelofcompensation.PensionexpenserelatedtotheExecutivesPlanisthenetofthecostofbenefitsprovided(includingthecostofanybenefitsprovidedforpastservice),thenetinterestcostonthenetdefinedliability/asset,andtheeffectsofsettlementsandcurtailmentsrelatedtospecialevents.Pensionfundassetsaremeasuredattheircurrentfairvalues.Thecostsofpensionplanimprovementsarerecognizedimmediatelyinexpensewhentheyoccur.Remeasurementsofthenetdefinedbenefitliabilityarerecognizedimmediatelyinothercomprehensiveincome(loss)andaresubsequentlytransferredtoretainedearnings.
Defined Contribution Plan
TheCompanyrecognizesthecontributionspayabletoadefinedcontributionplaninexchangeforservicesrenderedbyemployeesasanexpense,unlessanotherpolicyrequiresorpermitstheinclusionofthecontributioninthecostofanasset.Afterdeductingcontributionsalreadypaid,aliabilityisrecordedthroughouteachperiodtoreflectunpaidbutearnedcontributions.Ifthecontributionpaidexceedsthecontributionduefortheservicebeforetheendofthereportingperiod,theCompanyrecognizesthatexcessasanassettotheextentthattheprepaymentwillleadtoareductioninfuturepaymentsoracashrefund.
Defined Benefit Plan
Planassetsaremeasuredattheirfairvalueattheconsolidatedbalancesheetdateandaredeductedfromthepresentvalueofplanliabilitiestoarriveatanetdefinedbenefitliability/asset.Thedefinedbenefitobligationreflectstheexpectedfuturepaymentsrequiredtosettletheobligationresultingfromemployeeserviceinthecurrentandpriorperiods.
Currentservicecostrepresentstheactuariallycalculatedpresentvalueofthebenefitsearnedbytheactiveemployeesineachperiodandreflectstheeconomiccostforeachperiodbasedoncurrentmarketconditions.Thecurrentservicecostisbasedonthemostrecentactuarialvaluation.Thenetinterestonthenetdefinedbenefitliability/assetisthechangeduringtheperiodinthedefinedbenefitliability/assetthatarisesfromthepassageoftime.
Pastservicecostrepresentsthechangeinthepresentvalueofthedefinedbenefitobligationresultingfromaplanamendmentorcurtailment.Pastservicecostsfromplanamendmentsthatincreaseordecreasevestedorunvested
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 17
benefitsarerecognizedimmediatelyinnetincomeattheearlierofwhentherelatedplanamendmentoccursorwhentheentityrecognizesrelatedrestructuringcostsorterminationbenefits.
Gainsorlossesonplansettlementsaremeasuredasthedifferenceinthepresentvalueofthedefinedbenefitobligationandsettlementprice.Thisresultsinagainorlossbeingrecognizedwhenthebenefitobligationsettles.Actuarialgainsandlossesarerecordedontheconsolidatedbalancesheetsaspartofthebenefitplan'sfundedstatus.Gainsandlossesarerecognizedimmediatelyinothercomprehensiveincomeandaresubsequentlytransferredtoretainedearningsandarenotsubsequentlyrecognizedinnetincome.
O) ContingentLiabilitiesandOtherProvisions
Provisionsarerecognizedwhenapresentobligationexists(legalorconstructive),asaresultofapastevent,forwhichitisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andareliableestimatecanbemadeoftheamountoftheobligation.Theamountrecognizedasaprovisionisthebestestimateoftheexpenditurerequiredtosettletheobligationattheconsolidatedbalancesheetdate,measuredusingtheexpectedcashflowsdiscountedforthetimevalueofmoney.Theincreaseinprovision(accretion)duetothepassageoftimeisrecognizedasafinancecostintheconsolidatedstatementsofincome.
Contingentliabilitiesarepossibleobligationswhoseexistencewillbeconfirmedonlyontheoccurrenceornon-occurrenceofuncertainfutureeventsoutsidetheentity'scontrol,orpresentobligationsthatarenotrecognizedbecauseitisnotprobablethatanoutflowofeconomicbenefitswouldberequiredtosettletheobligationortheamountcannotbemeasuredreliably.Contingentliabilitiesarenotrecognizedbutaredisclosedanddescribedinthenotestotheconsolidatedfinancialstatements,includinganestimateoftheirpotentialfinancialeffectanduncertaintiesrelatingtotheamountortimingofanyoutflow,unlessthepossibilityofsettlementisremote.InassessinglosscontingenciesrelatedtolegalproceedingsthatarependingagainsttheCompanyorunassertedclaimsthatmayresultinsuchproceedings,theCompany,withassistancefromitslegalcounsel,evaluatestheperceivedmeritsofanylegalproceedingsorunassertedclaimsaswellastheperceivedmeritsoftheamountofreliefsoughtorexpectedtobesought.
P) Stock-basedCompensation
TheCompanyoffersequity-settledawards(theemployeestockoptionplan,incentivesharepurchaseplanandRestrictedShareUnitplan)tocertainemployees,officersanddirectorsoftheCompany.
Employee Stock Option Plan ("ESOP")
TheCompany'sESOPprovidesforthegrantingofoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.Optionshaveexercisepricesequaltothemarketpriceonthedaypriortothedateofgrant.Thefairvalueoftheseoptionsisrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincomeorintheconsolidatedbalancesheetsifcapitalizedaspartofproperty,plantandminedevelopmentovertheapplicablevestingperiodasacompensationcost.Anyconsiderationpaidbyemployeesonexerciseofoptionsorpurchaseofcommonsharesiscreditedtosharecapital.
FairvalueisdeterminedusingtheBlack-Scholesoptionvaluationmodel,whichrequirestheCompanytoestimatetheexpectedvolatilityoftheCompany'ssharepriceandtheexpectedlifeofthestockoptions.Limitationswithexistingoptionvaluationmodelsandtheinherentdifficultiesassociatedwithestimatingthesevariablescreatedifficultiesindeterminingareliablesinglemeasureofthefairvalueofstockoptiongrants.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryoftheawardrecipient'spayrollcostsandthecorrespondingentryisrecordedinequity.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.ThedilutiveimpactofstockoptiongrantsisfactoredintotheCompany'sreporteddilutednetincomeper
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share.Thestockoptionexpenseincorporatesanexpectedforfeiturerate,estimatedbasedonexpectedemployeeturnover.
Incentive Share Purchase Plan ("ISPP")
UndertheISPP,directors(excludingnon-executivedirectors),officersandemployees(theparticipants)oftheCompanymaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachparticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.
TheCompanyrecordsanexpenseequaltoitscashcontributiontotheISPP.Noforfeiturerateisappliedtotheamountsaccrued.Whereanemployeeleavespriortothevestingdate,anyaccrualforcontributionsbytheCompanyduringthevestingperiodrelatedtothatemployeeisreversed.
Restricted Share Unit ("RSU") Plan
TheRSUplanisopentodirectorsandcertainemployeesincludingseniorexecutivesoftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryastheawardrecipient'spayrollcosts.ThecostoftheRSUsisrecordedwithinequityuntilsettled.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.
Q) RevenueRecognition
Revenuefromminingoperationsconsistsofgoldrevenues,netofsmelting,refining,transportationandothermarketingcharges.Revenuesfromby-productmetalsalesareshownnetofsmelterchargesaspartofrevenuesfromminingoperations.
Revenuefromthesaleofgoldandsilverisrecognizedwhenthefollowingconditionshavebeenmet:
• TheCompanyhastransferredtothebuyerthesignificantrisksandrewardsofownership;
• TheCompanyretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;
• Theamountofrevenuecanbemeasuredreliably;
• ItisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheCompany;and
• Thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.
Revenuefromgoldandsilverintheformofdorebarsisrecordedwhentherefinedgoldorsilverissoldanddeliveredtothecustomer.Generally,allofthegoldandsilverintheformofdorebarsrecoveredintheCompany'smillingprocessissoldintheperiodinwhichitisproduced.
UnderthetermsoftheCompany'sconcentratesalescontractswiththird-partysmelters,finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.TheCompanyrecordsrevenuesunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepassestothethird-partysmelters.Thetermsofthecontractsresultindifferencesbetweentherecordedestimatedpriceatdeliveryandthefinalsettlementprice.Thesedifferencesareadjustedthroughrevenueateachsubsequentfinancialstatementdate.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 19
R) ExplorationandEvaluationExpenditures
Explorationandevaluationexpendituresarethecostsincurredintheinitialsearchformineraldepositswitheconomicpotentialorintheprocessofobtainingmoreinformationaboutexistingmineraldeposits.Explorationexpenditurestypicallyincludecostsassociatedwithprospecting,sampling,mapping,diamonddrillingandotherworkinvolvedinsearchingforore.Evaluationexpendituresarethecostsincurredtoestablishthetechnicalandcommercialviabilityofdevelopingmineraldepositsidentifiedthroughexplorationactivitiesorbyacquisition.
Explorationandevaluationexpendituresareexpensedasincurredunlessitcanbedemonstratedthattheprojectwillgeneratefutureeconomicbenefit.Whenitisdeterminedthataprojectcangeneratefutureeconomicbenefitthecostsarecapitalizedintheproperty,plantandminedevelopmentlineitemoftheconsolidatedbalancesheets.
Theexplorationandevaluationphaseendswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralisdemonstrable.
S) NetIncomePerShare
Basicnetincomepershareiscalculatedbydividingnetincomeforagivenperiodbytheweightedaveragenumberofcommonsharesoutstandingduringthatsameperiod.Dilutednetincomepersharereflectsthepotentialdilutionthatcouldoccurifholderswithrightstoconvertinstrumentstocommonsharesexercisetheserights.Convertibledebtisdilutivewheneveritsimpactonnetincome,includingmark-to-marketgains(losses),interestandtaxexpense,perordinaryshareobtainableonconversionislessthanbasicnetincomepershare.Theweightedaveragenumberofcommonsharesusedtodeterminedilutednetincomepershareincludesanadjustment,usingthetreasurystockmethod,forstockoptionsoutstanding.Underthetreasurystockmethod:
• Theexerciseofoptionsisassumedtooccuratthebeginningoftheperiod(ordateofissuance,iflater);
• Theproceedsfromtheexerciseofoptionsplusthefutureperiodcompensationexpenseonoptionsgrantedareassumedtobeusedtopurchasecommonsharesattheaveragemarketpriceduringtheperiod;and
• Theincrementalnumberofcommonshares(thedifferencebetweenthenumberofsharesassumedissuedandthenumberofsharesassumedpurchased)isincludedinthedenominatorofthedilutednetincomepersharecalculation.
T) IncomeTaxes
Currenttaxanddeferredtaxexpensesarerecognizedintheconsolidatedstatementsofincomeexcepttotheextentthattheyrelatetoabusinesscombination,ortoitemsrecognizeddirectlyinequityorinothercomprehensiveincome(loss).
Currenttaxexpenseisbasedonsubstantivelyenactedstatutorytaxratesandlawsattheconsolidatedbalancesheetdate.
Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandthetaxbasisofsuchassetsandliabilitiesmeasuredusingtaxratesandlawsthataresubstantivelyenactedattheconsolidatedbalancesheetdateandeffectiveforthereportingperiodwhenthetemporarydifferencesareexpectedtoreverse.
Deferredtaxesarenotrecognizedinthefollowingcircumstances:
• Wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwill;
20 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
• Wherethedeferredtaxassetorliabilityarisesontheinitialrecognitionofanassetorliabilityinanacquisitionthatisnotabusinesscombinationand,atthetimeoftheacquisition,affectsneithernetincomenorincomebeforeincomeandminingtaxes;and
• FortemporarydifferencesrelatingtoinvestmentsinsubsidiariesandjointlycontrolledentitiestotheextentthattheCompanycancontrolthetimingofthetemporarydifferenceanditisprobablethattheywillnotreverseintheforeseeablefuture.
Deferredtaxassetsarerecognizedforunusedlossescarriedforwardanddeductibletemporarydifferencestotheextentthatitisprobablethatfuturetaxablenetincomewillbeavailableagainstwhichtheycanbeutilizedexceptasnotedabove.
Ateachreportingperiod,previouslyunrecognizeddeferredtaxassetsarereassessedtodeterminewhetherithasbecomeprobablethatfuturetaxablenetincomewillallowthedeferredtaxassetstoberecovered.
Recently Issued Accounting Pronouncements
IFRS9–FinancialInstruments
InJuly2014,theIASBissuedIFRS9–Financial Instruments whichbringstogethertheclassificationandmeasurement,impairmentandhedgeaccountingphasesoftheIASB'sprojecttoreplaceIAS39–Financial Instruments: Recognition and Measurement .ApplicationofthestandardismandatoryforannualperiodsbeginningonorafterJanuary1,2018,withearlyadoptionpermitted.AgnicoEagleisevaluatingtheimpactoftheadoptionofIFRS9ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
IFRS15–RevenuefromContractswithCustomers
InMay2014,theIASBissuedIFRS15–Revenue from Contracts with Customers ,whichestablishesprinciplesthatanentityshallapplytoreportusefulinformationtousersoffinancialstatementsaboutthenature,amount,timing,anduncertaintyofrevenueandcashflowsarisingfromacontractwithacustomer.ApplicationofthestandardismandatoryforannualreportingperiodsbeginningonorafterJanuary1,2018,withearlieradoptionpermitted.AgnicoEagleisevaluatingtheimpactoftheadoptionofIFRS15ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
IFRS16–Leases
InJanuary2016,theIASBissuedIFRS16–Leases whichbringsmostleaseson-balancesheetforlesseesbyeliminatingthedistinctionbetweenoperatingandfinanceleases.Lessoraccountingremainslargelyunchangedandthedistinctionbetweenoperatingandfinanceleasesisretained.UnderIFRS16,alesseerecognizesaright-of-useassetandaleaseliability.Theright-of-useassetistreatedsimilarlytoothernon-financialassetsanddepreciatedaccordingly,andtheliabilityaccruesinterest.Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepaymentspayableovertheleaseterm,discountedattherateimplicitinthelease.Lesseesarepermittedtomakeanaccountingpolicyelection,byclassofunderlyingasset,toapplyamethodlikeIAS17'soperatingleaseaccountingandnotrecognizeleaseassetsandleaseliabilitiesforleaseswithaleasetermof12monthsorlessandonalease-by-leasebasis,toapplyamethodsimilartocurrentoperatingleaseaccountingtoleasesforwhichtheunderlyingassetisoflowvalue.IFRS16supersedesIAS17–Leases andrelatedinterpretationsandiseffectiveforperiodsbeginningonorafterJanuary1,2019,withearlieradoptionpermittedifIFRS15hasalsobeenapplied.AgnicoEagleiscurrentlyevaluatingtheimpactoftheadoptionofIFRS16ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 21
AGNICO EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2015
4. SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS
ThepreparationoftheseconsolidatedfinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheamountsreportedintheconsolidatedfinancialstatementsandaccompanyingnotes.Managementbelievesthattheestimatesusedinthepreparationoftheconsolidatedfinancialstatementsarereasonable;however,actualresultsmaydiffermateriallyfromtheseestimates.Thekeyareaswheresignificantjudgments,estimatesandassumptionshavebeenmadearesummarizedbelow.
ProvenandProbableMineralReserves
ProvenandprobablemineralreservesareestimatesoftheamountoforethatcanbeeconomicallyandlegallyextractedfromtheCompany'sminingproperties.Theestimatesarebasedoninformationcompiledby"qualifiedpersons"asdefinedundertheCanadianSecuritiesAdministrators'NationalInstrument43-101–Standards of Disclosure for Mineral Projects ("NI43-101").Suchananalysisrelatingtothegeologicalandtechnicaldataonthesize,depth,shapeandgradeoftheorebodyandsuitableproductiontechniquesandrecoveryratesrequirescomplexgeologicaljudgmentstointerpretthedata.Theestimationofrecoverableprovenandprobablemineralreservesisbaseduponfactorssuchasestimatesofcommodityprices,futurecapitalrequirementsandproductioncosts,geologicalassumptionsandjudgmentsmadeinestimatingthesizeandgradeoftheorebodyandforeignexchangerates.
Astheeconomicassumptionsusedmaychangeandasadditionalgeologicalinformationisacquiredduringtheoperationofamine,estimatesofprovenandprobablemineralreservesmaychange.SuchchangesmayimpacttheCompany'sconsolidatedbalancesheetsandconsolidatedstatementsofincomeandcomprehensiveincome,including:
• ThecarryingvalueoftheCompany'sproperty,plantandminedevelopmentandgoodwillmaybeaffectedduetochangesinestimatedfuturecashflows;
• Amortizationchargesintheconsolidatedstatementsofincomeandcomprehensiveincomemaychangewheresuchchargesaredeterminedusingtheunits-of-productionmethodorwheretheusefullifeoftherelatedassetschange;
• Capitalizedstrippingcostsrecognizedintheconsolidatedbalancesheetsaseitherpartofminingpropertiesoraspartofinventoriesorchargedtoincomemaychangeduetochangesintheratiooforetowasteextracted;and
• Reclamationprovisionsmaychangewherechangestotheprovenandprobablemineralreserveestimatesaffectexpectationsaboutwhensuchactivitieswilloccurandtheassociatedcostoftheseactivities.
ExplorationandEvaluationExpenditures
TheapplicationoftheCompany'saccountingpolicyforexplorationandevaluationexpendituresrequiresjudgmenttodeterminewhetherfutureeconomicbenefitsarelikelytoariseandwhetheractivitieshavereachedastagethatpermitsareasonableassessmentoftheexistenceofprovenandprobablemineralreserves.
ProductionStageofaMine
Aseachmineisunique,significantjudgmentisrequiredtodeterminethedatethatamineenterstheproductionstage.TheCompanyconsidersthefactorsoutlinedinnote3totheseconsolidatedfinancialstatementstomakethisdetermination.
Contingencies
Contingenciescanbeeitherpossibleassetsorpossibleliabilitiesarisingfrompasteventswhich,bytheirnature,willberesolvedonlywhenoneormoreuncertainfutureeventsoccurorfailtooccur.Theassessmentoftheexistenceandpotentialimpactofcontingenciesinherentlyinvolvestheexerciseofsignificantjudgmentandtheuseofestimatesregardingtheoutcomeoffutureevents.
22 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ReclamationProvisions
EnvironmentalremediationcostswillbeincurredbytheCompanyattheendoftheoperatinglifeoftheCompany'sminingproperties.Managementassessesitsreclamationprovisioneachreportingperiodorwhennewinformationbecomesavailable.Theultimateenvironmentalremediationcostsareuncertainandcostestimatescanvaryinresponsetomanyfactors,includingestimatesoftheextentandcostsofreclamationactivities,technologicalchanges,regulatorychanges,costincreasesascomparedtotheinflationrateandchangesindiscountrates.Theseuncertaintiesmayresultinfutureactualexpendituresdifferingfromtheamountofthecurrentprovision.Asaresult,therecouldbesignificantadjustmentstotheprovisionsestablishedthatwouldaffectfuturefinancialresults.Thereclamationprovisionasatthereportingdaterepresentsmanagement'sbestestimateofthepresentvalueofthefutureenvironmentalremediationcostsrequired.
IncomeandMiningTaxes
Managementisrequiredtomakeestimatesregardingthetaxbasisofassetsandliabilitiesandrelateddeferredincomeandminingtaxassetsandliabilities,amountsrecordedforuncertaintaxpositions,themeasurementofincomeandminingtaxexpense,andestimatesofthetimingofrepatriationofincome.Severaloftheseestimatesrequiremanagementtomakeassessmentsoffuturetaxableprofitand,ifactualresultsaresignificantlydifferentthantheCompany'sestimates,theabilitytorealizethedeferredincomeandminingtaxassetsrecordedontheconsolidatedbalancesheetscouldbeaffected.
ImpairmentofGoodwillandNon-currentAssets
TheCompanyevaluateseachassetorCGU(excludinggoodwill,whichisassessedannuallyregardlessofindicators)ineachreportingperiodtodetermineifanyindicatorsofimpairmentexist.Whencompletinganimpairmenttest,theCompanycalculatestheestimatedrecoverableamountofCGUs,whichrequiresmanagementtomakeestimatesandassumptionswithrespecttoitemssuchasfutureproductionlevels,operatingandcapitalcosts,long-termcommodityprices,foreignexchangerates,discountrates,explorationpotential,andclosureandenvironmentalremediationcosts.Theseestimatesandassumptionsaresubjecttoriskanduncertainty.Therefore,thereisapossibilitythatchangesincircumstanceswillhaveanimpactontheseprojections,whichmayimpacttherecoverableamountofassetsorCGUs.Accordingly,itispossiblethatsomeortheentirecarryingamountoftheassetsorCGUsmaybefurtherimpairedortheimpairmentchargereducedwiththeimpactrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincome.
JointArrangements
JudgmentisrequiredtodeterminewhentheCompanyhasjointcontrolofacontractualarrangement,whichrequiresacontinuousassessmentoftherelevantactivitiesandwhenthedecisionsinrelationtothoseactivitiesrequireunanimousconsent.Judgmentisalsocontinuallyrequiredtoclassifyajointarrangementaseitherajointoperationorajointventurewhenthearrangementhasbeenstructuredthroughaseparatevehicle.ClassifyingthearrangementrequirestheCompanytoassessitsrightsandobligationsarisingfromthearrangement.Specifically,theCompanyconsidersthelegalformoftheseparatevehicle,thetermsofthecontractualarrangementandotherrelevantfactsandcircumstances.Thisassessmentoftenrequiressignificantjudgment,andadifferentconclusiononjointcontrol,orwhetherthearrangementisajointoperationorajointventure,mayhaveamaterialimpactontheaccountingtreatment.
ManagementevaluateditsjointarrangementwithYamanaGoldInc.("Yamana")toeachacquire50.0%ofthesharesofOsisko(nowCanadianMalarticCorporation)undertheprinciplesofIFRS11Joint Arrangements .TheCompanyconcludedthatthearrangementqualifiedasajointoperationuponconsideringthefollowingsignificantfactors:
• Therequirementthatthejointoperatorspurchasealloutputfromtheinvesteeandinvesteerestrictionsonsellingtheoutputtoanythirdparty;
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 23
• Thepartiestothearrangementaresubstantiallytheonlysourceofcashflowcontributingtothecontinuityofthearrangement;and
• Ifthesellingpricedropsbelowcost,thejointoperatorsarerequiredtocoveranyobligationstheentitycannotsatisfy.
5. ACQUISITIONS
GunnarnMiningAB
OnJune11,2015,AgnicoEagleSwedenAB("AESweden")anindirectwholly-ownedsubsidiaryoftheCompany,acquired55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn")fromOrexMineralsInc.("Orex"),bywayofasharepurchaseagreement(the"GunnarnSPA").TheoperationandgovernanceofGunnarnandtheBarseleprojectaregovernedbyajointventureagreementamongtheCompany,AESweden,OrexandGunnarn(the"GunnarnJVA").
UndertheGunnarnSPA,theconsiderationfortheacquisitionofthe55.0%ofGunnarn'soutstandingcommonshareswas$10.0million,comprisedof$6.0millionincashpayableatclosingandpaymentsof$2.0millionincashor,atAESweden'ssolediscretion,sharesoftheCompanyoneachofthefirstandsecondanniversaryoftheclosing.UndertheGunnarnJVA,AESwedencommittedtoincuranaggregateof$7.0millionofexplorationexpensesattheBarseleprojectbyJune11,2018,45.0%or$3.1millionofwhichisconsideredaccruedpurchaseconsideration.Accordingly,theCompany'stotalpurchaseconsiderationfortheacquisitionofits55.0%interestinGunnarnwas$13.1million.AESwedenmayearnanadditional15.0%interestinGunnarnundertheGunnarnJVAifitcompletesafeasibilitystudyinrespectoftheBarseleproject.
TheGunnarnJVAalsoprovidesAESwedenwiththerighttonominateamajorityofthemembersoftheboardofdirectorsofGunnarn(basedoncurrentshareholdings)andAESwedenisthesoleoperatoroftheBarseleprojectandpaidcustomarymanagementfees.
Inconnectionwiththetransaction,Orexalsoobtaineda2.0%netsmelterreturnroyaltyonproductionfromtheBarseleproperty,whichtheCompanymayrepurchaseatanytimefor$5.0million.
TheGunnarnacquisitionwasaccountedforbytheCompanyasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$0.6millionwerecapitalizedtotheminingpropertiesacquired.
24 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
Thefollowingtablesetsouttheallocationofthepurchasepricetoassetsacquiredandliabilitiesassumed,basedonmanagement'sestimatesoffairvalue:
Total purchase price:
Cashpaidforacquisition $ 5,994
Accruedconsideration 7,150
Totalpurchasepricetoallocate $ 13,144
Fair value of assets acquired and liabilities assumed:
Miningproperties $ 20,021
Cashandcashequivalents 3
Othercurrentassets 35
Accountspayableandaccruedliabilities (80)
Long-termdebt (29)
Otherliabilities (6,806)
Netassetsacquired $ 13,144
SoltoroLtd.
OnJune9,2015,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),includingcommonsharesissuableontheexerciseofSoltoro'soutstandingoptionsandwarrants,bywayofaplanofarrangementundertheCanada Business CorporationsAct (the"SoltoroArrangement").Atthetimeofitsacquisition,SoltorowasaTSXVenturelistedexplorationcompanyfocusedonthediscoveryofpreciousmetalsinMexico.
EachoutstandingshareofSoltorowasexchangedundertheSoltoroArrangementfor:(i)C$0.01incash;(ii)0.00793ofanAgnicoEaglecommonshare;and(iii)onecommonshareofPalaminaCorp.,acompanythatwasnewlyformedinconnectionwiththeSoltoroArrangement.
PursuanttotheSoltoroArrangement,SoltorotransferredallminingpropertieslocatedoutsideofthestateofJalisco,MexicotoPalaminaCorp.,andretainedallminingpropertieslocatedwithinthestateofJalisco,Mexico.AgnicoEaglehadnointerestinPalaminaCorp.upontheclosingoftheSoltoroArrangement.
AgnicoEagle'stotalpurchasepriceof$26.7millionwascomprisedof$2.4millionincash,including$1.6millionincashcontributedtoPalaminaCorp.,and770,429AgnicoEaglecommonsharesissuedfromtreasury.TheSoltoroacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$1.4millionwerecapitalizedtotheminingpropertiesacquiredseparatelyfromthepurchasepriceallocationsetoutbelow.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 25
Thefollowingtablesetsouttheallocationofthepurchasepricetoassetsacquiredandliabilitiesassumed,basedonmanagement'sestimatesoffairvalue:
Total purchase price:
Cashpaidforacquisition $ 2,366
AgnicoEaglecommonsharesissuedforacquisition 24,351
Totalpurchasepricetoallocate $ 26,717
Fair value of assets acquired and liabilities assumed:
Miningproperties $ 27,053
Cashandcashequivalents 2,375
Available-for-salesecurities 17
Othercurrentassets 130
Plantandequipment 33
Accountspayableandaccruedliabilities (1,134)
Othercurrentliabilities (1,757)
Netassetsacquired $ 26,717
MalarticCHLProperty
OnMarch19,2015,AgnicoEagle,YamanaandCanadianMalarticGPcompletedthepurchaseofa30.0%interestintheMalarticCHLpropertyfromAbitibiRoyaltiesInc.("Abitibi")inexchangefor459,197AgnicoEaglecommonshares,3,549,695Yamanacommonsharesand3.0%netsmelterreturnroyaltiestoeachofAbitibiandOsiskoGoldRoyaltiesLtd.ontheMalarticCHLproperty.TotalAgnicoEaglecommonshareconsiderationissuedwasvaluedat$13.4millionbasedontheclosingpriceofthecommonsharesonMarch18,2015.TheMalarticCHLpropertyislocatedadjacenttotheCompany'sjointlyownedCanadianMalarticmineandtheremaining70.0%interestintheMalarticCHLpropertywasjointlyacquiredthroughtheJune16,2014acquisitionofOsisko(thepredecessortoCanadianMalarticCorporation).Concurrentwiththetransactionclosing,eachofAbitibi,AgnicoEagle,Yamana,CanadianMalarticGPandCanadianMalarticCorporationreleasedanddischargedtheotherswithrespecttoallproceedingspreviouslycommencedbyAbitibiwithrespecttotheMalarticCHLproperty.Asaresultofthetransaction,AgnicoEagleandYamanajointlyowna100%interestintheMalarticCHLpropertythroughtheirrespectiveindirectinterestsinCanadianMalarticGP.
CaydenResourcesInc.
OnNovember28,2014,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofCaydenResourcesInc.("Cayden"),includingcommonsharesissuedontheexerciseofCayden'sthenoutstandingoptionsandwarrants,pursuanttoacourt-approvedplanofarrangementundertheBusiness Corporations Act (BritishColumbia).Atthetimeofitsacquisition,CaydenwasaTSXVenturelistedexplorationcompanyfocusedonthediscoveryofpreciousmetalsinMexico.
Thetotalpurchasepriceof$122.1millionwascomprisedof$0.5millionincashand4,853,875AgnicoEaglecommonsharesissuedfromtreasury.TheCaydenacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$3.2millionwerecapitalizedtotheminingpropertiesacquired.
26 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
Thefollowingtablesetsouttheallocationofthepurchasepricetoassetsacquiredandliabilitiesassumed,basedonmanagement'sestimatesoffairvalue:
Total purchase price:
Cashpaidforacquisition $ 476
AgnicoEaglecommonsharesissuedforacquisition 121,655
Totalpurchasepricetoallocate $ 122,131
Fair value of assets acquired and liabilities assumed:
Miningproperties $ 117,178
Cashandcashequivalents 3,953
Tradereceivables 141
Incometaxesrecoverable 1,942
Othercurrentassets 129
Plantandequipment 68
Accountspayableandaccruedliabilities (1,280)
Netassetsacquired $ 122,131
OsiskoMiningCorporation
OnJune16,2014,AgnicoEagleandYamanajointlyacquired100.0%oftheissuedandoutstandingsharesofOsiskobywayofacourt-approvedplanofarrangement(the"OsiskoArrangement")undertheCanada Business Corporations Act .UndertheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyacquired50.0%ofOsisko'sissuedandoutstandingshares.AspartoftheOsiskoArrangement,theCanadianMalarticmineinQuebecwastransferredtothenewlyformedCanadianMalarticGPinwhicheachofAgnicoEagleandYamanahaveanindirect50.0%interest.AgnicoEagleandYamanawillalsojointlyexploretheKirklandLakeassets,theHammondReefprojectandthePandoraandWood-PandorapropertiesthroughtheirindirectjointownershipofCanadianMalarticCorporation(thesuccessortoOsisko).Together,theacquiredpropertiesconstitutetheCanadianMalarticjointoperationsegment(seenote22totheseconsolidatedfinancialstatementsfordetails).
EachoutstandingshareofOsiskowasexchangedundertheOsiskoArrangementfor:(i)C$2.09incash(AgnicoEagle's50.0%sharewasC$1.045);(ii)0.07264ofanAgnicoEaglecommonshare(avalueofC$2.64basedontheclosingpriceofC$36.29forAgnicoEaglecommonsharesontheTorontoStockExchangeasofJune16,2014);(iii)0.26471ofaYamanacommonshare;and(iv)0.1ofonecommonshareofOsiskoGoldRoyaltiesLtd.,acompanythatwasnewlyformedinconnectionwiththeOsiskoArrangementthatisnowtradedontheTorontoStockExchange.
PursuanttotheOsiskoArrangement,thefollowingassetsofOsiskoweretransferredtoOsiskoGoldRoyaltiesLtd.:(i)a5.0%netsmelterroyaltyontheCanadianMalarticmine;(ii)C$157.0millionincash;(iii)a2.0%netsmelterroyaltyontheKirklandLakeassets,theHammondReefproject,andcertainotherexplorationpropertiesretainedbyCanadianMalarticCorporation;(iv)allassetsandliabilitiesofOsiskoinitsGuerrerocampinMexico;and(v)certainotherinvestmentsandassets.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 27
AgnicoEaglehasrecognizeditsinterestintheassets,liabilities,revenuesandexpensesofOsiskoinaccordancewiththeCompany'srightsandobligationsprescribedbytheOsiskoArrangement,asthejointarrangementwasdeterminedtobeajointoperationunderIFRS.
AgnicoEagle'stransactioncostsassociatedwiththeacquisitiontotaling$16.7millionwereexpensedthroughthegeneralandadministrativelineitemoftheannualauditedconsolidatedstatementsofincomeandcomprehensiveincomefortheyearendedDecember31,2014.
AgnicoEagle'sshareoftheJune16,2014purchasepriceofOsiskowascomprisedofthefollowing:
Cashpaidforacquisition $ 462,728
AgnicoEaglecommonsharesissuedforacquisition 1,135,071
TotalAgnicoEaglepurchasepricetoallocate $ 1,597,799
AfairvalueapproachwasappliedbymanagementindevelopingestimatesofthefairvalueofidentifiableassetsandliabilitiescontributedtothenewlyformedOsiskojointoperation.Theseestimatesoffairvaluehavenowbeenfinalizedasallrelevantinformationaboutfactsandcircumstancesthatexistedattheacquisitiondatehavebeenreceived.
CertainpreviouslyreportedAgnicoEagleconsolidatedbalancesheetlineitemsasatDecember31,2014wereupdatedtoreflectadjustedfinalestimatesofthefairvalueofidentifiableassetsacquiredandliabilitiesassumedrelatedtotheJune16,2014jointacquisitionofOsisko.AsaresultofnewinformationobtainedaboutthefactsandcircumstancesthatexistedasoftheOsiskoacquisitiondate,thefollowingadjustmentswererecordedtoboththeadjustedfinalpurchasepriceallocationandtheDecember31,2014balancesheetaspreviouslyreported:theproperty,plantandminedevelopmentlineitemdecreasedby$145.6million;thegoodwilllineitem(notdeductiblefortaxpurposes)increasedby$114.3million;theaccountspayableandaccruedliabilitieslineitemincreasedby$3.7millionandthedeferredincomeandminingtaxliabilitieslineitemdecreasedby$35.0million.
28 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThefollowingtablesetsouttheallocationofAgnicoEagle'sshareofthepurchasepricetoattributableassetsacquiredandliabilitiesassumedpursuanttotheOsiskoArrangement,basedonmanagement'spreviouslyreportedpreliminaryestimatesoffairvalueandadjustedfinalestimatesoffairvalue:
Fair value of assets acquired and liabilities assumed:
Preliminary (i)
Adjustments
Adjusted Final
Property,plantandminedevelopment $ 1,452,148 $ (145,631) $ 1,306,517
Goodwill(ii) 543,444 114,348 657,792
Cashandcashequivalents 59,219 – 59,219
Restrictedcash 35,528 – 35,528
Tradereceivables(iii) 9,653 – 9,653
Inventories 51,477 – 51,477
Othercurrentassets 11,420 – 11,420
Accountspayableandaccruedliabilities (49,391) (3,726) (53,117)
Reclamationprovision (20,776) – (20,776)
Long-termdebt (151,333) – (151,333)
Deferredincomeandminingtaxliabilities (343,590) 35,009 (308,581)
Netassetsacquired $ 1,597,799 $ – $ 1,597,799
Notes:
(i) PreliminaryestimatesofthefairvalueofassetsacquiredandliabilitiesassumedarepresentedasreportedintheCompany's2014annualauditedconsolidatedfinancialstatements.
(ii) GoodwillisnotdeductiblefortaxpurposesandisallocatedtotheCanadianMalarticjointoperationsegment.
(iii) Thefairvalueoftradereceivablesapproximatesthegrosscontractualamountsreceivable.
ThejointacquisitionofOsiskowasastrategicfitwiththeCompany'sskillsetanditsotheroperatingassetsinthearea.TheCompanybelievesthatgoodwillassociatedwiththejointacquisitionofOsiskoaroseprincipallybecauseofthefollowingfactors:(1)thevalueimplicitintheCompany'sabilitytosustainand/orgrowitsbusinessbyincreasingprovenandprobablemineralreservesandmineralresourcesthroughnewdiscoveries;and(2)therequirementtorecordadeferredtaxliabilityforthedifferencebetweentheassignedvaluesandthetaxbasesofassetsacquiredandliabilitiesassumedinabusinesscombinationatamountsthatdonotreflectfairvalue.TheamountofgoodwillassociatedwiththejointacquisitionofOsiskothatisexpectedtobedeductiblefortaxpurposesisnil.Uponfinalizationofmanagement'sestimatesofthefairvalueofidentifiableassetsandliabilities,theCompanyconductedaretrospectivegoodwillimpairmenttestasatDecember31,2014basedontheadjustedfinalvalueofgoodwill,withnoimpairmentlossesrequired.
TheCompany'sindirect50.0%interestinCanadianMalarticGPresultedinrevenuesfromminingoperationsof$189.9millionandanetlossof$15.8millionbetweentheJune16,2014completionoftheOsiskoArrangementandDecember31,2014.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 29
6. FAIR VALUE MEASUREMENT
Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Allassetsandliabilitiesforwhichfairvalueismeasuredordisclosedintheconsolidatedfinancialstatementsarecategorizedwithinthefairvaluehierarchy,described,asfollows,basedonthelowest-levelinputthatissignificanttothefairvaluemeasurementasawhole:
Level1–Unadjustedquotedpricesinactivemarketsthatareaccessibleatthemeasurementdateforidentical,unrestrictedassetsorliabilities;
Level2–Quotedpricesinmarketsthatarenotactiveorinputsthatareobservable,eitherdirectlyorindirectly,forsubstantiallythefulltermoftheassetorliability;and
Level3–Pricesorvaluationtechniquesthatrequireinputsthatarebothsignificanttothefairvaluemeasurementandunobservable(supportedbylittleornomarketactivity).
ThefairvaluehierarchygivesthehighestprioritytoLevel1inputsandthelowestprioritytoLevel3inputs.
Foritemsthatarerecognizedatfairvalueonarecurringbasis,theCompanydetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyreassessingtheirclassificationattheendofeachreportingperiod.
DuringtheyearendedDecember31,2015,therewerenotransfersbetweenLevel1andLevel2fairvaluemeasurements,andnotransfersintooroutofLevel3fairvaluemeasurements.
TheCompany'sfinancialassetsandliabilitiesincludecashandcashequivalents,short-terminvestments,restrictedcash,tradereceivables,available-for-salesecurities,accountspayableandaccruedliabilities,long-termdebtandderivativefinancialinstruments.
Thefairvaluesofcashandcashequivalents,short-terminvestments,restrictedcashandaccountspayableandaccruedliabilitiesapproximatetheircarryingvaluesduetotheirshort-termnature.
Long-termdebtisrecordedontheconsolidatedbalancesheetsatDecember31,2015atamortizedcost.Thefairvalueoflong-termdebtisdeterminedbyapplyingadiscountrate,reflectingthecreditspreadbasedontheCompany'screditrating,tofuturerelatedcashflowswhichiscategorizedwithinLevel2ofthefairvaluehierarchy.AsatDecember31,2015,theCompany'slong-termdebthadafairvalueof$1,226.5million(December31,2014–$1,498.4million).
ThefollowingtablesetsouttheCompany'sfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisasatDecember31,2015usingthefairvaluehierarchy:
Level 1 Level 2 Level 3 Total Financial assets:
Tradereceivables $ – $ 7,714 $ – $ 7,714
Available-for-salesecurities 27,630 4,233 – 31,863
Fairvalueofderivativefinancialinstruments – 87 – 87
Totalfinancialassets $ 27,630 $ 12,034 $ – $ 39,664
Financial liabilities:
Fairvalueofderivativefinancialinstruments $ – $ 8,073 $ – $ 8,073
Totalfinancialliabilities $ – $ 8,073 $ – $ 8,073
30 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThefollowingtablesetsouttheCompany'sfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisasatDecember31,2014usingthefairvaluehierarchy:
Level 1 Level 2 Level 3 Total Financial assets:
Tradereceivables $ – $ 59,716 $ – $ 59,716
Available-for-salesecurities 51,653 4,815 – 56,468
Fairvalueofderivativefinancialinstruments – 4,877 – 4,877
Totalfinancialassets $ 51,653 $ 69,408 $ – $ 121,061
Financial liabilities:
CMGPConvertibleDebentures $ – $ – $ 34,678 $ 34,678
Fairvalueofderivativefinancialinstruments – 8,249 – 8,249
Totalfinancialliabilities $ – $ 8,249 $ 34,678 $ 42,927
Valuation Techniques
TradeReceivables
Tradereceivablesfromprovisionalinvoicesforconcentratesalesarevaluedusingquotedforwardratesderivedfromobservablemarketdatabasedonthemonthofexpectedsettlement(classifiedwithinLevel2ofthefairvaluehierarchy).
Available-for-saleSecurities
Available-for-salesecuritiesrepresentingsharesofpubliclytradedentitiesarerecordedatfairvalueusingquotedmarketprices(classifiedwithinLevel1ofthefairvaluehierarchy).Available-for-salesecuritiesrepresentingsharesofnon-publiclytradedentitiesarerecordedatfairvalueusingexternalbroker-dealerquotationscorroboratedbyoptionpricingmodels(classifiedwithinLevel2ofthefairvaluehierarchy).
DerivativeFinancialInstruments
DerivativefinancialinstrumentsclassifiedwithinLevel2ofthefairvaluehierarchyarerecordedatfairvalueusingexternalbroker-dealerquotationscorroboratedbyoptionpricingmodelsoroptionpricingmodelsthatutilizeavarietyofinputsthatareacombinationofquotedpricesandmarket-corroboratedinputs.Derivativefinancialinstrumentsareclassifiedasatfairvaluethroughtheconsolidatedstatementsofincome.
CMGPConvertibleDebentures
OnJune30,2015,thenegotiatedearlysettlementofalloftheseniorunsecuredconvertibledebenturesissuedbyOsiskoandsubsequentlyanobligationofCanadianMalarticGP(the"CMGPConvertibleDebentures")wascompleted.TheCMGPConvertibleDebentureswerereportedatfairvalueandclassifiedwithinLevel3ofthefairvaluehierarchyandconstitutedcontractswhichresultedinthepaymentofcashandtheissuanceofpublicly-tradedshares.Fairvaluewascalculatedwithconsiderationgiventotheinfluenceofavarietyofinputsincludingquotedmarketpricesandinterestrates.CMGPConvertibleDebentureswereincludedinthecurrentportionoflong-termdebtlineitemoftheconsolidatedbalancesheetspriortosettlement.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 31
AGNICO EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2015
7. RESTRICTED CASH
AspartoftheCompany'sinsuranceprogramsfrontedbyathirdpartyproviderandreinsuredthroughtheCompany'sinternalinsuranceprogram,thethirdpartyproviderrequiresthatcashof$0.4millionberestrictedasatDecember31,2015(December31,2014–$5.8million).
AspartoftheCompany'staxplanning,$32.0millionwascontributedtoaqualifiedenvironmentaltrust("QET")inDecember2011tofulfilltherequirementoffinancialsecurityforcostsrelatedtotheenvironmentalremediationoftheGoldexmine.DuringtheyearendedDecember31,2015,$13.1million(2014–$0.1million)waswithdrawnfromtheQET.AsatDecember31,2015,$0.1million(December31,2014–$15.5million)remainedintheQET.
AtDecember31,2015,cashofnil(December31,2014–$11.8million)wasrestrictedrepresenting50.0%ofamountsheldbyadepositarytosatisfyobligationsinconnectionwiththeCMGPConvertibleDebentures.
AsatDecember31,2015,cashof$0.7million(December31,2014–$20.9million)wasrestrictedrepresenting50.0%ofthedepositsinrespectofenvironmentalguaranteesintheProvinceofQuebecmadebyCanadianMalarticGPinconnectionwithitsownershipoftheCanadianMalarticmine.
8. INVENTORIES
As at December 31,
2015
As at December 31,
2014 Oreinstockpilesandonleachpads $ 26,319 $ 51,970
Concentratesanddorebars 170,971 111,912
Supplies 264,686 282,778
Totalcurrentinventories $ 461,976 $ 446,660
Non-currentoreinstockpilesandonleachpads(i) 61,167 25,125
Totalinventories $ 523,143 $ 471,785
Note:
(i) OrethattheCompanydoesnotexpecttoprocesswithin12monthsisclassifiedaslong-termandisrecordedintheotherassetslineitemontheconsolidatedbalancesheets.
DuringtheyearendedDecember31,2015,achargeof$8.6million(2014–$4.6million)wasrecordedwithinproductioncoststoreducethecarryingvalueofinventoriestotheirnetrealizablevalue.
32 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
9. AVAILABLE-FOR-SALE SECURITIES
As at December 31,
2015
As at December 31,
2014 Cost $ 64,832 $ 74,928
Accumulatedimpairmentlosses (36,842) (30,090)
Unrealizedgainsinaccumulatedothercomprehensiveincome 4,030 11,815
Unrealizedlossesinaccumulatedothercomprehensiveincome (157) (185)
Totalestimatedfairvalueofavailable-for-salesecurities $ 31,863 $ 56,468
DuringtheyearendedDecember31,2015,theCompanyreceivedproceedsof$54.4million(2014–$41.4million)andrecognizedagainbeforeincometaxesof$24.6million(2014–$5.6million)onthesaleofcertainavailable-for-salesecurities.
DuringtheyearendedDecember31,2015,theCompanyrecordedanimpairmentlossof$12.0million(2014–$15.8million)oncertainavailable-for-salesecuritiesthatweredeterminedtohaveanimpairmentthatwassignificantorprolonged.
10. OTHER ASSETS
(a) OtherCurrentAssets
As at December 31,
2015
As at December 31,
2014
Federal,provincialandothersalestaxesreceivable $ 89,313 $ 70,143
Prepaidexpenses 71,811 39,608
Insurancereceivable 12,288 113
Other 21,277 13,537
Totalothercurrentassets $ 194,689 $ 123,401
(b) OtherAssets
As at December 31,
2015
As at December 31,
2014
Non-currentoreinstockpilesandonleachpads $ 61,167 $ 25,125
Otherassets 6,071 2,497
Totalotherassets $ 67,238 $ 27,622
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 33
11. PROPERTY, PLANT AND MINE DEVELOPMENT
Mining
Properties Plant and Equipment
Mine Development
Costs Total
As at December 31, 2013 $ 820,253 $ 1,683,902 $ 1,190,306 $ 3,694,461
Additions 94,081 204,661 208,342 507,084
Disposals (2,526) (6,142) – (8,668)
Acquisitions 1,105,961 111,844 205,958 1,423,763
Amortization (79,363) (290,530) (90,882) (460,775)
Transfersbetweencategories 1,534 305,512 (307,046) –
As at December 31, 2014 1,939,940 2,009,247 1,206,678 5,155,865
Additions 103,664 174,477 283,221 561,362
Disposals (88) (6,269) (1,757) (8,114)
Amortization (168,612) (352,090) (99,444) (620,146)
Transfersbetweencategories (209,294) 239,041 (29,747) –
As at December 31, 2015 $ 1,665,610 $ 2,064,406 $ 1,358,951 $ 5,088,967
As at December 31, 2014:
Cost $ 3,485,005 $ 3,832,709 $ 1,615,431 $ 8,933,145
Accumulatedamortizationandnetimpairments (1,545,065) (1,823,462) (408,753) (3,777,280)
Netcarryingamount–December31,2014 $ 1,939,940 $ 2,009,247 $ 1,206,678 $ 5,155,865
As at December 31, 2015:
Cost $ 3,330,464 $ 4,273,798 $ 1,867,172 $ 9,471,434
Accumulatedamortizationandnetimpairments (1,664,854) (2,209,392) (508,221) (4,382,467)
Netcarryingamount—December31,2015 $ 1,665,610 $ 2,064,406 $ 1,358,951 $ 5,088,967
AsatDecember31,2015,assetsunderconstruction,andthereforenotyetbeingdepreciated,includedinthenetcarryingamountofproperty,plantandminedevelopmentamountedto$350.7million(December31,2014–$270.6million).
34 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
GeographicInformation:
As at December 31,
2015
As at December 31,
2014
Northern Business: Canada $ 3,196,494 $ 3,272,656
Finland 851,867 825,292
Southern Business: Mexico 1,030,364 1,047,669
UnitedStates 10,242 10,248
Totalproperty,plantandminedevelopment $ 5,088,967 $ 5,155,865
12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at December 31,
2015
As at December 31,
2014
Tradepayables $ 132,914 $ 92,275
Wagespayable 40,020 37,025
Accruedliabilities 40,252 37,886
Otherliabilities 30,600 42,720
Totalaccountspayableandaccruedliabilities $ 243,786 $ 209,906
In2015and2014,theotherliabilitiesbalanceconsistedprimarilyofvariousemployeepayrolltaxwithholdingsandotherpayrolltaxes.
13. RECLAMATION PROVISION
AgnicoEagle'sreclamationprovisionincludesbothassetretirementobligationsandenvironmentalremediationliabilities.Reclamationprovisionestimatesarebasedoncurrentlegislation,thirdpartyestimates,management'sestimatesandfeasibilitystudycalculations.Assumptionsbasedoncurrenteconomicconditions,whichtheCompanybelievesarereasonable,havebeenusedtoestimatethereclamationprovision.However,actualreclamationcostswillultimatelydependonfutureeconomicconditionsandcostsforthenecessaryreclamationwork.Changesinreclamationprovisionestimatesduringtheperiodreflectchangesincashflowestimatesaswellasassumptionsincludingdiscountandinflationrates.ThediscountratesusedinthecalculationofthereclamationprovisionatDecember31,2015rangedbetween0.48%and2.37%(December31,2014–between1.03%and2.54%).
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 35
ThefollowingtablereconcilesthebeginningandendingcarryingamountsoftheCompany'sassetretirementobligations.Thesettlementoftheobligationisestimatedtooccurthroughto2068.
Year Ended December 31,
2015
Year Ended December 31,
2014
Assetretirementobligations–long-term,beginningofyear $ 242,615 $ 171,472
Assetretirementobligations–current,beginningofyear 2,863 1,029
Currentyearadditionsandchangesinestimate,net 64,305 69,420
CurrentyearattributableadditionsuponjointacquisitionofOsisko – 20,776
Currentyearaccretion 4,178 5,173
Liabilitiessettled (1,496) (1,714)
Foreignexchangerevaluation (38,954) (20,678)
Reclassificationfromlong-termtocurrent,endofyear (4,443) (2,863)
Assetretirementobligations–long-term,endofyear $ 269,068 $ 242,615
ThefollowingtablereconcilesthebeginningandendingcarryingamountsoftheCompany'senvironmentalremediationliability.Thesettlementoftheobligationisestimatedtooccurthroughto2020.
Year Ended December 31,
2015
Year Ended December 31,
2014
Environmentalremediationliability–long-term,beginningofyear $ 7,302 $ 12,537
Environmentalremediationliability–current,beginningofyear 3,906 2,423
Currentyearadditionsandchangesinestimate,net 180 563
Liabilitiessettled (562) (3,202)
Foreignexchangerevaluation (1,793) (1,113)
Reclassificationfromlong-termtocurrent,endofyear (1,802) (3,906)
Environmentalremediationliability–long-term,endofyear $ 7,231 $ 7,302
36 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
14. LEASES
(a) FinanceLeases
TheCompanyhasenteredintosale-leasebackagreementswiththirdpartiesforvariousfixedandmobileequipmentwithinCanada.Thesearrangementsrepresentsale-leasebacktransactionsinaccordancewithIAS17–Leases .Thesale-leasebackagreementshaveanaverageeffectiveannualinterestrateof3.3%andtheaveragelengthofthecontractsisfiveyears.
Allofthesale-leasebackagreementshaveendofleaseclausesthatqualifyasbargainpurchaseoptionsthattheCompanyexpectstoexecute.AsatDecember31,2015,thetotalnetbookvalueofassetsrecordedundersale-leasebackfinanceleasesamountedto$7.1million(December31,2014–$12.9million).
TheCompanyhasagreementswiththirdpartyprovidersofmobileequipment.ThesearrangementsrepresentfinanceleasesinaccordancewiththeguidanceinIAS17–Leases .Theleasesareforfivetosevenyearsandhaveanaverageeffectiveannualinterestrateof4.2%.
AsaresultofitsJune16,2014jointacquisitionofOsisko,AgnicoEagleassumedindirectattributablesecuredfinanceleaseobligationsofC$38.3million($35.3million)providedinseparatetrancheswithmaturitiesrangingbetween2015and2019anda7.5%interestrate.AsatDecember31,2015,theCompany'sattributablefinanceleaseobligationsamountedto$13.7million(December31,2014–$31.7million).
Thefollowingtablesetsoutfutureminimumleasepaymentsunderfinanceleasestogetherwiththepresentvalueofthenetminimumleasepayments:
As at December 31, 2015
As at December 31, 2014
Minimum Finance Lease
Payments Interest Present
Value
Minimum Finance Lease
Payments Interest Present
Value
Within1year $ 10,191 $ 602 $ 9,589 $ 23,587 $ 1,445 $ 22,142
Between1–5years 10,057 510 9,547 22,232 1,095 21,137
Total $ 20,248 $ 1,112 $ 19,136 $ 45,819 $ 2,540 $ 43,279
AsatDecember31,2015,thetotalnetbookvalueofassetsrecordedunderfinanceleases,includingsale-leasebackfinanceleases,was$38.0million(December31,2014–$61.7million).Theamortizationofassetsrecordedunderfinanceleasesisincludedintheamortizationofproperty,plantandminedevelopmentlineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 37
(b) OperatingLeases
TheCompanyhasanumberofoperatingleaseagreementsinvolvingofficefacilities.Someoftheleasesforofficefacilitiescontainescalationclausesforincreasesinoperatingcostsandpropertytaxes.Futureminimumleasepaymentsrequiredtomeetobligationsthathaveinitialorremainingnon-cancellableleasetermsinexcessofoneyearareasfollows:
As at December 31,
2015
As at December 31,
2014
Within1year $ 1,780 $ 1,051
Between1–3years 2,479 1,619
Between3–5years 2,205 1,452
Thereafter 10,272 1,549
Total $ 16,736 $ 5,671
DuringtheyearendedDecember31,2015,$1.4million(yearendedDecember31,2014–$1.2million)ofoperatingleasepaymentswererecognizedintheconsolidatedstatementsofincome.
15. LONG-TERM DEBT
As at December 31,
2015
As at December 31,
2014
CreditFacility(i) $ 258,083 $ 492,470
2015Note(i) 49,364 –
2012Notes(i) 198,722 198,549
2010Notes(i) 597,567 596,966
AttributableCMGPConvertibleDebentures – 34,679
Otherattributabledebtinstruments 28,902 51,979
Totaldebt 1,132,638 1,374,643
Less:currentportion 14,451 52,182
Totallong-termdebt $ 1,118,187 $ 1,322,461
(i) Inclusiveofdeferredfinancingcosts.
38 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ScheduledDebtPrincipalRepayments
2016 2017 2018 2019 2020 2021 and Thereafter Total
CreditFacility $ – $ – $ – $ – $ 265,000 $ – $ 265,000
2015Note – – – – – 50,000 50,000
2012Notes – – – – – 200,000 200,000
2010Notes – 115,000 – – 360,000 125,000 600,000
Otherattributabledebtinstruments 14,451 14,451 – – – – 28,902
Total $ 14,451 $ 129,451 $ – $ – $ 625,000 $ 375,000 $ 1,143,902
CreditFacility
OnSeptember5,2014,theCompanyamendeditsunsecuredrevolvingbankcreditfacility(the"CreditFacility"),extendingthematuritydatefromJune22,2017toJune22,2019andamendingpricingterms.
OnSeptember30,2015,theCompanyfurtheramendedtheCreditFacility,amongotherthings,extendingthematuritydatefromJune22,2019toJune22,2020andamendingpricingterms.
AtDecember31,2015,theCreditFacilitywasdrawndownby$265.0million(December31,2014–$500.0million).Amountsdrawndown,togetherwithoutstandinglettersofcreditundertheCreditFacility,resultedinCreditFacilityavailabilityof$924.1millionatDecember31,2015.
2015Note
OnSeptember30,2015,theCompanyclosedaprivateplacementconsistingofa$50.0millionguaranteedseniorunsecurednote(the"2015Note")withaSeptember30,2025maturitydateandayieldof4.15%(togetherwiththe2010Notesandthe2012Notes,the"Notes").Anamountequaltoorgreaterthanthenetproceedsfromthe2015NotearetobeappliedtowardminingprojectsintheProvinceofQuebec,Canada.
2012Notes
OnJuly24,2012,theCompanycloseda$200.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2012Notes")which,onissuance,hadaweightedaveragematurityof11.0yearsandweightedaverageyieldof4.95%.
Thefollowingtablesetsoutdetailsoftheindividualseriesofthe2012Notes:
Principal Interest Rate Maturity Date SeriesA $ 100,000 4.87% 7/23/2022
SeriesB 100,000 5.02% 7/23/2024
Total $ 200,000
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 39
2010Notes
OnApril7,2010,theCompanycloseda$600.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2010Notes")which,onissuance,hadaweightedaveragematurityof9.84yearsandweightedaverageyieldof6.59%.
Thefollowingtablesetsoutdetailsoftheindividualseriesofthe2010Notes:
Principal Interest Rate Maturity Date SeriesA $ 115,000 6.13% 4/7/2017
SeriesB 360,000 6.67% 4/7/2020
SeriesC 125,000 6.77% 4/7/2022
Total $ 600,000
CMGPConvertibleDebentures
InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,CanadianMalarticGPwasassignedandassumedcertainoutstandingdebtobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtinstrumentsincludedtheCMGPConvertibleDebentureswithprincipaloutstandingofC$37.5million($34.6million),aNovember2017maturitydateanda6.875%interestrate.
OnJune30,2015,thenegotiatedearlysettlementofalloftheCMGPConvertibleDebentureswascompleted.Asaresultofthissettlement,871,680AgnicoEaglecommonshareswithafairvalueof$24.8millionwerereleasedfromadepositarytotheholdersoftheCMGPConvertibleDebenturesalongwithacashpaymentof$10.1milliontosettletheCompany'sobligation.IntheyearendedDecember31,2015a$2.4millionmark-to-marketlosswasrecordedintheotherexpenses(income)lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomerelatedtotheCMGPConvertibleDebentures.IntheyearendedDecember31,2014,amark-to-marketgainof$8.0millionwasrecordedrelatedtotheCMGPConvertibleDebentures.Additionalcashconsiderationof$3.2millionwaspaidtotheholdersoftheCMGPConvertibleDebenturesuponsettlementandwasrecordedintheotherexpenses(income)lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.AsatDecember31,2015,theCMGPConvertibleDebentureshadprincipaloutstandingofnil.
OtherLoans
InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,CanadianMalarticGPwasassignedandassumedcertainoutstandingdebtobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtobligationsincludedasecuredloanfacility(the"CMGPLoan").AscheduledrepaymentofC$20.0million($16.0million)wasmadeonJune30,2015,resultinginattributableoutstandingprincipalofC$40.0million($28.9million)asatDecember31,2015(December31,2014–$51.7million).
Covenants
PaymentandperformanceofAgnicoEagle'sobligationsundertheCreditFacilityandtheNotesisguaranteedbyeachofitsmaterialsubsidiariesandcertainofitsothersubsidiaries(the"Guarantors").
TheCreditFacilitycontainscovenantsthatlimit,amongotherthings,theabilityoftheCompanytoincuradditionalindebtedness,makedistributionsincertaincircumstancesandsellmaterialassets.
40 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThenotepurchaseagreementspursuanttowhichtheNoteswereissued(the"NotePurchaseAgreements")containcovenantsthatrestrict,amongotherthings,theabilityoftheCompanytoamalgamateorotherwisetransferitsassets,sellmaterialassets,carryonabusinessotherthanonerelatedtominingandtheabilityoftheGuarantorstoincurindebtedness.
TheCreditFacilityandNotePurchaseAgreementsalsorequiretheCompanytomaintainatotalnetdebttoearningsbeforeinterest,taxes,depreciationandamortization("EBITDA")ratiobelowaspecifiedmaximumvalue.
TheCMGPLoanrequiresCanadianMalarticGPtomaintainaminimumEBITDAtointerestexpenseratioandamaximumdebttoEBITDAratio.
TheCompanywasincompliancewithallcovenantscontainedintheCreditFacilityandNotePurchaseAgreementsasatDecember31,2015.CanadianMalarticGPwasincompliancewithallCMGPLoancovenantsasatDecember31,2015.
InterestonLong-termDebt
Totallong-termdebtinterestcostsincurredduringtheyearendedDecember31,2015were$58.8million(2014–$56.9million).
Totalborrowingcostscapitalizedtoproperty,plantandminedevelopmentduringtheyearendedDecember31,2015were$1.7million(2014–$1.7million)atacapitalizationrateof1.25%(2014–1.28%).
DuringtheyearendedDecember31,2015,cashinterestpaidontheCreditFacilitywas$8.7million(2014–$7.5million),cashstandbyfeespaidontheCreditFacilitywere$3.8million(2014–$5.1million)andcashinterestpaidontheNoteswas$49.4million(2014–$49.4million).
16. OTHER LIABILITIES
Otherliabilitiesconsistofthefollowing:
As at December 31,
2015
As at December 31,
2014 Long-termportionofcapitalleaseobligations(note14(a)) $ 9,547 $ 21,137
Pensionbenefitobligations(note16(a)) 17,146 17,507
Other 7,345 159
Totalotherliabilities $ 34,038 $ 38,803
(a) PensionBenefitObligations
Executives Plan
AgnicoEagleprovidestheExecutivesPlanforcertaincurrentandformerseniorofficers.ItisconsideredadefinedbenefitplanasdefinedinIAS19–Employee Benefits withapensionformulabasedonfinalaverageearningsinexcessoftheamountspayablefromtheregisteredplan.AssetsfortheExecutivesPlanconsistofdepositsonhandwithregulatoryauthoritiesthatarerefundablewhenbenefitpaymentsaremadeorontheultimatewind-upoftheplan.TheestimatedaverageremainingservicelifeoftheplanatDecember31,2015is3.0years.ThefundedstatusoftheExecutivesPlanisbasedonactuarialvaluationsperformedasofDecember31,2015.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 41
ThefundedstatusoftheExecutivesPlanfor2015and2014isasfollows:
Year Ended December 31, 2015 2014 Reconciliation of the Executives Plan assets:
ExecutivesPlanassets,beginningofyear $ 2,278 $ 2,346
AgnicoEagle'scontributions 312 372
Benefitpayments (202) (239)
InterestonExecutivesPlanassets 83 111
NetreturnonExecutivesPlanassetsexcludinginterest (83) (111)
Effectofexchangeratechanges (377) (201)
ExecutivesPlanassets,endofyear 2,011 2,278
Reconciliation of Executives Plan defined benefit obligation:
Definedbenefitobligation,beginningofyear 11,895 11,298
Servicecost 435 470
Benefitpayments (202) (239)
Interestcost 445 550
Actuariallossesarisingfromchangesineconomicassumptions – 1,581
Actuarialgainsarisingfromchangesindemographicassumptions – (164)
Actuariallosses(gains)arisingfromExecutivesPlanexperience 48 (584)
Effectofexchangeratechanges (1,980) (1,017)
Definedbenefitobligation,endofyear 10,641 11,895
Net defined benefit liability, end of year $ 8,630 $ 9,617
42 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThecomponentsofAgnicoEagle'spensionexpenserecognizedintheconsolidatedstatementsofincomerelatingtotheExecutivesPlanareasfollows:
Year Ended December 31, 2015 2014 Servicecost $ 435 $ 470
Interestcostondefinedbenefitobligation 445 550
InterestonExecutivesPlanassets (83) (111)
Pensionexpense $ 797 $ 909
Theremeasurementsofthenetdefinedbenefitliabilityrecognizedinothercomprehensiveincome(loss)relatingtotheExecutivesPlanareasfollows:
Year Ended December 31, 2015 2014 Actuariallossesrelatingtothedefinedbenefitobligation $ 48 $ 833
NetreturnonExecutivesPlanassetsexcludinginterest 83 111
Totalremeasurementsofthenetdefinedbenefitliability $ 131 $ 944
In2016,theCompanyexpectstomakecontributionsof$0.2millionandbenefitpaymentsof$0.1millionrelatedtotheExecutivesPlan.
ThefollowingtablesetsoutsignificantweightedaverageassumptionsusedinmeasuringtheCompany'sExecutivesPlandefinedbenefitobligation:
As at December 31, 2015 2014 Assumptions:
Discountrate–beginningofyear 4.0% 4.9%
Discountrate–endofyear 4.0% 4.0%
Rateofcompensationincrease 3.0% 3.0%
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 43
ThefollowingisasummaryoftheeffectofchangesinsignificantactuarialassumptionsontheCompany'sExecutivesPlandefinedbenefitobligation:
As at December 31,
2015
Change in assumption:
0.5%increaseindiscountrate $ (726)
0.5%decreaseindiscountrate 802
0.5%increaseintherateofcompensationincrease 50
0.5%decreaseintherateofcompensationincrease (50)
ThesummaryoftheeffectofchangesinsignificantactuarialassumptionswaspreparedusingthesamemethodsandactuarialassumptionsasthoseusedforthecalculationoftheExecutivesPlandefinedbenefitobligationasattheendofthefiscalyear,exceptforthechangeinthesingleactuarialassumptionbeingevaluated.Themodificationofseveralactuarialassumptionsatthesametimecouldleadtodifferentresults.
Other Plans
InadditiontotheExecutivesPlan,theCompanymaintainstheBasicPlanandtheSupplementalPlan.UndertheBasicPlan,AgnicoEaglecontributes5.0%ofcertainemployees'baseemploymentcompensationtoadefinedcontributionplan.In2015,$9.8million(2014–$11.1million)wascontributedtotheBasicPlan,$0.1millionofwhichrelatedtocontributionsforkeymanagementpersonnel(2014–$0.1million).EffectiveJanuary1,2008,theCompanyadoptedtheSupplementalPlanfordesignatedexecutivesatthelevelofVice-Presidentorabove.TheSupplementalPlanisfundedbytheCompanythroughnotionalcontributionsequalto10.0%ofthedesignatedexecutive'searningsfortheyear(includingsalaryandshort-termbonus).In2015,theCompanymade$1.3million(2014–$1.5million)innotionalcontributionstotheSupplementalPlan,$0.2million(2014–$0.1million)ofwhichrelatedtocontributionsforkeymanagementpersonnel.TheCompany'sliabilityrelatedtotheSupplementalPlanis$5.3millionatDecember31,2015(December31,2014–$5.0million).TheSupplementalPlanisaccountedforasacashbalanceplan.
44 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
AGNICO EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2015
17. EQUITY
CommonShares
TheCompany'sauthorizedsharecapitalincludesanunlimitednumberofcommonshareswithnoparvalue.AsatDecember31,2015,AgnicoEagle'sissuedcommonsharestotaled218,028,368(December31,2014–215,192,887),less377,573commonsharesheldinatrust(December31,2014–956,653commonsharesheldinatrustrelatedtotheRSUplanorbyadepositarytosatisfyobligationsinconnectionwiththeCMGPConvertibleDebenturesthatweresettledonJune30,2015).
373,785commonsharesareheldinatrustinconnectionwiththeCompany'sRSUplan(December31,2014–84,973commonsharesheldinatrust).
Inthefirstquarterof2015,aLongTermIncentivePlan("LTIP")wasimplementedforcertainemployeesofthejointlyownedCanadianMalarticGPandCanadianMalarticCorporationcomprisedof50.0%deferredcash,25.0%AgnicoEaglecommonsharesand25.0%Yamanacommonsharesandvestingoveraperiodrangingbetween18to36months.AsatDecember31,2015,3,788AgnicoEaglecommonshareswereheldinatrustinconnectionwiththeLTIP.
ThetrustshavebeenevaluatedunderIFRS10–Consolidated Financial Statements andareconsolidatedintheaccountsoftheCompany,withsharesheldintrustoffsetagainsttheCompany'sissuedsharesinitsconsolidatedfinancialstatements.Thecommonsharespurchasedandheldinatrustareexcludedfromthebasicnetincomepersharecalculationsuntiltheyhavevested.Allofthenon-vestedcommonsharesheldinatrustareincludedinthedilutednetincomepersharecalculations,unlesstheimpactisanti-dilutive.
ThefollowingtablesetsoutthemaximumnumberofcommonsharesthatwouldbeoutstandingifalldilutiveinstrumentsoutstandingatDecember31,2015wereexercised:
CommonsharesoutstandingatDecember31,2015 217,650,795
Employeestockoptions 12,082,212
CommonsharesheldinatrustinconnectionwiththeRSUplan(note19(c))andLTIP 377,573
Total 230,110,580
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 45
NetIncomePerShare
Thefollowingtablesetsouttheweightedaveragenumberofcommonsharesusedinthecalculationofbasicanddilutednetincomepershare:
Year Ended December 31, 2015 2014 Netincomefortheyear–basic $ 24,583 $ 82,970
Less:DilutiveimpactofCMGPConvertibleDebentures(i) – (7,345)
Netincomefortheyear–diluted $ 24,583 $ 75,625
Weightedaveragenumberofcommonsharesoutstanding–basic(inthousands) 216,168 195,223
Add:DilutiveimpactofcommonsharesheldbyadepositaryrelatingtoCMGPConvertibleDebentures(i) – 475
Add:DilutiveimpactofcommonsharesrelatedtotheRSUplanandLTIP 300 259
Add:Dilutiveimpactofemployeestockoptions 633 244
Weightedaveragenumberofcommonsharesoutstanding–diluted(inthousands) 217,101 196,201
Netincomepershare–basic $ 0.11 $ 0.43
Netincomepershare–diluted $ 0.11 $ 0.39
Note:
(i) InconnectionwiththejointacquisitionofOsiskoMiningCorporationonJune16,2014,AgnicoEagleindirectlyassumeditsattributableinterestintheCMGPConvertibleDebentures.OnJune30,2015,thenegotiatedearlysettlementofalltheCMGPConvertibleDebentureswascompleted,resultinginprincipaloutstandingofnil.TheimpactoftheCMGPConvertibleDebentureshasbeenincludedinthecalculationofdilutednetincomepersharewheredilutiveandhasbeenexcludedfromthecalculationofdilutednetincomepersharewhereanti-dilutive.ThedilutiveimpactoftheCMGPConvertibleDebentures,includingboththeirimpactondilutednetincomeandthedilutiveimpactofrelatedcommonsharesheldbyadepositaryinconnectionwithanyconversionthereof,wasexcludedfromthecalculationofdilutednetincomepersharefortheyearendedDecember31,2015astheirimpactwouldhavebeenanti-dilutivefortheportionoftheyeartheywereoutstanding.
Dilutednetincomepersharehasbeencalculatedusingthetreasurystockmethod.Inapplyingthetreasurystockmethod,outstandingemployeestockoptionswithanexercisepricegreaterthantheaveragequotedmarketpriceofthecommonsharesfortheperiodoutstandingarenotincludedinthecalculationofdilutednetincomepershareastheimpactwouldbeanti-dilutive.
FortheyearendedDecember31,2015,6,806,055(yearendedDecember31,2014–9,102,210)employeestockoptionswereexcludedfromthecalculationofdilutednetincomepershareastheirimpactwouldhavebeenanti-dilutive.
18. REVENUES FROM MINING OPERATIONS AND TRADE RECEIVABLES
AgnicoEagleisagoldminingcompanywithminingoperationsinCanada,MexicoandFinland.TheCompanyearnsasignificantproportionofitsrevenuesfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedbytheproductionandsaleofby-productmetals.Therevenuefromby-productmetalsisprimarilygeneratedbyproductionattheLaRondemineinCanada(silver,zincandcopper)andthePinosAltosmineinMexico(silver).
46 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThecashflowandprofitabilityoftheCompany'soperationsaresignificantlyaffectedbythemarketpriceofgoldand,toalesserextent,silver,zincandcopper.ThepricesofthesemetalscanfluctuatesignificantlyandareaffectedbynumerousfactorsbeyondtheCompany'scontrol.
DuringtheyearendedDecember31,2015,fourcustomerseachcontributedmorethan10.0%oftotalrevenuesfromminingoperationsforacombinedtotalofapproximately78.0%ofrevenuesfromminingoperationsintheNorthernandSouthernbusinessunits.However,goldcanbesoldthroughnumerousgoldmarkettradersworldwide,theCompanyisnoteconomicallydependentonalimitednumberofcustomersforthesaleofitsproduct.
TradereceivablesarerecognizedoncethetransferofownershipforthemetalssoldhasoccurredandreflecttheamountsowingtotheCompanyinrespectofitssalesofdorebarsorconcentratestothirdpartiespriortothesatisfactioninfullofthepaymentobligationsofthethirdparties.AsatDecember31,2015,theCompanyhad$7.7million(December31,2014–$59.7million)inreceivablesrelatingtoprovisionallypricedconcentratesales.FortheyearendedDecember31,2015,theCompanyrecognizedmark-to-marketlossesof$0.5million(2014–$0.8million)onconcentratereceivables.
Year Ended December 31, 2015 2014 Revenues from mining operations:
Gold $ 1,911,500 $ 1,807,927
Silver 66,991 62,466
Zinc 505 9,901
Copper 6,436 16,479
Lead(i) – (7)
Totalrevenuesfromminingoperations $ 1,985,432 $ 1,896,766
Note:
(i) Lead concentrate revenues of nil in 2015 (2014 – $0.1 million) are netted against direct fees of nil (2014 – $0.1 million). Other metal revenues derived from leadconcentrate are included in their respective metal categories in the above table.
In2015,preciousmetals(goldandsilver)accountedfor99.7%ofAgnicoEagle'srevenuesfromminingoperations(2014–98.6%).Theremainingrevenuesfromminingoperationsconsistedofnetby-productmetalrevenuesfromnon-preciousmetals.
19. STOCK-BASED COMPENSATION
(a) EmployeeStockOptionPlan
TheCompany'sESOPprovidesforthegrantofstockoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.UndertheESOP,stockoptionsaregrantedatthefairmarketvalueoftheunderlyingsharesonthedaypriortothedateofgrant.Thenumberofcommonsharesthatmaybereservedforissuancetoanyonepersonpursuanttostockoptions(undertheESOPorotherwise),warrants,sharepurchaseplansorotherarrangementsmaynotexceed5.0%oftheCompany'scommonsharesissuedandoutstandingatthedateofgrant.
OnApril24,2001,theCompensationCommitteeoftheBoardadoptedapolicypursuanttowhichstockoptionsgrantedafterthatdatehaveamaximumtermoffiveyears.In2013,theshareholdersapprovedaresolutiontoincreasethenumberofcommonsharesreservedforissuanceundertheESOPto27,800,000.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 47
Ofthe3,068,080stockoptionsgrantedundertheESOPin2015,688,995stockoptionsvestedimmediately.Theremainingstockoptions,allofwhichexpirein2020,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.Ofthe3,187,500stockoptionsgrantedundertheESOPin2014,796,875stockoptionsvestedimmediately.Theremainingstockoptions,allofwhichexpirein2019,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.UpontheexerciseofstockoptionsundertheESOP,theCompanyissuescommonsharesfromtreasurytosettletheobligation.
ThefollowingtablesetsoutactivitywithrespecttoAgnicoEagle'soutstandingstockoptions:
Year Ended December 31, 2015
Year Ended December 31, 2014
Number of Stock
Options
Weighted Average Exercise
Price
Number of Stock
Options
Weighted Average Exercise
Price
Outstanding,beginningofyear 11,913,210 C$ 48.84 11,283,535 C$ 56.02
Granted 3,068,080 29.09 3,187,500 28.07
Exercised (747,683) 29.68 (582,925) 31.46
Forfeited (92,314) 40.40 (250,750) 53.08
Expired (2,059,081) 57.20 (1,724,150) 62.64
Outstanding,endofyear 12,082,212 C$ 43.65 11,913,210 C$ 48.84
Optionsexercisable,endofyear 7,519,120 C$ 50.71 7,503,335 C$ 55.98
TheaveragesharepriceofAgnicoEagle'scommonsharesduringtheyearendedDecember31,2015wasC$36.16(2014–C$34.83)
Theweightedaveragegrantdatefairvalueofstockoptionsgrantedin2015wasC$8.10(2014–C$6.53).
ThefollowingtablesetsoutinformationaboutAgnicoEagle'sstockoptionsoutstandingandexercisableatDecember31,2015:
Stock Options Outstanding
Stock Options Exercisable
Range of Exercise Prices Number
Outstanding
Weighted Average
Remaining Contractual
Life
Weighted Average Exercise
PriceNumber
Exercisable
Weighted Average Exercise
Price
C$28.03–C$39.46 7,274,207 2.83years C$ 30.99 3,386,865 C$ 33.74
C$40.66–C$53.14 2,674,500 2.03years $ 51.94 1,998,750 $ 52.02
C$63.39–C$76.60 2,133,505 0.02years $ 76.44 2,133,505 $ 76.44
C$28.03–C$76.60 12,082,212 2.15years C$ 43.65 7,519,120 C$ 50.71
48 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
TheweightedaverageremainingcontractualtermofstockoptionsexercisableatDecember31,2015was1.41years.
TheCompanyhasreservedforissuance12,082,212commonsharesintheeventthatthesestockoptionsareexercised.
ThenumberofcommonsharesavailableforthegrantofstockoptionsundertheESOPasatDecember31,2015andDecember31,2014was2,678,591and3,595,276,respectively.
SubsequenttotheyearendedDecember31,2015,2,140,075stockoptionsweregrantedundertheESOP,ofwhich535,019stockoptionsvestedwithin30daysofthegrant.Theremainingstockoptions,allofwhichexpirein2021,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.
AgnicoEagleestimatedthefairvalueofstockoptionsundertheBlack-Scholesoptionpricingmodelusingthefollowingweightedaverageassumptions:
Year Ended December 31, 2015 2014 Risk-freeinterestrate 1.50% 1.52%
Expectedlifeofstockoptions(inyears) 2.7 2.6
ExpectedvolatilityofAgnicoEagle'sshareprice 45.0% 42.5%
Expecteddividendyield 1.69% 3.82%
TheCompanyuseshistoricalvolatilitytoestimatetheexpectedvolatilityofAgnicoEagle'sshareprice.Theexpectedtermofstockoptionsgrantedisderivedfromhistoricaldataonemployeeexerciseandpost-vestingemploymentterminationexperience.
ThetotalcompensationexpensefortheESOPrecordedinthegeneralandadministrativelineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomefor2015was$20.1million(2014–$20.8million).OfthetotalcompensationcostfortheESOP,$0.6millionwascapitalizedaspartoftheproperty,plantandminedevelopmentlineitemoftheconsolidatedbalancesheetsin2015(2014–$0.8million).
(b) IncentiveSharePurchasePlan
OnJune26,1997,theCompany'sshareholdersapprovedtheISPPtoencouragedirectors,officersandemployees("Participants")topurchaseAgnicoEagle'scommonsharesatmarketvalue.In2009,theISPPwasamendedtoremovenon-executivedirectorsaseligibleParticipants.
UndertheISPP,Participantsmaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachParticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.Thetotalcompensationcostrecognizedin2015relatedtotheISPPwas$4.7million(2014–$5.2million).
In2015,512,438commonsharesweresubscribedforundertheISPP(2014–517,721)foravalueof$14.0million(2014–$15.5million).InMay2015,theCompany'sshareholdersapprovedanincreaseinthemaximumnumberofcommonsharesreservedforissuanceundertheISPPto7,100,000from6,100,000.AsatDecember31,2015,AgnicoEaglehasreservedforissuance1,899,748commonshares(2014–1,412,186)undertheISPP.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 49
(c) RestrictedShareUnitPlan
In2009,theCompanyimplementedtheRSUplanforcertainemployees.EffectiveJanuary1,2012,theRSUplanwasamendedtoincludedirectorsandseniorexecutivesoftheCompany.
AdeferredcompensationbalanceisrecordedforthetotalgrantdatevalueonthedateofeachRSUplangrant.Thedeferredcompensationbalanceisrecordedasareductionofequityandisamortizedascompensationexpenseoverthevestingperiodofthreeyears.
In2015,423,822(2014–298,877)RSUsweregrantedwithagrantdatefairvalueof$27.99(2014–$28.62).In2015,theCompanyfundedtheRSUplanbytransferring$11.5million(2014–$7.5million)toanemployeebenefittrustthatthenpurchasedcommonsharesoftheCompanyintheopenmarket.ThegrantdatefairvalueoftheRSUsgenerallyapproximatesthecostofpurchasingthesharesintheopenmarket.Oncevested,thecommonsharesinthetrustaredistributedtosettletheobligationalongwithacashpaymentreflectingtheaccumulatedamountthatwouldhavebeenpaidasdividendshadthecommonsharesbeenoutstanding.
CompensationexpenserelatedtotheRSUplanwas$12.0millionin2015(2014–$12.8million).CompensationexpenserelatedtotheRSUplanisincludedaspartofthegeneralandadministrativelineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.
SubsequenttotheyearendedDecember31,2015,340,042RSUsweregrantedundertheRSUplan.
20. CAPITAL AND FINANCIAL RISK MANAGEMENT
TheCompany'sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includinginterestraterisk,commoditypriceriskandforeigncurrencyrisk),creditriskandliquidityrisk.TheCompany'soverallriskmanagementpolicyistosupportthedeliveryoftheCompany'sfinancialtargetswhileminimizingthepotentialadverseeffectsontheCompany'sperformance.
RiskmanagementiscarriedoutbyacentralizedtreasurydepartmentunderpoliciesapprovedbytheBoard.TheCompany'sfinancialactivitiesaregovernedbypoliciesandproceduresanditsfinancialrisksareidentified,measuredandmanagedinaccordancewithitspoliciesandrisktolerance.
a) MarketRisk
Marketriskistheriskthatchangesinmarketfactors,suchasinterestrates,commoditypricesandforeignexchangerates,willaffectthevalueofAgnicoEagle'sfinancialinstruments.TheCompanycanchoosetoeitheracceptmarketriskormitigateitthroughtheuseofderivativesandothereconomichedgingstrategies.
i. InterestRateRisk
Interestrateriskistheriskthatthefairvalueoffuturecashflowsofafinancialinstrumentwillfluctuateasaresultofchangesinmarketinterestrates.TheCompany'sexposuretotheriskofchangesinmarketinterestratesrelatesprimarilytotheCompany'slong-termdebtobligationsthathavefloatinginterestrates.
50 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
Thefollowingtablesetsouttheimpactofa1.0%increaseordecreaseininterestratesonincomebeforeincomeandminingtaxes.Theimpactonequityisthesameastheimpactonincomebeforeincomeandminingtaxes.
Year Ended December 31, 2015 2014 1.0%Increase $ (4,454) $ (3,548)
1.0%Decrease $ 4,454 $ 3,548
ii. CommodityPriceRisk
a. MetalPrices
AgnicoEagle'srevenuesfromminingoperationsandnetincomearesensitivetometalprices.Changesinthemarketpriceofgoldmaybeattributedtonumerousfactorssuchasdemand,globalmineproductionlevels,centralbankpurchasesandsalesandinvestorsentiment.Changesinthemarketpricesofby-productmetals(silver,zincandcopper)maybeattributedtofactorssuchasdemandandglobalmineproductionlevels.
Inordertomitigatetheimpactoffluctuatingby-productmetalprices,theCompanyoccasionallyentersintoderivativefinancialinstrumentcontractsunderitsBoard-approvedRiskManagementPoliciesandProcedures.TheCompanyhasalong-standingpolicyofnoforwardgoldsales.However,thepolicydoesallowtheCompanytouseothereconomichedgingstrategies,whereappropriate,tomitigateby-productmetalpricingrisks.TheCompanyoccasionallybuysputoptions,entersintopricecollarsandentersintoforwardcontractstoprotectminimumby-productmetalpriceswhilemaintainingfullexposuretothepriceofgold.TheRiskManagementCommitteehasapprovedthestrategyofusingshort-termcalloptionsinanattempttoenhancetherealizedby-productmetalprices.TheCompany'spolicydoesnotallowspeculativetrading.
b. Fuel
Tomitigatetherisksassociatedwithfluctuatingdieselfuelprices,theCompanyusesderivativefinancialinstrumentsaseconomichedgesofthepriceriskonaportionofitsdieselfuelcosts(refertonote21totheseconsolidatedfinancialstatementsforfurtherdetailsonderivativefinancialinstruments).
iii. ForeignCurrencyRisk
TheCompanyreceivespaymentforallofitsmetalsalesinUSdollarsandpaysmostofitsoperatingandcapitalcostsinCanadiandollars,EurosorMexicanpesos.Thisgivesrisetosignificantcurrencyriskexposure.TheCompanyentersintocurrencyeconomichedgingtransactionsundertheBoard-approvedForeignExchangeRiskManagementPoliciesandProcedures,tohedgepartofitsforeigncurrencyexposure.Thepolicydoesnotpermitthehedgingoftranslationexposure(thatis,thegainsandlossesthatarisefromtheaccountingtranslationofCanadiandollar,EuroorMexicanpesodenominatedassetsandliabilitiesintoUSdollars),asitdoesnotgiverisetocashexposure.TheCompany'sforeigncurrencyderivativefinancialinstrumentstrategyincludestheuseofpurchasedputs,soldcalls,collarsandforwardsthatarenotheldforspeculativepurposes(refertonote21totheseconsolidatedfinancialstatementsforfurtherdetailsontheCompany'sderivativefinancialinstruments).
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 51
ThefollowingtablesetsoutthetranslationimpactonincomebeforeincomeandminingtaxesandequityfortheyearendedDecember31,2015ofa10.0%changeintheexchangerateoftheUSdollarrelativetotheCanadiandollar,EuroandMexicanpeso,withallothervariablesheldconstant.
Impact on Income Before Income and
Mining Taxes and Equity
10.0%Strengthening of the US Dollar
10.0% Weakening
of the US Dollar
Canadiandollar $ 6,304 $ (6,304)
Euro $ 2,595 $ (2,595)
Mexicanpeso $ (1,534) $ 1,534
b) CreditRisk
Creditriskistheriskthatathirdpartymightfailtofulfillitsobligationsunderthetermsofafinancialinstrument.Creditriskarisesfromcashandcashequivalents,short-terminvestments,restrictedcash,tradereceivablesandderivativefinancialinstruments.TheCompanyholdsitscashandcashequivalents,restrictedcashandshort-terminvestmentsinhighlyratedfinancialinstitutionsresultinginalowlevelofcreditrisk.Fortradereceivablesandderivativefinancialinstruments,historicallevelsofdefaulthavebeennegligible,resultinginalowlevelofcreditrisk.TheCompanymitigatescreditriskbydealingwithrecognizedcreditworthycounterpartiesandlimitingconcentrationrisk.Forderivativefinancialinstrumentliabilities,theCompanyassumesnocreditriskwhenthefairvalueofaninstrumentisnegative.Themaximumexposuretocreditriskisequaltothecarryingamountoftheinstrumentsasfollows:
As at December 31,
2015
As at December 31,
2014
Cashandcashequivalents $ 124,150 $ 177,537
Short-terminvestments 7,444 4,621
Restrictedcash 1,426 54,021
Tradereceivables 7,714 59,716
Derivativefinancialinstrumentassets 87 4,877
Total $ 140,821 $ 300,772
c) LiquidityRisk
LiquidityriskistheriskthattheCompanywillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.TheCompanymonitorsitsriskofashortageoffundsbymonitoringitsdebtratingandprojectedcashflowstakingintoaccountthematuritydatesofexistingdebtandotherpayables.TheCompanymanagesexposuretoliquidityriskbymaintainingcashbalances,havingaccesstoundrawncreditfacilitiesandaccesstopublicdebtmarkets.Contractualmaturitiesrelatingtofinanceleaseobligationsaredetailedinnote14totheseconsolidatedfinancialstatementsandcontractualmaturities
52 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
relatingtolong-termdebtaredetailedinnote15totheseconsolidatedfinancialstatements.Otherfinancialliabilities,includingaccountspayableandaccruedliabilitiesandderivativefinancialinstruments,havematuritieswithinoneyearofDecember31,2015.
d) CapitalRiskManagement
TheCompany'sprimarycapitalmanagementobjectiveistomaintainanoptimalcapitalstructuretosupportcurrentandlong-termbusinessactivitiesandtoprovidefinancialflexibilityinordertomaximizevalueforequityholders.
AgnicoEagle'scapitalstructurecomprisesamixoflong-termdebtandtotalequityasfollows:
As at December 31,
2015
As at December 31,
2014
Long-termdebt $ 1,132,638 $ 1,374,643
Totalequity 4,141,020 4,068,490
Total $ 5,273,658 $ 5,443,133
TheCompanymanagesitscapitalstructureandmakesadjustmentstoitbasedonchangesineconomicconditionsandtherequirementsoffinancialcovenants.Toeffectivelymanageitscapitalrequirements,AgnicoEaglehasinplacearigorousplanning,budgetingandforecastingprocesstoensureithastheappropriateliquiditytomeetitsoperatingandgrowthobjectives.TheCompanyhastheabilitytoadjustitscapitalstructurebyvariousmeans.
Seenote15totheseconsolidatedfinancialstatementsfordetailsrelatedtoAgnicoEagle'scompliancewithitslong-termdebtcovenants.
21. DERIVATIVE FINANCIAL INSTRUMENTS
CurrencyRiskManagement
TheCompanyutilizesforeignexchangeeconomichedgestoreducethevariabilityinexpectedfuturecashflowsarisingfromchangesinforeigncurrencyexchangerates.TheCompanyisprimarilyexposedtocurrencyfluctuationsrelativetotheUSdollarasaportionoftheCompany'soperatingcostsandcapitalexpendituresaredenominatedinforeigncurrencies;primarilytheCanadiandollar,theEuroandtheMexicanpeso.Thesepotentialcurrencyfluctuationsincreasethevolatilityof,andcouldhaveasignificantimpacton,theCompany'sproductioncosts.Theeconomichedgesrelatetoaportionoftheforeigncurrencydenominatedcashoutflowsarisingfromforeigncurrencydenominatedexpenditures.TheCompanydoesnotapplyhedgeaccountingtothesearrangements.
AsatDecember31,2015,theCompanyhadoutstandingforeignexchangezerocostcollars.ThepurchaseofUSdollarputoptionswasfinancedthroughsellingUSdollarcalloptionsatahigherlevelsuchthatthenetpremiumpayabletothedifferentcounterpartiesbytheCompanywasnil.AtDecember31,2015,thezerocostcollarsrelatedto$217.0millionof2016expendituresandtheCompanyrecognizedmark-to-marketadjustmentsinthelossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.Mark-to-marketgains(losses)relatedtoforeignexchangederivativefinancialinstrumentsarerecordedatfairvaluebasedonbroker-dealerquotationscorroboratedbyoptionpricingmodelsthatutilizeperiodendforwardpricingoftheapplicableforeigncurrencytocalculatefairvalue.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 53
AGNICO EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2015
21. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
TheCompany'sotherforeigncurrencyderivativestrategiesin2015and2014consistedmainlyofwritingUSdollarcalloptionswithshortmaturitiestogeneratepremiumsthatwould,inessence,enhancethespottransactionratereceivedwhenexchangingUSdollarsforCanadiandollars.AllofthesederivativetransactionsexpiredpriortoyearendsuchthatnoderivativeswereoutstandingasatDecember31,2015orDecember31,2014.Thecalloptionpremiumswererecognizedinthelossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.
CommodityPriceRiskManagement
Tomitigatetherisksassociatedwithfluctuatingdieselfuelprices,theCompanyusesderivativefinancialinstrumentsaseconomichedgesofthepriceriskonaportionofdieselfuelcostsassociatedwiththeMeadowbankmine'sdieselfuelexposureasitrelatestooperatingcosts.TherewerederivativefinancialinstrumentsoutstandingatDecember31,2015relatingto7.0milliongallonsofheatingoil(December31,2014–14.0milliongallons).Therelatedmark-to-marketadjustmentspriortosettlementwererecognizedinthelossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.TheCompanydoesnotapplyhedgeaccountingtothesearrangements.
Mark-to-marketgains(losses)relatedtoheatingoilderivativefinancialinstrumentsarebasedonbroker-dealerquotationsthatutilizeyearendforwardpricingtocalculatefairvalue.
AsatDecember31,2015andDecember31,2014,therewerenometalderivativepositions.TheCompanymayfromtimetotimeutilizeshort-termfinancialinstrumentsaspartofitsstrategytominimizerisksandoptimizereturnsonitsby-productmetalsales.
Thefollowingtablesetsoutasummaryoftheamountsrecognizedinthelossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome:
Year Ended December 31,
2015
2014
Premiumsrealizedonwrittenforeignexchangecalloptions $ 2,654 $ 2,725
Realizedgain(loss)onwarrants 9,072 (4,263)
Unrealized(loss)gainonwarrants(i) (2,213) 3,426
Realized(loss)gainoncurrencyandcommodityderivatives (29,297) 20
Unrealizedgain(loss)oncurrencyandcommodityderivatives(i) 176 (8,064)
Totallossonderivativefinancialinstruments $ (19,608) $ (6,156)
Note:
(i) Unrealizedgainsandlossesonfinancialinstrumentsthatdidnotqualifyforhedgeaccountingarerecognizedthroughthelossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomeandthroughtheotherlineitemoftheconsolidatedstatementsofcashflows.
22. SEGMENTED INFORMATION
AgnicoEagleoperatesinasingleindustry,namelyexplorationforandproductionofgold.TheCompany'sprimaryoperationsareinCanada,MexicoandFinland.TheCompanyidentifiesitsreportablesegmentsasthoseoperationswhoseoperatingresultsarereviewedbytheChiefOperatingDecisionMaker("CODM"),theChiefExecutiveOfficerforthepurposeofallocatingresourcesandassessingperformanceandthatrepresentmorethan10.0%ofthecombinedrevenuefromminingoperations,incomeorlossortotalassetsofalloperatingsegments.EachoftheCompany'ssignificantoperatingminesandprojectsareconsideredtobeseparateoperatingsegments.Certainoperatingsegmentsthatdonotmeetthequantitative
54 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
thresholdsarestilldisclosedwhentheCompanybelievesthattheinformationisuseful.TheCODMalsoreviewssegmentincome(definedasrevenuesfromminingoperationslessproductioncosts,explorationandcorporatedevelopmentexpensesandimpairmentlosses)onamine-by-minebasis.ThefollowingaretheCompany'sreportablesegmentsorganizedaccordingtotheirrelationshipwiththeCompany'sthreebusinessunitsandreflecthowtheCompanymanagesitsbusinessandhowitclassifiesitsoperationsforplanningandmeasuringperformance:
NorthernBusiness: LaRondemine,Lapamine,Goldexmine,MeadowbankmineincludingtheAmaruqdeposit,CanadianMalarticjointoperation,MeliadineprojectandKittilamine
SouthernBusiness: PinosAltosmine,CrestonMascotadepositatPinosAltosandLaIndiamine
Exploration: UnitedStatesExplorationoffice,EuropeExplorationoffice,CanadaExplorationofficesandLatinAmericaExplorationoffice
Revenuesfromminingoperationsandproductioncostsforthereportablesegmentsarereportednetofintercompanytransactions.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 55
Corporateandotherassetsandspecificincomeandexpenseitemsarenotallocatedtoreportablesegments.
Year Ended December 31, 2015:
Revenues from Mining
Operations
Production Costs
Exploration and Corporate
Development
Segment Income (Loss)
Northern Business:
LaRondemine $ 318,207 $ (172,283) $ – $ 145,924
Lapamine 104,785 (52,571) – 52,214
Goldexmine 133,845 (61,278) – 72,567
Meadowbankmine 446,898 (230,564) (43,676) 172,658
CanadianMalarticjointoperation(note5) 333,280 (171,473) (6,093) 155,714
Kittilamine 206,357 (126,095) – 80,262
Total Northern Business 1,543,372 (814,264) (49,769) 679,339
Southern Business:
PinosAltosmine 250,909 (105,175) – 145,734
CrestonMascotadepositatPinosAltos 66,472 (26,278) – 40,194
LaIndiamine 124,679 (49,578) – 75,101
Total Southern Business 442,060 (181,031) – 261,029
Exploration – – (60,584) (60,584)
Segments totals $ 1,985,432 $ (995,295) $ (110,353) $ 879,784
Totalsegmentsincome $ 879,784
Corporateandother:
Amortizationofproperty,plantandminedevelopment (608,609)
Generalandadministrative (96,973)
Impairmentlossonavailable-for-salesecurities (12,035)
Financecosts (75,228)
Lossonderivativefinancialinstruments (19,608)
Gainonsaleofavailable-for-salesecurities 24,600
Environmentalremediation (2,003)
Foreigncurrencytranslationgain 4,728
Otherexpenses (12,028)
Incomebeforeincomeandminingtaxes $ 82,628
56 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
Year Ended December 31, 2014:
Revenues from Mining
Operations
Production Costs
Exploration and Corporate
Development
Segment Income (Loss)
Northern Business:
LaRondemine $ 308,794 $ (188,736) $ – $ 120,058
Lapamine 115,254 (61,056) – 54,198
Goldexmine 125,574 (64,836) – 60,738
Meadowbankmine 575,856 (270,824) (11,199) 293,833
CanadianMalarticjointoperation(note5) 189,900 (113,916) – 75,984
Kittilamine 176,520 (116,893) – 59,627
Total Northern Business 1,491,898 (816,261) (11,199) 664,438
Southern Business:
PinosAltosmine 251,783 (123,342) – 128,441
CrestonMascotadepositatPinosAltos 59,573 (28,007) – 31,566
LaIndiamine 93,512 (36,949) – 56,563
Total Southern Business 404,868 (188,298) – 216,570
Exploration – – (44,803) (44,803)
Segments totals $ 1,896,766 $ (1,004,559) $ (56,002) $ 836,205
Totalsegmentsincome $ 836,205
Corporateandother:
Amortizationofproperty,plantandminedevelopment (433,628)
Generalandadministrative (118,771)
Impairmentlossonavailable-for-salesecurities (15,763)
Financecosts (73,393)
Lossonderivativefinancialinstruments (6,156)
Gainonsaleofavailable-for-salesecurities 5,635
Environmentalremediation (8,214)
Foreigncurrencytranslationloss (3,781)
Otherincome 7,004
Incomebeforeincomeandminingtaxes $ 189,138
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 57
Total Assets as at
December 31, 2015
December 31, 2014
Northern Business:
LaRondemine $ 834,881 $ 856,489
Lapamine 50,951 74,131
Goldexmine 201,257 205,101
Meadowbankmine 595,682 660,278
CanadianMalarticjointoperation(note5) 2,012,648 2,068,532
Meliadineproject 561,271 487,901
Kittilamine 933,362 931,335
Total Northern Business 5,190,052 5,283,767
Southern Business:
PinosAltosmine 585,735 573,786
CrestonMascotadepositatPinosAltos 70,670 84,176
LaIndiamine 501,179 543,297
Total Southern Business 1,157,584 1,201,259
Exploration 199,606 144,580
Corporate and other 135,938 179,649
Total assets $ 6,683,180 $ 6,809,255
58 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThefollowingtablesetsoutthechangesinthecarryingamountofgoodwillbysegmentfortheyearsendedDecember31,2014andDecember31,2015:
Meliadine Project
La India Mine
Canadian Malartic Joint
Operation
Total
Cost:
BalanceatDecember31,2013 $ 200,064 $ 39,017 $ – $ 239,081
JointacquisitionofOsisko(note5) – – 657,792 657,792
BalanceatDecember31,2014 200,064 39,017 657,792 896,873
BalanceatDecember31,2015 200,064 39,017 657,792 896,873
Accumulated impairment:
BalanceatDecember31,2014 (200,064) – – (200,064)
BalanceatDecember31,2015 (200,064) – – (200,064)
Carrying amount at December 31, 2014 $ – $ 39,017 $ 657,792 $ 696,809
Carrying amount at December 31, 2015 $ – $ 39,017 $ 657,792 $ 696,809
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 59
Thefollowingtablesetsoutcapitalexpendituresbysegment:
Capital Expenditures Year Ended December 31,
2015
2014
Northern Business:
LaRondemine $ 67,342 $ 76,651
Lapamine 6,491 20,198
Goldexmine 48,818 34,330
Meadowbankmine 65,230 65,883
CanadianMalarticjointoperation 43,368 36,083
Meliadineproject 66,747 48,270
Kittilamine 56,404 106,220
Total Northern Business 354,400 387,635
Southern Business:
PinosAltosmine 61,829 48,365
CrestonMascotadepositatPinosAltos 4,195 10,852
LaIndiamine 23,379 22,692
Total Southern Business 89,403 81,909
Corporate and other 5,955 5,868
Total capital expenditures $ 449,758 $ 475,412
Thefollowingtablesetsoutrevenuesfromminingoperationsbygeographicarea:
Year Ended December 31,
2015
2014
Canada $ 1,337,017 $ 1,315,378
Mexico 442,058 404,868
Finland 206,357 176,520
Total revenues from mining operations $ 1,985,432 $ 1,896,766
60 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
Thefollowingtablesetsoutnon-currentassetsbygeographicarea:
Non-current Assets as at
December 31, 2015
December 31, 2014
Canada $ 3,878,644 $ 3,954,725
Mexico 1,082,524 1,095,160
Finland 882,345 841,062
UnitedStates 10,242 10,248
Total non-current assets $ 5,853,755 $ 5,901,195
23. IMPAIRMENT LOSSES
TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendandifanindicatorofimpairmentisidentified,goodwillandnon-currentassetsaretestedforimpairmentatthattime.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Animpairmentlossisrecognizedforanyexcessofthecarryingamountoftheassetoveritsrecoverableamount.
TheestimatedrecoverableamountoftheCanadianMalarticjointoperationsegmentasatDecember31,2015andDecember31,2014wasdeterminedonthebasisoffairvaluelesscoststodisposeoftheCanadianMalarticmineaswellastheexplorationpropertiesincludedinthejointoperation.TheestimatedrecoverableamountoftheCanadianMalarticminewascalculatedbydiscountingtheestimatedfuturenetcashflowsovertheestimatedlifeofthemineusingadiscountrateof5.25%(2014–7.6%),commensuratewiththeestimatedlevelofriskassociatedwiththeCanadianMalarticmine.Therecoverableamountcalculationwasbasedonanestimateoffutureproductionlevelsapplyinggoldpricesof$1,150to$1,250perounce(inrealterms)(2014–$1,300perounce),foreignexchangeratesofUS$0.75:C$1.00toUS$0.80:C$1.00(2014–US$0.88:C$1.00toUS$0.91:C$1.00),aninflationrateof2.0%(2014–2.0%),andcapital,operatingandreclamationcostsbasedonapplicablelife-of-mineplans.Explorationpropertieswithinthejointoperationwerevaluedbyreferencetocomparablerecenttransactions.TheCanadianMalarticjointoperationsegmentestimatedrecoverableamountexceededitscarryingamountatDecember31,2015andDecember31,2014.ThediscountedcashflowapproachusessignificantunobservableinputsandisthereforeconsideredLevel3fairvaluemeasurementunderthefairvaluehierarchy.
Discountrateswerebasedoneachassetgroup'sweightedaveragecostofcapital,ofwhichthetwomaincomponentsarethecostofequityandtheafter-taxcostofdebt.Costofequitywascalculatedbasedonthecapitalassetpricingmodel,incorporatingtherisk-freerateofreturnbasedonGovernmentofCanadamarketablebondyieldsasatthevaluationdate,theCompany'sbetacoefficientadjustmenttothemarketequityriskpremiumbasedonthevolatilityoftheCompany'sreturninrelationtothatofacomparablemarketportfolio,plusasizepremiumandCompany-specificriskfactor.CostofdebtwasdeterminedbyapplyinganappropriatemarketindicationoftheCompany'sborrowingcapabilitiesandthecorporateincometaxrateapplicabletoeachassetgroup'sjurisdiction.Goldpriceestimatesweredeterminedusingforecastsoffuturepricespreparedbyindustryanalysts,whichwereavailableasatorclosetothevaluationdate.Foreignexchangeestimatesarebasedonacombinationofcurrencyforwardcurvesandestimatesthatreflecttheoutlooksofmajorglobalfinancialinstitutions.
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 61
24. INCOME AND MINING TAXES
Incomeandminingtaxesexpenseismadeupofthefollowingcomponents:
Year Ended December 31,
2015
2014
Currentincomeandminingtaxes $ 51,495 $ 69,110
Deferredincomeandminingtaxes:
Originationandreversaloftemporarydifferences 6,550 37,058
Totalincomeandminingtaxesexpense $ 58,045 $ 106,168
TheincomeandminingtaxesexpenseisdifferentfromtheamountthatwouldhavebeencalculatedbyapplyingtheCanadianstatutoryincometaxrateasaresultofthefollowing:
Year Ended December 31,
2015
2014
Combinedfederalandcompositeprovincialtaxrates 26.0% 26.0%
Expectedincometaxexpenseatstatutoryincometaxrate $ 21,442 $ 49,082
Increase(decrease)inincomeandminingtaxesresultingfrom:
Miningtaxes 19,042 28,857
Taxlawchanges 4,357 –
Impactofforeigntaxrates (8,499) (7,462)
Permanentdifferences 1,359 14,042
Impactofforeignexchangeondeferredincometaxbalances 20,344 21,649
Totalincomeandminingtaxesexpense $ 58,045 $ 106,168
62 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
ThefollowingtablesetsoutthecomponentsofAgnicoEagle'snetdeferredincomeandminingtaxliabilities:
As at December 31,
2015
As at December 31,
2014
Miningproperties $ 1,039,105 $ 1,043,811
Netoperatingandcapitallosscarryforwards (86,126) (117,995)
Miningtaxes (75,410) (54,643)
Reclamationprovisionsandotherliabilities (75,455) (73,981)
Totaldeferredincomeandminingtaxliabilities $ 802,114 $ 797,192
Year Ended December 31,
2015
2014
Deferredincomeandminingtaxliabilities–beginningofyear $ 797,192 $ 453,411
Incomeandminingtaximpactrecognizedinnetincome 6,025 33,884
Incometaximpactrecognizedinothercomprehensiveincome(loss) (1,103) 1,316
AttributabledeferredincomeandminingtaxliabilitiesjointlyacquiredfromOsisko – 308,581
Deferredincomeandminingtaxliabilities–endofyear $ 802,114 $ 797,192
TheCompanyoperatesindifferentjurisdictionsand,accordingly,itissubjecttoincomeandothertaxesunderthevarioustaxregimesinthecountriesinwhichitoperates.Thetaxrulesandregulationsinmanycountriesarehighlycomplexandsubjecttointerpretation.TheCompanymaybesubjectinthefuturetoareviewofitshistoricincomeandothertaxfilingsandinconnectionwithsuchreviews,disputescanarisewiththetaxingauthoritiesovertheinterpretationorapplicationofcertaintaxrulesandregulationstotheCompany'sbusinessconductedwithinthecountryinvolved.
Thedeductibletemporarydifferencesandunusedtaxlossesinrespectofwhichadeferredtaxassethasnotbeenrecognizedintheconsolidatedbalancesheetsareasfollows:
As at December 31,
2015
As at December 31,
2014
Netcapitallosscarryforwards $ 90,647 $ 83,353
Otherdeductibletemporarydifferences 213,879 204,293
Unrecognizeddeductibletemporarydifferencesandunusedtaxlosses $ 304,526 $ 287,646
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 63
TheCompanyalsohasunusedtaxcreditsof$9.9millionasatDecember31,2015(December31,2014–nil)forwhichadeferredtaxassethasnotbeenrecognized.
Capitallosscarryforwardsandotherdeductibletemporarydifferenceshavenoexpirydatewhiletheunusedtaxcreditsexpirein2020.
TheCompanyhas$412.8million(2014–$499.9million)oftaxabletemporarydifferencesassociatedwithitsinvestmentsinsubsidiariesforwhichdeferredincometaxof$2.7million(2014–$2.3million)hasnotbeenrecognized,astheCompanyisabletocontrolthetimingofthereversalofthetaxabletemporarydifferencesanditisprobablethattheywillnotreverseintheforeseeablefuture.
TheCompanyissubjecttotaxesinCanada,MexicoandFinland,eachwithvaryingstatutesoflimitations.Priortaxationyearsgenerallyremainsubjecttoexamination.
25. EMPLOYEE BENEFITS AND COMPENSATION OF KEY MANAGEMENT PERSONNEL
DuringtheyearendedDecember31,2015,employeebenefitsexpensewas$463.0million(2014–$493.3million).Therewerenorelatedpartytransactionsin2015or2014otherthancompensationofkeymanagementpersonnel.KeymanagementpersonnelincludethemembersoftheBoardandtheseniorleadershipteam.Compensationforkeymanagementpersonnelwasasfollows:
Year ended December 31,
2015
2014
Salaries,short-termincentivesandotherbenefits $ 7,428 $ 6,629
Post-employmentbenefits 611 2,009
Share-basedpayments 4,914 4,688
Total $ 12,953 $ 13,326
26. COMMITMENTS AND CONTINGENCIES
Aspartofitsongoingbusinessandoperations,theCompanyhasbeenrequiredtoprovideassuranceintheformoflettersofcreditforenvironmentalandsiterestorationcosts,customcredits,governmentgrantsandothergeneralcorporatepurposes.AsatDecember31,2015,thetotalamountoftheseguaranteeswas$268.7million.
CertainoftheCompany'spropertiesaresubjecttoroyaltyarrangements.Thefollowingarethemostsignificantroyaltyarrangements:
• TheCompanyhasaroyaltyagreementwiththeFinnishgovernmentrelatingtotheKittilamine.Starting12monthsaftertheKittilamine'soperationscommenced,theCompanyhasbeenrequiredtopay2.0%onnetsmelterreturns,definedasrevenuelessprocessingcosts.Theroyaltyispaidonanannualbasisinthefollowingyear.
• TheCompanyiscommittedtopayaroyaltyonproductionfromcertainpropertiesinQuebec,Canada.Thetypeofroyaltyagreementsinclude,butarenotlimitedto,netprofitsinterestroyaltiesandnetsmelterreturnroyalties,withpercentagesrangingfrom2.5%to5.0%.
• TheCompanyiscommittedtopayaroyaltyonproductionfromcertainpropertiesinMexico.Thetypeofroyaltyagreementsinclude,butarenotlimitedto,netprofitsinterestroyaltiesandnetsmelterreturnroyalties,withpercentagesrangingfrom0.5%to3.5%.
64 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
TheCompanyregularlyentersintovariousearn-inandshareholderagreements,oftenwithcommitmentstopaynetsmelterreturnandotherroyalties.
TheCompanyhadthefollowingpurchasecommitmentsasatDecember31,2015,ofwhich$29.3millionrelatedtocapitalexpenditures:
Purchase
Commitments
2016 $ 38,750
2017 10,556
2018 7,991
2019 5,709
2020 4,702
Thereafter 20,400
Total $ 88,108
27. SUBSEQUENT EVENTS
DividendsDeclared
OnFebruary10,2016,AgnicoEagleannouncedthattheBoardapprovedthepaymentofaquarterlycashdividendof$0.08percommonshare(atotalvalueofapproximately$17.5million),paidonMarch15,2016toholdersofrecordofthecommonsharesoftheCompanyonMarch1,2016.
Flow-throughshareprivateplacement
OnMarch10,2016,theCompanyissued374,869commonsharesunderflow-throughshareprivateplacementsfortotalproceedsofC$25.0million($18.7million).TheCompanyhasanobligationtoincurC$25.0millioninexplorationexpendituresandtorenouncesuchexpenditurestotheinvestorsoftheseflow-throughshares.
28. ONGOING LITIGATION
SecuritiesClassActionLawsuits
OnMarch8,2012andApril10,2012,aNoticeofActionandStatementofClaim(collectively,the"OntarioClaim")wereissuedbyWilliamLeslie,AFALivforsakringsaktiebolagandcertainotherentitiesagainsttheCompanyandcertainofitscurrentandformerofficers,someofwhoalsoareorweredirectorsoftheCompany.TheOntarioClaimallegedthattheCompany'spublicdisclosureconcerningwaterflowissuesattheGoldexminewasmisleading.TheOntarioClaimwasissuedbytheplaintiffsonbehalfofallpersonsandentitieswhoacquiredsecuritiesoftheCompanyduringtheperiodMarch26,2010toOctober19,2011,excludingpersonsresidentordomiciledintheProvinceofQuebecatthetimetheypurchasedoracquiredsuchsecurities.Theplaintiffssought,amongotherthings,damagesofC$250.0million.OnApril17,2013,anOrderwasgrantedonconsentcertifyingtheactionandgrantingleavefortheclaimsunderSection138oftheSecurities Act (Ontario)toproceed.
OnMarch28,2012,theCompanyandcertainofitscurrentandformerofficers,someofwhomalsoareorweredirectorsoftheCompany,werenamedasrespondentsinaMotionforLeavetoInstituteaClassActionandfortheAppointmentofa
ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 65
RepresentativePlaintiff(the"QuebecMotion").Theactionwasonbehalfofallpersonsandentitieswithfewerthan50employeesresidentinQuebecwhoacquiredsecuritiesoftheCompanybetweenMarch26,2010andOctober19,2011.TheproposedclassactionwasfordamagesofC$100.0millionarisingasaresultofallegedlymisleadingdisclosurebytheCompanyconcerningitsoperationsattheGoldexmine.OnOctober1,2013,theQuebeccourtcertifiedtheclassactionontermsidenticaltothosesetoutintheconsentOrdergrantedinOntarioonApril17,2013.
SettlementofOntarioandQuebecActions
InSeptember2015,theCompanyparticipatedinamediationwiththeplaintiffsinrespectofboththeOntarioandQuebecactionsandreachedanagreementtosettletheOntarioandQuebecactionsforanaggregateofC$17.0millionwithoutanyadmissionofliability.Aspartofthesettlement,theproceedingsagainsttheCompanyandtheindividualdefendantsweredismissed.ThesettlementwasapprovedbytheOntarioandQuebeccourtsonFebruary11,2016andFebruary1,2016,respectively.TheamountofthesettlementhasbeencoveredbytheinsurerstotheCompany.AsatDecember31,2015,theCompanyrecordedC$17.0millionintheaccountspayableandaccruedliabilitieslineitemoftheconsolidatedbalancessheetstoreflectthesettlementpayment,withanequalamountrecordedintheothercurrentassetslineitemoftheconsolidatedbalancessheetstoreflecttherelatedinsurancereceivable.
66 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS
QuickLinks
Exhibit99.2
REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMONINTERNALCONTROLOVERFINANCIALREPORTINGMANAGEMENTCERTIFICATIONREPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMAGNICOEAGLEMINESLIMITEDCONSOLIDATEDBALANCESHEETS(thousandsofUnitedStatesdollars,exceptshareamounts)AGNICOEAGLEMINESLIMITEDCONSOLIDATEDSTATEMENTSOFEQUITY(thousandsofUnitedStatesdollars,exceptshareandpershareamounts)AGNICOEAGLEMINESLIMITEDCONSOLIDATEDSTATEMENTSOFCASHFLOWS(thousandsofUnitedStatesdollars)
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Exhibit 99.3
Management's Discussion and Analysis(PREPAREDINACCORDANCEWITHINTERNATIONALFINANCIALREPORTINGSTANDARDS)FOR THE YEAR ENDED DECEMBER 31, 2015
AGNICO EAGLE MINES LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS
Table of Contents
Page ExecutiveSummary 1
Strategy 1
PortfolioOverview 2
KeyPerformanceDrivers 4
BalanceSheetReview 6
ResultsofOperations 7
RevenuesfromMiningOperations 8
ProductionCosts 9
ExplorationandCorporateDevelopmentExpense 12
AmortizationofProperty,PlantandMineDevelopment 12
GeneralandAdministrativeExpense 12
ImpairmentLossonAvailable-for-saleSecurities 13
FinanceCosts 13
ImpairmentLoss 13
ForeignCurrencyTranslation(Gain)Loss 14
IncomeandMiningTaxesExpense(Recovery) 14
LiquidityandCapitalResources 14
OperatingActivities 14
InvestingActivities 14
FinancingActivities 16
ContractualObligations 18
Off-BalanceSheetArrangements 18
2016LiquidityandCapitalResourcesAnalysis 19
QuarterlyResultsReview 19
Outlook 20
GoldProduction 20
FinancialOutlook 22
RiskProfile 24
CommodityPricesandForeignCurrencies 24
CostInputs 26
InterestRates 26
i
FinancialInstruments 26
OperationalRisk 26
RegulatoryRisk 28
ControlsEvaluation 29
OutstandingSecurities 29
Governance 29
SustainableDevelopmentManagement 29
EmployeeHealthandSafety 30
Community 30
Environment 30
InternationalFinancialReportingStandards 31
CriticalIFRSAccountingPoliciesandAccountingEstimates 31
DerivativeInstrumentsandHedgeAccounting 31
Goodwill 31
MiningProperties,PlantandEquipmentandMineDevelopmentCosts 32
DevelopmentStageExpenditures 33
ImpairmentofLong-livedAssets 34
ReclamationProvisions 34
Stock-basedCompensation 35
RevenueRecognition 36
IncomeTaxes 36
RecentlyIssuedAccountingPronouncements 37
MineralReserveData 37
Non-GAAPFinancialPerformanceMeasures 39
SummarizedQuarterlyData 50
ThreeYearFinancialandOperatingSummary 56
ThisManagement'sDiscussionandAnalysis("MD&A")datedMarch23,2016ofAgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")shouldbereadinconjunctionwiththeCompany'sannualconsolidatedfinancialstatementsfortheyearendedDecember31,2015thatwerepreparedinaccordancewithInternationalFinancialReportingStandards("IFRS")asissuedbytheInternationalAccountingStandardsBoard("IASB").TheCompanyhasadoptedIFRSasitsbasisofaccounting,replacingUnitedStatesgenerallyacceptedaccountingprinciples("USGAAP")effectiveJuly1,2014.TheannualconsolidatedfinancialstatementsandthisMD&AarepresentedinUnitedStatesdollars("USdollars","$"or"US$")andallunitsofmeasurementareexpressedusingthemetricsystem,unlessotherwisespecified.CertaininformationinthisMD&AispresentedinCanadiandollars("C$"),MexicanpesosorEuropeanUnioneuros("Euro"or"€").AdditionalinformationrelatingtotheCompany,includingtheCompany'sAnnualInformationFormfortheyearendedDecember31,2015(the"AIF"),isavailableontheCanadianSecuritiesAdministrators'(the"CSA")SEDARwebsiteatwww.sedar.com.
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NOTE TO INVESTORS CONCERNING FORWARD-LOOKING INFORMATION CertainstatementsinthisMD&A,referredtohereinas"forward-lookingstatements",constitute"forward-lookinginformation"undertheprovisionsofCanadianprovincialsecuritieslawsandconstitute"forward-lookingstatements"withinthemeaningoftheUnitedStatesPrivateSecuritiesLitigationReformActof1995.Thesestatementsrelateto,amongotherthings,theCompany'splans,objectives,expectations,estimates,beliefs,strategiesandintentionsandcangenerallybeidentifiedbytheuseofwordssuchas"anticipate","believe","budget","could","estimate","expect","forecast","intend","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisMD&Ainclude,butarenotlimitedto,thefollowing:
• theCompany'soutlookfor2016andfutureperiods;
• statementsregardingfutureearnings,andthesensitivityofearningstogoldandothermetalprices;
• anticipatedlevelsortrendsforpricesofgoldandby-productmetalsminedbytheCompanyorforexchangeratesbetweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;
• estimatesoffuturemineralproductionandsales;
• estimatesoffuturecosts,includingminingcosts,totalcashcostsperounce,all-insustainingcostsperounce,minesitecostspertonneandothercosts;
• estimatesoffuturecapitalexpenditures,explorationexpendituresandothercashneeds,andexpectationsastothefundingthereof;
• statementsregardingtheprojectedexploration,developmentandexploitationofcertainoredeposits,includingestimatesofexploration,developmentandproductionandothercapitalcostsandestimatesofthetimingofsuchexploration,developmentandproductionordecisionswithrespectthereto;
• estimatesofmineralreservesandmineralresourcesandtheirsensitivitiestogoldpricesandotherfactors,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;
• estimatesofcashflow;
• estimatesofminelife;
• anticipatedtimingofeventswithrespecttotheCompany'sminesites,minedevelopmentprojectsandexplorationprojects;
• estimatesoffuturecostsandotherliabilitiesforenvironmentalremediation;
• statementsregardinganticipatedlegislationandregulations,includingwithrespecttoclimatechange,andestimatesoftheimpactontheCompany;and
• otheranticipatedtrendswithrespecttotheCompany'scapitalresourcesandresultsofoperations.
Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisMD&Aarebased,andwhichmayprovetobeincorrect,includetheassumptionssetoutelsewhereinthisMD&Aaswellas:thattherearenosignificantdisruptionsaffectingAgnicoEagle'soperations,whetherduetolabourdisruptions,supplydisruptions,damagetoequipment,naturalorman-madeoccurrences,miningormillingissues,politicalchanges,titleissuesorotherwise;thatpermitting,developmentandexpansionateachofAgnicoEagle'sminesandminedevelopmentprojectsproceedonabasisconsistentwithexpectations,andthatAgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheUSdollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisMD&A;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations;thatproductionmeetsexpectations;thatAgnicoEagle'scurrentestimatesofmineralreserves,mineralresources,mineralgradesandmineralrecoveriesareaccurate;thattherearenomaterialdelaysinthetimingforcompletionofdevelopmentprojects;andthattherearenomaterialvariationsinthecurrenttaxandregulatoryenvironmentthataffectAgnicoEagle.
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Theforward-lookingstatementsinthisMD&AreflecttheCompany'sviewsasatthedateofthisMD&Aandinvolveknownandunknownrisks,uncertaintiesandotherfactorswhichcouldcausetheactualresults,performanceorachievementsoftheCompanyorindustryresultstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutin"RiskFactors"below.Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisMD&Acontainsinformationregardingestimatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowingyearoveryearcomparisons.Investorsarecautionedthatthisinformationmaynotbesuitableforotherpurposes.
Meaningof"including"and"suchas":WhenusedinthisMD&A,theterms"including"and"suchas"meanincludingandsuchas,withoutlimitation.
NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources
Thisdocumentusestheterms"measuredmineralresources"and"indicatedmineralresources".InvestorsareadvisedthatwhilethesetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or allof mineral deposits in these categories will ever be converted into mineral reserves.
Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources
Thisdocumentusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbeassumedthatanypartorallofaninferredmineralresourcewilleverbeupgradedtoahighercategory.UnderCanadianrules,estimatesofinferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legally mineable.
NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE ThisMD&Apresentscertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce","adjustednetincome"and"minesitecostspertonne"thatarenotrecognizedmeasuresunderIFRS.Thisdatamaynotbecomparabletodatapresentedbyothergoldproducers.ForareconciliationofthesemeasurestothemostdirectlycomparablefinancialinformationpresentedintheconsolidatedfinancialstatementspreparedinaccordancewithIFRS,seeNon-GAAP Financial Performance Measures inthisMD&A.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinperformingyearoveryearcomparisons.However,thesenon-GAAPmeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS,andthesemeasures,takenbythemselves,arenotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.ThisMD&Aalsocontainsinformationastoestimatedfuturetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonne.Theestimatesoftotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnearebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethattheCompanyexpectstoincurtominegoldatitsminesandprojectsand,consistentwiththereconciliationoftheseactualcostsreferredtoabove,donotincludeproductioncostsattributabletoaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-GAAPfinancialmeasurestothemostcomparableIFRSmeasure.
All-insustainingcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).All-insustainingcostsperounceofgoldproducedonaby-productbasisiscalculatedastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andnon-cashreclamationprovisionexpenseperounceofgoldproduced.All-in
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sustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismadetototalcashcostsperounceofgoldproduced.Thecalculationofall-insustainingcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.
All-insustainingcostsperounceisanon-IFRSmeasureandisusedtoshowthefullcostofgoldproductionfromcurrentoperations.TheCompany'smethodologyforcalculatingall-insustainingcostsperouncemaynotbesimilartothemethodologyusedbyotherproducersthatdiscloseall-insustainingcostsperounce.TheCompanymaychangethemethodologyitusestocalculateall-insustainingcostsperounceinthefuture,includinginresponsetotheadoptionofformalindustryguidanceregardingthismeasurebytheWorldGoldCouncil.
v
Executive Summary
AgnicoEagleisaseniorCanadiangoldminingcompanythathasproducedpreciousmetalssince1957.TheCompany'sminesarelocatedinCanada,MexicoandFinland,withexplorationanddevelopmentactivitiesineachoftheseregionsaswellasintheUnitedStatesandSweden.TheCompanyanditsshareholdershavefullexposuretogoldpricesduetoitslong-standingpolicyofnoforwardgoldsales.AgnicoEaglehasdeclaredacashdividendeveryyearsince1983.
AgnicoEagleearnsasignificantproportionofitsrevenueandcashflowfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedbytheproductionandsaleofby-productmetals,primarilysilver,zincandcopper.In2015,AgnicoEaglerecordedtotalcashcostsperounceofgoldproducedof$567onaby-productbasisand$626onaco-productbasisonpayablegoldproductionof1,671,340ounces.Theaveragerealizedpriceofgolddecreasedby8.3%from$1,261perouncein2014to$1,156perouncein2015.
AgnicoEagle'snineminesarelocatedinwhattheCompanybelievestobepoliticallystablecountriesthataresupportiveoftheminingindustry.ThepoliticalstabilityoftheregionsinwhichAgnicoEagleoperateshelpstoprovideconfidenceinitscurrentandfutureprospectsandprofitability.ThisisimportantforAgnicoEagleasitbelievesthatmanyofitsnewminesandrecentlyacquiredminingprojectshavelong-termminingpotential.
Highlights
• Recordannualpayablegoldproductionof1,671,340ouncesduring2015,anincreaseof16.9%comparedwith2014payablegoldproductionof1,429,288ounces.
• Totalcashcostsperounceofgoldproducedof$567onaby-productbasisand$626onaco-productbasisin2015,an11.0%and13.2%decreasecomparedwith2014,respectively.
• All-insustainingcostsperounceofgoldproducedof$810onaby-productbasisand$869onaco-productbasisin2015,a15.1%and16.3%decreasecomparedwith2014,respectively.
• Provenandprobablegoldreservestotaled19.1millionouncesatDecember31,2015,including3.9millionattributableouncesresultingfromtheJune16,2014jointacquisitionofOsiskoMiningCorporation("Osisko"),nowCanadianMalarticCorporation,comparedwith20.0millionouncesatDecember31,2014.
• OnJune9,2015,theCompanyacquired100.0%ofSoltoroLtd.("Soltoro")foratotalpurchasepriceof$26.7millioncomprisedof$2.4millionincashand770,429AgnicoEaglecommonsharesissuedfromtreasury.
• OnJune11,2015,theCompanyacquired55.0%ofGunnarnMiningAB("Gunnarn")foratotalpurchasepriceof$13.1million(includingtheassociatedexpenditurecommitment),addingthepromisingBarseleprojectinSwedentotheCompany'sportfolioofassets.
• TheCompany'soperationsarelocatedinmining-friendlyregionsthattheCompanybelieveshavelowpoliticalriskandlong-termminingpotential.
• TheCompanymaintainsasolidfinancialpositionandforecastsbeingfullyfundedforitscurrentlyplannedinvestmentinexistingmines,keyexplorationprojectsanddevelopmentpipelineadvancement.
• TheCompanyhasstrongseniormanagementcontinuityasitschiefexecutiveofficerhasover30yearsofservicewiththeCompany.
• InFebruary2016,theCompanydeclaredaquarterlycashdividendof$0.08percommonshare.AgnicoEaglehasnowdeclaredacashdividendeveryyearsince1983.
Strategy
AgnicoEagle'sabilitytoconsistentlyexecuteitsbusinessstrategyhasprovidedasolidfoundationforgrowth.
TheCompany'sgoalsareto:
• Deliverhighqualitygrowthwhilemeetingexpectationsandmaintaininghighperformance standardsinhealth,safety,environmentandcommunitydevelopment;
• Buildastrongpipeline ofprojectstodrivefutureproduction;and
• Employthebestpeople andmotivatethemtoreachtheirpotential.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 1
Thesethreepillars–performance, pipeline and people –formthebasisofAgnicoEagle'ssuccessandcompetitiveadvantage.Bydeliveringonthem,theCompanystrivestocontinuetobuilditsproductionbaseandgenerateincreasedvalueforshareholders,whilemakingmeaningfulcontributionstoitsemployeesandcommunities.
Portfolio Overview
NorthernBusiness
Canada – LaRonde Mine
The100%ownedLaRondemineinnorthwesternQuebec,theCompany'sfirstmine,achievedcommercialproductionin1988.TheLaRondemineextension,theportionoftheminebelowthe245level,achievedcommercialproductioninDecember2011andisexpectedtoextendthelifeoftheminethrough2024.TheLaRondemine'sprovenandprobablemineralreserveswereapproximately3.1millionouncesatDecember31,2015.
In2015,workwascompletedontheinstallationofacoarseoreconveyorsystemthatextendsfromthe293leveloftheLaRondeminetothecrusheronthe280level.Thenewconveyorwascommissionedinthefourthquarterof2015andaneworepassandsilodesignedtofeedtheconveyorsystemisexpectedtobecommissionedinthesecondquarterof2016.ThisnewconveyorwillimproveminingflexibilityandreducecongestioninthedeeperportionsoftheLaRondemine.
Studiesareongoingtoassessthepotentialtoextendthemineralreservebaseandcarryoutminingactivitiesbetweenthe311and371levelsattheLaRondemine.TheCompanyisalsoevaluatingthepotentialtodevelopandmineBousquetZone5ontheadjoining100%ownedBousquetproperty.DewateringoftheoldpitontheBousquetpropertyisunderwayandpermitapplicationstocollectabulksampleareexpectedtobesubmittedin2016.
Canada – Lapa Mine
Commercialproductionwasachievedatthe100%ownedLapamineinnorthwesternQuebecinMay2009.TheLapamine'sprovenandprobablemineralreserveswereapproximately0.1millionouncesatDecember31,2015.Basedonthecurrentlifeofmineplan,2016isexpectedtobethelastyearoffullproductionattheLapamine.
Canada – Goldex Mine
OnOctober19,2011,theCompanysuspendedminingoperationsandgoldproductionatthe100%ownedGoldexmineinnorthwesternQuebecduetogeotechnicalconcernswiththerockabovethemininghorizon.AsofSeptember30,2011,AgnicoEaglerecordedanimpairmentlossonitsinvestmentintheGoldexmine(netofexpectedresidualvalue)anditsundergroundorestockpile.Alloftheremaining1.6millionouncesofprovenandprobablemineralreservesattheGoldexmine,otherthanorestockpiledonthesurface,werereclassifiedasmineralresources.AnenvironmentalremediationliabilitywasrecordedasofSeptember30,2011reflectinganticipatedcostsofremediation.TheGoldexmillcompletedprocessingfeedfromtheremainingGoldexExtensionZone("GEZ")surfacestockpileinOctoberof2011.OperationsintheGEZremainsuspendedindefinitely.
ExplorationdrillingcontinuedonseveralmineralizedzonesontheGoldexminepropertyneartheGEZafterminingoperationsweresuspendedinOctoberof2011.AteamofindependentconsultantsandAgnicoEaglestaffperformedathoroughreview,includingapreliminaryeconomicassessment,todeterminewhetherfutureminingoperationsontheproperty,includingtheMandEZones,wouldbeviable.Afterareviewoftheassessment,AgnicoEagle'sBoardofDirectors(the"Board")approvedtheMandEZonesfordevelopmentusingexistingGoldexmineinfrastructuresuchastheshaftandmill.CommercialproductionwasachievedattheGoldexmine'sMandEZonesinOctober2013.
AsaresultoftheCompany'srestatementofcomparativeinformationunderIFRS,a$109.7millionimpairmentlossreversalwasrecordedasattheJanuary1,2013IFRStransitiondate.Specificlong-livedassetsassociatedwiththeGEZthatwereimpairedasatSeptember30,2011duetothesuspensionofminingoperations,includingtheGoldexmine'sshaftandmill,weresubsequentlyincorporatedintothedevelopmentplanfortheGoldexmine'sMandEZones,whichwasapprovedbytheBoardinJuly2012.
In2015,rehabilitationofthesurfacerampwascompleted,whichprovidedincreasedoperationalflexibilityandaccesstotheM2andM5satelliteZonesforconversiondrillingandpotentialdevelopment.InJuly2015,theCompanyannouncedtheapprovaloftheDeep1project,whichisexpectedtobegincommissioningin2018.TheGoldexmine'sprovenandprobablemineralreserveswereapproximately0.7millionouncesatDecember31,2015.
2 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Canada – Canadian Malartic Mine
AgnicoEagleandYamanajointlyacquired100.0%ofOsiskoonJune16,2014pursuanttoacourt-approvedplanofarrangementundertheCanadaBusiness Corporations Act (the"OsiskoArrangement").AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsiskoandCanadianMalarticGP,whichnowholdstheCanadianMalarticmineinnorthwesternQuebec.AgnicoEagleandYamanawillalsojointlyexplore,throughtheirindirectownershipofCanadianMalarticCorporation(thesuccessortoOsisko),theKirklandLakeassets,theHammondReefprojectandthePandoraandWood-Pandoraproperties.
In2016,explorationprogramsareplannedtoevaluateanumberofnearopenpitandundergroundtargetsadjacenttoexistingCanadianMalarticmineinfrastructureandtofurtherdefinetheextentofthemineralizationattheOdysseyZone.PermittingactivitiesrelatedtotheBarnatextensionandthere-routingoftheadjacentHighway117areexpectedtocontinuein2016.AgnicoEagle'sattributableshareofprovenandprobablemineralreservesattheCanadianMalarticminewereapproximately3.9millionouncesatDecember31,2015.
Canada – Meadowbank Mine
In2007,theCompanyacquiredCumberlandResourcesLtd.,whichhelda100%interestintheMeadowbankgoldprojectinNunavut,Canada.CommercialproductionwasachievedbyAgnicoEagleattheMeadowbankmineinMarch2011.TheMeadowbankmine'sprovenandprobablemineralreserveswereapproximately0.9millionouncesatDecember31,2015.
The100%ownedAmaruqprojectislocatedapproximately50kilometresnorthwestoftheMeadowbankmineinNunavut,Canada.The2016drillprogramwillfocusontryingtoexpandandupgrademineralresourcesandoutlineasecondopenpitdeposit.TheCompanyhopesthatitcanpotentiallydeveloptheAmaruqprojectasasatelliteoperationtotheMeadowbankmine.Inlate2015,theCompanyreceivedapprovalfortheconstructionofanall-weatherexplorationroadlinkingtheAmaruqprojecttotheMeadowbankmine.In2016,theCompanyexpectstocarryoutadditionalengineeringworkandbeginroadpreparation.
AdecisionwasmadetoextendtheVaultpitattheMeadowbankminein2015,increasingtheexpectedminelifebyapproximatelyoneyearthrough2018,thoughdecreasingexpectedannualproduction.TheVaultpitextensionisexpectedtopartiallybridgetheproductiongapattheMeadowbankminethroughtothepotentialcommencementofdevelopmentoftheAmaruqproject.
Canada – Meliadine Project
OnJuly6,2010,AgnicoEagleacquiredits100%interestintheMeliadineprojectinNunavut,CanadathroughitsacquisitionofComaplexMineralsCorp.ActivitiesattheMeliadineprojectduring2015includedrampdevelopment,permitting,campoperationandthecompletionofanupdatedtechnicalstudy.Budgeted2016Meliadineprojectcapitalexpendituresof$96.0millionarefocusedonfurtherundergrounddevelopment,detailedengineeringandprocurement,constructionofessentialsurfaceinfrastructureandtheacquisitionofacampfacility.TheMeliadineprojecthadprovenandprobablemineralreservesofapproximately3.4millionouncesatDecember31,2015.
Finland – Kittila Mine
The100%ownedKittilamineinnorthernFinlandwasaddedtotheCompany'sportfoliothroughtheacquisitionofRiddarhyttanResourcesABin2005.ConstructionattheKittilaminewascompletedin2008andcommercialproductionwasachievedinMay2009.ProvenandprobablemineralreservesattheKittilamineamountedtoapproximately4.4millionouncesatDecember31,2015.
ThemainundergroundrampattheKittilamineisbeingextendedtoreachthedeeperportionsoftheRimpiZoneandwillprovidefurtherundergrounddrillaccesstotestforadditionaldepthextensionsoftheRimpi,Suuri,RouraandthenewlydiscoveredSisarmineralizedZones.AsurfacerampisbeingdrivenintotheRimpiZoneforproductionpurposesandtoprovideasecondegressfortheSuurirampsystem.ThissurfacerampisexpectedtoserveasthemainhaulageroutefromthedeeperportionsoftheRimpi,SuuriandSisarZones.
In2015,anewzoneofmineralizationknownastheSisarZonewasdiscoveredbyexplorationdrillingfromtheundergroundrampbeingdriventowardsthedeeperportionoftheRimpiZone.TheSisarZoneislocatedtotheeastofthemainorezoneattheKittilamineincloseproximitytoexistingundergroundinfrastructure.TheSisarZonecouldpotentiallyprovideanadditionalsourceofundergroundoretotheKittilamillwithrelativelyminimaladditionalundergrounddevelopment,shouldfurtherdrillingoutlineaneconomicdeposit.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 3
AgnicoEagleisalsoevaluatingthepotentialoftheKuotkodeposit,locatedapproximately15kilometresnorthoftheKittilamine,asanopenpitfeedingthemillattheKittilamine.Metallurgicaltestingisongoingandstudiesarebeingcarriedouttoassesstheviabilityofminingthedeposit.
SouthernBusiness
Mexico – Pinos Altos Mine
In2006,theCompanycompletedtheacquisitionofthePinosAltosproperty,thenanadvancedstageexplorationpropertyinnorthernMexico.CommercialproductionwasachievedatthePinosAltosmineinNovember2009.ThePinosAltosmine'sprovenandprobablemineralreserveswereapproximately1.5millionouncesatDecember31,2015.
A$106.0millionshaftsinkingprojectremainsonscheduleforcompletionin2016atthePinosAltosmine.Uponcompletion,itisexpectedthatthisnewshaftwillfacilitateimprovedmatchingofminingandmillcapacityastheopenpitminingoperationwindsdown.
Mexico – Creston Mascota Deposit at Pinos Altos
The100%ownedCrestonMascotadepositatPinosAltosislocatedapproximatelysevenkilometresnorthwestofthemaindepositatthePinosAltosmineinnorthernMexico.CommercialproductionwasachievedattheCrestonMascotadepositatPinosAltosinMarch2011.Provenandprobablemineralreserveswereapproximately0.2millionouncesattheCrestonMascotadepositatPinosAltosatDecember31,2015.
In2015,workonthePhase4leachpadadvancedwithconstructionactivitiesfocusedonearthworks,drainage,peripheralroadsandwaterdiversionchannels,withprojectcompletionexpectedin2016.
Mexico – La India Mine
AgnicoEaglecompleteditsacquisitionofGraydResourceCorporation("Grayd")onJanuary23,2012.GraydownedtheLaIndiaproject,whichislocatedapproximately70kilometresnorthwestofthePinosAltosmineinnorthernMexico.InSeptember2012,developmentandconstructionoftheLaIndiaminewasapprovedbytheBoardandcommercialproductionwasachievedinFebruary2014.
In2015,constructionwascompletedontheLaIndiamine'sleachpadexpansion(earthworksandlinerinstallation)andhaulroad.PreparationactivitiesrelatedtotheMainZonepitwerealsocompleted.DrillingwasfocusedonextendingmineralizationintheMainZoneandtheLaIndiaZoneandconvertingsulfidemineralizationintomineralreservesandmineralresources.TheLaIndiamine'sprovenandprobablemineralreserveswereapproximately0.9millionouncesatDecember31,2015.
Mexico – El Barqueno Project
OnNovember28,2014,theCompanyacquiredCaydenResourcesInc.("Cayden")pursuanttoacourt-approvedplanofarrangement.Caydenholdsa100.0%interestintheMorelosSurpropertyaswellasanoptiontoacquirea100%interestintheElBarquenoproperty,bothlocatedinMexico.
TheCompanybelievesthattheElBarquenoprojectmayhavethepotentialtobedevelopedasacombinationopenpit/undergroundminewithmillandheapleachprocessingandmineralizationsimilartothePinosAltosmine.In2016,AgnicoEagleplanstocarryouta$13.0millionexplorationprogramtofurtherexpandandinfilltheknownmineralresourcebase.
Key Performance Drivers
ThekeydriversoffinancialperformanceforAgnicoEagleinclude:
• Thespotpriceofgold,silver,zincandcopper;
• Productionvolumes;
• Productioncosts;and
• Canadiandollar/USdollar,Mexicanpeso/USdollarandEuro/USdollarexchangerates.
4 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
SpotPriceofGold,Silver,ZincandCopper
Gold Prices ($ per ounce)
2015 2014 % Change Highprice $1,308 $1,392 (6.0%)
Lowprice $1,046 $1,131 (7.5%)
Averageprice $1,160 $1,266 (8.4%)
Averagepricerealized $1,156 $1,261 (8.3%)
In2015,theaveragemarketpriceperounceofgoldwas8.4%lowerthanin2014.TheCompany'saveragerealizedpriceperounceofgoldin2015was8.3%lowerthanin2014.
SILVER ($ per ounce) ZINC ($ per tonne) COPPER ($ per tonne)
Netby-product(primarilysilver,zincandcopper)revenueistreatedasareductionofproductioncostsincalculatingtotalcashcostsperounceofgoldproducedonaby-productbasis.AgnicoEagle'srealizedsalespriceforsilverdecreasedby14.4%in2015comparedwith2014whilerealizedsalespricesforzincdecreasedby15.7%andrealizedsalespricesforcopperdecreasedby23.8%overthesameperiod.Significantquantitiesofby-productmetalsareproducedbytheLaRondemine(silver,zinc,andcopper)andthePinosAltosmine(silver).
TheCompanyhasneversoldgoldforward,allowingtheCompanytotakefulladvantageofrisinggoldprices.Managementbelievesthatlowcostproductionisthebestprotectionagainstadecreaseingoldprices.
ProductionVolumesandCosts
ChangesinproductionvolumeshaveadirectimpactontheCompany'sfinancialresults.Totalpayablegoldproductionwas1,671,340ouncesin2015,anincreaseof16.9%comparedwith1,429,288ouncesin2014primarilyduetoafullyearofproductionfromtheCompany's50.0%interestintheCanadianMalarticminein2015,whichwasacquiredonJune16,2014,theachievementofcommercialproductionattheLaIndiamineinFebruary2014,anincreaseingoldgradeattheLaRondemineandanincreaseinthequantityoforemilledattheKittilaminein2015comparedwith2014.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 5
ProductioncostsarediscussedindetailintheResults of Operations sectionbelow.
ForeignExchangeRates(RatiotoUS$)
TheexchangerateoftheCanadiandollar,MexicanpesoandEurorelativetotheUSdollarisanimportantfinancialdriverfortheCompanyforthefollowingreasons:
• AllrevenuesareearnedinUSdollars;
• AsignificantportionofoperatingcostsattheLaRonde,Lapa,Goldex,MeadowbankandCanadianMalarticminesareincurredinCanadiandollars;
• AsignificantportionofoperatingcostsatthePinosAltosmine,theCrestonMascotadepositatPinosAltosandtheLaIndiamineareincurredinMexicanpesos;and
• AsignificantportionofoperatingcostsattheKittilamineareincurredinEuros.
TheCompanymitigatespartofitsforeigncurrencyexposurebyusingcurrencyhedgingstrategies.
CANADIAN DOLLAR MEXICAN PESO EURO
Onaverage,theCanadiandollar,MexicanpesoandEuroallweakenedrelativetotheUSdollarin2015comparedwith2014,decreasingcostsdenominatedinlocalcurrencieswhentranslatedintoUSdollarsforreportingpurposes.
Balance Sheet Review
TotalassetsatDecember31,2015of$6,683.2millionwerecomparablewithDecember31,2014totalassetsof$6,809.3million.Ofthetotal$2,229.2millionincreaseintotalassetsbetweentheDecember31,2013balanceof$4,580.1millionandDecember31,2014,$2,110.4millionrelatedtotheCompany'sJune16,2014acquisitionofits50%interestinOsiskoand$125.3millionrelatedtotheNovember28,2014acquisitionofCayden.
Cashandcashequivalentswere$124.2millionatDecember31,2015,adecreaseof$53.4millioncomparedwithDecember31,2014,primarilyduetoanet$261.1millionrepaymentoflong-termdebt,$449.8millionincapitalexpendituresand$59.5millionindividendspaidduring2015,partiallyoffsetbycashprovidedbyoperatingactivitiesof$616.2million,netproceedsfromthesaleofavailable-for-salesecuritiesandwarrantsof$61.1millionandtheissuanceofa$50.0millionnote.
Restrictedcashdecreasedby$52.6millionbetweenDecember31,2014andDecember31,2015,primarilyduetothetransferofcashfromarestrictedtrustaccounttoaCanadianMalarticCorporationcashaccount,thereleaseoffundsfromtheCompany'squalifiedenvironmentaltrustthatwassetupforcostsrelatedtotheenvironmentalremediationoftheGoldexmineandthereleaseof$10.1millionheldbyadepositaryinrelationtotheearlysettlementoftheseniorunsecuredconvertibledebentures(the"CMGPConvertibleDebentures")previouslyissuedbyOsiskoandassumedbyCanadianMalarticGP.
Inventoryoforeinstockpilesandonleachpadsdecreasedby$25.6millionto$26.3millionatDecember31,2015primarilyduetoupdatedminesequencingplansattheKittilaandCanadianMalarticminesresultinginthereclassificationoforestockpilesfromshort-termtolong-term.Suppliesinventorydecreasedby$18.1millionfrom$282.8millionatDecember31,2014to$264.7millionatDecember31,2015primarilyduetolowerfuelinventoryattheMeadowbankmine.Concentratesanddorebarinventoriesincreasedby$59.1millionto$171.0millionatDecember31,2015primarilyduetoabuildupofconcentratesanddorebarinventoriesattheCanadianMalarticmineasmillthroughputisincreasedtowardanticipatedcapacityandtoplannedminesequencingresultinginthebuildupofconcentratesanddorebarinventoriesatthePinosAltosandLaIndiamines.Non-currentoreinstockpilesincreasedby$36.0millionto$61.2millionatDecember31,2015
6 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
comparedwithDecember31,2014duetoupdatedminesequencingplansattheKittilaandCanadianMalarticminesresultinginthereclassificationoforestockpilesfromshort-termtolong-term.
Available-for-salesecuritiesdecreasedfrom$56.5millionatDecember31,2014to$31.9millionatDecember31,2015primarilydueto$29.8millionindisposals,$12.0millioninimpairmentlossesand$7.7millioninunrealizedfairvaluelosses,partiallyoffsetby$24.8millioninnewinvestmentsduring2015.
Property,plantandminedevelopmentdecreasedby$66.9millionto$5,089.0millionatDecember31,2015comparedwithDecember31,2014primarilyduetoamortizationexpenseof$608.6millionduring2015.Thiswaspartiallyoffsetbya$449.8millionincreaseinproperty,plantandminedevelopmentrelatedtocapitalexpendituresandpropertyacquisitionstotaling$67.5millionduring2015.
Totalliabilitiesdecreasedto$2,542.2millionatDecember31,2015from$2,740.8millionatDecember31,2014dueprimarilytoanet$235.0millionrepaymentundertheCompany's$1.2billionunsecuredrevolvingcreditfacility(the"CreditFacility")during2015andthesettlementoftheCMGPConvertibleDebenturesissuedbyOsiskoandassumedbyCanadianMalarticGP,partiallyoffsetbyincreasesinaccountspayableandaccruedliabilitiesandreclamationprovisionsduring2015.Ofthetotal$878.1millionincreaseintotalliabilitiesbetweentheDecember31,2013balanceof$1,862.7millionandDecember31,2014,$526.7millionrelatedtotheCompany'sJune16,2014jointacquisitionofOsiskoand$335.1millionrelatedtoincreasedlong-termdebtduring2014.
Accountspayableandaccruedliabilitiesincreasedby$33.9millionbetweenDecember31,2014andDecember31,2015primarilyduetoa$12.3millionsecuritiesclassactionlawsuitsettlementagreementthatwaspaidbytheCompany'sinsurersandtheadditionof$19.1millionforaccountspayablerelatedtofuelpurchasesfortheMeadowbankmineatDecember31,2015.
Long-termdebtdecreasedby$242.0millionbetweenDecember31,2014andDecember31,2015primarilydueto$235.0millioninnetCreditFacilityrepaymentsandtheearlysettlementoftheCMGPConvertibleDebentureswithaprincipaloutstandingofC$37.5million(theCompany'sattributable50%share)previouslyissuedbyOsiskoandassumedbyCanadianMalarticGP,partiallyoffsetbytheclosingofa$50.0millionguaranteedseniorunsecurednote.
AgnicoEagle'sreclamationprovisionincreasedby$25.9millionbetweenDecember31,2014andDecember31,2015primarilyduetothere-measurementoftheCompany'sreclamationprovisionsbyapplyingupdatedexpectedcashflowsandassumptionsasatDecember31,2015.
CertainpreviouslyreportedAgnicoEagleconsolidatedbalancesheetlineitemsasatDecember31,2014wereupdatedtoreflectadjustedfinalestimatesofthefairvalueofidentifiableassetsacquiredandliabilitiesassumedrelatedtotheJune16,2014jointacquisitionofOsisko.AsaresultofnewinformationobtainedaboutthefactsandcircumstancesthatexistedasoftheOsiskoacquisitiondate,thefollowingadjustmentswererecordedtoboththeadjustedfinalpurchasepriceallocationandtheDecember31,2014balancesheetaspreviouslyreported:thegoodwilllineitem(notdeductiblefortaxpurposes)increasedby$114.3million;theproperty,plantandminedevelopmentlineitemdecreasedby$145.6millionandthedeferredincomeandminingtaxliabilitieslineitemdecreasedby$35.0million.
FairValueofDerivativeFinancialInstruments
TheCompanyoccasionallyentersintocontractstolimittheriskassociatedwithdecreasedby-productmetalprices,increasedforeigncurrencycosts(includingcapitalexpenditures)andinputcosts.Thecontractsactaseconomichedgesofunderlyingexposuresandarenotheldforspeculativepurposes.AgnicoEagledoesnotusecomplexderivativecontractstohedgeexposures.ThefairvalueoftheCompany'sderivativefinancialinstrumentsisoutlinedinthederivativefinancialinstrumentsnotetotheannualconsolidatedfinancialstatements.
Results of Operations
AgnicoEaglereportednetincomeof$24.6million,or$0.11pershare,in2015comparedwithnetincomeof$83.0million,or$0.43pershare,in2014.In2013,theCompanyreportedanetlossof$686.7million,or$3.97pershare.AgnicoEaglereportedbasicadjustednetincomeof$93.0million,or$0.43pershare,in2015comparedwithbasicadjustednetincomeof$144.3million,or$0.74pershare,in2014.In2013,theCompanyreportedbasicadjustednetincomeof$187.6million,or$1.09pershare.In2015,theoperatingmargin(revenuesfromminingoperationslessproductioncosts)increasedto$990.1millionfrom$892.2millionin2014.In2013,operatingmarginwas$772.3million.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 7
RevenuesfromMiningOperations
Revenuesfromminingoperationsincreasedby$88.6million,or4.7%,to$1,985.4millionin2015from$1,896.8millionin2014primarilyduetoincreasedgoldandsilverproduction,partiallyoffsetbylowersalespricesrealizedongoldandsilver.Revenuesfromminingoperationswere$1,638.4millionin2013.
Salesofpreciousmetals(goldandsilver)accountedfor99.7%ofrevenuesfromminingoperationsin2015,upfrom98.6%in2014and97.7%in2013.Theincreaseinthepercentageofrevenuesfrompreciousmetalscomparedwith2014isprimarilyduetoincreasedgoldandsilverproduction,partiallyoffsetbylowersalespricesrealizedongoldandsilveranddecreasedzincproduction.Revenuesfromminingoperationsareaccountedfornetofrelatedsmelting,refining,transportationandothercharges.
Thetablebelowsetsoutrevenuesfromminingoperations,productionvolumesandsalesvolumesbymetal:
2015 2014 2013
(thousands of United States dollars) Revenuesfromminingoperations:
Gold $ 1,911,500 $ 1,807,927 $ 1,500,354
Silver 66,991 62,466 100,895
Zinc 505 9,901 16,685
Copper 6,436 16,479 20,653
Lead(i) – (7) (181)
Totalrevenuesfromminingoperations $ 1,985,432 $ 1,896,766 $ 1,638,406
Payableproduction(ii):
Gold(ounces) 1,671,340 1,429,288 1,099,335
Silver(thousandsofounces) 4,258 3,564 4,623
Zinc(tonnes) 3,501 10,515 19,814
Copper(tonnes) 4,941 4,997 4,835
Payablemetalsold:
Gold(ounces) 1,645,081 1,425,338 1,098,382
Silver(thousandsofounces) 4,184 3,633 4,694
Zinc(tonnes) 3,596 10,535 20,432
Copper(tonnes) 4,947 5,003 4,838
Notes:
(i) Leadconcentraterevenuesofnilmillionin2015(2014–$0.1million;2013–$0.9million)arenettedagainstdirectfeesofnil(2014–$0.1million;2013–$1.1million).Othermetalrevenuesderivedfromleadconcentratein2015includedgoldrevenueofnil(2014–nil;2013–$7.9million)andsilverrevenueofnil(2014–nil;2013–$2.8million).Othermetalrevenuesderivedfromleadconcentrateareincludedintheirrespectivemetalcategoriesintheabovetable.
(ii) Payableproduction(anon-GAAPnon-financialperformancemeasure)isthequantityofmineralproducedduringaperiodcontainedinproductsthatareorwillbesoldbytheCompany,whethersuchproductsaresoldduringtheperiodorheldasinventoriesattheendoftheperiod.
Revenuesfromgoldsalesincreasedby$103.6millionor5.7%in2015comparedwith2014.Goldproductionincreasedby242,052ounces,or16.9%to1,671,340ouncesin2015from1,429,288ouncesin2014primarilydueto142,801attributableouncesofadditionalproductionfromtheCanadianMalarticminereflectingafullyearofattributableproductionafterhavingacquiredaninterestonJune16,2014,29,269ouncesofadditionalproductionfromtheLaIndiaminereflectingafullyearofproductionin2015afterhavingachievedcommercialproductioninFebruary2014,increasedgoldgradeandmillrecoveryratesattheLaRonde,Goldex,andPinosAltosminesanda26.6%increaseintonnesprocessed
8 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
attheKittilamine.PartiallyoffsettingtheoverallincreaseingoldproductionweredecreasedgoldgradeandmillrecoveryratesattheMeadowbankminein2015comparedwith2014.AgnicoEagle'saveragerealizedgoldpricedecreasedby$105or8.3%,to$1,156perouncein2015from$1,261perouncein2014.
Revenuesfromsilversalesincreasedby$4.5millionor7.2%in2015comparedwith2014.Silverproductionincreasedby19.5%toapproximately4,258,000ouncesprimarilyduetoincreasedsilvergradeatthePinosAltosmine,partiallyoffsetbylowersilvergradeandsilvermillrecoveriesattheLarondemine.AgnicoEagle'saveragerealizedsilverpricedecreasedby14.4%to$15.63perouncein2015from$18.27perouncein2014.Revenuesfromzincsalesdecreasedby$9.4millionor94.9%to$0.5millionin2015comparedwith2014primarilyduetolowerzincgradeandmillrecoveryratesattheLaRondemine,anda15.7%decreaseintherealizedzincpricebetweenperiods.Revenuesfromcoppersalesdecreasedby$10.0millionor60.9%in2015comparedwith2014primarilyduetoa23.8%declineintherealizedcopperpriceandan11.4%increaseindirectfeesbetweenperiods.
ProductionCosts
Productioncostsdecreasedto$995.3millionin2015comparedwith$1,004.6millionin2014primarilyduetotheimpactofaweakerCanadiandollar,MexicanpesoandEurorelativetotheUSdollar.Partiallyoffsettingtheoveralldecreasewas$57.6millioninadditionalattributableproductioncostsfromtheacquiredinterestintheCanadianMalarticmineand$12.6millioninadditionalproductioncostsfromtheLaIndiamine.Productioncostswere$866.1millionin2013.
Thetablebelowsetsoutproductioncostsbymine:
2015 2014 2013
(thousands of United States dollars) LaRondemine $ 172,283 $ 188,736 $ 228,640
Lapamine 52,571 61,056 69,371
Goldexmine 61,278 64,836 15,339
Meadowbankmine 230,564 270,824 318,414
CanadianMalarticmine 171,473 113,916 –
Kittilamine 126,095 116,893 97,934
PinosAltosmine 105,175 123,342 116,959
CrestonMascotadepositatPinosAltos 26,278 28,007 19,425
LaIndiamine 49,578 36,949 –
Totalproductioncosts $ 995,295 $ 1,004,559 $ 866,082
Thediscussionofproductioncostsbelowrefersto"totalcashcostsperounceofgoldproduced"and"minesitecostspertonne",neitherofwhicharerecognizedmeasuresunderIFRS.ForareconciliationofthesemeasurestoproductioncostsandadiscussionoftheirusebytheCompany,seeNon-GAAP Financial Performance Measures inthisMD&A.
ProductioncostsattheLaRondeminewere$172.3millionin2015,a8.7%decreasecomparedwith2014productioncostsof$188.7million,primarilyduetoaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.During2015,theLaRondemineprocessedanaverageof6,141tonnesoforeperdaycomparedwith5,713tonnesoforeperdayduring2014.Theincreaseinthroughputbetweenperiodswasprimarilyduetoaplanned2014shutdownfortheinstallationofreplacementhoistdrivesatthePennashaft.MinesitecostspertonneremainedunchangedatC$99between2014and2015.
ProductioncostsattheLapaminewere$52.6millionin2015,a13.9%decreasecomparedwith2014productioncostsof$61.1million,primarilyduetoaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.During2015,theLapamineprocessedanaverageof1,534tonnesoforeperdaycomparedwith1,750tonnesoforeperdayprocessedduring2014.Thedecreaseinthroughputisconsistentwiththemineplanastonnageisexpectedtodeclineprogressively.MinesitecostspertonneincreasedtoC$117in2015comparedwithC$107in2014,primarilyduetolowerthroughput.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 9
ProductioncostsattheGoldexminewere$61.3millionin2015,a5.5%decreasecomparedwith2014productioncostsof$64.8million,primarilyduetoaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.During2015,theGoldexmineprocessedanaverageof6,336tonnesoforeperdaycomparedwith5,799tonnesoforeperdayprocessedduring2014.Theincreaseinthroughputbetweenperiodswasprimarilyduetoplannedincreasedstopeavailability.MinesitecostspertonneremainedunchangedatC$33between2014and2015.
ProductioncostsattheMeadowbankminewere$230.6millionin2015,a14.9%decreasecomparedwith2014productioncostsof$270.8millionprimarilyduetoaweakerCanadiandollarrelativetotheUSdollarandcostreductionsbetweenperiods.During2015,theMeadowbankmineprocessedanaverageof11,049tonnesoforeperdaycomparedwith11,313tonnesoforeperdayprocessedduring2014.MinesitecostspertonnedecreasedtoC$70in2015comparedwithC$73in2014,primarilyduetooverallproductivitygainsandimprovedcostcontrols.
AttributableproductioncostsattheCanadianMalarticminewere$171.5millionin2015comparedwith$113.9millionin2014,reflectingafullyearofattributableproductioncostsin2015afterhavingacquiredanindirect50.0%interestintheCanadianMalarticmineonJune16,2014.During2015,theCanadianMalarticmineprocessedanaverageof26,150attributabletonnesoforeperdayandminesitecostspertonnewereC$23.
ProductioncostsattheKittilaminewere$126.1millionin2015,anincreaseof7.9%comparedwith2014productioncostsof$116.9millionprimarilyduetoincreasedthroughput.During2015,theKittilamineprocessedanaverageof4,011tonnesoforeperday,anincreaseof26.6%comparedwiththe3,168tonnesoforeperdayprocessedduring2014primarilyduetothecompletionofthemillexpansioninSeptember2014.Minesitecostspertonnedecreasedto€76in2015comparedwith€78in2014primarilyduetoincreasedthroughput.
ProductioncostsatthePinosAltosminewere$105.2millionin2015,adecreaseof14.7%comparedwith2014productioncostsof$123.3millionprimarilyduetoaweakerMexicanpesorelativetotheUSdollarbetweenperiods.During2015,thePinosAltosminemillprocessedanaverageof5,462tonnesoforeperday,anincreaseof2.1%comparedwiththe5,350tonnesoforeperdayprocessedduring2014.In2015,approximately384,700tonnesoforewerestackedonthePinosAltosmineleachpad,adecreaseof32.1%comparedwiththeapproximate567,800tonnesoforestackedin2014primarilyduetominesequencing.Minesitecostspertonnedecreasedto$45in2015comparedwith$48in2014primarilyduetoaweakerMexicanpesorelativetotheUSdollarbetweenperiods,partiallyoffsetbyfewertonnesoforestackedontheheapleachpad.
ProductioncostsattheCrestonMascotadepositatPinosAltoswere$26.3millionin2015,adecreaseof6.2%comparedwith2014productioncostsof$28.0million,primarilyduetoaweakerMexicanpesorelativetotheUSdollarbetweenperiods.During2015,approximately2,098,800tonnesoforewerestackedontheleachpadattheCrestonMascotadepositatPinosAltos,anincreaseof17.0%comparedwiththeapproximate1,793,800tonnesoforestackedin2014.Minesitecostspertonnedecreasedto$12in2015comparedwith$16in2014primarilyduetoaweakerMexicanpesorelativetotheUSdollarbetweenperiods.
ProductioncostsattheLaIndiaminewere$49.6millionin2015comparedwith$36.9millionin2014,reflectingafullyearofproductionattheLaIndiaminein2015afterhavingachievedcommercialproductioninFebruary2014.During2015,theLaIndiaminestackedapproximately5,371,400tonnesoforeontheleachpadandminesitecostspertonnewere$9.
Total Production Costs by Category
10 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
TotalcashcostsperounceofgoldproducedispresentedinthisMD&Aonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.
Totalcashcostsperounceofgoldproducedonaby-productbasis,representingtheweightedaverageofalloftheCompany'sproducingmines,decreasedto$567in2015comparedwith$637in2014and$648in2013.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$626in2015comparedwith$721in2014and$806in2013.SetoutbelowisananalysisofthechangeintotalcashcostsperounceateachoftheCompany'sminingoperations:
• AttheLaRondemine,totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$590in2015comparedwith$668in2014primarilyduetoa30.9%increaseingoldproductionandaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.Partiallyoffsettingtheoveralldecreaseintotalcashcostsperounceofgoldproducedonaby-productbasis,by-productrevenuewassignificantlylowerin2015.Lowerby-productrevenuesweretheresultoftheLaRondeminetransitioningtooresourcedfromlowerlevels,whichhaslowerby-productmetalcontent,andlowersilverandcoppersalespricesrealizedin2015comparedwith2014.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$760in2015comparedwith$1,055in2014,reflectingtheincreaseingoldproductionandcostsnotedabove.
• AttheLapamine,totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$590in2015comparedwith$667in2014.ThisdecreasewasprimarilyduetoaweakerCanadiandollarrelativetotheUSdollarbetweenperiods,partiallyoffsetbya1.8%decreaseingoldproduction.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$591in2015comparedwith$667in2014asaresultofthesamefactorsasnotedabove.
• AttheGoldexmine,totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$538in2015comparedwith$638in2014.Thisdecreasewasprimarilyduetoa14.9%increaseingoldproductionandaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$538in2015comparedwith$638in2014asaresultofthesamefactorsasnotedabove.
• AttheMeadowbankmine,totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$613in2015comparedwith$599in2014.Thisincreasewasprimarilyduetoa15.7%decreaseingoldproduction,partiallyoffsetbyaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$623in2015comparedwith$604in2014asaresultofthesamefactorsasnotedabove.
• Totalcashcostsperounceofgoldproducedonaby-productbasisattheCanadianMalarticminedecreasedto$596in2015comparedwith$701duringtheJune16,2014toDecember31,2014period,primarilyduetoaweakerCanadiandollarrelativetotheUSdollarbetweenperiods.Attributabletotalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$613in2015comparedwith$721duringtheJune16,2014toDecember31,2014period,asaresultofthesamefactorsasnotedabove.TheCanadianMalarticminewasjointlyacquiredbyAgnicoEagleandYamanaonJune16,2014.
• AttheKittilamine,totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$709in2015comparedwith$845in2014.Thisdecreasewasprimarilyduetoa25.1%increaseingoldproductionandhighercostsin2014associatedwiththemillexpansion.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$710in2015comparedwith$846in2014asaresultofthesamefactorsasnotedabove.
• Totalcashcostsperounceofgoldproducedonaby-productbasisatthePinosAltosminedecreasedto$387in2015comparedwith$533in2014.Thisdecreasewasprimarilyduetoa12.8%increaseingoldproductionandaweakerMexicanpesorelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$578in2015comparedwith$718in2014asaresultofthesamefactorsasnotedabove.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 11
• Totalcashcostsperounceofgoldproducedonaby-productbasisattheCrestonMascotadepositatPinosAltosdecreasedto$430in2015comparedwith$578in2014.Thisdecreasewasprimarilyduetoa14.3%increaseingoldproductionandaweakerMexicanpesorelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$474in2015comparedwith$611in2014asaresultofthesamefactorsasnotedabove.
• Totalcashcostsperounceofgoldproducedonaby-productbasisattheLaIndiaminedecreasedto$436in2015comparedwith$487in2014.ThisdecreasewasdueprimarilyaweakerMexicanpesorelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$475in2015comparedwith$532in2014asaresultofthesamefactorsasnotedabove.CommercialproductionwasachievedattheLaIndiamineinFebruary2014.
ExplorationandCorporateDevelopmentExpense
Explorationandcorporatedevelopmentexpenseincreasedby97.1%to$110.4millionin2015from$56.0millionin2014.Explorationandcorporatedevelopmentexpensewas$44.2millionin2013.
AsummaryoftheCompany'ssignificant2015explorationandcorporatedevelopmentactivitiesissetoutbelow:
• InCanada,explorationexpensesincreasedby102.0%to$56.1millionin2015comparedwith2014primarilyduetoincreasedexplorationattheAmaruqprojectattheMeadowbankmineinNunavut.
• Explorationexpensesincreasedby218.3%to$25.5millioninLatinAmericacomparedwith2014primarilyduetoincreasedexplorationattheElBarquenoprojectinMexico.
• Explorationexpensesincreasedby40.2%to$3.7millionintheUnitedStatesanddecreasedby21.8%to$3.9millioninEuropein2015comparedwith2014.
• TheCompany'scorporatedevelopmentteamremainedactivein2015,completingtheacquisitionofSoltoroandtheacquisitionof55%ofGunnarnduringtheyear.
Thetablebelowsetsoutexplorationexpensebyregionandtotalcorporatedevelopmentexpense:
2015 2014 2013 (thousands of United States dollars) Canada $ 56,099 $ 27,773 $ 20,339
LatinAmerica 25,483 8,006 7,311
UnitedStates 3,666 2,615 3,501
Europe 3,943 5,044 4,624
Corporatedevelopmentexpense 21,162 12,564 8,461
Totalexplorationandcorporatedevelopmentexpense $ 110,353 $ 56,002 $ 44,236
AmortizationofProperty,PlantandMineDevelopment
Amortizationofproperty,plantandminedevelopmentexpenseincreasedto$608.6millionin2015comparedwith$433.6millionin2014and$313.9millionin2013.Theincreaseinamortizationofproperty,plantandminedevelopmentbetween2014and2015wasprimarilyduetotheconsolidationforafullyearoftheacquiredinterestintheCanadianMalarticmineandtheincreasetoitsdepreciableminingpropertiesbetweenperiods(duetothefinalizationofrelatedacquisitiondatefairvalueestimates)alongwitharampupingoldproductionattheLaIndiamine.Amortizationexpensecommencesonceoperationsareincommercialproduction.
GeneralandAdministrativeExpense
Generalandadministrativeexpensedecreasedto$97.0millionin2015from$118.8millionin2014.Thedecreasewasprimarilyduetonon-recurringtransactioncostsof$16.7millionassociatedwiththejointacquisitionofOsiskoincurredin
12 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
2014,decreasedstockcompensationexpenseandadecreaseinconsultingcostsbetweenperiods.Generalandadministrativeexpensewere$113.8millionin2013.
ImpairmentLossonAvailable-for-saleSecurities
Impairmentlossonavailable-for-salesecuritieswas$12.0millionin2015comparedwith$15.8millionin2014and$32.5millionin2013.Impairmentlossevaluationsofavailable-for-salesecuritiesarebasedonwhetheradeclineinfairvalueisconsideredtobesignificantorprolonged.
FinanceCosts
Financecostsincreasedto$75.2millionin2015comparedwith$73.4millionin2014and$62.5millionin2013.Thetablebelowsetsoutthecomponentsoffinancecosts:
2015 2014 2013 (thousands of United States dollars) Stand-byfeesoncreditfacilities $ 4,025 $ 4,605 $ 4,946
Amortizationofcreditfacilities,financingandnoteissuancecosts 2,437 2,757 3,192
InterestonCreditFacility 8,892 7,499 1,999
Interestonnotes 49,937 49,414 49,414
Accretionexpenseonreclamationprovisions 4,164 5,173 4,456
Otherinterestandpenalties 7,476 5,651 1,966
Interestcapitalizedtoconstructioninprogress (1,703) (1,706) (3,518)
Totalfinancecosts $ 75,228 $ 73,393 $ 62,455
SeeLiquidity and Capital Resources – Financing Activities inthisMD&AfordetailsontheCreditFacilityandnotesreferencedabove.
ImpairmentLoss
AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Animpairmentlossisrecognizedforanyexcessofthecarryingamountoftheassetoveritsrecoverableamount.Therecoverableamountsarebasedoneachasset'sfuturecashflowsandrepresentseachasset'sfairvaluelesscostsofdisposal.
BasedonassessmentscompletedbytheCompany,noimpairmentlosseswererequiredin2015or2014.AsatDecember31,2013,theCompanyidentifiedthecontinueddeclineinthemarketpriceofgoldasanindicatorofpotentialimpairmentfortheCompany'slong-livedassets.Asaresultoftheidentificationofthisindicator,theCompanyestimatedtherecoverableamountsofallcashgeneratingunits("CGUs")usingupdatedassumptionsandestimatesandconcludedthateachoftheLapamine,MeadowbankmineandMeliadineprojectwereimpaired.
Adiscountedcashflowapproachwasusedtoestimatefairvaluelesscostsofdisposal,whichrepresentstherecoverableamountofproperty,plantandminedevelopmentassetsthatwasusedtodeterminetheimpairmentlossamounts.ThetotalimpairmentlossrecordedduringtheyearendedDecember31,2013was$1,014.7million.
Management'sestimatesoffuturenetcashflowsaresubjecttoriskanduncertainties.Therefore,itisreasonablypossiblethatchangescouldoccurwhichmayaffecttherecoverabilityoftheCompany'slong-livedassetsandgoodwill.ThismayhaveamaterialeffectontheCompany'sfutureconsolidatedfinancialstatements.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 13
ForeignCurrencyTranslation(Gain)Loss
TheCompany'soperatingresultsandcashflowaresignificantlyaffectedbychangesintheexchangeratebetweentheUSdollarandeachoftheCanadiandollar,MexicanpesoandEuroasalloftheCompany'srevenuesareearnedinUSdollarswhileasignificantportionofitsoperatingandcapitalcostsareincurredinsuchothercurrencies.DuringtheperiodfromJanuary1,2014throughDecember31,2015,thedailyUSdollar(noon)exchangerateasreportedbytheBankofCanadahasfluctuatedbetweenC$1.06andC$1.40,12.85Mexicanpesosand17.36Mexicanpesosand€0.72and€0.95perUS$1.00.
Aforeigncurrencytranslationgainof$4.7millionwasrecordedin2015comparedwithforeigncurrencytranslationlossesof$3.8millionin2014and$1.8millionin2013.Onaverage,theUSdollarstrengthenedagainsttheCanadiandollar,MexicanpesoandEuroin2015comparedwith2014.TheUSdollaralsostrengthenedagainsttheCanadiandollar,MexicanpesoandEurobetweenDecember31,2014andDecember31,2015.Thenetforeigncurrencytranslationgainin2015wasprimarilyduetothetranslationimpactofcurrentliabilitiesdenominatedinCanadiandollars,MexicanpesosandEuros,offsetpartiallybythetranslationimpactofcurrentassetsdenominatedinMexicanpesos,CanadiandollarsandEuros.
IncomeandMiningTaxesExpense(Recovery)
In2015,theCompanyrecordedincomeandminingtaxesexpenseof$58.0milliononincomebeforeincomeandminingtaxesof$82.6millionataneffectivetaxrateof70.2%.In2014,theCompanyrecordedincomeandminingtaxesexpenseof$106.2milliononincomebeforeincomeandminingtaxesof$189.1millionataneffectivetaxrateof56.1%.TheCompany's2015and2014effectivetaxrateswerehigherthantheapplicablestatutorytaxrateof26.0%primarilyduetotheimpactofminingtaxes,foreignexchangeandnon-deductiblepermanentdifferences.In2013,anincomeandminingtaxesrecoveryof$131.6millionwasrecordedonalossbeforeincomeandminingtaxesof$818.3millionprimarilyduetoimpairmentlossesrecordedontheMeliadineproject,theMeadowbankmineandtheLapamineasatDecember31,2013.In2013,incomeandminingtaxeswerealsoaffectedbynon-deductiblepermanentdifferencesandadeferredtaxchargerelatingtothe2013enactmentoftheSpecialMiningDutyinMexico.
Liquidity and Capital Resources
AtDecember31,2015,theCompany'scashandcashequivalents,short-terminvestmentsandcurrentrestrictedcashtotaled$132.3million,comparedwith$215.3millionatDecember31,2014.TheCompany'spolicyistoinvestexcesscashinhighlyliquidinvestmentsofthehighestcreditqualitytoeliminaterisksassociatedwiththeseinvestments.Suchinvestmentswithremainingmaturitiesatthetimeofpurchasegreaterthanthreemonthsareclassifiedasshort-terminvestments.Decisionsregardingthelengthofmaturitiesarebasedoncashflowrequirements,ratesofreturnandotherfactors.
Workingcapital(currentassetslesscurrentliabilities)decreasedto$517.9millionatDecember31,2015from$575.7millionatDecember31,2014.
OperatingActivities
Cashprovidedbyoperatingactivitiesdecreasedby$52.1millionto$616.2millionin2015comparedwith2014.Thedecreaseincashprovidedbyoperatingactivitieswasprimarilyduetodecreasesintheaveragerealizedpriceofallmetalsanda$54.4millionincreaseinexplorationandcorporatedevelopmentexpensesbetween2014and2015,partiallyoffsetbya16.9%increaseingoldproduction,a19.5%increaseinsilverproduction,a$21.8milliondecreaseingeneralandadministrativeexpensesandtheimpactofaweakerCanadiandollar,MexicanpesoandEurorelativetotheUSdollaroncostsbetweenperiods.Cashprovidedbyoperatingactivitieswas$481.0millionin2013,$187.3millionlowerthanin2014primarilyduetoa30.0%increaseingoldproductionin2014comparedwith2013.
InvestingActivities
Cashusedininvestingactivitiesdecreasedto$374.5millionin2015from$851.6millionin2014.Thedecreaseincashusedininvestingactivitieswasprimarilydueto$403.5millioninnetcashexpendituresassociatedwiththeCompany'sJune16,2014jointacquisitionofOsisko,a$41.0millionincrementaldecreaseinrestrictedcash,a$25.7milliondecreaseincapitalexpenditures,a$16.4millionincreaseinnetproceedsfromthesaleofavailable-for-salesecuritiesandwarrantsanda$7.4milliondecreaseinpurchasesofavailable-for-salesecuritiesandwarrantsbetweenperiods.Cashusedininvestingactivitieswas$687.2millionin2013,includingcapitalexpendituresof$620.5million,$59.8millioninpurchasesofavailable-for-salesecuritiesandwarrantsand$10.1millionassociatedwiththeacquisitionofUrastarGoldCorporation.
14 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
In2015,theCompanyinvestedcashof$449.8millioninprojectsandsustainingcapitalexpenditures.Capitalexpendituresin2015included$67.3millionattheLaRondemine,$66.7millionattheMeliadineproject,$65.2millionattheMeadowbankmine,$61.8millionatthePinosAltosmine,$56.4millionattheKittilamina,$48.8millionattheGoldexmine,$43.4millionattheCanadianMalarticmine(theCompany'sattributableportion),$23.4millionattheLaIndiamine,$6.5millionattheLapamine,$4.2millionattheCrestonMascotadepositatPinosAltosand$6.1millionatotherprojects.The$25.7milliondecreaseincapitalexpendituresbetween2014and2015wasprimarilyduetosignificantexpendituresthatwereincurredin2014relatingtotheKittilamine'smillexpansionprojectandtheLaRondemine'scoarseoreconveyorandventilationsystems,inadditiontothewind-downofcapitalexpendituresattheLapaminebetweenperiodsasitapproachestheendofitsplannedminelife.Partiallyoffsettingtheoveralldecreaseincapitalexpendituresbetween2014and2015wereincreaseddevelopmentexpendituresattheMeliadineprojectandattheGoldexandPinosAltosminesandanincreaseinattributablecapitalexpendituresrelatedtotheCanadianMalarticminewhichwasjointlyacquiredonJune16,2014.
OnJune11,2015,AgnicoEagleSwedenAB("AESweden"),anindirectwholly-ownedsubsidiaryoftheCompany,acquired55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn")fromOrexMineralsInc.("Orex"),bywayofasharepurchaseagreement(the"GunnarnSPA").TheoperationandgovernanceofGunnarnandtheBarseleprojectaregovernedbyajointventureagreementamongtheCompany,AESweden,OrexandGunnarn(the"GunnarnJVA").UndertheGunnarnSPA,theconsiderationfortheacquisitionofthe55.0%ofGunnarn'soutstandingcommonshareswas$10.0million,comprisedof$6.0millionincashpayableatclosingandpaymentsof$2.0millionincashor,atAESweden'ssolediscretion,sharesoftheCompany,oneachofthefirstandsecondanniversaryoftheclosing.UndertheGunnarnJVA,AESwedencommittedtoincuranaggregateof$7.0millionofexplorationexpensesattheBarseleprojectbyJune11,2018,45.0%or$3.1millionofwhichisconsideredaccruedpurchaseconsideration.Accordingly,theCompany'stotalpurchaseconsiderationfortheacquisitionofits55.0%interestinGunnarnwas$13.1million.AESwedenmayearnanadditional15.0%interestinGunnarnundertheGunnarnJVAifitcompletesafeasibilitystudyinrespectoftheBarseleproject.TheGunnarnJVAalsoprovidesAESwedenwiththerighttonominateamajorityofthemembersoftheboardofdirectorsofGunnarn(basedoncurrentshareholdings)andAESwedenisthesoleoperatoroftheBarseleprojectandpaidcustomarymanagementfees.Inconnectionwiththetransaction,Orexalsoobtaineda2.0%netsmelterreturnroyaltyonproductionfromtheBarseleproperty,whichtheCompanymayrepurchaseatanytimefor$5.0million.TheGunnarnacquisitionwasaccountedforbytheCompanyasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$0.6millionwerecapitalizedtotheminingpropertiesacquired.OnSeptember25,2015,OrexMineralsInc.assigneditsinterestintheGunnarnJVAgreementtoBarseleMineralsCorp.("BarseleMinerals"),whichwasatthetimeawholly-ownedsubsidiaryofOrex.AllofthesharesofBarseleMineralsweresubsequentlydistributedtoshareholdersofOrexunderaplanofarrangement.
OnJune9,2015,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),includingcommonsharesissuableontheexerciseofSoltoro'soutstandingoptionsandwarrants,bywayofaplanofarrangementundertheCanada Business CorporationsAct (the"SoltoroArrangement").EachoutstandingshareofSoltorowasexchangedundertheSoltoroArrangementfor:(i)C$0.01incash;(ii)0.00793ofanAgnicoEaglecommonshare;and(iii)onecommonshareofPalaminaCorp.,acompanythatwasnewlyformedinconnectionwiththeSoltoroArrangement.PursuanttotheSoltoroArrangement,SoltorotransferredallminingpropertieslocatedoutsideofthestateofJalisco,MexicotoPalaminaCorp.andretainedallotherminingproperties.AgnicoEaglehadnointerestinPalaminaCorp.upontheclosingoftheSoltoroArrangement.AgnicoEagle'stotalpurchasepriceof$26.7millionwascomprisedof$2.4millionincash,including$1.6millionincashcontributedtoPalaminaCorp.,and770,429AgnicoEaglecommonsharesissuedfromtreasury.TheSoltoroacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$1.4millionwerecapitalizedtotheminingpropertiesacquired.
OnMay21,2015,theCompanysubscribedfor62,500,000commonsharesofBeloSunMiningCorp.("BeloSun")inanon-brokeredprivateplacementatapriceofC$0.24perBeloSuncommonshare,fortotalcashconsiderationofC$15.0million.Uponclosingthetransaction,theCompanyheldapproximately17.4%oftheissuedandoutstandingcommonsharesofBeloSun.
OnMarch19,2015,AgnicoEagle,YamanaandCanadianMalarticGPcompletedthepurchaseofa30.0%interestintheMalarticCHLpropertyfromAbitibiRoyaltiesInc.("Abitibi")inexchangefor459,197AgnicoEaglecommonshares,3,549,695Yamanacommonsharesand3.0%netsmelterreturnroyaltiestoeachofAbitibiandOsiskoGoldRoyaltiesLtd.ontheMalarticCHLproperty.TotalAgnicoEaglecommonshareconsiderationissuedwasvaluedat$13.4millionbasedontheclosingpriceofthecommonsharesonMarch18,2015.TheMalarticCHLpropertyislocatedadjacenttotheCompany'sjointlyownedCanadianMalarticmineandtheremaining70.0%interestintheMalarticCHLpropertywasjointlyacquired
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 15
throughtheJune16,2014acquisitionofOsisko(thepredecessortoCanadianMalarticCorporation).Concurrentwiththetransactionclosing,eachofAbitibi,AgnicoEagle,Yamana,CanadianMalarticGPandCanadianMalarticCorporationreleasedanddischargedtheotherswithrespecttoallproceedingspreviouslycommencedbyAbitibiwithrespecttotheMalarticCHLproperty.Asaresultofthetransaction,AgnicoEagleandYamanajointlyowna100.0%interestintheMalarticCHLpropertythroughtheirrespectiveindirectinterestsinCanadianMalarticGP.
OnNovember28,2014,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofCayden,includingcommonsharesissuableontheexerciseofCayden'soutstandingoptionsandwarrants,pursuanttoacourt-approvedplanofarrangement.Thetotalpurchasepriceof$122.1millionwascomprisedof$0.5millionincashand4,853,875AgnicoEaglecommonsharesissuedfromtreasury.TheCaydenacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$3.2millionwerecapitalizedtotheminingpropertiesacquired.
OnJune16,2014,AgnicoEagleandYamanajointlyacquired100.0%ofOsiskobywayoftheOsiskoArrangement.AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsiskoandCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.AgnicoEagleandYamanawillalsojointlyexploreotherpropertiesthatwereheldbyOsisko(nowCanadianMalarticCorporation)atthetimeofacquisition.AgnicoEaglehasrecognizeditsinterestintheassets,liabilities,revenuesandexpensesofOsiskoinaccordancewiththeCompany'srightsandobligationsprescribedbytheOsiskoArrangementunderIFRS.AgnicoEagle'sshareofOsisko'sJune16,2014purchasepricewascomprisedofcashpaymentstotaling$462.7millionand33,923,212AgnicoEaglecommonsharesvaluedat$1,135.1million.
In2015,theCompanyreceivednetproceedsof$61.1millionfromthesaleofavailable-for-salesecuritiesandwarrantscomparedwith$44.7millionin2014and$0.2millionin2013.In2015,theCompanypurchased$19.8millionofavailable-for-salesecuritiesandwarrantscomparedwith$27.2millionin2014and$59.8millionin2013.TheCompany'sinvestmentsinavailable-for-salesecuritiesconsistprimarilyofinvestmentsincommonsharesofentitiesintheminingindustry.
FinancingActivities
Cashusedinfinancingactivitiesof$280.8millionin2015comparedwithcashprovidedbyfinancingactivities$229.2millionin2014primarilyduetoachangefromnetproceedsfromlong-termdebtof$286.0millionin2014toa$261.1millionnetrepaymentoflong-termdebtin2015,partiallyoffsetbytheissuanceofthe$50.0million2015Note(asdefinedbelow)onSeptember30,2015.Cashprovidedbyfinancingactivitieswas$48.7millionin2013,whichincludednetproceedsfromlong-termdebtof$170.0million,partiallyoffsetbydividendspaidof$126.3million.
In2015,theCompanypaiddividendsof$59.5millioncomparedwith$54.1millionin2014and$126.3millionin2013.AgnicoEaglehasdeclaredacashdividendeveryyearsince1983.AlthoughtheCompanyexpectstocontinuepayingdividends,futuredividendswillbeatthediscretionoftheBoardandwillbesubjecttofactorssuchasincome,financialconditionandcapitalrequirements.
OnSeptember30,2015,theCompanyamendedits$1.2billionCreditFacility,amongotherthings,extendingthematuritydatefromJune22,2019toJune22,2020andamendingpricingterms.AsatDecember31,2015,theCompany'soutstandingbalanceundertheCreditFacilitywas$265.0million.CreditFacilityavailabilityisreducedbyoutstandinglettersofcredit,amountingto$10.9millionatDecember31,2015.AsatDecember31,2015,$924.1millionwasavailableforfuturedrawdownundertheCreditFacility.
OnSeptember30,2015,theCompanyclosedaprivateplacementconsistingofa$50.0millionguaranteedseniorunsecurednote(the"2015Note")withaSeptember30,2025maturitydateandayieldof4.15%.Underthenotepurchaseagreementinrespectofthe2015Note,theCompanyagreedthatanamountequaltoorgreaterthanthenetproceedsfromthe2015NotewouldbespentonminingprojectsintheProvinceofQuebec,Canada.
OnSeptember23,2015,theCompanyenteredintoastandbyletterofcreditfacilitywithafinancialinstitutionprovidingforafurtherC$150.0millionuncommittedletterofcreditfacility(asamended,the"NewLCFacility").TheNewLCFacilitymaybeusedbytheCompanytosupportthereclamationobligationsoftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestortheperformanceobligations(otherthanwithrespecttoindebtednessforborrowedmoney)oftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestthatarenotdirectlyrelatedtoreclamationobligations.PaymentandperformanceoftheCompany'sobligationsundertheNewLCFacilityaresupportedbyguaranteesissuedbyExportDevelopmentCanadaunderacontractinsurancebondingprogramagreement(the"EDCFacility")infavourofthelender.AsatDecember31,2015,$69.8millionhadbeendrawnundertheNewLCFacility.
16 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
OnJuly31,2015,theCompanyamendeditscreditagreementwithanotherfinancialinstitutionrelatingtoitsuncommittedletterofcreditfacility(asamended,the"ExistingLCFacility").TheamountavailableundertheExistingLCFacilityincreasedfromC$175.0milliontoC$200.0million.EffectiveSeptember28,2015,theamountavailableundertheExistingLCFacilitywasincreasedtoC$250.0million.TheobligationsoftheCompanyundertheExistingLCFacilityareguaranteedbycertainofitssubsidiaries.TheExistingLCFacilitymaybeusedtosupportthereclamationobligationsornon-financialorperformanceobligationsoftheCompanyoritssubsidiaries.AsatDecember31,2015,$172.6millionhadbeendrawnundertheExistingLCFacility.
OnJuly24,2012,theCompanyclosedaprivateplacementconsistingof$200.0millionofguaranteedseniorunsecurednotes(the"2012Notes").The2012Notesmaturein2022and2024andatissuancehadaweightedaveragematurityof11.0yearsandweightedaverageyieldof4.95%.Proceedsfromthe2012NoteswereusedtorepayamountsoutstandingundertheCreditFacility.
OnApril7,2010,theCompanyclosedaprivateplacementconsistingof$600.0millionofguaranteedseniorunsecurednotesduein2017,2020and2022(the"2010Notes")withaweightedaveragematurityof9.84yearsandweightedaverageyieldof6.59%.Proceedsfromtheofferingofthe2010NoteswereusedtorepayamountsundertheCompany'sthenoutstandingcreditfacilities.
InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,CanadianMalarticGPwasassignedandassumedcertainoutstandingdebtandfinanceleaseobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtandfinanceleaseobligationsisassetoutbelow:
• AsecuredloanfacilityintheprincipalamountofC$75.0million($69.1million)withscheduledC$20.0millionrepaymentsonJune30,2016andJune30,2017anda6.875%perannuminterestrate.AscheduledrepaymentofC$15.0million($14.1million)wasmadesubsequenttotheJune16,2014acquisitiondateandthescheduledC$20.0million($16.0million)repaymentwasmadeonJune30,2015,resultinginattributableoutstandingprincipalof$28.9millionasatDecember31,2015.OnSeptember29,2014,CanadianMalarticGPamendedtheacquiredsecuredloanfacility(the"CMGPLoan")withnochangetomaturityorpricingterms.
• TheCMGPConvertibleDebentureswithprincipaloutstandingofC$37.5million($34.6million),aNovember2017maturitydateanda6.875%interestrate.AsattheJune16,2014Osiskoacquisitiondate,theCMGPConvertibleDebentureshadanattributablefairvalueof$44.9million.OnJune30,2015,thenegotiatedearlysettlementofalloftheCMGPConvertibleDebentureswascompleted.Asaresultofthissettlement,871,680AgnicoEaglecommonshareswithafairvalueof$24.8millionwerereleasedfromadepositarytotheholdersoftheCMGPConvertibleDebenturesalongwithacashpaymentof$10.1milliontosettletheCompany'sobligation.Additionalcashconsiderationof$3.2millionwaspaidtotheholdersoftheCMGPConvertibleDebenturesuponsettlementandwasrecordedintheotherexpenses(income)lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.In2015,a$2.4millionmark-to-marketlosswasrecordedintheotherexpenses(income)lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomerelatedtotheCMGPConvertibleDebentures.An$8.0millionmark-to-marketgainwasrecordedintheotherexpenses(income)lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomerelatedtotheCMGPConvertibleDebenturesbetweentheJune16,2014jointacquisitiondateandDecember31,2014.AsatDecember31,2015,theCMGPConvertibleDebentureshadprincipaloutstandingofnil.
• AloanwithprincipaloutstandingofC$2.1million($2.0million)withmonthlyrepaymentsscheduledthroughthefirstquarterof2015anda0.0%interestrate.AsatDecember31,2015,theCompany'sattributableloanprincipaloutstandingwasnil.
• SecuredfinanceleaseobligationsofC$38.3million($35.3million)providedinseparatetrancheswithmaturitiesrangingbetween2015and2019anda7.5%interestrate.AsatDecember31,2015,theCompany'sattributablefinanceleaseobligationswere$13.7million.
TheCompanywasincompliancewithallcovenantscontainedintheCreditFacility,2015Note,2012Notes,2010Notes,ExistingLCFacility,NewLCFacilityandtheEDCFacilityasatDecember31,2015.CanadianMalarticGPwasincompliancewithallcovenantsundertheCMGPLoanasatDecember31,2015.
TheCompanyissuedcommonsharesundertheCompany'sincentivesharepurchaseplananddividendreinvestmentplanforgrossproceedsof$9.4millionin2015comparedwith$10.4millionin2014and$15.7millionin2013.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 17
ContractualObligations
AgnicoEagle'scontractualobligationsasatDecember31,2015aresetoutbelow:
Total 2016 2017-2018 2019-2020 Thereafter (millions of United States dollars) Reclamationprovisions(i) $ 397.3 $ 6.2 $ 13.5 $ 22.5 $ 355.1
Purchasecommitments(ii) 88.1 38.8 18.5 10.4 20.4
Pensionobligations(iii) 5.7 0.1 0.2 1.6 3.8
Financeandoperatingleases 35.9 11.4 10.1 4.1 10.3
Long-termdebt(iv) 1,143.9 14.5 129.4 625.0 375.0
Total(v) $ 1,670.9 $ 71.0 $ 171.7 $ 663.6 $ 764.6
Notes:
(i) Miningoperationsaresubjecttoenvironmentalregulationsthatrequirecompaniestoreclaimandremediatelanddisturbedbyminingoperations.TheCompanyhassubmittedclosureplanstotheappropriategovernmentalagencieswhichestimatethenature,extentandcostsofreclamationforeachofitsminingproperties.Expectedreclamationcashflowsarepresentedaboveonanundiscountedbasis.ReclamationprovisionsrecordedintheCompany'sconsolidatedfinancialstatementsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.
(ii) Purchasecommitmentsincludecontractualcommitmentsfortheacquisitionofproperty,plantandminedevelopmentandintangibleassets.AgnicoEagle'sattributableinterestinthepurchasecommitmentsassociatedwithitsjointoperationstotaled$2.6millionasatDecember31,2015.
(iii) AgnicoEagleprovidesanon-registeredsupplementaryexecutiveretirementdefinedbenefitplanforcertaincurrentandformerseniorofficers(the"ExecutivesPlan").TheExecutivesPlanbenefitsaregenerallybasedontheemployee'syearsofserviceandlevelofcompensation.Thefigurespresentedinthistablehavebeenactuariallydetermined.
(iv) WithrespecttotheCompany'slong-termdebtobligations,theCompanyhasassumedthatrepaymentwilloccuroneachinstrument'srespectivematuritydate.
(v) TheCompany'sfutureoperatingcashflowsareexpectedtobesufficienttosatisfyitscontractualobligations.
Off-BalanceSheetArrangements
TheCompany'soff-balancesheetarrangementsasatDecember31,2015includeoperatingleaseswithvariouscounterpartiesof$16.7million(seeNote14(b)totheconsolidatedfinancialstatements)andoutstandinglettersofcreditforenvironmentalandsiterestorationcosts,customcredits,governmentgrantsandothergeneralcorporatepurposesof$268.7millionundertheExistingLCFacilityandNewLCFacility(seeNote26totheconsolidatedfinancialstatements).IftheCompanyweretoterminatetheseoff-balancesheetarrangements,theCompany'sliquidityposition(asoutlinedinthetablebelow)issufficienttosatisfyanyrelatedpenaltiesorobligations.
18 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
2016LiquidityandCapitalResourcesAnalysis
TheCompanybelievesthatithassufficientcapitalresourcestosatisfyits2016mandatoryexpenditurecommitments(includingthecontractualobligationssetoutabove)anddiscretionaryexpenditurecommitments.Thefollowingtablesetsoutexpectedcapitalrequirementsandresourcesfor2016:
Amount
(millions of United States
dollars)
2016MandatoryCommitments:
Contractualobligations(seetableabove) $ 71.0
Accountspayableandaccruedliabilities(asatDecember31,2015) 243.8
Interestpayable(asatDecember31,2015) 14.5
Incometaxespayable(asatDecember31,2015) 14.9
Total2016mandatoryexpenditurecommitments $ 344.2
2016DiscretionaryCommitments:
Expected2016capitalexpenditures $ 491.0
Expected2016explorationandcorporatedevelopmentexpenses 138.0
Total2016discretionaryexpenditurecommitments $ 629.0
Total 2016 mandatory and discretionary expenditure commitments $ 973.2
2016CapitalResources:
Cash,cashequivalentsandshort-terminvestments(asatDecember31,2015) $ 131.6
Expected2016cashprovidedbyoperatingactivities 423.5
Workingcapital,excludingcash,cashequivalentsandshort-terminvestments(asatDecember31,2015) 386.3
AvailableundertheCreditFacility(asatDecember31,2015) 924.1
Total 2016 Capital Resources $ 1,865.5
WhiletheCompanybelievesitscapitalresourceswillbesufficienttosatisfyall2016commitments(mandatoryanddiscretionary),theCompanymaychoosetodecreasecertainofitsdiscretionaryexpenditurecommitments,whichincludescertaincapitalexpenditures,shouldunexpectedfinancialcircumstancesariseinthefuture.TheCompanybelievesthatitwillcontinuetohavesufficientcapitalresourcesavailabletosatisfyitsplanneddevelopmentandgrowthactivities.
Quarterly Results Review
FortheCompany'sdetailed2015and2014quarterlyfinancialandoperatingresultsseeSummarized Quarterly Data inthisMD&A.
Revenuesfromminingoperationsdecreasedby4.0%to$482.9millioninthefourthquarterof2015comparedwith$503.1millioninthefourthquarterof2014primarilyduetolowersalespricesrealizedongoldandsilver,partiallyoffsetbya9.0%increaseinpayablegoldproductionbetweenperiods.Productioncostsdecreasedby20.0%to$229.8millioninthefourthquarterof2015comparedwith$287.3millioninthefourthquarterof2014primarilyduetotheimpactofaweakerCanadiandollar,MexicanpesoandEurorelativetotheUSdollarbetweenperiods.Explorationandcorporatedevelopmentexpensesincreasedby$11.6millionto$26.0millioninthefourthquarterof2015comparedwith$14.4millioninthefourthquarterof2014primarilyduetoexplorationexpensesincurredattheElBarquenoprojectinMexicoandtheAmaruqprojectattheMeadowbankMineinNunavut.Amortizationofproperty,plantandminedevelopmentincreasedby13.0%to$157.1millioninthefourthquarterof2015comparedwith$139.1millioninthefourthquarterof2014primarilyduetoincreasedgoldproductionattheMeadowbankandLaRondeminesandanincreaseindepreciableminingpropertiesatthe
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 19
CanadianMalarticminebetweenperiodsbasedonfinalestimatesoffairvalueasattheJune16,2014acquisitiondate.Anetlossof$15.5millionwasrecordedinthefourthquarterof2015afterincomeandminingtaxesexpenseof$34.6millioncomparedwithanetlossof$21.3millioninthefourthquarterof2014afterincomeandminingtaxesexpenseof$23.6million.
Cashprovidedbyoperatingactivitiesdecreasedby14.2%to$140.7millioninthefourthquarterof2015comparedwith$164.0millioninthefourthquarterof2014.Thedecreaseincashprovidedbyoperatingactivitieswasprimarilyduetodecreasesintheaveragerealizedpriceofgoldandsilverandan$11.6millionincreaseinexplorationandcorporatedevelopmentexpenses,partiallyoffsetbya9.0%increaseinpayablegoldproductionanda$57.5milliondecreaseinproductioncostsbetweenperiods.
Outlook
Thefollowingsectioncontains"forward-lookingstatements"and"forward-lookinginformation"withinthemeaningofapplicablesecuritieslaws.PleaseseeNote to Investors Concerning Forward-Looking Information inthisMD&Aforadiscussionofassumptionsandrisksrelatingtosuchstatementsandinformation.
GoldProduction
LaRonde Mine
In2016,payablegoldproductionattheLaRondemineisexpectedtobeapproximately275,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheLaRondemineisexpectedtobeapproximately323,000ounces.ThecommissioningofacoolingplantattheLaRondeminehashelpedtoenhanceproductivitybyreducingheatandcongestioninthelowersectionofthemineandprovidesadditionalflexibilityintheminingplan.Inaddition,anewcourseoreconveyorsystemthatisscheduledtobefullycommissionedin2016isexpectedtofurtherenhanceflexibilityinthelowersectionofthemine.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLaRondemineareexpectedtobeapproximately$592in2016comparedwith$590in2015.
Lapa Mine
In2016,payablegoldproductionattheLapamineisexpectedtobeapproximately60,000ounces.2016isthefinalyearofproductionbasedontheLapamine'scurrentlifeofmineplanwithproductionexpectedtodeclineprogressivelyduetolowertonnageandstopeavailability.TheCompanyexpectsthattheLapaminewilloperateuntilearlyinthefourthquarterof2016.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLapamineareexpectedtobeapproximately$640in2016comparedwith$590in2015,reflectingexpectationsofdecreasedproductionandlowergoldgrade.
Goldex Mine
TheGoldexmineachievedcommercialproductionfromtheMandEZonesinOctober2013.In2016,payablegoldproductionattheGoldexmineisexpectedtobeapproximately105,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheGoldexmineisexpectedtobeapproximately117,000ounces.ContinuedexploitationoftheM3andM4ZonesisexpectedtomaintainrelativelyconstantproductionlevelsandcostsattheGoldexminethrough2017.Additionally,inJuly2015,theCompanyannouncedapprovaloftheDeep1project,withcommissioningexpectedtobegincommissioningin2018.Totalcashcostsperounceofgoldproducedonaby-productbasisattheGoldexmineareexpectedtobeapproximately$601in2016comparedwith$538in2015,reflectingexpectationsofdecreasedproduction.
Meadowbank Mine
In2016,payablegoldproductionattheMeadowbankmineisexpectedtobeapproximately305,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheMeadowbankmineisexpectedtobeapproximately260,000ounces.In2015,theCompanydeterminedtoextendtheVaultpitatMeadowbank,whichresultedindecreasedproductionfor2016,butaddedapproximatelyanotheryearofproduction,throughthethirdquarterof2018.Productionlevelsareexpectedtodecreaseprogressivelythrough2018duetoadeclineingoldgradeasthecurrentmineralreservebaseisdepleted.Totalcashcostsperounceofgoldproducedonaby-productbasisattheMeadowbankmineareexpectedtobeapproximately$750in2016comparedwith$613in2015,reflectingexpectationsofdecreasedproductionandlowergoldgrade.
20 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Canadian Malartic Mine
TheCanadianMalarticminewasjointlyacquiredbyAgnicoEagleandYamanaonJune16,2014.In2016,attributablepayablegoldproductionattheCanadianMalarticmineisexpectedtobeapproximately280,000ounces.Overthe2016to2018period,averageannualattributablepayablegoldproductionattheCanadianMalarticmineisexpectedtobeapproximately293,000ounces.Theincreaseinthroughputto55,000tonnesperdayin2016remainscontingentuponupdatingtheexistingoperatingpermits.Totalcashcostsperounceofgoldproducedonaby-productbasisattheCanadianMalarticmineareexpectedtobeapproximately$593in2016comparedwith$596in2015.
Kittila Mine
In2016,payablegoldproductionattheKittilamineisexpectedtobeapproximately200,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheKittilamineisexpectedtobeapproximately197,000ounces.During2015,thefocusatKittilawasimprovingmillreliability,andseveralprojectswerecarriedoutthatimprovedmaintenanceperformance.Withfurtheroptimization,theCompanybelievesthereispotentialforimprovedmillavailability,whichcouldleadtohigherthroughputlevelsinthefuture.Aspartofaninitiativetoincreaseminethroughput,developmentofarampsystemrelatedtotheRimpiZonewillbeprioritized.Totalcashcostsperounceofgoldproducedonaby-productbasisattheKittilamineareexpectedtobeapproximately$646in2016comparedwith$709in2015,reflectingexpectationsofincreasedproduction.
Pinos Altos Mine
In2016,payablegoldproductionatthePinosAltosmineisexpectedtobeapproximately175,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionatthePinosAltosmineisexpectedtobeapproximately177,000ounces.CommissioningofthePinosAltosshaftin2016isexpectedtoallowforbettermatchingofthefutureminingcapacitywiththemill,oncetheopenpitminingoperationbeginstowinddown.Totalcashcostsperounceofgoldproducedonaby-productbasisatthePinosAltosmineareexpectedtobeapproximately$443in2016comparedwith$387in2015,reflectingexpectationsofdecreasedproduction.
Creston Mascota deposit at Pinos Altos
In2016,payablegoldproductionattheCrestonMascotadepositatPinosAltosisexpectedtobeapproximately45,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheCrestonMascotadepositatPinosAltosisexpectedtobeapproximately42,000ounces.FurtherdrillingontheBravodepositisplannedfor2016toevaluateitasapotentialsourceoffutureadditionalproduction.Totalcashcostsperounceofgoldproducedonaby-productbasisattheCrestonMascotadepositatPinosAltosareexpectedtobeapproximately$604in2016comparedwith$430in2015,reflectingexpectationsofdecreasedproduction.
La India Mine
TheLaIndiamineachievedcommercialproductioninFebruary2014.In2016,payablegoldproductionattheLaIndiamineisexpectedtobeapproximately100,000ounces.Overthe2016to2018period,averageannualpayablegoldproductionattheLaIndiamineisexpectedtobeapproximately107,000ounces.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLaIndiamineareexpectedtobeapproximately$470in2016comparedwith$436in2015.
Production Summary
WiththeachievementofcommercialproductionattheKittila,LapaandPinosAltosminesin2009,theMeadowbankminein2010,theCrestonMascotadepositatPinosAltosandLaRondemineextensionin2011,theGoldexmineMandEZonesin2013andtheLaIndiaminein2014,alongwiththejointacquisitionoftheCanadianMalarticmineonJune16,2014,AgnicoEaglehastransformedfromaonemineoperationtoaneightmineseniorgoldminingcompanyoverthelastsevenyears.In2015,theCompanyachievedrecordannualpayablegoldproductionof1,671,340ounces.AstheCompanyplansitsnextgrowthphasefromthisexpandedproductionplatform,itexpectstocontinuetodeliveronitsvisionandstrategy.Annualpayablegoldproductionisexpectedtodecreasetoapproximately1,545,000ouncesin2016,representinga7.5%decreasecomparedwith2015.TheCompanyexpectsthatthemaincontributorstoachievingthetargetedlevelsofpayablegoldproduction,mineralreservesandmineralresourcesin2016willinclude:
• IncreasedproductionfromtheLaRondemineduetothesuccessfulcommissioningofacoolingplantandtheexpectedfullcommissioningofthecoarseoreconveyor;
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 21
• IncreasedproductionfromtheKittilamineduetocontinuedmilloptimization;and
• ContinuedconversionofAgnicoEagle'scurrentmineralresourcestomineralreserves.
FinancialOutlook
Revenue from Mining Operations and Production Costs
In2016,theCompanyexpectstocontinuetogeneratesolidcashflowwithpayablegoldproductionofapproximately1,545,000ouncescomparedwith1,671,340ouncesin2015.ThisexpecteddecreaseinpayablegoldproductionisprimarilyduetotheplannedwinddownoftheLapaminein2016,lowerexpectedgradesatthePinosAltosmineandtheexpansionoftheMeadowbankmine'sVaultpit,deferringgoldproductionfrom2016tosubsequentyearsthoughextendingtheMeadowbankminelife.
Thetablebelowsetsoutactualpayableproductionin2015andexpectedpayableproductionin2016:
2016
Forecast2015 Actual
Gold(ounces) 1,545,000 1,671,340
Silver(thousandsofounces) 3,886 4,258
Zinc(tonnes) 4,887 3,501
Copper(tonnes) 4,860 4,941
In2016,theCompanyexpectstotalcashcostsperounceofgoldproducedonaby-productbasisattheLaRondeminetobeapproximately$592comparedwith$590in2015.Incalculatingexpectationsoftotalcashcostsperounceofgoldproducedonaby-productbasisfortheLaRondemine,netsilver,zincandcopperby-productrevenueoffsetsproductioncosts.Therefore,productionandpriceassumptionsforby-productmetalsplayanimportantroleintheLaRondemine'sexpectedtotalcashcostsperounceofgoldproducedonaby-productbasisduetoitssignificantby-productproduction.ThePinosAltosminealsogeneratessignificantsilverby-productrevenue.Anincreaseinby-productmetalpricesaboveforecastedlevelswouldresultinimprovedtotalcashcostsperounceofgoldproducedonaby-productbasisatthesemines.Totalcashcostsperounceofgoldproducedonaco-productbasisareexpectedtobeapproximately$756in2016attheLaRondeminecomparedwith$760in2015.
AsproductioncostsattheLaRonde,Lapa,Goldex,MeadowbankandCanadianMalarticminesaredenominatedprimarilyinCanadiandollars,productioncostsattheKittilaminearedenominatedprimarilyinEurosandproductioncostsatthePinosAltosmine,theCrestonMascotadepositatPinosAltosandtheLaIndiaminearedenominatedprimarilyinMexicanpesos,theCanadiandollar/USdollar,Euro/USdollarandMexicanpeso/USdollarexchangeratesalsoaffecttheCompany'sexpectationsforthetotalcashcostsperounceofgoldproducedbothonaby-productandco-productbasis.
22 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Thetablebelowsetsoutthemetalpriceandexchangerateassumptionsusedinderivingtheexpected2016totalcashcostsperounceofgoldproducedonaby-productbasis(forecastedproductionforeachmetalisshowninthetableabove)aswellastheactualmarketaverageclosingpricesforeachvariablefortheperiodofJanuary1,2016throughFebruary29,2016:
2016
Assumptions
Actual Market Average
(January 1, 2016 – February 29, 2016)
Gold(perounce) $1,100 $1,147
Silver(perounce) $16.00 $14.60
Zinc(pertonne) $1,750 $1,615
Copper(pertonne) $4,700 $4,533
C$/US$exchangerate(C$) $1.30 $1.40
Euro/US$exchangerate(Euros) €0.91 €0.91
Mexicanpeso/US$exchangerate(Mexicanpesos) 16.00 18.25
SeeRisk Profile – Metal Prices and Foreign Currencies inthisMD&Afortheexpectedimpactonforecasted2016totalcashcostsperounceofgoldproducedonaby-productbasisofcertainchangesinmetalpriceandexchangerateassumptions.
Exploration and Corporate Development Expenditures
In2016,AgnicoEagleexpectstoincurexplorationandcorporatedevelopmentexpensesofapproximately$138.0million.ExplorationexpensesareexpectedtobefocusedontheAmaruqprojectinNunavut,Canada(locatedapproximately50kilometresnorthwestoftheMeadowbankmine),theElBarquenoprojectinJaliscoState,Mexico(acquiredonNovember28,2014aspartofCayden)andtheSisarZoneattheKittilamineinFinland.Theexpected2016Amaruqprojectdrillprogramofapproximately$43.0millionwillfocusonexpandingandupgradingmineralresourcesandoutliningasecondopenpitdepositwiththegoalofpotentiallydevelopingthedepositasasatelliteoperationtotheMeadowbankmine.TheCompanybelievesthattheElBarquenoproject'sgold-silverdepositscouldpotentiallybedevelopedintoaseriesofopenpitsutilizingheapleachprocessing,similartotheCrestonMascotadepositatPinosAltosandtheLaIndiamine.AgnicoEagle'sexpectedexplorationprogramattheElBarquenoprojectin2016ofapproximately$13.0millionwillfocusonmineralresourcedevelopment,conversionandregionalexploration.
ExplorationprogramsaredesignedtoinfillandexpandknowndepositsandtestotherfavourabletargetareasthatcouldultimatelysupplementtheCompany'sexistingproductionprofile.Explorationissuccessdrivenandthusplannedexplorationcouldchangemateriallybasedontheresultsofthevariousexplorationprograms.Whenitisdeterminedthataprojectcangeneratefutureeconomicbenefit,thecostsofdrillinganddevelopmenttofurtherdelineatetheorebodyonsuchapropertyarecapitalized.In2016,theCompanyexpectstocapitalizeapproximately$15.0millionondrillinganddevelopmentrelatedtofurtherdelineatingorebodiesandconvertingmineralresourcesintomineralreserves.
Other Expenses
Generalandadministrativeexpensesareexpectedtobebetween$90.0millionand$105.0millionin2016comparedwith$97.0millionin2015.Amortizationofproperty,plantandminedevelopmentisexpectedtoincreasetobetween$630.0millionand$660.0millionin2016comparedwith$608.6millionin2015primarilyduetoexpectedincreasesingoldproductionattheKittilaandLaRondeminesbetweenperiodsandtheamortizationofexpected2016capitalexpendituresof$41.0millionattheMeadowbankmineoveritslimitedremainingminelife.TheCompany'seffectivetaxrateisexpectedtobebetween40.0%and45.0%in2016.
Capital Expenditures
Capitalexpenditures,includingsustainingcapital,constructionanddevelopmentcostsandcapitalizedexplorationcosts,areexpectedtototalapproximately$491.0millionin2016.TheCompanyexpectstofundits2016capitalexpendituresthrough
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 23
operatingcashflowfromthesaleofitsgoldproductionandtheassociatedby-productmetals.Significantcomponentsoftheexpected2016capitalexpendituresprogramincludethefollowing:
• $297.0millioninsustainingcapitalexpendituresrelatingtotheLaRondemine($62.0million),CanadianMalarticmine($59.0million–portionattributabletotheCompany),Kittilamine($56.0million),PinosAltosmine($54.0million),Meadowbankmine($41.0million),Goldexmine($10.0million),LaIndiamine($8.0million)andtheCrestonMascotadepositatPinosAltos($7.0million);
• $179.0millionincapitalizeddevelopmentexpendituresrelatingtotheMeliadineproject($96.0million),Goldexmine($64.0million),Kittilamine($10.0million),PinosAltosmine($7.0million)andtheCanadianMalarticmine($2.0million–portionattributabletotheCompany);and
• $15.0millionincapitalizeddrillingexpenditures.
TheCompanycontinuestoexamineotherpossiblecorporatedevelopmentopportunitieswhichmayresultintheacquisitionofcompaniesorassetswithsecurities,cashoracombinationthereof.Ifcashisusedtofundacquisitions,AgnicoEaglemayberequiredtoissuedebtorsecuritiestosatisfycashrequirements.
All-in Sustaining Costs per Ounce of Gold Produced
BasedontherecommendationsoftheWorldGoldCouncilmadein2013,theCompanymodifieditscalculationofall-insustainingcostsperounceofgoldproducedbeginningin2014.All-insustainingcostsperounceofgoldproducediscalculatedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).All-insustainingcostsperounceofgoldproducedonaby-productbasisiscalculatedastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andnon-cashreclamationprovisionexpenseperounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismadetototalcashcostsperounceofgoldproduced.Thecalculationofall-insustainingcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.
AgnicoEagle'sall-insustainingcostsperounceofgoldproducedonaby-productbasisareexpectedtobeapproximately$850to$890in2016comparedwith$810millionin2015.
Risk Profile
TheCompanymitigatesthelikelihoodandpotentialseverityofthevariousrisksitencountersinitsday-to-dayoperationsthroughtheapplicationofhighstandardsintheplanning,constructionandoperationofitsminingfacilities.Emphasisisplacedonhiringandretainingcompetentpersonnelanddevelopingtheirskillsthroughtraining,includingsafetyandlosscontroltraining.TheCompany'soperatingandtechnicalpersonnelhaveasolidtrackrecordofdevelopingandoperatingpreciousmetalminesandseveraloftheCompany'smineshavereceivedsafetyanddevelopmentawards.Nevertheless,theCompanyanditsemployeescontinueeffortstoimproveworkplacesafetywithanemphasisonsafetyproceduretrainingforbothminingandsupervisoryemployees.
TheCompanyalsomitigatessomeofitsnormalbusinessriskthroughthepurchaseofinsurancecoverage.AnInsurableRiskManagementPolicy,approvedbytheBoard,governsthepurchaseofinsurancecoverageandrestrictscoveragetoinsurancecompaniesofthehighestcreditquality.ForamorecompletelistoftheriskfactorsaffectingtheCompany,pleasesee"RiskFactors"intheAIF.
CommodityPricesandForeignCurrencies
AgnicoEagle'snetincomeissensitivetometalpricesandtheCanadiandollar/USdollar,Mexicanpeso/USdollarandEuro/USdollarexchangerates.Forthepurposeofthesensitivityanalysessetoutinthetablebelow,theCompanyappliedthefollowingmetalpriceandexchangerateassumptionsfor2016:
• Gold–$1,100perounce;
• Silver–$16perounce;
• Zinc–$1,750pertonne;
24 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
• Copper–$4,700pertonne;
• Diesel–C$0.77perlitre;
• Canadiandollar/USdollar–C$1.30per$1.00;
• Euro/USdollar–€0.91per$1.00;and
• Mexicanpeso/USdollar–16.00Mexicanpesosper$1.00.
Changesinthemarketpriceofgoldmaybeattributedtonumerousfactorssuchasdemand,globalmineproductionlevels,centralbankpurchasesandsalesandinvestorsentiment.Changesinthemarketpricesofothermetalsmaybeattributedtofactorssuchasdemandandglobalmineproductionlevels.Changesinthemarketpriceofdieselmaybeattributedtofactorssuchassupplyanddemand.Changesinexchangeratesmaybeattributedtofactorssuchassupplyanddemandforcurrenciesandeconomicconditionsineachcountryorcurrencyarea.In2015,therangesofmetalprices,dieselpricesandexchangerateswereasfollows:
• Gold:$1,046–$1,308perounce,averaging$1,160perounce;
• Silver:$13.65–$18.49perounce,averaging$15.71perounce;
• Zinc:$1,461–$2,434pertonne,averaging$1,928pertonne;
• Copper:$4,512–$6,482pertonne,averaging$5,499pertonne;
• Diesel:C$98.60–C$128.40perlitre,averagingC$109.31perlitre;
• Canadiandollar/USdollar:C$1.16–C$1.40per$1.00,averagingC$1.28per$1.00;
• Euro/USdollar:€0.83–€0.96per$1.00,averaging€0.90per$1.00;and
• Mexicanpeso/USdollar:14.44–17.47Mexicanpesosper$1.00,averaging15.88Mexicanpesosper$1.00.
Thefollowingtablesetsouttheimpactonforecasted2016totalcashcostsperounceofgoldproducedonaby-productbasisofspecificallyidentifiedchangesinassumedmetalprices,thedieselpriceandexchangerates.Specificallyidentifiedchangesineachvariablewereconsideredinisolationwhileholdingallotherassumptionsconstant.Basedonhistoricalmarketdataandthe2015pricerangesshownabove,thesespecificallyidentifiedchangesinassumedmetalpricesandexchangeratesarereasonablylikelyin2016.
Changes in Variable
Impact on Forecasted2016
Total Cash Costs perOunce
of Gold Produced (By-Product Basis)
Silver–$1perounce $2
Zinc–10% –
Copper–10% –
Diesel–10% $2
Canadiandollar/USdollar–1% $5
Euro/USdollar–1% $1
Mexicanpeso/USdollar–10% $3
Inordertomitigatetheimpactoffluctuatingby-productmetalprices,theCompanyoccasionallyentersintoderivativefinancialinstrumentcontractsunderitsBoard-approvedRiskManagementPoliciesandProcedures.TheCompanyhasalong-standingpolicyofnoforwardgoldsales.However,thepolicydoesallowtheCompanytouseotherhedgingstrategieswhereappropriatetomitigateforeignexchangeandby-productmetalpricingrisks.TheCompanyoccasionallybuysputoptions,entersintopricecollarsandentersintoforwardcontractstoprotectminimumby-productmetalpriceswhilemaintainingfullexposuretothepriceofgold.TheRiskManagementCommitteehasapprovedthestrategyofusing
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 25
short-termcalloptionsinanattempttoenhancetherealizedby-productmetalprices.TheCompany'spolicydoesnotallowspeculativetrading.
TheCompanyreceivespaymentforallofitsmetalsalesinUSdollarsandpaysmostofitsoperatingandcapitalcostsinCanadiandollars,EurosorMexicanpesos.Thisgivesrisetosignificantcurrencyriskexposure.TheCompanyentersintocurrencyhedgingtransactionsunderitsBoard-approvedForeignExchangeRiskManagementPoliciesandProcedurestohedgepartofitsforeigncurrencyexposure.Thepolicydoesnotpermitthehedgingoftranslationexposure(thatis,thegainsandlossesthatarisefromtheaccountingtranslationofCanadiandollar,EuroorMexicanpesodenominatedassetsandliabilitiesintoUSdollars),asitdoesnotgiverisetocashexposure.TheCompany'sforeigncurrencyderivativefinancialinstrumentstrategyincludestheuseofpurchasedputs,soldcalls,collarsandforwardsthatarenotheldforspeculativepurposes.
CostInputs
TheCompanyconsidersandmayenterintoriskmanagementstrategiestomitigatepriceriskoncertainconsumablesincluding,butnotlimitedto,dieselfuel.Thesestrategieshavelargelybeenconfinedtolongertermpurchasingcontractsbutmayincludefinancialandderivativeinstruments.
InterestRates
TheCompany'scurrentexposuretomarketriskforchangesininterestratesrelatesprimarilytodrawdownsonitsCreditFacilityanditsinvestmentportfolio.DrawdownsontheCreditFacilityareusedprimarilytofundaportionofthecapitalexpendituresrelatedtotheCompany'sdevelopmentprojectsandworkingcapitalrequirements.AsatDecember31,2015,theCompanyhaddrawndown$265.0millionontheCreditFacility.Inaddition,theCompanyinvestsitscashininvestmentswithshortmaturitiesorwithfrequentinterestresettermsandacreditratingofR1-Highorbetter.Asaresult,theCompany'sinterestincomefluctuateswithshort-termmarketconditions.AsatDecember31,2015,short-terminvestmentswere$7.4million.
AmountsdrawnundertheCreditFacilityaresubjecttofloatinginterestratesbasedonbenchmarkratesavailableintheUnitedStatesandCanadaoronLIBOR.Inthepast,theCompanyhasenteredintoderivativeinstrumentstohedgeagainstunfavorablechangesininterestrates.TheCompanywillcontinuetomonitoritsinterestrateexposureandmayenterintosuchagreementstomanageitsexposuretofluctuatinginterestrates.
FinancialInstruments
TheCompanyoccasionallyentersintocontractstolimittheriskassociatedwithdecreasedby-productmetalprices,increasedforeigncurrencycosts(includingcapitalexpenditures)andinputcosts.Thecontractsactaseconomichedgesofunderlyingexposuresandarenotheldforspeculativepurposes.AgnicoEagledoesnotusecomplexderivativecontractstohedgeexposures.
Usingfinancialinstrumentscreatesvariousfinancialrisks.CreditriskistheriskthatthecounterpartiestofinancialcontractswillfailtoperformonanobligationtotheCompany.Creditriskispartiallymitigatedbydealingwithhighqualitycounterpartiessuchasmajorbanks.Marketliquidityriskistheriskthatafinancialpositioncannotbeliquidatedquickly.TheCompanyprimarilymitigatesmarketliquidityriskbyspreadingoutthematurityoffinancialcontractsovertime,usuallybasedonprojectedproductionlevelsforthespecificmetalbeinghedged,suchthattherelevantmarketswillbeabletoabsorbthecontracts.Mark-to-marketriskistheriskthatanadversechangeinmarketpricesformetalswillaffectfinancialcondition.Becausederivativecontractsareprimarilyusedaseconomichedges,changesinmark-to-marketvaluemayimpactincome.Foradescriptionoftheaccountingtreatmentofderivativefinancialinstruments,pleaseseeCritical IFRS Accounting Policies and Accounting Estimates – DerivativeInstruments and Hedge Accounting inthisMD&A.
OperationalRisk
Thebusinessofgoldminingisgenerallysubjecttorisksandhazards,includingenvironmentalhazards,industrialaccidents,unusualorunexpectedrockformations,changesintheregulatoryenvironment,cave-ins,rockbursts,rockfalls,groundconditions,pitwallfailures,floodingandgoldbullionlosses.Theoccurrenceoftheseorsimilartypesofeventsandcircumstancesmayresultindamageto,ordestructionof,mineralpropertiesorproductionfacilities,personalinjuryordeath,environmentaldamage,delaysinmining,monetarylossesandlegalliability.TheCompanycarriesinsurancetoprotectitselfagainstcertainrisksofminingandprocessinginamountsthatitconsiderstobeadequatebutwhichmaynotprovidecoverageincertainunforeseencircumstances.TheCompanymayalsobecomesubjecttoliabilityforpollution,cave-insor
26 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
otherhazardsagainstwhichitcannotinsureoragainstwhichithaselectednottoinsurebecauseofpremiumcostsorotherreasons.TheCompanyalsomaybecomesubjecttoliabilitieswhichexceedpolicylimits.Inthesecircumstances,theCompanymayberequiredtoincursignificantcoststhatcouldhaveamaterialadverseeffectonitsfinancialperformanceandresultsofoperations.
TheCompany'srelativeminesitegoldproductioncontributionsareexpectedtocontinuetodiversifyin2016comparedwithprioryears.TheMeadowbankmine,whichwastheCompany'smostsignificantpayablegoldproductioncontributorin2015at22.8%,isexpectedtoaccountfor19.7%oftheCompany'spayablegoldproductionin2016.
Thefollowingtablesetsoutexpected2016payablegoldproductionbymine:
Expected Payable Gold Production
(Ounces)
Expected Payable Gold Production
(%)
LaRondemine 275,000 17.8
Lapamine 60,000 3.9
Goldexmine 105,000 6.8
Meadowbankmine 305,000 19.7
CanadianMalarticmine 280,000 18.1
Kittilamine 200,000 13.0
PinosAltosmine 175,000 11.3
CrestonMascotadepositatPinosAltos 45,000 2.9
LaIndiamine 100,000 6.5
Total 1,545,000 100.0
Miningisacomplexandunpredictablebusinessand,therefore,actualpayablegoldproductionmaydifferfromexpectations.AdverseconditionsaffectingminingormillingmayhaveamaterialadverseimpactontheCompany'sfinancialperformanceandresultsofoperations.TheCompanyanticipatesusingrevenuegeneratedbyitsoperationstofinancethecapitalexpendituresrequiredatitsmineprojects.
TheCompanymaynotachieveexpectedpayablegoldproductionlevelsasaresultofoccurrencessuchascave-ins,rockfalls,rockbursts,pitwallfailures,firesorfloodingorasaresultofotheroperationalproblemssuchasafailureofaproductionhoist,anautoclave,afilterpressoragrindingmill.Payablegoldproductionmayalsobeaffectedbyunfavorableweatherconditions,groundconditionsorseismicactivity,lowerthanexpectedoregrades,higherthanexpecteddilution,electricalpowerinterruptions,thephysicalormetallurgicalcharacteristicsoftheoreandheapleachprocessingresultingincontainmentdischarge.TheCompanyhasfailedtomeetpayablegoldproductionforecastsinthepastduetoadverseconditionssuchasrockfalls,productiondrillingchallenges,lowerthanplannedmillrecoveriesandgrades,higherthanexpecteddilution,minestructuralissuesanddelaysinthecommencementofproductionandrampupatnewmines.OnOctober19,2011,theCompanysuspendedminingoperationsandgoldproductionattheGoldexmine'sGoldexExtensionZoneindefinitelyduetogeotechnicalconcernswiththerockabovethemininghorizon,significantlyimpactingAgnicoEagle'spayablegoldproduction.OnSeptember30,2012,theCrestonMascotadepositatPinosAltosexperiencedamovementofleachedorefromtheupperliftsofthePhaseOneleachpad,resultinginatemporarysuspensionofactiveleachingthroughMarch13,2013andsignificantlyimpactingtheCompany'spayablegoldproduction.Occurrencesofthisnatureandotheraccidents,adverseconditions,operationalproblemsorregulatorycircumstancesinfutureyearsmayresultintheCompany'sfailuretoachievecurrentorfutureproductionexpectations.
TheLaRondemineextensionisoneofthedeepestoperationsintheWesternHemisphere,withanexpectedmaximumdepthofover3kilometres.TheoperationsoftheLaRondemineextensionrelyonnewinfrastructureforhaulingoreandmaterialstothesurface,includingawinze(orinternalshaft)andaseriesoframpslinkingminingdepositstothePennaShaftthatservicescurrentoperationsattheLaRondemine.In2012,challengesassociatedwithheatandcongestionintheLaRondemine
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 27
extensioncausedadelayintheexpectedrampupingoldproduction.AlthoughanewcoolingplantbeganoperatinginDecember2013,thedepthoftheoperationscouldcontinuetoposesignificantchallengestotheCompany,suchasgeomechanicalrisksandventilationandairconditioningrequirements,whichmayresultindifficultiesanddelaysinachievinggoldproductionobjectives.
ThecontinuedsustainingdevelopmentoftheLaRondemineextensionissubjecttoanumberofrisksandchallenges,includingunforeseengeologicalformations,theimplementationofnewminingprocesses,andengineeringandminedesignadjustments.TheseoccurrencesmayresultinoperationaldelaysandinadditionalcostsbeingincurredbytheCompanybeyondthosebudgeted.
TheCompany'sstatedmineralreservesandmineralresourcesareestimatesandnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoveryofgoldwillberealized.TheoregradeactuallyrecoveredbytheCompanymaydifferfromtheexpectedgradesofthemineralreservesandmineralresources.Theestimatesofmineralreservesandmineralresourceshavebeendeterminedbasedon,amongotherthings,assumedmetalprices,foreignexchangeratesandoperatingcosts.Prolongeddeclinesinthemarketpriceofgold(orapplicableby-productmetalprices)mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandcouldmateriallyreducetheCompany'smineralreserves.Shouldsuchreductionsoccur,theCompanymayberequiredtorecordamaterialimpairmentlossonitsinvestmentinminingpropertiesordelayordiscontinueproductionorthedevelopmentofnewprojects,resultinginnetlossesandreducedcashflow.Marketpricefluctuationsofgold(orapplicableby-productmetalprices),aswellasincreasedproductioncostsorreducedrecoveryrates,mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandmayultimatelyresultinarestatementofmineralreservesandmineralresources.Short-termfactorsrelatingtothemineralreserve,suchastheneedfororderlydevelopmentoforebodiesortheprocessingofnewordifferentgrades,mayimpairtheprofitabilityofamineinanyparticularreportingperiod.
Mineralresourceestimatesforpropertiesthathavenotcommencedproductionoratdepositsthathavenotyetbeenexploitedarebased,inmostinstances,onverylimitedandwidelyspaceddrillholeinformation,whichisnotnecessarilyindicativeofconditionsbetweenandaroundthedrillholes.Accordingly,suchmineralresourceestimatesmayrequirerevisionasmoredrillinginformationbecomesavailableorasactualproductionexperienceisgained.
TheCompany'soperationsincludeamineinFinlandandminesinMexico.Theseoperationsareexposedtovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadianproperties.Theserisksanduncertaintiesvaryfromcountrytocountryandmayinclude:extremefluctuationsincurrencyexchangerates;highratesofinflation;labourunrest;risksofwarorcivilunrest;increasedregulatoryrequirements;expropriationandnationalization;renegotiationornullificationofexistingconcessions,licenses,permitsandcontracts;illegalmining;corruption;restrictionsonforeignexchangeandrepatriation;hostagetaking;andchangingpoliticalconditionsandcurrencycontrols.Inaddition,theCompanymustcomplywithmultipleandpotentiallyconflictingregulationsinCanada,theUnitedStates,EuropeandMexico,includingexportrequirements,taxes,tariffs,importdutiesandothertradebarriers,aswellashealth,safetyandenvironmentalrequirements.
TheCompany'sMeadowbankmineislocatedintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.ThoughtheCompanybuilta110kilometreall-weatherroadfromBakerLake,whichprovidessummershippingaccessviaHudsonBaytotheMeadowbankmine,theCompany'soperationsareconstrainedbytheremotenessofthemine,particularlyastheportofBakerLakeisonlyaccessibleapproximately2.5monthsperyear.MostofthematerialsthattheCompanyrequiresfortheoperationoftheMeadowbankmine,includingtheexplorationandpotentialdevelopmentoftheAmaruqdeposit,mustbetransportedthroughtheportofBakerLakeduringthisshippingseason,whichmaybefurthertruncatedduetoweatherconditions.IftheCompanyisnotabletoacquireandtransportnecessarysuppliesduringthistime,thismayresultinaslowdownorstoppageofoperationsattheMeadowbankmine.Furthermore,ifmajorequipmentfails,anyitemsnecessarytoreplaceorrepairsuchequipmentmayhavetobeshippedthroughBakerLakeduringthiswindow.FailuretohavethenecessarymaterialsrequiredforoperationsortorepairorreplacemalfunctioningequipmentattheMeadowbankminemayrequiretheslowdownorstoppageofoperations.
RegulatoryRisk
TheCompany'sminingandmineralprocessingoperations,explorationactivitiesandpropertiesaresubjecttothelawsandregulationsoffederal,provincial,stateandlocalgovernmentsinthejurisdictionsinwhichtheCompanyoperates.Theselawsandregulationsareextensiveandgovernprospecting,exploration,development,production,exports,taxes,labourstandards,occupationalhealthandsafety,wastedisposal,toxicsubstances,environmentalprotection,minesafetyandother
28 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
matters.Compliancewithsuchlawsandregulationsincreasesthecostsofplanning,designing,drilling,developing,constructing,operating,closing,reclaimingandrehabilitatingminesandotherfacilities.Newlawsorregulations,amendmentstocurrentlawsandregulationsgoverningoperationsandactivitiesofminingcompaniesormorestringentimplementationorinterpretationthereofcouldhaveamaterialadverseimpactontheCompany,causeareductioninlevelsofproductionanddelayorpreventthedevelopmentofnewminingproperties.
Controls Evaluation
TheCompany'smanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting("ICFR")anddisclosurecontrolsandprocedures("DC&P").TheCompany'smanagement,underthesupervisionoftheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,hasevaluatedtheeffectivenessofitsICFRandDC&PasatDecember31,2015.Basedonthisevaluation,managementconcludedthattheCompany'sICFRandDC&Pwereeffective.
Outstanding Securities
ThefollowingtablesetsoutthemaximumnumberofcommonsharesthatwouldbeoutstandingifalldilutiveinstrumentsoutstandingatFebruary29,2016wereexercised:
CommonsharesoutstandingatFebruary29,2016 219,677,985
Employeestockoptions 9,566,989
CommonsharesheldinatrustinconnectionwiththeRestrictedShareUnitplan,PerformanceShareUnitplanandLongTermIncentivePlan 848,176
Total 230,093,150
Governance
AgnicoEagle'sSustainableDevelopmentPolicy,approvedbytheBoardofDirectorsin2012,formallyoutlinestheguidingprinciplesandcommitmentsthattheCompanystrivestouphold.TheSustainableDevelopmentPolicyisbasedonfourfundamentalvaluesofsustainabledevelopmentatAgnicoEagle:respectfortheCompany'semployees;protectionoftheenvironment;safeoperations;andrespectfortheCompany'scommunities.
Sustainable Development Management
In2015,theCompanycontinuedtheprocessofintegratingsustainabilityintoallaspectsandstagesofitsbusiness,fromthecorporateobjectivesandexecutiveresponsibilityof'maintaininghighstandardsinsustainability'toexplorationandacquisitionactivities,daytodayoperatingandsiteclosureplans.Thisintegrationisintendedtoleadtoemployeestakinggreaterownershiptowardstheimplementationofresponsibleminingpractices,therebyreducingrisk.
ThisintegrationprocessisdonethroughthedevelopmentandimplementationofaformalHealth,Safety,EnvironmentandCommunityManagementSystem,termedtheResponsibleMiningManagementSystem("RMMS").TheaimoftheRMMSistofurtherpromoteacultureofaccountabilityandleadershipinmanaginghealth,safety,environmentalandsocialacceptabilitymatters.RMMSdocumentationissupportedbythesoftwareIntelex,whichiswidelyusedintheCanadianminingindustryandisconsistentwiththeISO14001EnvironmentalManagementSystemandtheBSOHSAS18001OccupationalHealthandSafetyManagementSystem.
AgnicoEaglebecameasignatoryoftheInternationalCyanideManagementCode(the"CyanideCode")in2011.TheCompany'scommitmentsasasignatorytotheCyanideCodeareincorporatedintheRMMS.CyanideCoderequirementscertificationwasreceivedbytheCompany'sKittila,PinosAltosandMeadowbankminesin2015.
TheRMMSalsointegratestherequirementsoftheMiningAssociationofCanada'sindustryleadingTowardsSustainableMiningInitiative(the"TSMInitiative"),aswellastheGlobalReportingInitiative'ssustainabilityreportingguidelinesfortheminingindustry.InDecember2010,AgnicoEaglebecameamemberoftheMiningAssociationofCanadaandendorsedtheTSMInitiative.TheTSMInitiativewasdevelopedtohelpminingcompaniesevaluatethequality,comprehensivenessandrobustnessoftheirmanagementsystemsundersixperformanceprotocols:crisismanagement;energyandgreenhousegasemissionsmanagement;tailingsmanagement;biodiversityconservationmanagement;healthandsafety;andaboriginalrelationsandcommunityoutreach.In2015,allofAgnicoEagle'sminescompletedanexternalauditevaluatingtheTSM
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 29
protocols.AsaresultoftheTSMprotocolsaudit,theMiningAssociationofCanadarecognizedtheKittila,GoldexandLaRondemineswithachievementawardsforhavingreachedAlevelstatusinallprotocols.Ofthe132indicatorsreviewed,allbut8achievedanAlevelstatus.TheCompanyhasdevelopedactionplanstoaddressthe8indicatorsreviewedthatdidnotachieveanAlevelstatus.
Employee Health and Safety
TheCompanyisresponsibleforprovidingemployeeswithasafeworkingenvironmentandwiththetoolsandtrainingtocarryouttheirdutiesinanefficientandsafemanner.In2015,AgnicoEagle'scombinedlost-timeaccident("LTA")frequencyratewassignificantlylowerthanitstargetrate,and17.0%lowerthan2014.TheCompanyhasnowachieveditslowestevercombinedLTArateforthefifthyearinarow.
In2015,anactionplanwasimplementedtoaddressrisksidentifiedthroughaCompany-wideriskassessmenttoidentifyandclassifyhealthandsafetyrisksaswellasriskstotheenvironmentandlocalcommunities.
OneofthemeasuresimplementedbytheCompanytoimprovesafetyperformanceistheworkplacesafetycardsystem.ThissystemwasimplementedacrosstheCompanytostrengthenitsrisk-basedtrainingprogram.DevelopedbytheQuebecMiningAssociation,thesafetycardsystemteachesworkersandsupervisorstouserisk-basedthinkingintheirduties.Workersandtheirsupervisorsmustmeeteachdaytodiscusson-the-jobhealthandsafetymatters.ThesafetycardsystemalsoallowstheCompany'sworkersandsupervisorstodocumentdailyinspectionsandrecordobservationsonconditionsintheworkplace,aswellasthenatureofrisks,issuesandotherinformation.Inaddition,itallowssupervisorstoexchangeandanalyzeinformationbetweenshiftstoimproveefficiencyandsafety.
EachoftheCompany'sminingoperationshasitsownEmergencyResponsePlanandhaspersonneltrainedtorespondtosafety,fireandenvironmentalemergencies.Eachminealsomaintainstheappropriateresponseequipment.
Community
TheCompany'sgoalateachofitsoperationsistohireasmuchaspossibleofitsworkforce,includingmanagementteams,directlyfromthelocalregioninwhichtheoperationislocated.In2015,theproportionofAgnicoEagle`smineworkforcehiredlocallywas80.0%whiletheproportionoftheminemanagementteamhiredlocallywas71.0%.TheCompanybelievesthatprovidingemploymentisoneofthemostsignificantcontributionsitcanmaketothecommunitiesinwhichitoperates.In2015,AgnicoEaglecontinueditspartnershipwiththeKivalliqMineTrainingSocietytobuildaqualifiedworkforcepoolintheKivalliqregionofNunavut.
AgnicoEagleworkscloselywithneighbouringcommunitiestodevelopalternativeemploymentandbusinessopportunitiestohelpdiversifylocaleconomies.TheCompanyalsocontinuestosupportanumberofcommunityhealthandeducationalinitiativessurroundingitsmines.In2015,theCompanyworkedwiththecommunityofBakerLake,Nunavutindevelopingaplantoimprovecommunitywellness.
Environment
In2015,aleakageofdischargequalitywateroccurredinonecorneroftheneutralizedprecipitatetailingspondattheKittilamine.Thedischargewascontrolledandaremediationplanthatwasapprovedbytherelevantauthoritywasimplemented.
TheappealprocessrelatedtotheJuly2013Kittilamineupdatedenvironmentalpermitcontinuedin2015.Afinaldecisionisexpectedin2016.
In2015,aprojectcertificatefortheMeliadineprojectwasreceivedfromtheNunavutImpactReviewBoardandatypeBwaterlicenceforpre-developmentworkwasreceivedfromtheNunavutWaterBoard.AtypeBwaterlicencefortheconstructionofanexplorationroadfromtheMeadowbankminetotheAmaruqprojectwasalsoreceivedfromtheNunavutWaterBoardin2015.AnapplicationfortheMeliadineprojecttypeAwaterlicence(operatinglicence)wasfiledin2015andthelicenceisexpectedtobereceivedin2016.
TheCanadianMalarticminereceivedregulatorynoticeof25infractionsin2015relatedprimarilytonoise,blastingfumesandoverpressure.Progresshasbeenmadeaddressingsuchissuessince2014.
InAugust2015,AgnicoEaglereceivedasummonstoappearincourtforanallegedenvironmentaloffencethatoccurredinJuly2013attheMeadowbankmine.Thesummonsreferstotheallegedreleaseofadeleterioussubstanceintothe
30 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
environment(alakefrequentedbyfish)andthefailuretoreportittoauthorities.Thecaseisexpectedtogothroughthecourtsystemin2016.
International Financial Reporting Standards
TheCompanyhasadoptedIFRSasitsbasisofaccounting,replacingUSGAAPeffectiveJuly1,2014.Asaresult,AgnicoEagle'sconsolidatedfinancialstatementsfor2015arereportedinaccordancewithIFRS,withcomparativeinformationrestatedunderIFRSandatransitiondateofJanuary1,2013.
GenerallyAcceptedAccountingPrinciples("GAAP")forCanadianpubliclyaccountableenterprisesbecameIFRSasissuedbytheInternationalAccountingStandardsBoardin2011andtheUSSecuritiesandExchangeCommission("SEC")intheUnitedStatesacceptsfinancialstatementspreparedinaccordancewithIFRSwithoutreconciliationtoUSGAAPfromforeignprivateissuers.Accordingly,AgnicoEagledecidedtoconvertitsbasisofaccountingtoIFRStoenhancethecomparabilityofitsfinancialstatementstotheCompany'speersintheminingindustry.
AgnicoEagledevelopedandexecutedadetailedIFRSconversionplanincludinganassessmentphase,animpactanalysisanddesignphaseandanimplementationphase,culminatingintheCompany'sinitialreportinginaccordancewithIFRSinthethirdquarterof2014.
Critical IFRS Accounting Policies and Accounting Estimates
AgnicoEagle'ssignificantIFRSaccountingpoliciesaredisclosedintheSummaryofSignificantAccountingPoliciesnotetotheconsolidatedfinancialstatements.
ThepreparationoftheconsolidatedfinancialstatementsinaccordancewithIFRSrequiresmanagementtomakeestimatesandjudgmentsthataffectthereportedamountsofassets,liabilities,revenuesandexpenses.Inmakingjudgmentsaboutthecarryingvalueofassetsandliabilities,theCompanyusesestimatesbasedonhistoricalexperienceandassumptionsthatareconsideredreasonableinthecircumstances.AlthoughtheCompanyevaluatesitsaccountingestimatesperiodically,actualresultsmaydifferfromtheseestimates.
TheCompanybelievesthefollowingcriticalaccountingpoliciesrelatetoitsmoresignificantjudgmentsandestimatesusedinthepreparationofitsconsolidatedfinancialstatements.ManagementhasdiscussedthedevelopmentandselectionofthefollowingcriticalaccountingpolicieswiththeAuditCommitteewhichhasreviewedtheCompany'sdisclosureinthisMD&A.
DerivativeInstrumentsandHedgeAccounting
TheCompanyusesderivativefinancialinstruments(primarilyoptionandforwardcontracts)tomanageexposuretofluctuationsinby-productmetalprices,interestratesandforeigncurrencyexchangeratesandmayusesuchmeanstomanageexposuretocertaininputcosts.TheCompanydoesnotholdfinancialinstrumentsorderivativefinancialinstrumentsfortradingpurposes.
TheCompanyrecognizesallderivativefinancialinstrumentsintheconsolidatedfinancialstatementsatfairvalueregardlessofthepurposeorintentforholdingtheinstrument.Changesinthefairvalueofderivativefinancialinstrumentsareeitherrecognizedperiodicallyintheconsolidatedstatementsofincomeandcomprehensiveincomeorinequityasacomponentofaccumulatedothercomprehensiveincome,dependingonthenatureofthederivativefinancialinstrumentandwhetheritqualifiesforhedgeaccounting.Financialinstrumentsdesignatedashedgesaretestedforeffectivenessateachreportingperiod.Realizedgainsandlossesonthosecontractsthatareproventobeeffectivearereportedasacomponentoftherelatedtransaction.
Goodwill
Goodwillisrecognizedinabusinesscombinationifthecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired.Goodwillisthenallocatedtothecashgeneratingunit("CGU")orgroupofCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.ACGUisthesmallestidentifiablegroupofassetsthatgeneratescashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.
TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendand,ifanindicatorofimpairmentisidentified,
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 31
goodwillistestedforimpairmentatthattime.IfthecarryingvalueoftheCGUorgroupofCGUstowhichgoodwillisassignedexceedsitsrecoverableamount,animpairmentlossisrecognized.Goodwillimpairmentlossesarenotreversed.
TherecoverableamountofaCGUorgroupofCGUsismeasuredasthehigherofvalueinuseandfairvaluelesscostsofdisposal.
MiningProperties,PlantandEquipmentandMineDevelopmentCosts
Miningproperties,plantandequipmentandminedevelopmentcostsarerecordedatcost,lessaccumulatedamortizationandaccumulatedimpairmentlosses.
Mining Properties
Thecostofminingpropertiesincludesthefairvalueattributabletoprovenandprobablemineralreservesandmineralresourcesacquiredinabusinesscombinationorassetacquisition,undergroundminedevelopmentcosts,deferredstripping,capitalizedexplorationandevaluationcostsandcapitalizedborrowingcosts.
Significantpaymentsrelatedtotheacquisitionoflandandmineralrightsarecapitalizedasminingpropertiesatcost.Ifamineableorebodyisdiscovered,suchcostsareamortizedtoincomewhencommercialproductioncommences,usingtheunits-of-productionmethod,basedonestimatedprovenandprobablemineralreserves.Ifnomineableorebodyisdiscovered,suchcostsareexpensedintheperiodinwhichitisdeterminedthatthepropertyhasnofutureeconomicvalue.Costcomponentsofaspecificprojectthatareincludedinthecapitalcostoftheassetincludesalariesandwagesdirectlyattributabletotheproject,suppliesandmaterialsusedintheproject,andincrementaloverheadcoststhatcanbedirectlyattributabletotheproject.
Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiodoroncecommercialproductionisachieved.Uponachievingtheproductionstage,thecapitalizedconstructioncostsaretransferredtotheappropriatecategoryofplantandequipment.
Plant and Equipment
Expendituresfornewfacilitiesandimprovementsthatcanextendtheusefullivesofexistingfacilitiesarecapitalizedasplantandequipmentatcost.Thecostofanitemofplantandequipmentincludes:itspurchaseprice,includingimportdutiesandnon-refundablepurchasetaxes,afterdeductingtradediscountsandrebates;anycostsdirectlyattributabletobringingtheassettothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement;andtheestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichitislocatedotherthancoststhatariseasaconsequenceofhavingusedtheitemtoproduceinventoriesduringtheperiod.
Amortizationofanassetbeginswhentheassetisinthelocationandconditionnecessaryforittooperateinthemannerintendedbymanagement.Amortizationceasesattheearlierofthedatetheassetisclassifiedasheldforsaleorthedatetheassetisderecognized.Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiod.Amortizationischargedaccordingtoeithertheunits-of-productionmethodoronastraight-linebasis,accordingtothepatterninwhichtheasset'sfutureeconomicbenefitsareexpectedtobeconsumed.Theamortizationmethodappliedtoanassetisreviewedatleastannually.
Usefullivesofproperty,plantandequipmentarebasedonestimatedminelivesasdeterminedbyprovenandprobablemineralreserves.RemainingminelivesatDecember31,2015rangefrom1to20years.
Mine Development Costs
Minedevelopmentcostsincurredafterthecommencementofproductionarecapitalizedwhentheyareexpectedtohaveafutureeconomicbenefit.Activitiesthataretypicallycapitalizedincludecostsincurredtobuildshafts,drifts,rampsandaccesscorridorswhichenabletheCompanytoextractoreunderground.
TheCompanyrecordsamortizationonundergroundminedevelopmentcostsonaunits-of-productionbasisbasedontheestimatedtonnageofprovenandprobablemineralreservesoftheidentifiedcomponentoftheorebody.Theunits-of-productionmethoddefinesthedenominatorasthetotaltonnageofprovenandprobablemineralreserves.
32 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Deferred Stripping
Inopenpitminingoperations,itisnecessarytoremoveoverburdenandotherwastematerialstoaccessorefromwhichmineralscanbeextractedeconomically.Theprocessofminingoverburdenandwastematerialsisreferredtoasstripping.
Duringthedevelopmentstageofthemine,strippingcostsarecapitalizedaspartofthecostofbuilding,developingandconstructingthemineandareamortizedoncetheminehasenteredtheproductionstage.
Duringtheproductionstageofamine,strippingcostsarerecordedasapartofthecostofinventoriesunlessthesecostsareexpectedtoprovideafutureeconomicbenefitand,insuchcases,arecapitalizedtoproperty,plantandminedevelopment.
Productionstagestrippingcostsprovideafutureeconomicbenefitwhen:
• Itisprobablethatthefutureeconomicbenefit(e.g. ,improvedaccesstotheorebody)associatedwiththestrippingactivitywillflowtotheCompany;
• TheCompanycanidentifythecomponentoftheorebodyforwhichaccesshasbeenimproved;and
• Thecostsrelatingtothestrippingactivityassociatedwiththatcomponentcanbemeasuredreliably.
Capitalizedproductionstagestrippingcostsareamortizedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatbecomesmoreaccessibleasaresultofthestrippingactivity.
Borrowing Costs
Borrowingcostsarecapitalizedtoqualifyingassets.QualifyingassetsareassetsthattakeasubstantialperiodoftimetopreparefortheCompany'sintendeduse,whichincludesprojectsthatareintheexplorationandevaluation,developmentorconstructionstages.
Borrowingcostsattributabletotheacquisition,constructionorproductionofqualifyingassetsareaddedtothecostofthoseassetsuntilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduse.Allotherborrowingcostsarerecognizedasfinancecostsintheperiodinwhichtheyareincurred.Wherethefundsusedtofinanceaqualifyingassetformpartofgeneralborrowings,theamountcapitalizediscalculatedusingaweightedaverageofratesapplicabletotherelevantborrowingsduringtheperiod.
Leases
Thedeterminationofwhetheranarrangementis,orcontains,aleaseisbasedonthesubstanceofthearrangementattheinceptiondate,includingwhetherthefulfillmentofthearrangementisdependentontheuseofaspecificassetorassetsorwhetherthearrangementconveysarighttousetheasset.
LeasingarrangementsthattransfersubstantiallyalltherisksandrewardsofownershipoftheassettotheCompanyareclassifiedasfinanceleases.Financeleasesarerecordedasanassetwithacorrespondingliabilityatanamountequaltothelowerofthefairvalueoftheleasedassetsandthepresentvalueoftheminimumleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancecostsusingtheeffectiveinterestratemethod,wherebyaconstantrateofinterestexpenseisrecognizedonthebalanceoftheliabilityoutstanding.Theinterestelementoftheleaseischargedtotheconsolidatedstatementofincomeasafinancecost.Anassetleasedunderafinanceleaseisamortizedovertheshorteroftheleasetermanditsusefullife.
Allotherleasesarerecognizedasoperatingleases.Operatingleasepaymentsarerecognizedasanoperatingexpenseintheconsolidatedstatementsofincomeonastraight-linebasisovertheleaseterm.
DevelopmentStageExpenditures
Developmentstageexpendituresarecostsincurredtoobtainaccesstoprovenandprobablemineralreservesandprovidefacilitiesforextracting,treating,gathering,transportingandstoringtheminerals.Thedevelopmentstageofaminecommenceswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralresourcehasbeendetermined.Coststhataredirectlyattributabletominedevelopmentarecapitalizedasproperty,plantandminedevelopmenttotheextentthattheyarenecessarytobringthepropertytocommercialproduction.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 33
Abnormalcostsareexpensedasincurred.Indirectcostsareincludedonlyiftheycanbedirectlyattributedtotheareaofinterest.Generalandadministrativecostsarecapitalizedaspartofthedevelopmentexpenditureswhenthecostsaredirectlyattributedtoaspecificminingdevelopmentproject.
Commercial Production
Amineconstructionprojectisconsideredtohaveenteredtheproductionstagewhenthemineconstructionassetsareavailableforuse.Indeterminingwhethermineconstructionassetsareconsideredavailableforuse,thecriteriaconsideredinclude,butarenotlimitedto,thefollowing:
• Completionofareasonableperiodoftestingmineplantandequipment;
• Abilitytoproducemineralsinsaleableform(withinspecifications);and
• Abilitytosustainongoingproductionofminerals.
Whenamineconstructionprojectmovesintotheproductionstage,amortizationcommences,thecapitalizationofcertainmineconstructioncostsceasesandexpendituresareeithercapitalizedtoinventoriesorexpensedasincurred.Exceptionsincludecostsincurredforadditionsorimprovementstoproperty,plantandminedevelopmentandopen-pitstrippingactivities.
ImpairmentofLong-livedAssets
AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,assetsaregroupedattheCGUlevelforthepurposeofassessingtherecoverableamount.AnimpairmentlossisrecognizedforanyexcessofthecarryingamountoftheCGUoveritsrecoverableamount.TheimpairmentlossrelatedtoaCGUisfirstallocatedtogoodwillandtheremaininglossisallocatedonapro-ratabasistotheremaininglong-livedassetsoftheCGUbasedontheircarryingamounts.
Anyimpairmentchargethatistakenonalong-livedassetexceptgoodwillisreversediftherearesubsequentchangesintheestimatesorsignificantassumptionsthatwereusedtorecognizetheimpairmentlossthatresultinanincreaseintherecoverableamountoftheCGU.Ifanindicatorofimpairmentreversalhasbeenidentified,arecoveryshouldberecognizedtotheextenttherecoverableamountoftheassetexceedsitscarryingamount.Theamountofthereversalislimitedtothedifferencebetweenthecurrentcarryingamountandtheamountwhichwouldhavebeenthecarryingamounthadtheearlierimpairmentnotbeenrecognizedandamortizationofthatcarryingamounthadcontinued.Impairmentsandsubsequentreversalsarerecordedintheconsolidatedstatementofincomeintheperiodinwhichtheyoccur.
ReclamationProvisions
Assetretirementobligations("AROs")arisefromtheacquisition,developmentandconstructionofminingpropertiesandplantandequipmentduetogovernmentcontrolsandregulationsthatprotecttheenvironmentontheclosureandreclamationofminingproperties.ThemajorpartsofthecarryingamountofAROsrelatetotailingsandheapleachpadclosureandrehabilitation,demolitionofbuildingsandminefacilities,ongoingwatertreatmentandongoingcareandmaintenanceofclosedmines.TheCompanyrecognizesanAROatthetimetheenvironmentaldisturbanceoccursoraconstructiveobligationisdeterminedtoexistbasedontheCompany'sbestestimateofthetimingandamountofexpectedcashflowsexpectedtobeincurred.WhentheAROprovisionisrecognized,thecorrespondingcostiscapitalizedtotherelateditemofproperty,plantandminedevelopment.Reclamationprovisionsthatresultfromdisturbanceinthelandtoextractoreinthecurrentperiodisincludedinthecostofinventories.
Thetimingoftheactualenvironmentalremediationexpendituresisdependentonanumberoffactorssuchasthelifeandnatureoftheasset,theoperatinglicenceconditionsandtheenvironmentinwhichthemineoperates.Reclamationprovisionsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.AROsareadjustedeachperiodtoreflectthepassageoftime(accretion).Accretionexpenseisrecordedinfinancingcostseachperiod.UponsettlementofanARO,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheARO.Settlementgainsorlossesarerecordedintheconsolidatedstatementsofincome.
34 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Expectedcashflowsareupdatedtoreflectchangesinfactsandcircumstances.Theprincipalfactorsthatcancauseexpectedcashflowstochangearetheconstructionofnewprocessingfacilities,changesinthequantitiesofmaterialinprovenandprobablemineralreservesandacorrespondingchangeinthelife-of-mineplan,changingorecharacteristicsthatimpactrequiredenvironmentalprotectionmeasuresandrelatedcosts,changesinwaterqualitythatimpacttheextentofwatertreatmentrequiredandchangesinlawsandregulationsgoverningtheprotectionoftheenvironment.
Eachreportingperiod,provisionsforAROsarere-measuredtoreflectanychangestosignificantassumptions,includingtheamountandtimingofexpectedcashflowsandrisk-freeinterestrates.Changestothereclamationprovisionresultingfromchangesinestimateareaddedtoordeductedfromthecostoftherelatedasset,exceptwherethereductionofthereclamationprovisionexceedsthecarryingvalueoftherelatedassetsinwhichcasetheassetisreducedtonilandtheremainingadjustmentisrecognizedintheconsolidatedstatementsofincome.
Environmentalremediationliabilities("ERLs")aredifferentiatedfromAROsinthatERLsdonotarisefromenvironmentalcontaminationinthenormaloperationofalong-livedassetorfromalegalorconstructiveobligationtotreatenvironmentalcontaminationresultingfromtheacquisition,constructionordevelopmentofalong-livedasset.TheCompanyisrequiredtorecognizealiabilityforobligationsassociatedwithERLsarisingfrompastacts.ERLsaremeasuredbydiscountingtheexpectedrelatedcashflowsusingarisk-freeinterestrate.TheCompanypreparesestimatesofthetimingandamountofexpectedcashflowswhenanERLisincurred.Eachreportingperiod,theCompanyassessescostestimatesandotherassumptionsusedinthevaluationofERLstoreflectevents,changesincircumstancesandnewinformationavailable.ChangesinthesecostestimatesandassumptionshaveacorrespondingimpactonthevalueoftheERL.AnychangeinthevalueofERLsresultsinacorrespondingchargeorcredittotheconsolidatedstatementsofincome.UponsettlementofanERL,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheERLintheconsolidatedstatementsofincome.
Stock-basedCompensation
TheCompanyoffersequity-settledawards(theemployeestockoptionplan,incentivesharepurchaseplanandRestrictedShareUnitplan)tocertainemployees,officersanddirectorsoftheCompany.
Employee Stock Option Plan ("ESOP")
TheCompany'sESOPprovidesforthegrantingofoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.Optionshaveexercisepricesequaltothemarketpriceonthedaypriortothedateofgrant.Thefairvalueoftheseoptionsisrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincomeorintheconsolidatedbalancesheetsifcapitalizedaspartofproperty,plantandminedevelopmentovertheapplicablevestingperiodasacompensationcost.Anyconsiderationpaidbyemployeesonexerciseofoptionsorpurchaseofcommonsharesiscreditedtosharecapital.
FairvalueisdeterminedusingtheBlack-Scholesoptionvaluationmodel,whichrequirestheCompanytoestimatetheexpectedvolatilityoftheCompany'ssharepriceandtheexpectedlifeofthestockoptions.Limitationswithexistingoptionvaluationmodelsandtheinherentdifficultiesassociatedwithestimatingthesevariablescreatedifficultiesindeterminingareliablesinglemeasureofthefairvalueofstockoptiongrants.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryoftheawardrecipient'spayrollcostsandthecorrespondingentryisrecordedinequity.Equity-settledawardsarenotre-measuredsubsequenttotheinitialgrantdate.ThedilutiveimpactofstockoptiongrantsisfactoredintotheCompany'sreporteddilutednetincomepershare.Thestockoptionexpenseincorporatesanexpectedforfeiturerate,estimatedbasedonexpectedemployeeturnover.
Incentive Share Purchase Plan ("ISPP")
UndertheISPP,directors(excludingnon-executivedirectors),officersandemployees(theparticipants)oftheCompanymaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachparticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.
TheCompanyrecordsanexpenseequaltoitscashcontributiontotheISPP.Noforfeiturerateisappliedtotheamountsaccrued.Whereanemployeeleavespriortothevestingdate,anyaccrualforcontributionsbytheCompanyduringthevestingperiodrelatedtothatemployeeisreversed.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 35
Restricted Share Unit ("RSU") Plan
TheRSUplanisopentodirectorsandcertainemployeesincludingseniorexecutivesoftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryastheawardrecipient'spayrollcosts.ThecostoftheRSUsisrecordedwithinequityuntilsettled.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.
RevenueRecognition
Revenuefromminingoperationsconsistsofgoldrevenues,netofsmelting,refining,transportationandothermarketingcharges.Revenuesfromby-productmetalsalesareshownnetofsmelterchargesaspartofrevenuesfromminingoperations.
Revenuefromthesaleofgoldandsilverisrecognizedwhenthefollowingconditionshavebeenmet:
• TheCompanyhastransferredtothebuyerthesignificantrisksandrewardsofownership;
• TheCompanyretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;
• Theamountofrevenuecanbemeasuredreliably;
• ItisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheCompany;and
• Thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.
Revenuefromgoldandsilverintheformofdorebarsisrecordedwhentherefinedgoldorsilverissoldanddeliveredtothecustomer.Generally,allofthegoldandsilverintheformofdorebarsrecoveredintheCompany'smillingprocessissoldintheperiodinwhichitisproduced.
UnderthetermsoftheCompany'sconcentratesalescontractswiththird-partysmelters,finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.TheCompanyrecordsrevenuesunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepassestothethird-partysmelters.Thetermsofthecontractsresultindifferencesbetweentherecordedestimatedpriceatdeliveryandthefinalsettlementprice.Thesedifferencesareadjustedthroughrevenueateachsubsequentfinancialstatementdate.
IncomeTaxes
Currenttaxanddeferredtaxexpensesarerecognizedintheconsolidatedstatementsofincomeexcepttotheextentthattheyrelatetoabusinesscombination,ortoitemsrecognizeddirectlyinequityorinothercomprehensiveincome(loss).
Currenttaxexpenseisbasedonsubstantivelyenactedstatutorytaxratesandlawsattheconsolidatedbalancesheetdate.
Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandthetaxbasisofsuchassetsandliabilitiesmeasuredusingtaxratesandlawsthataresubstantivelyenactedattheconsolidatedbalancesheetdateandeffectiveforthereportingperiodwhenthetemporarydifferencesareexpectedtoreverse.
Deferredtaxesarenotrecognizedinthefollowingcircumstances:
• Wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwill;
• Wherethedeferredtaxassetorliabilityarisesontheinitialrecognitionofanassetorliabilityinanacquisitionthatisnotabusinesscombinationand,atthetimeoftheacquisition,affectsneithernetincomenorincomebeforeincomeandminingtaxes;and
• FortemporarydifferencesrelatingtoinvestmentsinsubsidiariesandjointlycontrolledentitiestotheextentthattheCompanycancontrolthetimingofthetemporarydifferenceanditisprobablethattheywillnotreverseintheforeseeablefuture.
36 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Deferredtaxassetsarerecognizedforunusedlossescarriedforwardanddeductibletemporarydifferencestotheextentthatitisprobablethatfuturetaxablenetincomewillbeavailableagainstwhichtheycanbeutilizedexceptasnotedabove.
Ateachreportingperiod,previouslyunrecognizeddeferredtaxassetsarereassessedtodeterminewhetherithasbecomeprobablethatfuturetaxablenetincomewillallowthedeferredtaxassetstoberecovered.
Recently Issued Accounting Pronouncements
IFRS9–FinancialInstruments
InJuly2014,theIASBissuedIFRS9–Financial Instruments whichbringstogethertheclassificationandmeasurement,impairmentandhedgeaccountingphasesoftheIASB'sprojecttoreplaceIAS39–Financial Instruments: Recognition and Measurement .ApplicationofthestandardismandatoryforannualperiodsbeginningonorafterJanuary1,2018,withearlyadoptionpermitted.AgnicoEagleisevaluatingtheimpactoftheadoptionofIFRS9ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
IFRS15–RevenuefromContractswithCustomers
InMay2014,theIASBissuedIFRS15–Revenue from Contracts with Customers ,whichestablishesprinciplesthatanentityshallapplytoreportusefulinformationtousersoffinancialstatementsaboutthenature,amount,timing,anduncertaintyofrevenueandcashflowsarisingfromacontractwithacustomer.ApplicationofthestandardismandatoryforannualreportingperiodsbeginningonorafterJanuary1,2018,withearlieradoptionpermitted.AgnicoEagleisevaluatingtheimpactoftheadoptionofIFRS15ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
IFRS16–Leases
InJanuary2016,theIASBissuedIFRS16–Leases whichbringsmostleaseson-balancesheetforlesseesbyeliminatingthedistinctionbetweenoperatingandfinanceleases.Lessoraccountingremainslargelyunchangedandthedistinctionbetweenoperatingandfinanceleasesisretained.UnderIFRS16,alesseerecognizesaright-of-useassetandaleaseliability.Theright-of-useassetistreatedsimilarlytoothernon-financialassetsanddepreciatedaccordingly,andtheliabilityaccruesinterest.Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepaymentspayableovertheleaseterm,discountedattherateimplicitinthelease.Lesseesarepermittedtomakeanaccountingpolicyelection,byclassofunderlyingasset,toapplyamethodlikeIAS17'soperatingleaseaccountingandnotrecognizeleaseassetsandleaseliabilitiesforleaseswithaleasetermof12monthsorlessandonalease-by-leasebasis,toapplyamethodsimilartocurrentoperatingleaseaccountingtoleasesforwhichtheunderlyingassetisoflowvalue.IFRS16supersedesIAS17–Leases andrelatedinterpretationsandiseffectiveforperiodsbeginningonorafterJanuary1,2019,withearlieradoptionpermittedifIFRS15hasalsobeenapplied.AgnicoEagleiscurrentlyevaluatingtheimpactoftheadoptionofIFRS16ontheCompany'sconsolidatedfinancialstatementsalongwiththetimingofadoption.
Mineral Reserve Data
ThescientificandtechnicalinformationsetoutinthisMD&Ahasbeenapprovedbythefollowing"qualifiedpersons"asdefinedundertheCSA'sNationalInstrument43-101Standards of Disclosure for Mineral Properties :mineralreservesandmineralresources(otherthanfortheCanadianMalarticmine)–DanielDoucet,Eng.,SeniorCorporateDirector,ReserveDevelopment;mineralreservesandmineralresources(fortheCanadianMalarticmine)–DonaldGervais,P.Geo.,DirectorofTechnicalServicesatCanadianMalarticCorporation;Quebecoperations–ChristianProvencher,Eng.,Vice-President,Canada;Nunavutoperations–DominiqueGirard,Eng.,Vice-President,TechnicalServicesandNunavutOperations;Kittilaoperations–FrancisBrunet,Eng.,CorporateDirector,Mining;SouthernBusinessoperations–TimHaldane,P.Eng.,SeniorVice-President,Operations–USA&LatinAmerica;andexploration–AlainBlackburn,Eng.,SeniorVice-President,ExplorationandGuyGosselin,Eng.,Vice-President,Exploration.TheCompany'smineralreservesestimatewasderivedfrominternallygenerateddataorgeologyreports.
TheassumptionsusedforthemineralreserveestimatesatallminesandprojectsreportedinthisMD&A(excepttheCanadianMalarticmine)asatDecember31,2015are$1,100perouncegold,$16.00perouncesilver,$0.90perpoundzincand$2.50perpoundcopper.ExchangerateassumptionsofC$1.16perUS$1.00,€0.83perUS$1.00and14.00Mexicanpesosper$1.00wereusedforallminesandprojectsotherthantheLapamine,theMeadowbankmine,theCrestonMascotadepositatPinosAltosandtheSantoNinoopenpitatPinosAltos,whichusedexchangerateassumptionsofC$1.30perUS$1.00and16.00Mexicanpesosper$1.00duetotheirshorterminelives.TheassumptionsusedforthemineralreserveestimatesreportedinthisMD&AfortheCanadianMalarticmineasatDecember31,2015are$1,150perouncegoldandanexchangerateofC$1.24perUS$1.00.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 37
Proven and Probable Mineral Reserves by Property (i) Tonnes
Gold Grade (Grams
per Tonne)
Contained Gold
(Ounces) (ii)
Proven Mineral Reserves
LaRondemine 3,455,000 4.09 454,000
Lapamine 444,000 5.49 78,000
Goldexmine 300,000 1.54 15,000
Meadowbankmine 1,203,000 1.51 58,000
CanadianMalarticmine(attributable50.0%) 27,446,000 0.97 860,000
Meliadineproject 34,000 7.31 8,000
Kittilamine 1,059,000 4.28 146,000
PinosAltosmine 2,769,000 3.08 274,000
CrestonMascotadepositatPinosAltos 187,000 0.68 4,000
LaIndiamine 244,000 0.68 5,000
Total Proven Mineral Reserves 37,141,000 1.59 1,903,000
Probable Mineral Reserves
LaRondemine 14,765,000 5.59 2,654,000
Goldexmine 12,644,000 1.61 653,000
Akasabaproject 4,759,000 0.92 141,000
Meadowbankmine 9,586,000 2.87 885,000
CanadianMalarticmine(attributable50.0%) 83,320,000 1.12 3,002,000
Meliadineproject 14,495,000 7.32 3,410,000
Kittilamine 27,136,000 4.82 4,208,000
PinosAltosmine 12,967,000 2.84 1,185,000
CrestonMascotadepositatPinosAltos 4,026,000 1.33 172,000
LaIndiamine 29,743,000 0.90 862,000
Total Probable Mineral Reserves 213,442,000 2.50 17,172,000
Total Proven and Probable Mineral Reserves 250,583,000 2.37 19,075,000
Notes:
(i) Completeinformationontheverificationprocedures,qualityassuranceprogram,qualitycontrolprocedures,operatingandcapitalcostassumptions,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisMD&Aanddefinitionsofcertaintermsusedhereinmaybefoundin:theAIFunderthecaption"InformationonMineralReservesandMineralResourcesoftheCompany";the2005LaRondeMineralResource&MineralReserveEstimatefiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2005;theTechnicalReportontheLapaGoldProjectfiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonJune8,2006;theTechnicalReportontheDecember31,2009MineralReserveandMineralResourceEstimateandtheSuuriExtensionProject,KittilaMine,FinlandfiledwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch4,2010;theTechnicalReportontheMineralResourcesandMineralReservesatMeadowbankGoldMine,Nunavut,CanadaasatDecember31,2011filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2012;thePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportonMineralResourcesandReservesasofDecember31,2008filedwithCanadiansecuritiesregulatoryauthoritiesonMarch25,2009;theUpdatedTechnicalReportontheMeliadineGoldProject,Nunavut,CanadadatedFebruary11,2015filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch12,2015;theTechnicalReportontheJune30,2012UpdateoftheMineralResourcesandMineralReserves,LaIndiaGoldProject,MunicipalityofSahuaripa,Sonora,MexicodatedAugust31,2012filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonOctober12,2012;theTechnicalReportonRestatementoftheMineralResourcesatGoldexMine,
Quebec,CanadaasatOctober19,2011filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonDecember5,2011;theTechnicalReportonProductionoftheMandEZonesatGoldexMinedatedOctober14,2012filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonNovember1,2012;andtheTechnicalReportontheMineralResourceandMineralReserveEstimatesfortheCanadianMalarticPropertyasatJune16,2014filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonAugust13,2014.
(ii) Totalcontainedgoldouncesdoesnotincludeequivalentgoldouncesfortheby-productmetalscontainedinthemineralreserves.
38 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Non-GAAP Financial Performance Measures
ThisMD&Apresentscertainfinancialperformancemeasures,includingadjustednetincome,totalcashcostsperounceofgoldproduced(onbothaby-productandco-productbasis),minesitecostspertonneandall-insustainingcostsperounceofgoldproduced,thatarenotrecognizedmeasuresunderIFRS.Thisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Non-GAAPfinancialperformancemeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS.
AdjustedNetIncome
AdjustednetincomeisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Thismeasureiscalculatedbyadjustingnetincome(loss)asrecordedintheconsolidatedstatementsofincome(loss)andcomprehensiveincome(loss)fornon-recurring,unusualandotheritems.TheCompanybelievesthatthisgenerallyacceptedindustrymeasureallowstheevaluationoftheresultsofcontinuingoperationsandisusefulinmakingcomparisonsbetweenperiods.AdjustednetincomeisintendedtoprovideinvestorswithinformationabouttheCompany'scontinuingincomegeneratingcapabilities.ManagementusesthismeasuretomonitorandplanfortheoperatingperformanceoftheCompanyinconjunctionwithotherdatapreparedinaccordancewithIFRS.
2015 2014 2013
(thousands of United States dollars) Net income (loss) for the period – basic $ 24,583 $ 82,970 $ (686,705)
Less:DilutiveimpactofCMGPConvertibleDebentures(i) – (7,345) –
Net income (loss) for the period – diluted $ 24,583 $ 75,625 $ (686,705)
Impairmentlossonavailable-for-salesecurities 12,035 15,763 32,476
Gainonsaleofavailable-for-salesecurities (24,600) (5,635) (74)
Foreigncurrencytranslation(gain)loss (4,728) 3,781 1,769
Lossonderivativefinancialinstruments 19,608 6,156 268
Stockoptionsexpense 19,490 20,092 26,398
Mark-to-marketloss(gain)onCMGPConvertibleDebentures(ii) 2,416 (7,995) –
Impairmentloss,netoftax – – 748,157
Incomeandminingtaxesadjustments 24,742 23,323 44,256
Other 19,442 5,832 21,097
Adjusted net income for the period – basic $ 92,988 $ 144,287 $ 187,642
Adjusted net income for the period – diluted $ 92,988 $ 144,937 $ 187,642
Netincome(loss)pershare–basic $ 0.11 $ 0.43 $ (3.97)
Netincome(loss)pershare–diluted $ 0.11 $ 0.39 $ (3.97)
Adjustednetincomepershare–basic $ 0.43 $ 0.74 $ 1.09
Adjustednetincomepershare–diluted $ 0.43 $ 0.74 $ 1.09
Notes:
(i) InconnectionwiththejointacquisitionofOsiskoonJune16,2014,AgnicoEagleindirectlyassumeditsattributableinterestintheCMGPConvertibleDebentures.OnJune30,2015,thenegotiatedearlysettlementofalltheCMGPConvertibleDebentureswascompleted,resultinginprincipaloutstandingofnil.TheimpactoftheCMGPConvertibleDebentureshasbeenincludedinthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharewheredilutiveandhasbeenexcludedfromthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharewhereanti-dilutive.ThedilutiveimpactofCMGPtheConvertibleDebentureswasexcludedfromthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharefortheyearendedDecember31,2015astheirimpactwouldhavebeenanti-dilutivefortheportionoftheyeartheywereoutstanding.
(ii) WheretheimpactoftheCMGPConvertibleDebenturesisdilutive,theadjustmentformark-to-marketloss(gain)onCMGPConvertibleDebenturesisexcludedfromthecalculationofadjustednetincomefortheperiodonadilutedbasisasitisalreadyincorporatedinthecalculationofnetincome(loss)fortheperiodonadilutedbasis.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 39
TotalCashCostsperOunceofGoldProducedandMinesiteCostsperTonne
TheCompanybelievesthattotalcashcostsperounceofgoldproducedandminesitecostspertonnearerealisticindicatorsofoperatingperformanceandfacilitateperiodoverperiodcomparisons.However,bothofthesenon-GAAPgenerallyacceptedindustrymeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS.Thesemeasures,takenbythemselves,arenotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.
Totalcashcostsperounceofgoldproducediscalculatedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsperounceofgoldproducedonaby-productbasis,by-productmetalprices.Managementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonne(discussedbelow)aswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.
AgnicoEagle'sprimarybusinessisgoldproductionandthefocusofitscurrentoperationsandfuturedevelopmentisonmaximizingreturnsfromgoldproduction,withothermetalproductionbeingincidentaltothegoldproductionprocess.Accordingly,allmetalsotherthangoldareconsideredby-products.
Totalcashcostsperounceofgoldproducedispresentedonaby-productbasisbecause(i)themajorityoftheCompany'srevenuesaregoldrevenues,(ii)theCompanyminesore,whichcontainsgold,silver,zinc,copperandothermetals,(iii)itisnotpossibletospecificallyassignallcoststorevenuesfromthegold,silver,zinc,copperandothermetalstheCompanyproduces,and(iv)itisamethodusedbymanagementandtheBoardtomonitoroperations.
Minesitecostspertonneiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincomeforunsoldconcentrateinventoryproductioncostsandotheradjustmentsandthendividingbytonnesoforeprocessed.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeaffectedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations.Managementalsousesminesitecostspertonnetodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeaffectedbyfluctuationsinproductionlevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.
TotalcashcostsperounceofgoldproducedandminesitecostspertonnehavebeenrestatedtoconformwithIFRSforallreportedperiods.
Thefollowingtablessetoutareconciliationoftotalcashcostsperounceofgoldproduced(onbothaby-productbasisandco-productbasis)andminesitecostspertonnetoproductioncosts,exclusiveofamortization,aspresentedintheconsolidatedstatementsofincomeandcomprehensiveincomeinaccordancewithIFRS.
40 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
TotalProductionCostsbyMine
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars) LaRondemine $ 172,283 $ 188,736 $ 228,640
Lapamine 52,571 61,056 69,371
Goldexmine(i) 61,278 64,836 15,339
Meadowbankmine 230,564 270,824 318,414
CanadianMalarticmine(ii) 171,473 113,916 –
Kittilamine(iii) 126,095 116,893 97,934
PinosAltosmine 105,175 123,342 116,959
CrestonMascotadepositatPinosAltos(iv) 26,278 28,007 19,425
LaIndiamine(v) 49,578 36,949 –
Productioncostspertheconsolidatedstatementsofincomeandcomprehensiveincome $ 995,295 $ 1,004,559 $ 866,082
ReconciliationofProductionCoststoTotalCashCostsperOunceofGoldProduced(vi)byMineandReconciliationofProductionCoststoMinesiteCostsperTonne(vii)byMine
LaRonde Mine – Total Cash Costs per Ounce of Gold Produced (vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 172,283 $ 188,736 $ 228,640
Adjustments:
Inventoryandotheradjustments(viii) 31,417 27,070 31,855
Cashoperatingcosts(co-productbasis) $ 203,700 $ 215,806 $ 260,495
By-productmetalrevenues (45,678) (79,015) (121,035)
Cashoperatingcosts(by-productbasis) $ 158,022 $ 136,791 $ 139,460
Goldproduction(ounces) 267,921 204,652 181,781
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 760 $ 1,055 $ 1,433
By-productbasis $ 590 $ 668 $ 767
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 41
LaRonde Mine – Minesite Costs per Tonne (vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 172,283 $ 188,736 $ 228,640
Inventoryandotheradjustments(ix) 2,582 (1,511) (6,259)
Minesiteoperatingcosts $ 174,865 $ 187,225 $ 222,381
Minesiteoperatingcosts(thousandsofC$) C$ 222,799 C$ 206,858 C$ 229,004
Tonnesoforemilled(thousandsoftonnes) 2,241 2,085 2,319
Minesitecostspertonne(C$)(vii) C$ 99 C$ 99 C$ 99
Lapa Mine – Total Cash Costs per Ounce of Gold Produced (vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 52,571 $ 61,056 $ 69,371
Adjustments:
Inventoryandotheradjustments(viii) 1,161 750 (1,105)
Cashoperatingcosts(co-productbasis) $ 53,732 $ 61,806 $ 68,266
By-productmetalrevenues (62) (61) (22)
Cashoperatingcosts(by-productbasis) $ 53,670 $ 61,745 $ 68,244
Goldproduction(ounces) 90,967 92,622 100,730
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 591 $ 667 $ 678
By-productbasis $ 590 $ 667 $ 677
Lapa Mine – Minesite Costs per Tonne (vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 52,571 $ 61,056 $ 69,371
Inventoryandotheradjustments(ix) (1,000) 545 (1,216)
Minesiteoperatingcosts $ 51,571 $ 61,601 $ 68,155
Minesiteoperatingcosts(thousandsofC$) C$ 65,686 C$ 68,128 C$ 70,194
Tonnesoforemilled(thousandsoftonnes) 560 639 640
Minesitecostspertonne(C$)(vii) C$ 117 C$ 107 C$ 110
42 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Goldex Mine – Total Cash Costs per Ounce of Gold Produced (i)(vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 61,278 $ 64,836 $ 15,339
Adjustments:
Inventoryandotheradjustments(viii) 878 (720) 1,924
Cashoperatingcosts(co-productbasis) $ 62,156 $ 64,116 $ 17,263
By-productmetalrevenues (23) (20) (3)
Cashoperatingcosts(by-productbasis) $ 62,133 $ 64,096 $ 17,260
Goldproduction(ounces) 115,426 100,433 19,305
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 538 $ 638 $ 894
By-productbasis $ 538 $ 638 $ 894
Goldex Mine – Minesite Costs per Tonne (i)(vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 61,278 $ 64,836 $ 15,339
Inventoryandotheradjustments(ix) (1,253) (797) 1,895
Minesiteoperatingcosts $ 60,025 $ 64,039 $ 17,234
Minesiteoperatingcosts(thousandsofC$) C$ 76,408 C$ 70,728 C$ 18,093
Tonnesoforemilled(thousandsoftonnes) 2,313 2,117 492
Minesitecostspertonne(C$)(vii) C$ 33 C$ 33 C$ 37
Meadowbank Mine – Total Cash Costs per Ounce of Gold Produced (vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 230,564 $ 270,824 $ 318,414
Adjustments:
Inventoryandotheradjustments(viii) 7,282 2,688 (4,601)
Cashoperatingcosts(co-productbasis) $ 237,846 $ 273,512 $ 313,813
By-productmetalrevenues (3,665) (2,420) (2,343)
Cashoperatingcosts(by-productbasis) $ 234,181 $ 271,092 $ 311,470
Goldproduction(ounces) 381,804 452,877 430,613
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 623 $ 604 $ 729
By-productbasis $ 613 $ 599 $ 723
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 43
Meadowbank Mine – Minesite Costs per Tonne (vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 230,564 $ 270,824 $ 318,414
Inventoryandotheradjustments(ix) (4,441) 2,539 (5,222)
Minesiteoperatingcosts $ 226,123 $ 273,363 $ 313,192
Minesiteoperatingcosts(thousandsofC$) C$ 280,950 C$ 300,635 C$ 322,677
Tonnesoforemilled(thousandsoftonnes) 4,033 4,129 4,143
Minesitecostspertonne(C$)(vii) C$ 70 C$ 73 C$ 78
Canadian Malartic Mine – Total Cash Costs per Ounce of Gold Produced (ii)(vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 171,473 $ 113,916 $ –
Adjustments:
Inventoryandotheradjustments(viii) 3,630 (10,862) –
Cashoperatingcosts(co-productbasis) $ 175,103 $ 103,054 $ –
By-productmetalrevenues (4,689) (2,771) –
Cashoperatingcosts(by-productbasis) $ 170,414 $ 100,283 $ –
Goldproduction(ounces) 285,809 143,008 –
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 613 $ 721 $ –
By-productbasis $ 596 $ 701 $ –
Canadian Malartic Mine – Minesite Costs per Tonne (ii)(vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 171,473 $ 113,916 $ –
Inventoryandotheradjustments(ix) 1,784 (11,656) –
Minesiteoperatingcosts $ 173,257 $ 102,260 $ –
Minesiteoperatingcosts(thousandsofC$) C$ 219,714 C$ 113,818 C$ –
Tonnesoforemilled(thousandsoftonnes) 9,545 5,263 –
Minesitecostspertonne(C$)(vii) C$ 23 C$ 22 C$ –
44 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Kittila Mine – Total Cash Costs per Ounce of Gold Produced (iii)(vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 126,095 $ 116,893 $ 97,934
Adjustments:
Inventoryandotheradjustments(iii)(viii) (187) 3,051 (13,442)
Cashoperatingcosts(co-productbasis) $ 125,908 $ 119,944 $ 84,492
By-productmetalrevenues (155) (124) (125)
Cashoperatingcosts(by-productbasis) $ 125,753 $ 119,820 $ 84,367
Goldproduction(ounces) 177,374 141,742 141,031
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 710 $ 846 $ 599
By-productbasis $ 709 $ 845 $ 598
Kittila Mine – Minesite Costs per Tonne (iii)(vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 126,095 $ 116,893 $ 97,934
Inventoryandotheradjustments(iii)(ix) (374) 2,560 (13,848)
Minesiteoperatingcosts $ 125,721 $ 119,453 $ 84,086
Minesiteoperatingcosts(thousandsof€) € 111,329 € 89,987 € 64,102
Tonnesoforemilled(thousandsoftonnes) 1,464 1,156 883
Minesitecostspertonne(€)(vii) € 76 € 78 € 73
Pinos Altos Mine – Total Cash Costs per Ounce of Gold Produced (vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 105,175 $ 123,342 $ 116,959
Adjustments: Inventoryandotheradjustments(viii) 6,458 (581) 2,473
Cashoperatingcosts(co-productbasis) $ 111,633 $ 122,761 $ 119,432 By-productmetalrevenues (37,030) (31,643) (51,773)
Cashoperatingcosts(by-productbasis) $ 74,603 $ 91,118 $ 67,659
Goldproduction(ounces) 192,974 171,019 181,773
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 578 $ 718 $ 657
By-productbasis $ 387 $ 533 $ 372
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 45
Pinos Altos Mine – Minesite Costs per Tonne (vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 105,175 $ 123,342 $ 116,959
Inventoryandotheradjustments(ix) 2,481 (2,376) (821)
Minesiteoperatingcosts $ 107,656 $ 120,966 $ 116,138
Tonnesoforeprocessed(thousandsoftonnes) 2,378 2,520 2,726
Minesitecostspertonne(US$)(vii) $ 45 $ 48 $ 43
Creston Mascota deposit at Pinos Altos – Total Cash Costs perOunce of Gold Produced (iv)(vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 26,278 $ 28,007 $ 19,425
Adjustments:
Inventoryandotheradjustments(iv)(viii) (328) 1,232 (2,289)
Cashoperatingcosts(co-productbasis) $ 25,950 $ 29,239 $ 17,136
By-productmetalrevenues (2,412) (1,574) (795)
Cashoperatingcosts(by-productbasis) $ 23,538 $ 27,665 $ 16,341
Goldproduction(ounces) 54,703 47,842 32,120
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 474 $ 611 $ 534
By-productbasis $ 430 $ 578 $ 509
Creston Mascota deposit at Pinos Altos – Minesite Costs per Tonne(iv)(vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 26,278 $ 28,007 $ 19,425
Inventoryandotheradjustments(iv)(ix) (757) 870 (2,564)
Minesiteoperatingcosts $ 25,521 $ 28,877 $ 16,861
Tonnesoforeprocessed(thousandsoftonnes) 2,099 1,794 1,023
Minesitecostspertonne(US$)(vii) $ 12 $ 16 $ 16
46 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
La India Mine – Total Cash Costs per Ounce of Gold Produced (v)(vi)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 49,578 $ 36,949 $ –
Adjustments:
Inventoryandotheradjustments(viii) (28) 1,172 –
Cashoperatingcosts(co-productbasis) $ 49,550 $ 38,121 $ –
By-productmetalrevenues (4,058) (3,230) –
Cashoperatingcosts(by-productbasis) $ 45,492 $ 34,891 $ –
Goldproduction(ounces)(v) 104,362 71,601 –
Totalcashcostsperounceofgoldproduced($perounce)(vi):
Co-productbasis $ 475 $ 532 $ –
By-productbasis $ 436 $ 487 $ –
La India Mine – Minesite Costs per Tonne (v)(vii)
Year Ended December 31,
2015
Year Ended December 31,
2014
Year Ended December 31,
2013
(thousands of United States dollars, except as noted) Productioncosts $ 49,578 $ 36,949 $ –
Inventoryandotheradjustments(ix) (657) 778 –
Minesiteoperatingcosts $ 48,921 $ 37,727 $ –
Tonnesoforeprocessed(thousandsoftonnes) 5,371 4,442 –
Minesitecostspertonne(US$)(vii) $ 9 $ 8 $ –
Notes:
(i) TheGoldexmine'sMandEZonesachievedcommercialproductiononOctober1,2013.
(ii) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100.0%ofOsiskobywayoftheOsiskoArrangement.AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50.0%interestintheCanadianMalarticminesincethedateofacquisition.
(iii) ThecalculationsoftotalcashcostsperounceofgoldproducedandminesitecostspertonneexcludetheKittilamine'sresultsforthesecondquarterof2013.Duetoanextendedmaintenanceshutdown,theKittilamineonlyoperatedfor14daysduringthesecondquarterof2013.TheKittilamineincurred$18,159inproductioncostsduringthesecondquarterof2013,whichwereremovedfromthecalculationoftotalcashcostsperounceofgoldproducedandminesitecostspertonnebymeansoftheinventoryandotheradjustmentslineintheirrespectivereconciliationtables.
(iv) ThecalculationsoftotalcashcostsperounceofgoldproducedandminesitecostspertonneexcludetheCrestonMascotadepositatPinosAltos'resultsforthefirstquarterof2013duetothetemporarysuspensionofactiveleachingbetweenOctober1,2012andMarch13,2013.TheCrestonMascotadepositatPinosAltosincurred$3,117inproductioncostsduringthefirstquarterof2013,whichwereremovedfromthecalculationoftotalcashcostsperounceofgoldproducedandminesitecostspertonnebymeansoftheinventoryandotheradjustmentslineintheirrespectivereconciliationtables.
(v) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.ThecalculationoftotalcashcostsperounceofgoldproducedintheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.
(vi) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Totalcashcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-product
basismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 47
by-productmetalprices.Managementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonne(discussedbelow)aswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.
(vii) MinesitecostspertonneisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Thismeasureiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincomeforunsoldconcentrateinventoryproductioncosts,andthendividingbytonnesoforemilled.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeimpactedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations,eliminatingtheimpactofvaryingproductionlevels.Managementalsousesthismeasuretodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeimpactedbyfluctuationsinprocessinglevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.
(viii) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedonconcentrateswhenlegaltitleandriskistransferred.Astotalcashcostsperounceofgoldproducedarecalculatedonaproductionbasis,aninventoryadjustmentismadetoreflectthesalesmarginontheportionofconcentrateproductionnotyetrecognizedasrevenue.Otheradjustmentsincludetheadditionofsmelting,refiningandmarketingchargestoproductioncosts.
(ix) Thisinventoryandotheradjustmentreflectsproductioncostsassociatedwithunsoldconcentrates.
All-inSustainingCostsperOunceofGoldProduced
All-insustainingcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.TheCompanybelievesthatthismeasureprovidesinformationaboutoperatingperformance.However,thisnon-GAAPmeasureshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRSasitisnotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.
BasedontherecommendationsoftheWorldGoldCouncilmadein2013,theCompanymodifieditscalculationofall-insustainingcostsperounceofgoldproducedbeginningin2014.All-insustainingcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).All-insustainingcostsperounceofgoldproducedonaby-productbasisiscalculatedastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andnon-cashreclamationprovisionexpenseperounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismadetototalcashcostsperounceofgoldproduced.Thecalculationofall-insustainingcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.
Priortomodifyingitscalculationofall-insustainingcostsperounceofgoldproducedfor2014basedontherecommendationsoftheWorldGoldCouncil,theCompanycalculatedall-insustainingcostsperounceofgoldproducedonaby-productbasisastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures,generalandadministrativeexpenses(netofstockoptions)andexplorationandcorporatedevelopmentexpenses(excludinggreenfieldexploration)perounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasiswouldhavebeencalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenues,netofsmelting,refiningandmarketingchargeswouldhavebeenmadetototalcashcostsperounceofgoldproduced.
48 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
ReconciliationofProductionCoststoAll-inSustainingCostsperOunceofGoldProduced
(United States dollars per ounce of gold produced, except where noted)
Year Ended December 31,
2015
Year Ended December 31,
2014
Productioncostspertheconsolidatedstatementsofincome(loss)(thousandsofUnitedStatesdollars) $995,295 $1,004,559
Adjustedgoldproduction(ounces)(i) 1,671,340 1,425,796
Productioncostsperounceofadjustedgoldproduction:(i) $596 $705
Adjustments:
Inventoryandotheradjustments(ii) 30 16
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $626 $721
By-productmetalrevenues (59) (84)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $567 $637
Adjustments:
Sustainingcapitalexpenditures(includingcapitalizedexploration) 183 230
Generalandadministrativeexpenses(includingstockoptions) 58 83
Non-cashreclamationprovisionandother 2 4
All-insustainingcostsperounceofgoldproduced–by-productbasis $810 $954
By-productmetalrevenues 59 84
All-insustainingcostsperounceofgoldproduced–co-productbasis $869 $1,038
Notes:
(i) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.ThecalculationoftotalcashcostsperounceofgoldproducedfortheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.
(ii) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedonconcentrateswhenlegaltitleandriskistransferred.Astotalcashcostsperounceofgoldproducedarecalculatedonaproductionbasis,thisinventoryadjustmentreflectsthesalesmarginontheportionofconcentrateproductionnotyetrecognizedasrevenue.
(iii) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Totalcashcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 49
SUMMARIZED QUARTERLY DATA (thousands of United States dollars, except where noted)
Three Months Ended
March 31,
2015 June 30,
2015 September 30,
2015 December 31,
2015 Total 2015
Operating margin (i) :
Revenuesfromminingoperations $ 483,596 $ 510,109 $ 508,795 $ 482,932 $ 1,985,432
Productioncosts 247,280 263,612 254,584 229,819 995,295
Totaloperatingmargin(i) 236,316 246,497 254,211 253,113 990,137
Operating margin (i) by mine:
NorthernBusiness
LaRondemine 30,015 32,799 32,443 50,667 145,924
Lapamine 14,687 11,351 13,813 12,363 52,214
Goldexmine 19,253 15,525 20,681 17,108 72,567
Meadowbankmine 46,577 49,600 55,493 64,664 216,334
CanadianMalarticmine(ii) 34,718 44,737 44,293 38,059 161,807
Kittilamine 27,415 16,145 21,528 15,174 80,262
SouthernBusiness
PinosAltosmine 34,652 44,538 37,217 29,327 145,734
CrestonMascotadepositatPinosAltos 8,409 12,968 8,898 9,919 40,194
LaIndiamine 20,590 18,834 19,845 15,832 75,101
Totaloperatingmargin(i) 236,316 246,497 254,211 253,113 990,137
Amortizationofproperty,plantandminedevelopment 135,897 157,615 157,968 157,129 608,609
Exploration,corporateandother 43,706 67,973 110,258 76,963 298,900
Income(loss)beforeincomeandminingtaxes 56,713 20,909 (14,015) 19,021 82,628
Incomeandminingtaxes(recovery) 27,970 10,826 (15,309) 34,558 58,045
Netincome(loss)fortheperiod $ 28,743 $ 10,083 $ 1,294 $ (15,537) $ 24,583
Netincome(loss)pershare–basic(US$) $ 0.13 $ 0.05 $ 0.01 $ (0.07) $ 0.11
Netincome(loss)pershare–diluted(US$) $ 0.13 $ 0.05 $ 0.01 $ (0.07) $ 0.11
Cash flows:
Cashprovidedbyoperatingactivities $ 143,455 $ 188,349 $ 143,687 $ 140,747 $ 616,238
Cashusedininvestingactivities $ (53,892) $ (104,476) $ (100,365) $ (115,786) $ (374,519)
Cash(usedin)providedbyfinancingactivities $ (123,182) $ (64,514) $ 7,396 $ (100,460) $ (280,760)
50 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Realized prices (US$):
Gold(perounce) $ 1,202 $ 1,196 $ 1,119 $ 1,094 $ 1,156
Silver(perounce) $ 17.02 $ 16.41 $ 14.93 $ 14.56 $ 15.63
Zinc(pertonne) $ 2,072 $ 2,231 $ 1,909 $ 1,602 $ 1,875
Copper(pertonne) $ 5,056 $ 6,274 $ 4,538 $ 4,568 $ 5,023
Payable production (iii) :
Gold(ounces):
NorthernBusiness
LaRondemine 58,893 64,007 71,860 73,161 267,921
Lapamine 25,920 19,450 25,668 19,929 90,967
Goldexmine 29,250 26,462 32,068 27,646 115,426
Meadowbankmine 88,523 91,276 99,425 102,580 381,804
CanadianMalarticmine(ii) 67,893 68,441 76,603 72,872 285,809
Kittilamine 44,654 41,986 46,455 44,279 177,374
SouthernBusiness
PinosAltosmine 50,106 50,647 47,725 44,496 192,974
CrestonMascotadepositatPinosAltos 12,448 15,606 12,716 13,933 54,703
LaIndiamine 26,523 25,803 28,604 23,432 104,362
Totalgold(ounces) 404,210 403,678 441,124 422,328 1,671,340
Silver(thousandsofounces):
NorthernBusiness
LaRondemine 198 201 221 296 916
Lapamine 1 1 1 1 4
Meadowbankmine 96 57 39 29 221
CanadianMalarticmine(ii) 72 69 76 83 300
Kittilamine 2 2 3 4 11
SouthernBusiness
PinosAltosmine 562 576 606 640 2,384
CrestonMascotadepositatPinosAltos 32 37 40 50 159
LaIndiamine 69 72 67 55 263
Totalsilver(thousandsofounces) 1,032 1,015 1,053 1,158 4,258
Zinc(tonnes) 936 827 739 999 3,501
Copper(tonnes) 1,167 1,133 1,306 1,335 4,941
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 51
Payable metal sold:
Gold(ounces):
NorthernBusiness
LaRondemine 60,943 59,376 69,143 65,067 254,529
Lapamine 23,497 20,771 23,331 23,278 90,877
Goldexmine 27,907 27,306 33,004 27,875 116,092
Meadowbankmine 84,780 96,870 100,440 103,667 385,757
CanadianMalarticmine(ii)(iv) 59,261 67,522 72,651 71,982 271,416
Kittilamine 48,982 39,385 47,070 43,499 178,936
SouthernBusiness
PinosAltosmine 41,433 54,402 49,327 41,418 186,580
CrestonMascotadepositatPinosAltos 11,399 16,537 12,911 14,997 55,844
LaIndiamine 26,898 23,803 28,983 25,366 105,050
Totalgold(ounces) 385,100 405,972 436,860 417,149 1,645,081
Silver(thousandsofounces):
NorthernBusiness
LaRondemine 205 225 220 308 958
Meadowbankmine 98 59 36 32 225
CanadianMalarticmine(ii)(iv) 54 80 53 98 285
Kittilamine 2 2 3 3 10
SouthernBusiness
PinosAltosmine 446 616 620 607 2,289
CrestonMascotadepositatPinosAltos 20 48 39 49 156
LaIndiamine 63 76 66 56 261
Totalsilver(thousandsofounces) 888 1,106 1,037 1,153 4,184
Zinc(tonnes) 1,264 733 650 949 3,596
Copper(tonnes) 1,160 1,131 1,302 1,354 4,947
52 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Three Months Ended
March 31,
2014 June 30,
2014 September 30,
2014 December 31,
2014 Total 2014
Operating margin (i) :
Revenuesfromminingoperations $ 491,767 $ 438,521 $ 463,388 $ 503,090 $ 1,896,766
Productioncosts 218,066 229,383 269,793 287,317 1,004,559
Totaloperatingmargin(i) 273,701 209,138 193,595 215,773 892,207
Operating margin (i) by mine:
NorthernBusiness
LaRondemine 45,425 26,402 14,696 33,535 120,058
Lapamine 15,340 9,050 13,748 16,060 54,198
Goldexmine 9,525 13,283 17,237 20,693 60,738
Meadowbankmine 123,961 88,728 52,504 39,839 305,032
CanadianMalarticmine(ii) – 3,668 33,224 39,092 75,984
Kittilamine 19,003 14,184 12,128 14,312 59,627
SouthernBusiness
PinosAltosmine 39,064 33,417 28,837 27,123 128,441
CrestonMascotadepositatPinosAltos 7,714 7,428 8,032 8,392 31,566
LaIndiamine(v) 13,669 12,978 13,189 16,727 56,563
Totaloperatingmargin(i) 273,701 209,138 193,595 215,773 892,207
Amortizationofproperty,plantandminedevelopment 83,481 93,656 117,396 139,095 433,628
Exploration,corporateandother 43,502 81,665 69,884 74,390 269,441
Incomebeforeincomeandminingtaxes 146,718 33,817 6,315 2,288 189,138
Incomeandminingtaxes 49,573 11,659 21,365 23,571 106,168
Netincome(loss)fortheperiod $ 97,145 $ 22,158 $ (15,050) $ (21,283) $ 82,970
Netincome(loss)pershare–basic(US$) $ 0.56 $ 0.12 $ (0.07) $ (0.10) $ 0.43
Netincome(loss)pershare–diluted(US$) $ 0.56 $ 0.12 $ (0.10) $ (0.12) $ 0.39
Cash flows:
Cashprovidedbyoperatingactivities $ 250,396 $ 182,728 $ 71,244 $ 163,956 $ 668,324
Cashusedininvestingactivities $ (108,288) $ (488,543) $ (131,662) $ (123,126) $ (851,619)
Cash(usedin)providedbyfinancingactivities $ (98,087) $ 381,951 $ (35,943) $ (18,685) $ 229,236
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 53
Realized prices (US$):
Gold(perounce) $ 1,308 $ 1,291 $ 1,249 $ 1,202 $ 1,261
Silver(perounce) $ 20.62 $ 19.45 $ 17.72 $ 15.60 $ 18.27
Zinc(pertonne) $ 2,027 $ 2,142 $ 2,365 $ 2,216 $ 2,224
Copper(pertonne) $ 6,386 $ 6,893 $ 7,500 $ 5,961 $ 6,596
Payable production (iii) :
Gold(ounces):
NorthernBusiness
LaRondemine 59,352 48,494 37,490 59,316 204,652
Lapamine 23,409 18,821 24,781 25,611 92,622
Goldexmine 19,430 23,929 27,611 29,463 100,433
Meadowbankmine 156,444 118,161 91,557 86,715 452,877
CanadianMalarticmine(ii) – 11,878 64,761 66,369 143,008
Kittilamine 38,552 31,830 28,230 43,130 141,742
SouthernBusiness
PinosAltosmine 45,217 43,978 41,155 40,669 171,019
CrestonMascotadepositatPinosAltos 10,317 11,159 13,377 12,989 47,842
LaIndiamine(v) 13,700 17,809 20,311 23,273 75,093
Totalgold(ounces) 366,421 326,059 349,273 387,535 1,429,288
Silver(thousandsofounces):
NorthernBusiness
LaRondemine 349 345 224 357 1,275
Meadowbankmine 26 25 34 49 134
CanadianMalarticmine(ii) – 10 66 75 151
Kittilamine 2 1 1 3 7
SouthernBusiness
PinosAltosmine 460 422 425 424 1,731
CrestonMascotadepositatPinosAltos 16 18 26 28 88
LaIndiamine(v) 27 40 44 67 178
Totalsilver(thousandsofounces) 880 861 820 1,003 3,564
Zinc(tonnes) 2,060 3,793 2,230 2,432 10,515
Copper(tonnes) 1,554 1,058 989 1,396 4,997
54 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Payable metal sold:
Gold(ounces):
NorthernBusiness
LaRondemine 58,100 48,115 39,279 56,844 202,338
Lapamine 23,451 18,162 22,422 28,054 92,089
Goldexmine 19,607 22,255 26,762 31,702 100,326
Meadowbankmine 147,502 118,176 98,604 87,741 452,023
CanadianMalarticmine(ii)(iv) – 16,377 60,093 66,219 142,689
Kittilamine 37,429 31,519 28,209 42,609 139,766
SouthernBusiness
PinosAltosmine 46,810 43,058 41,143 45,457 176,468
CrestonMascotadepositatPinosAltos 10,228 10,737 12,793 12,940 46,698
LaIndiamine(v) 14,632 15,025 19,265 24,019 72,941
Totalgold(ounces) 357,759 323,424 348,570 395,585 1,425,338
Silver(thousandsofounces):
NorthernBusiness
LaRondemine 340 322 249 367 1,278
Meadowbankmine 28 24 32 49 133
CanadianMalarticmine(ii)(iv) – 15 57 68 140
Kittilamine 2 1 1 2 6
SouthernBusiness
PinosAltosmine 507 430 430 456 1,823
CrestonMascotadepositatPinosAltos 14 18 18 34 84
LaIndiamine(v) 26 34 42 67 169
Totalsilver(thousandsofounces) 917 844 829 1,043 3,633
Zinc(tonnes) 1,673 2,458 3,936 2,468 10,535
Copper(tonnes) 1,542 1,074 988 1,399 5,003
Notes:
(i) Operatingmarginiscalculatedasrevenuesfromminingoperationslessproductioncosts.
(ii) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100.0%ofOsiskobywayoftheArrangement.AsaresultoftheArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50.0%interestintheCanadianMalarticminesincethedateofacquisition.
(iii) Payableproduction(anon-GAAPnon-financialperformancemeasure)isthequantityofmineralproducedduringaperiodcontainedinproductsthatareorwillbesoldbytheCompany,whethersuchproductsaresoldduringtheperiodorheldasinventoriesattheendoftheperiod.
(iv) TheCanadianMalarticmine'spayablemetalsoldexcludesthe5.0%netsmelterroyaltytransferredtoOsiskoGoldRoyaltiesLtd.,pursuanttotheArrangement.
(v) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 55
THREE YEAR FINANCIAL AND OPERATING SUMMARY (thousands of United States dollars, except where noted)
2015 2014 2013 Revenuesfromminingoperations $ 1,985,432 $ 1,896,766 $ 1,638,406
Productioncosts 995,295 1,004,559 866,082
Operatingmargin(i) 990,137 892,207 772,324
Amortizationofproperty,plantandminedevelopment 608,609 433,628 313,890
Impairmentloss – – 1,014,688
Exploration,corporateandother 298,900 269,441 262,033
Income(loss)beforeincomeandminingtaxes 82,628 189,138 (818,287)
Incomeandminingtaxes(recovery)expense 58,045 106,168 (131,582)
Netincome(loss)fortheyear $ 24,583 $ 82,970 $ (686,705)
Netincome(loss)pershare–basic $ 0.11 $ 0.43 $ (3.97)
Netincome(loss)pershare–diluted $ 0.11 $ 0.39 $ (3.97)
Operatingcashflow $ 616,238 $ 668,324 $ 481,043
Investingcashflow $ (374,519) $ (851,619) $ (687,220)
Financingcashflow $ (280,760) $ 229,236 $ 48,729
Dividendsdeclaredpershare $ 0.32 $ 0.32 $ 0.66
Capitalexpenditures $ 449,758 $ 475,412 $ 620,536
Averagegoldpriceperouncerealized $ 1,156 $ 1,261 $ 1,366
Averageexchangerate–C$per$ C$ 1.2788 C$ 1.1047 C$ 1.0301
Weightedaveragenumberofcommonsharesoutstanding–basic(thousands) 216,168 195,223 172,893
Workingcapital(includingundrawncreditlines) $ 1,441,991 $ 1,274,627 $ 1,586,676
Totalassets $ 6,683,180 $ 6,840,538 $ 4,580,081
Long-termdebt $ 1,118,187 $ 1,374,643 $ 987,356
Shareholders'equity $ 4,141,020 $ 4,068,490 $ 2,717,406
56 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Operating Summary
LaRondemine
Revenuesfromminingoperations $ 318,207 $ 308,794 $ 329,900
Productioncosts 172,283 188,736 228,640
Operatingmargin(i) $ 145,924 $ 120,058 $ 101,260
Amortizationofproperty,plantandminedevelopment 80,298 64,945 59,455
Grossprofit $ 65,626 $ 55,113 $ 41,805
Tonnesoforemilled 2,241,424 2,085,300 2,319,132
Gold–gramspertonne 3.91 3.24 2.63
Goldproduction–ounces 267,921 204,652 181,781
Silverproduction–thousandsofounces 916 1,275 2,102
Zincproduction–tonnes 3,501 10,515 19,814
Copperproduction–tonnes 4,941 4,997 4,835
Totalcashcostsperounceofgoldproduced($perouncebasis):
Productioncosts $ 643 $ 922 $ 1,258
Adjustments:
Inventoryandotheradjustments(ii) 117 133 175
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 760 $ 1,055 $ 1,433
By-productmetalrevenues (170) (387) (666)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 590 $ 668 $ 767
Minesitecostspertonne(iv) C$ 99 C$ 99 C$ 99
Lapamine
Revenuesfromminingoperations $ 104,785 $ 115,254 $ 141,167
Productioncosts 52,571 61,056 69,371
Operatingmargin(i) $ 52,214 $ 54,198 $ 71,796
Amortizationofproperty,plantandminedevelopment 30,939 25,991 43,986
Grossprofit $ 21,275 $ 28,207 $ 27,810
Tonnesoforemilled 559,926 638,800 640,422
Gold–gramspertonne 5.83 5.59 6.06
Goldproduction–ounces 90,967 92,622 100,730
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 57
Totalcashcostsperounceofgoldproduced($perouncebasis):
Productioncosts $ 578 $ 659 $ 689
Adjustments:
Inventoryandotheradjustments(ii) 13 8 (11)
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 591 $ 667 $ 678
By-productmetalrevenues $ (1) – (1)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 590 $ 667 $ 677
Minesitecostspertonne(iv) C$ 117 C$ 107 C$ 110
Goldexmine
Revenuesfromminingoperations $ 133,845 $ 125,574 $ 21,418
Productioncosts 61,278 64,836 15,339
Operatingmargin(i) $ 72,567 $ 60,738 $ 6,079
Amortizationofproperty,plantandminedevelopment 55,728 52,552 8,915
Grossprofit $ 16,839 $ 8,186 $ (2,836)
Tonnesoforemilled 2,312,567 2,116,777 527,654
Gold–gramspertonne 1.66 1.60 1.35
Goldproduction–ounces 115,426 100,433 20,810
Totalcashcostsperounceofgoldproduced($perouncebasis)(v):
Productioncosts $ 531 $ 646 $ 795
Adjustments:
Inventoryandotheradjustments(ii) 7 (8) 99
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 538 $ 638 $ 894
By-productmetalrevenues – – –
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 538 $ 638 $ 894
Minesitecostspertonne(iv)(v) C$ 33 C$ 33 C$ 37
Meadowbankmine
Revenuesfromminingoperations $ 446,898 $ 575,856 $ 591,473
Productioncosts 230,564 270,824 318,414
Operatingmargin(i) $ 216,334 $ 305,032 $ 273,059
Amortizationofproperty,plantandminedevelopment 144,931 119,545 130,373
Grossprofit $ 71,403 $ 185,487 $ 142,686
58 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Tonnesoforemilled 4,032,852 4,129,100 4,142,840
Gold–gramspertonne 3.16 3.61 3.43
Goldproduction–ounces 381,804 452,877 430,613
Silverproduction–thousandsofounces 221 135 100
Totalcashcostsperounceofgoldproduced($perouncebasis):
Productioncosts $ 604 $ 598 $ 739
Adjustments:
Inventoryandotheradjustments(ii) 19 6 (10)
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 623 $ 604 $ 729
By-productmetalrevenues (10) (5) (6)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 613 $ 599 $ 723
Minesitecostspertonne(iv) C$ 70 C$ 73 C$ 78
CanadianMalarticmine(vi)
Revenuesfromminingoperations $ 333,280 $ 189,900 $ –
Productioncosts 171,473 113,916 –
Operatingmargin(i) $ 161,807 $ 75,984 $ –
Amortizationofproperty,plantandminedevelopment 103,050 40,973 –
Grossprofit $ 58,757 $ 35,011 $ –
Tonnesoforemilled 9,544,763 5,263,100 –
Gold–gramspertonne 1.05 0.95 –
Goldproduction–ounces 285,809 143,008 –
Silverproduction–thousandsofounces 300 151 –
Totalcashcostsperounceofgoldproduced($perouncebasis):
Productioncosts $ 600 $ 797 $ –
Adjustments:
Inventoryandotheradjustments(ii) 13 (76) –
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 613 $ 721 $ –
By-productmetalrevenues (17) (20) –
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 596 $ 701 $ –
Minesitecostspertonne(iv) C$ 23 C$ 22 C$ –
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 59
Kittilamine
Revenuesfromminingoperations $ 206,357 $ 176,520 $ 209,723
Productioncosts 126,095 116,893 97,934
Operatingmargin(i) $ 80,262 $ 59,627 $ 111,789
Amortizationofproperty,plantandminedevelopment 48,648 33,683 27,597
Grossprofit $ 31,614 $ 25,944 $ 84,192
Tonnesoforemilled 1,464,038 1,156,400 934,224
Gold–gramspertonne 4.44 4.57 5.40
Goldproduction–ounces 177,374 141,742 146,421
Silverproduction–thousandsofounces 11 7 6
Totalcashcostsperounceofgoldproduced($perouncebasis)(vii):
Productioncosts $ 711 $ 825 $ 565
Adjustments:
Inventoryandotheradjustments(ii) (1) 21 34
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 710 $ 846 $ 599
By-productmetalrevenues (1) (1) (1)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 709 $ 845 $ 598
Minesitecostspertonne(iv)(vii) € 76 € 78 € 73
PinosAltosmine
Revenuesfromminingoperations $ 250,909 $ 251,783 $ 303,203
Productioncosts 105,175 123,342 116,959
Operatingmargin(i) $ 145,734 $ 128,441 $ 186,244
Amortizationofproperty,plantandminedevelopment 41,894 42,957 36,267
Grossprofit $ 103,840 $ 85,484 $ 149,977
Tonnesoforeprocessed 2,378,406 2,520,400 2,725,703
Gold–gramspertonne 2.68 2.22 2.20
Goldproduction–ounces 192,974 171,019 181,773
Silverproduction–thousandsofounces 2,384 1,731 2,366
60 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
Totalcashcostsperounceofgoldproduced($perouncebasis):
Productioncosts $ 545 $ 721 $ 643
Adjustments:
Inventoryandotheradjustments(ii) 33 (3) 14
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 578 $ 718 $ 657
By-productmetalrevenues (191) (185) (285)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 387 $ 533 $ 372
Minesitecostspertonne(iv) $ 45 $ 48 $ 43
CrestonMascotadepositatPinosAltos
Revenuesfromminingoperations $ 66,472 $ 59,573 $ 41,522
Productioncosts 26,278 28,007 19,425
Operatingmargin(i) $ 40,194 $ 31,566 $ 22,097
Amortizationofproperty,plantandminedevelopment 17,868 9,626 7,297
Grossprofit $ 22,326 $ 21,940 $ 14,800
Tonnesoforeprocessed 2,098,812 1,793,800 1,276,159
Gold–gramspertonne 1.34 1.30 1.43
Goldproduction–ounces 54,703 47,842 34,027
Silverproduction–thousandsofounces 159 88 46
Totalcashcostsperounceofgoldproduced($perouncebasis)(viii):
Productioncosts $ 480 $ 585 $ 508
Adjustments:
Inventoryandotheradjustments(ii) (6) 26 26
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 474 $ 611 $ 534
By-productmetalrevenues (44) (33) (25)
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 430 $ 578 $ 509
Minesitecostspertonne(iv)(viii) $ 12 $ 16 $ 16
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 61
LaIndiamine(ix)
Revenuesfromminingoperations $ 124,679 $ 93,512 $ –
Productioncosts 49,578 36,949 –
Operatingmargin(i) $ 75,101 $ 56,563 $ –
Amortizationofproperty,plantandminedevelopment 81,430 43,356 –
Grossprofit $ (6,329) $ 13,207 $ –
Tonnesoforeprocessed 5,371,419 4,773,190 –
Gold–gramspertonne 0.95 0.98 –
Goldproduction–ounces 104,362 75,093 –
Silverproduction–thousandsofounces 263 178 –
Totalcashcostsperounceofgoldproduced($perouncebasis)(ix):
Productioncosts $ 475 $ 516 $ –
Adjustments:
Inventoryandotheradjustments(ii) – 16 –
Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 475 $ 532 $ –
By-productmetalrevenues (39) (45) –
Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 436 $ 487 $ –
Minesitecostspertonne(iv) $ 9 $ 8 $ –
Notes:
(i) Operatingmarginiscalculatedasrevenuesfromminingoperationslessproductioncosts.(ii) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedonconcentrateswhenlegaltitlepasses.Astotalcashcostsperounceofgoldproducedare
calculatedonaproductionbasis,thisinventoryadjustmentreflectsthesalesmarginontheportionofconcentrateproductionnotyetrecognizedasrevenue.Otheradjustmentsincludetheadditionofsmelting,refiningandmarketingchargestoproductioncosts.
(iii) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Totalcashcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforeby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,by-productmetalprices.Managementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonne(discussedbelow)aswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates
(iv) MinesitecostspertonneisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Thismeasureiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincomeforunsoldconcentrateinventoryproductioncosts,andthendividingbytonnesoforemilled.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeimpactedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations,eliminatingtheimpactofvaryingproductionlevels.Managementalsousesthismeasuretodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeimpactedbyfluctuationsinprocessinglevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.
62 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS
(v) TheGoldexmine'sMandEZonesachievedcommercialproductiononOctober1,2013.ExcludestheGoldexmine'sresultsforthethirdquarterof2013.Initialnon-commercialpayablegoldproductionof1,505ounceswasachievedattheGoldexmine'sMandEZonesduringthethirdquarterof2013.
(vi) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100%ofOsiskobywayoftheArrangement.AsaresultoftheArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50.0%interestintheCanadianMalarticminesincethedateofacquisition.
(vii) ThecalculationsoftotalcashcostsperounceofgoldproducedandminesitecostspertonneexcludetheKittilamine'sresultsforthesecondquarterof2013.Duetoanextendedmaintenanceshutdown,theKittilamineonlyoperatedfor14daysduringthesecondquarterof2013.TheKittilamineincurred$18,159inproductioncostsduringthesecondquarterof2013,whichwereremovedfromthecalculationoftotalcashcostsperounceofgoldproducedandminesitecostspertonne.
(viii) ThecalculationsoftotalcashcostsperounceofgoldproducedandminesitecostspertonneexcludetheCrestonMascotadepositatPinosAltos'resultsforthefirstquarterof2013duetothetemporarysuspensionofactiveleachingbetweenOctober1,2012andMarch13,2013.TheCrestonMascotadepositatPinosAltosincurred$3,117inproductioncostsduringthefirstquarterof2013,whichwereremovedfromthecalculationoftotalcashcostsperounceofgoldproducedandminesitecostspertonne.
(ix) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.ThecalculationoftotalcashcostsperounceofgoldproducedfortheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.
MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 63
QuickLinks
Exhibit99.3
AGNICOEAGLEMINESLIMITEDMANAGEMENT'SDISCUSSIONANDANALYSISNOTETOINVESTORSCONCERNINGFORWARD-LOOKINGINFORMATIONNOTETOINVESTORSCONCERNINGESTIMATESOFMINERALRESOURCES
CautionaryNotetoInvestorsConcerningEstimatesofMeasuredandIndicatedMineralResourcesCautionaryNotetoInvestorsConcerningEstimatesofInferredMineralResources
NOTETOINVESTORSCONCERNINGCERTAINMEASURESOFPERFORMANCEGoldPrices($perounce)TotalProductionCostsbyCategorySUMMARIZEDQUARTERLYDATA(thousandsofUnitedStatesdollars,exceptwherenoted)THREEYEARFINANCIALANDOPERATINGSUMMARY(thousandsofUnitedStatesdollars,exceptwherenoted)
Exhibit 99.4
Rule 13a-14(a) or Rule 15d-14(a) Certification - CEO I, Sean Boyd, certify that: 1. I have reviewed this annual report on Form 40-F of Agnico Eagle Mines Limited; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer andhave:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s
auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control
over financial reporting.
Toronto, Canada
March 23, 2016 /s/ Sean BoydSean BoydVice-Chairman and Chief Executive Officer
Exhibit 99.5
Rule 13a-14(a) or Rule 15d-14(a) Certification - CFO I, David Smith, certify that: 1. I have reviewed this annual report on Form 40-F of Agnico Eagle Mines Limited; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer andhave:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s
auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control
over financial reporting.
Toronto, Canada
March 23, 2016
/s/ David SmithDavid SmithSenior Vice-President, Finance and Chief Financial Officer
Exhibit 99.6
Rule 13a-14(b) Certification CEO In connection with the annual report of Agnico Eagle Mines Limited (the “Company”) on Form 40-F for the fiscal year ended December 31, 2015 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Sean Boyd, the Vice-Chairman and Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Toronto, Canada
March 23, 2016
/s/ Sean BoydSean BoydVice-Chairman and Chief Executive Officer
Exhibit 99.7
Rule 13a-14(b) Certification CFO In connection with the annual report of Agnico Eagle Mines Limited (the “Company”) on Form 40-F for the fiscal year ended December 31, 2015 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, David Smith, the Senior Vice-President, Finance and Chief Financial Officer of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Toronto, Canada
March 23, 2016
/s/ David SmithDavid SmithSenior Vice-President, Finance and Chief Financial Officer
Exhibit 99.8
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our Firm under the caption “Interests of Experts” and to the inclusion in the Annual Report on Form 40-F of Agnico Eagle MinesLimited for the year ended December 31, 2015 filed with the Securities and Exchange Commission on March 24, 2016 (the “Annual Report”), and theincorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8(registration nos. 333-130339 and 333-152004) of our reports dated March 23, 2016, with respect to the consolidated financial statements of Agnico Eagle MinesLimited as of December 31, 2015 and December 31, 2014 and for each of the years in the two-year period ended December 31, 2015 and with respect to theeffectiveness of internal control over financial reporting of Agnico Eagle Mines Limited, which reports are included in the Annual Report. Toronto, Canada
March 23, 2016
/s/ ERNST & YOUNG LLPERNST & YOUNG LLPChartered Professional Accountants,Licensed Public Accountants
Exhibit 99.9
CONSENT OF DANIEL DOUCET I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF.
March 23, 2016
/s/ Daniel DoucetDaniel DoucetSenior Corporate Director, Reserve Development
Exhibit 99.10
CONSENT OF DONALD GERVAIS I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Donald GervaisDonald GervaisDirector of Technical Services at Canadian Malartic Corporation
Exhibit 99.11
CONSENT OF LOUISE GRONDIN I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I ave approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Louise GrondinLouise GrondinSenior Vice-President, Environment, Sustainable Development and People
Exhibit 99.12
CONSENT OF TIM HALDANE I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Tim HaldaneTim HaldaneSenior Vice-President, Operations - USA & Latin America
Exhibit 99.13
CONSENT OF PAUL COUSIN I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Paul CousinPaul CousinVice-President, Metallurgy
Exhibit 99.14
CONSENT OF FRANCIS BRUNET I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Francis BrunetFrancis BrunetCorporate Director Mining
Exhibit 99.15
CONSENT OF DOMINIQUE GIRARD I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Dominique GirardDominique GirardVice-President Technical Services and Nunavut Operations
Exhibit 99.16
CONSENT OF CHRISTIAN PROVENCHER I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2015 filed with the Securities andExchange Commission on March 24, 2016 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March 15, 2016 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-190888) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 23, 2016
/s/ Christian ProvencherChristian ProvencherVice-President, Canada