Agnico Eagle Provides Further Update on Quebec and Nunavut Operations
TORONTO, March 24, 2020 – Agnico Eagle Mines Limited (NYSE: AEM, TSX: AEM) (“Agnico Eagle” or the “Company”) is providing a further update on its Quebec and Nunavut operations. Today the Company held discussions with representatives from the Government of Quebec to get additional clarity in regard to the order by the Government of Quebec to close all non-essential businesses in response to the COVID-19 outbreak issued on the afternoon of March 23, 2020 (the “Order”). Pursuant to the Order, mining operations were directed to minimize their activities until April 13, 2020.
Based on today’s discussions, and in response to the Quebec decision, the Company will take steps to ramp down its operations in the Abitibi region of Quebec (the LaRonde Complex, the Goldex mine and the Canadian Malartic mine (50%)) in an orderly fashion while ensuring the safety of employees and the sustainability of the infrastructure. Each of these operations are to be placed on care and maintenance until April 13, 2020, and as instructed, minimal work will take place during that time. In addition, the Company will reduce activities at the Meliadine and Meadowbank mining operations in Nunavut, which are currently serviced out of Mirabel and Val d’Or, Quebec. Exploration activities in Canada will also be suspended during this period.
“The health, safety and well-being of all our employees and the communities that we operate in continue to remain our priority. As directed by the Quebec government, our Quebec mines will be placed on care and maintenance. At the same time, our Nunavut mines will be operating at reduced levels”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “Even with the reduction in mining activities, we plan to maintain a state of operational readiness in order to resume normal operations in a timely and safe manner once the restrictions are lifted.”
At the present time there are no confirmed cases of COVID-19 at the Company’s Abitibi or Nunavut operations or at any of the Company’s global operations. The Company is working to ensure the continued health of its employees and residents in the communities in which it operates.
Agnico Eagle’s senior management team has been working across all of the Company’s operations to ensure correct protocols and safety precautions are in place. The Company is basing its guidelines on, and is following, advice of the public health authorities and governments with respect to the COVID-19 virus in the different jurisdictions in which we operate. In addition, all of the Company’s operations have implemented site-specific action plans that enable them to better meet and respond to changing situations in their regions.
In the Abitibi region, as a result of the Order, minimal staffing levels will be put in place to maintain surface and underground infrastructure and to comply with environmental requirements. The Company expects that these activities should allow for the timely and safe re-start of normal operations once the Order is lifted. Employees from the Quebec operations will continue to receive their base remuneration through April 13, 2020. The Company will continue to communicate with the Government of Quebec to ensure compliance with its order and will continue to discuss procedures to potentially increase activities at the Company’s operations while having regard to the health and safety of our employees and communities.
In Nunavut, the Company will be reducing activities at the Meliadine and Meadowbank operations. At Meliadine, the Company is evaluating scenarios to continue limited underground activity and milling operations. Existing ore stockpiles at Meliadine are sufficient to support milling activity for approximately 40 days. At Meadowbank, the focus will be on continued ramp-up of maintenance activities and water management as needed for the upcoming freshet (spring melt). These activities at both Nunavut mines, are expected to position the Company to achieve a timely and safe ramp up of normal operations once all restrictions are lifted. Affected employees will continue to receive their base remuneration through April 13, 2020.
At this time, Agnico Eagle’s Mexican and Finnish mines continue to operate at normal levels. The COVID-19 pandemic is a rapidly evolving situation and the Company will continue to assess its mining operations in each of its regions on an ongoing basis.
2020 Guidance and Financial Liquidity
With the reduced production activity at the Quebec and Nunavut operations, together with the uncertainties with respect to future developments, including the duration, severity and scope of the COVID-19 outbreak and the measures taken to contain the outbreak, Agnico Eagle is withdrawing its full year 2020 production and cash costs guidance. Payable gold production in the first quarter of 2020 is expected to be approximately 400,000 ounces (after factoring in the expected reduced production volumes in the Abitibi and Nunavut operations resulting from the measures discussed above). However, gold sales could potentially be impacted by challenges with transport and refining.
As a cautionary measure given the current uncertainty with respect to the COVID-19 pandemic, in March, 2020, the Company drew down US$1.0 billion on its US$1.2 billion unsecured revolving bank credit facility. The Company has no current plans to use the funds, though a portion may be used to repay a portion of the US$360 million 6.67% Series B Notes due April 2020. The Company will also be reviewing its 2020 sustaining and growth capital budget with a focus on reducing expenditures.
About Agnico Eagle
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its operating mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these countries as well as in the United States and Sweden. Agnico Eagle and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.