AGNICO EAGLE MINES LTD Q1 2026 earnings call

Thank you, Vincent. Good morning, and thank you for joining our Agnico Eagle first quarter 2026 conference call. I'd like to remind everyone that we'll be making a number of forward-looking statements, so please keep that in mind and refer to the disclaimers at the beginning of this presentation. Next slide, please. We're pleased to announce a solid start to the year, with production slightly above budget and with costs in line with our guidance. This solid operating performance, coupled with exceptional gold prices, has allowed Agnico Eagle to announce yet another quarter of record net income driven by record operating margins. We are reiterating 2026 production guidance, with production expected to be weighted approximately 48%, 52% between the first and second halves of the year. We're also pleased to re-reiterate our cost guidance for 2026.

This is no small task given the uncertainties and pressures in the market over the past several weeks. As you'll hear on this call, this has been a strong quarter across all of our businesses. Solid operations, strong progress on moving our growth pipeline forward, continued exceptional exploration results, as mentioned, another quarter of record financial results. My team will go through all of this in more detail in a moment, let me outline and summarize what I believe are the three key messages that are important to take away from this call. one, as mentioned, we're off to a good start to the year with solid operating performance, delivering record operational and financial results. Record mill throughput at Macassa, record development rates at Meliadine, record pit tonnage at Detour.

We're delivering these solid operating results while doing an excellent job controlling costs, leveraging off our relentless focus on cost control while benefiting from certain structural cost advantages that derive from our business model, including, for example, in both Ontario and Quebec, where we produce the majority of our gold, all of our electricity is either hydro or nuclear and really not exposed to changes in fuel and diesel prices. With regards to Nunavut, where we do generate our own power through diesel, we've got a lot of that diesel hedged both by necessity because we have to bring the diesel up in advance through a short barge season, and we have it stored up there, but also by some very smart and proactive hedging by our treasury department with regards to diesel exposure.

We've also got the benefit of lower employee turnover and the reliable supply chain that comes from being the best customer for decades in the safe regions in which we operate. Two, we continue to strengthen our financial position and to increase returns to shareholders. This quarter, we paid a $1.3 billion 2025 tax catch-up. We distributed $375 million to shareholders. We invested almost $400 million into our high-quality growth projects, all while increasing our cash position by almost $250 million. At these gold prices, we will increase our share repurchases, and we are increasing our normal course issuer bid to $2 billion.

Three, and perhaps the most important takeaway, we continue to aggressively reinvest in our business, into the best pipeline in the industry, into projects that deliver exceptional returns at relatively lower risk, and we are making steady progress, in many cases, ahead of schedule. Dom and Natasha will spend some time talking about the projects they're moving forward to increase production at Agnico Eagle by up to 20%-30% over the next decade, including Detour to 1 million ounces, Malartic to 1 million ounces, Hope Bay, Upper Beaver, and San Nicolas. In addition, with the expected consolidation of our Finnish platform, we now see a path to further growth that comes from building a 500,000 ounce a year multi-decade platform in what we believe to be the most prospective land package in Northern Europe.

He will spend some time going over the some of the continued great exploration results he and his team have generated, focusing on Detour and Malartic, but he'll also spend a bit more time talking about this Finnish land consolidation and what he and his team see as a long-term potential well beyond the Ikkari project. Our strategy remains focused on safe, responsible mining, focused on operational excellence, delivering reliable, low-cost production. We have the best land packages in the most prospective and safest gold jurisdictions in the world. We have a path to industry-leading production growth over the next decade. Our execution of delivering this growth remains on track, and at these gold prices, we think we can deliver this growth and reduce share count at the same time.

Before I turn the call over to Jamie, I need to spend a moment on safety. Tragically, we've had two fatalities over the past five months. This is not acceptable. I recognize and I accept that the responsibility for the safety of our people rests ultimately with myself and with my team. We've mobilized our teams to reinforce across our company and at all levels and to all employees our commitment to not only deliver on our guidance, but to do so safely and responsibly. There is nothing more important than the safety of our people and our communities, and we commit to do better. With that, I'll turn the call over to our CFO, Jamie Porter, to review our 1st quarter operating and financial results.

Thank you, Ammar Al-Joundi. As highlighted earlier, we delivered another strong financial quarter, driven by solid operational performance and continued leverage to higher gold prices. We had several record financial results during the quarter, including adjusted net income of approximately $1.7 billion or $3.41 per share, and adjusted EBITDA of just over $3 billion. We generated about $730 million of free cash flow in the first quarter. This is particularly impressive given that we paid roughly 50% of our expected 2026 cash taxes totaling $1.8 billion in the quarter, of which $1.3 billion had been previously disclosed as related to our 2025 tax liability.

First quarter gold production of approximately 825,000 ounces was actually slightly better than planned, with the lower production year-over-year reflecting mine sequencing at LaRonde, Macassa and Fosterville. With the first quarter representing about 24% of the midpoint of our annual guidance in production weighted to the second half of the year, we're well-positioned to meet our full-year production targets. total cash costs were $1,093 per ounce, and all-in sustaining costs were $1,483 per ounce, reflecting higher royalty costs associated with a significantly higher realized gold price, lower production volumes as expected, and a stronger Canadian dollar compared to the first quarter of 2025.

Importantly, costs continue to trend within our full-year guidance ranges of $1,020-1,120 per ounce for total cash costs and $1,400-1,550 per ounce for all-in sustaining costs. While we continue to monitor cost volatility, including diesel prices and foreign exchange movements, we believe our regional operating model, local procurement strategies and disciplined hedging program provide meaningful mitigation against potential cost pressures. With respect to diesel prices, our 2026 cost guidance assumes an average diesel price of $0.78 per liter. Direct diesel consumption, covering mobile equipment and on-site power generation in Nunavut, is estimated at approximately 108 liters per ounce of gold produced, representing roughly 7% of our total operating cost base.

We believe that our exposure to diesel price volatility is below industry average, reflecting the fact that the majority of our gold production comes from underground mines, which are generally less diesel-intensive than open-pit mines. The majority of our gold production is from mines located in Ontario and Quebec, which benefit from access to non-oil-based grid power. Overall, our sensitivity to diesel prices is estimated such that a 10% change in diesel prices results in roughly a $6 per ounce impact on annual total cash costs after taking into account our hedge position. We do not currently anticipate any disruption to our procurement strategy for fuel or other key consumables, and we remain comfortable with our full-year cost guidance. If we turn to slide 5, we are in the strongest financial position in the company's history.

We continue to deliver meaningful returns to our shareholders alongside further balance sheet strengthening and disciplined reinvestment in the business. During the quarter, we returned approximately $375 million to shareholders through dividends and share repurchases, representing roughly half of free cash flow. As previously announced, we intend to renew the normal course issuer bid in May on substantially the same terms with an increased limit of up to $2 billion. At current gold prices, we are still targeting returning approximately 40% of annual free cash flow through dividends and buybacks. We will also look for opportunities to offset dilution from the proposed Rupert Resources acquisition, including potentially returning proceeds from portfolio investment sales through additional share repurchases. In parallel, the balance sheet keeps getting stronger.

At the end of the first quarter, our net cash position increased to approximately $2.9 billion, giving us one of the strongest balance sheets in the sector. This strength was recognized recently by Fitch, which upgraded Agnico Eagle's long-term issuer rating to A minus with a stable outlook. At the same time, we continue to reinvest in the business, advancing our five key pipeline projects that are expected to underpin long-term production growth of 20%-30% over the next decade. We are exceptionally well-positioned in the current gold price environment with a continued focus on disciplined capital allocation and long-term shareholder value creation. With that, I'll turn the call over to Dom.

Thank you, Jamie. Good morning, everyone. In my section, I'm gonna talk ab-- the update on operation and project for Quebec, Nunavut, and Finland.

For the first quarter, a good start led by Malartic and Meadowbank on the production, we are in good position for the full-year cost and production. An important milestone in the first quarter at Malartic, where we took the first stop at East Gouldie via the ramp, approximately 1 kilometer underground. Why it's important, based on the 2023 study, we're gonna mine there up to 2042, based on what we know now, we're gonna be mining there up to 2060. Most probably, I will not be the COO at that time. We have good bench that's gonna take it from there. It's very positive. On the shaft sinking, I'm gonna talk a bit about that next slide, shaft sinking and also production ore, it's also going well.

The plan is to bring that ore to the surfaces via the shaft mid-2027. Everything is aligned. On the continuous improvement, an important milestone achieved at LaRonde. They were working on that since a couple of years to do autonomous hauling. It's a good example of leveraging the synergy into the region, using the LZ5 expertise. What is that autonomous hauling? We are taking the ore from the 3.2 kilometers underground up to 2.9 kilometers without drivers. This is a real example of a positive impact using technology. Instead of operating, let's say, or using four trucks and eight operators for day shift, for night shift, those guys in the current situation, they are able to operate effectively 10-12 hours per shift just by the time to go underground.

Using the technology, we're able to use two trucks operating by one person, one night shift, one day shift, so a total of one, and we're able to operate on a 20-hour basis. It's a clear example of using technology to improve productivity, and very good job done at LaRonde on that. Also in Finland, what we did, we took two and four people, key people from each site, from mainly Canadian operation. I mean, the GMs, the key guys in the continuous improvement, the VP. We bring them to Finland to see what they did there. It was the first time for most of the people, not just to see the reindeers, but also the Finland site.

It was about how they did it in Finland, the mindset on continuous improvement, the leadership and the tools they were using. It was also a very good opportunity to build relationship and sharing best practices through our key people into the company. Guy Gosselin's gonna talk about that, but very also happy about the Ikkari. What's going on is very positive for the Finland team. Next slide. On the growth project, at Malartic, the ramp and shaft, as mentioned, going well. The pilot hole for the 2nd shaft is done, down to 1.8 kilometer underground. No issue related to that. The study continue on the shaft two and Marban in the Wasamac study. It's progressing well, and we're looking to give you an update in September later this year.

At Hope Bay, look to the picture. We are in good position. That was our goal. We are in good position to potentially announce the construction in May with the board. The camp is ready. The fab shops are ready to welcome the construction team. The mill is empty, ready to go. We are in good position for the engineering. That was an important goal, so we're gonna be over 50%. That guarantee and give us confidence into the cost and into the schedule. We're gonna give you more detail at the visit at site for the lucky one that are coming because we're gonna have muskox on barbecue, charcoal barbecue. This is, the team is working on that. That's gonna be a good thing.

Before giving the mic to Natasha, the visit at Hope Bay, you're gonna see the picture over the first 10 years. We're gonna most probably there, be there for many 10 years. That's what Guy's gonna show you into the core shack, what is our vision onto the region. The last two-year, we focused on infilling the patch, the new deposit, and to be ready for that study. Guy is also gearing up to restart treasure hunting into the Hope Bay site eventually more next-year and the years after. On that, I will pass the mic to my great colleague, Natasha.

Thanks, Dom, and good morning, everyone. I'll cover the operational highlights for Ontario, Australia and Mexico. The regions delivered good performance to start the year. At Detour, they hit a quarterly record in tons mined, but they also had a record mill throughput for a 1st quarter with the lowest turnover, quarterly turnover that we have seen since the mine began open pit operations. Over at Macassa, the mill here also delivered record quarterly throughput as a result of the ongoing optimization initiative as we ramp up that mill towards over 2,000 tons per day by the end of the year. Despite this progress, total mill tonnage was below plan this quarter, and this was mainly a function of challenges we faced with our old paste plant while commissioning the new one, which we expect to be fully operational in Q2.

At Fosterville, they also performed very well this quarter. There was a significant step change in productivity, and that's really due to ongoing mine optimization efforts. Improvements this quarter were seen in both development and stope cycling. It was the same with Pinos Altos. The team there continues to work very hard on initiatives to safely extract the most value from their assets. Now, in terms of initiatives this past quarter, Dom spoke about our knowledge-sharing trip to Finland to help other sites understand their continuous improvement journey and really inspire them to do the same. Of course, it was really great to network, to gain alignment, to collaborate with other sites.

Another good example of collaboration between sites and really maximizing the value of our assets and our infrastructure was between Macassa and LaRonde. I just wanna take a quick second to recognize both teams here. They worked very closely together over the last few months, and with a coordinated e-effort, they were successful in receiving the approval to allow ore from the AK deposit to be transported and processed at the LZ 5 facility. At Macassa, we also successfully completed the installation of the LTE network underground. The connectivity is expected to support a range of optimization initiatives, including the implementation of a dispatch system and enabling the site to obtain short interval control.

This can enable us to make decisions quicker, to become more agile, to become more productive, and as a result, further optimize our costs. These are just a few examples of our ongoing productivity focus and our operational improvement initiatives. Moving to the next slide, I'll give you an update on the projects in Ontario and Mexico. The Detour Underground project, that plays a very big role in the plan for the complex to be a 1 million ounce producer annually. We're still in the early days of this project, but we're making very good progress, and we're advancing on schedule. We continue to advance the exploration ramp and have achieved just over 820 meters of development, reaching a depth of about 140, 147 meters.

We also began excavating the overburden for the conveyor portal, which is near the mill, and progressed work on the camp extension. To complement the planned bulk sample, we initiated a high-intensity drill program in an area being considered for mining as early as 2028, and Guy will speak to this program shortly. Over at Upper Beaver, there have been a lot of progress made this quarter with both the ramp and the shaft advancing ahead of schedule. The ramp has advanced over 500 meters in the quarter and has reached a depth of 108 meters. The shaft sinking, which commenced in the 4th quarter of last year, has already reached a depth of 382 meters.

Similar to Detour, to complement the planned bulk sample at 760 level, the high-intensity drill program continued during the quarter. Now, with respect to San Nicolas, we're waiting on the regulatory decision for key permits. In the meantime, we're continuing to advance the engineering of the critical infrastructures, which will help further de-risk and build confidence in our execution strategy. We're also continuing to continue with the drilling activities focused in on condemnation drilling and geological evaluation near the planned mine area. Finally, I'd like to close by just recognizing the teams at our operations and our projects for their very disciplined execution in the 1st quarter and for their continued focus on advancing our optimization initiatives and our key projects as we move through the year. With that, I'll turn the call over to my friend, Guy.

Thank you, Natasha, Good morning, everyone. Pleasure again to be able to report on progress we're making in exploration, as obviously it is one of the key component to be able to deliver that 20%-30% growth that we are promoting. We had an excellent quarter in terms of diamond drilling, completing 25% or nearly 360 km of drilling of our overall budget of 1.4 million meter for the year, having 127 rig in operation on mine site and key value driver project. We continue to advance in our journey in exploration to make drilling safer and more productive while maintaining a unit cost in the same order than the last couple of year, aiming to offset inflation with gain in productivity. Going to specific project, on slide 10.

In Malartic, 35 drill rigs are in operation, completing 75,000 meter in Q1. 16 underground, 13 on surface in proximity to the Odyssey infrastructure, and 6 other on regional target, including Marban deposit across the street. At Odyssey, as mentioned by Dominique, the shaft and the ramp development are progressing ahead of schedule, and the first stope is currently being mined at East Gouldie, which is quite exciting considering the discovery hole in East Gouldie was made just a couple of years ago in 2018, and that we are already there with the ramp and the shaft because of the great collaboration between the various team to turn it from a discovery into a mine in such a short period of time. This is impressive.

We continue to get strong exploration result at East Gouldie, with 6.7 gram over 36 meter on level 105. In the center of the ore body and also in the internal zone between Odyssey North and Odyssey South with a new structure that returned 9 gram over 53 meter core length. While though we do not have a full understanding yet of the true thickness of that structure, it continue to shows, the additional upside we see, both in the internal zone in, at Odyssey North and South and in East Gouldie that keeps growing laterally. On the adjacent, Marban project, lateral exploration drilling continue to the west and to the north of the proposed open pit, while we are at the same time advancing with the combination drilling program to confirm the potential location of surface infrastructure.

Now on slide 11 at Detour Lake, nine rigs completed close to 40,000 meter of drilling in the first quarter in line with our budget. Drilling was continued to focus on the western extension of the ore body to the west of the open pit, where we are contemplating to initiate mining underground early on, utilizing the exploration ramp. Some strong results, such as 8.9 grams over 14 meter at 190 meter depth and 10.7 gram over 10 meter at 500 meter depth shows a strong potential for high grade underground mineralization over a large area that extend over more than a kilometer now adjacent into the west of the open pit, where the exploration ramp is currently being developed. Briefly, at Hope Bay, as mentioned by Dominique Girard, we've had a great quarter in terms of drilling on Ice.

Thanks to the team's great winter drilling program. We started early. We've completed north of 33,000 meters of drilling as of the end of March. A full update will be provided on the May 19th press release along with the project announcement we've been talking. Finally, on slide 13 in Finland, I would like to provide some color on the recent announcement we made with an offer to acquire all of the outstanding share of Rupert and Orion Resource Partners, along with the 70% interest of B2Gold and the FinGold JV. It was a great job by our corporate development team and legal team.

With these three combined transaction adding to our current landholding, we will be consolidating close to 2,500 sq km, consistent with our corporate strategy of focusing on regional, leveraging our 20 years of experience in exploration, permitting, mine construction, and operation with a strong social license to operate in the most fertile greenstone belt in Europe. By combining the Finnish workforce of Agnico along with the workforce of Rupert and Orion and removing property boundaries, we will aggressively explore in the near-term the immediate lateral extension of the Ikkari deposit, as well as the multiple occurrences that were identified on the Fingold JV and the large land position owned by Rupert and Orion. Personally, it reminds me a lot about Kittila mine acquisition in 2005.

At the time of the acquisition, there was approximately 2 million ounces down to less than a kilometer. 20 years later, at Kittila, it grows down to and still open at depth below 2 kilometer with a global endowment of 10 million ounces, considering past production reserves and resources known so far. I see a similar potential on the structure that hold the Ikkari deposit. As these mineral system are similar to our Canadian Greenstone Belt that have demonstrated extended vertical geological fertility. By this transaction, we are aiming to deliver in Finland a platform for multiple mine over multiple decade, similar to the 3 region in Canada that are Quebec, Ontario, and Nunavut, where we will be leveraging our regional expertise. On that, I will return the microphone to Ammar for some closing remarks.

Thank you, Guy. Thank you, Jamie and Dominique and Natasha and everyone else on our team. Really exceptional work, really tremendous results. Well done. As you can see, we continue to work hard for all of our stakeholders, and we'll continue to build off the same foundational pillars that have defined our strategy and that have served us very well over the past almost 70 years. We will focus on the best mining jurisdictions based on geologic potential and political stability. We'll be disciplined with our owners' money, making investment decisions based on technical and regional knowledge, creating value through the drill bit and through smart acquisitions where and when it makes sense. We are uniquely well-positioned with a quality project pipeline, leveraging existing assets in the best regions in the world where we believe we have a competitive advantage.

We will continue to be focused on creating value on a per-share basis and on being leaders in our industry in returning capital to shareholders as evidenced by over 43 years of consecutive dividend payments and increased share buybacks. We have a clear and executable strategy to create tremendous additional value per share for our owners well into the foreseeable future with manageable risk, leveraging off existing infrastructure and regional competitive advantages. We have the assets, we have the projects, we have the resources, and we have the people. We are making it happen right now. We will stay focused, and we will not be distracted. Thank you again for joining us on this call, and for many of you, thank you for decades of trust and support. We will always work hard to maintain that trust, and we will never take it for granted.

Operator, may I ask that we now open up the call for questions?