管理層發言
Good morning, ladies and gentlemen. My name is Vanessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Mines Limited Q2 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, then the number 2. And thank you. Mr. Ammar Al-Joundi, you may begin your conference.
Thank you, operator. Good morning, everyone, and thank you for joining our Agnico Eagle second quarter 2026 conference call. I would like to remind everyone that we will 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. My colleagues and I are pleased to report another strong quarter with not only record free cash flow generated by our operations, but also record capital returns to our shareholders. Gold production of 856 thousand ounces was, for the second consecutive quarter, above budget, with cash costs and all-in sustaining costs both within our guidance range. This is not a small accomplishment in a quarter where oil traded above $100 per barrel for much of the time. As you will hear on this call, the business is strong and we continue to move towards creating substantial additional value for our owners. This quarter, we are reporting solid operations, excellent progress on our growth pipeline, continued exceptional exploration results, all with yet another quarter of record financials. My team will go through all of this in more detail, but let me outline and summarize what I believe are the key messages that are important to take away from this call. The first key message is that we continue to work hard every day not only to deliver what we promise, but also to continue to take every opportunity to improve our business step by step, quarter by quarter. For example, this quarter, I am pleased to highlight that at Macassa we had record skip tonnes, record mill throughput, and the first processing of our AK4 at LZ5. At Detour, record total mine tons and record daily mill throughput at Meliadine. Record mill throughput at Kittila. Individually, these may seem like small accomplishments, but when we step back and look at the big picture collectively, this quarter we have had record mill throughput at mines representing slightly more than half of our total production. In and of itself, record mill throughput at half our mines represents substantial continuous operational improvement. But the real message we want to convey is that these improvements are an illustration of the culture and the dedication of our teams — a culture of commitment to always do the best they can and then to look to do even better, even when things are going well, even when gold prices are high, and even when we are delivering record financial returns to our owners. I have to tell you, sincerely as a CEO, that makes me very proud. To be sure, mining is a challenging business, and Agnico Eagle is not immune to these challenges. For example, on July 1 we had a rock movement in the wall of our Barnat pit. Of course, this was a disappointment. But I am proud of our team and, importantly, of our systems and our processes, including the systems and processes we had in place to track potential wall movement, which allowed us to move quickly to protect both our people and our equipment. The safety of our people remains the most important thing always. I am proud that within 24 hours of the event we had a good understanding of its impact and we were able to communicate to our owners and to the market that we were still able to forecast 2026 production within our original guidance range of 3.3 million to 3.5 million ounces, albeit towards the lower end of that range. Agnico Eagle is not immune to the challenges common to our business, but we have a long and demonstrated history of managing these challenges well, and we have a long and demonstrated history of recovering from these challenges quickly. The second key message I want to convey this morning is that we continue to aggressively reinvest in our business into projects that deliver exceptional returns at relatively lower risk. We are making steady progress, and in many cases we are well ahead of schedule. We have announced the go-ahead of our Hope Bay mine; this will be a world-class low-cost mine producing between 400 and 450 thousand ounces a year that we expect to operate for decades. We had the opportunity to tour this project with our board a few days ago and while we are all impressed with the very real and substantial progress, I think what really stood out was the excitement of the team regarding the potential on these two 80-kilometer greenstone belts. We really are just starting to scratch the surface of the potential at Hope Bay. Dominique and Natasha will spend some time talking about continued progress in moving both Malartic and Detour to 1 million ounces of yearly production, and moving forward on Upper Beaver, another high-quality low-cost, brand-new mine in our backyard. Jussi, who runs our Northern European business, will talk about our recent consolidation of what our team believes to be the most prospective exploration belt in the Nordic region and his team's plans to more than double that business to over 500 thousand ounces of yearly production. We are making excellent and steady progress on our target of increasing production by up to 20% to 30% over the next decade and that target was before the Finland land consolidation. We have the strongest pipeline in our history; we have the strongest pipeline in the business. And there is more to come. We are only in the third or fourth inning here. We remain long-term bullish on gold, and we remain heavily focused on steadily increasing gold production per share for years and for decades to come. The third key takeaway is, again, continued exceptional exploration results. Exploration is the lifeblood of our business and Guy will spend some time going over some exciting holes that are both confirming and expanding our key mines and our organic growth projects. As Jamie, our CFO, likes to say, we are in a gold price environment where with strong operating performance and with good cost control we are able to do it all. We are able to reinvest in our business to support the best organic growth in the industry. This quarter we invested over $800 million in advancing key projects and in capitalized exploration. This quarter we were able to opportunistically pursue strategic M&A opportunities that add value per share and that improve the quality of our business. This quarter we consolidated the best land package in Northern Europe including using almost $600 million in cash. We continue to strengthen the balance sheet: in the second quarter we added over $350 million of cash to reach a record $3.5 billion of cash on hand. All of this while delivering another record quarter of returns to our shareholders. In the second quarter we delivered $625 million to our owners between our dividends and our $400 million of share repurchases. The second quarter of 2026 has been volatile — volatile geopolitically, volatile economically, and certainly volatile gold prices. But even in this environment our team was able to deliver the steady reliable performance that Agnico Eagle is known for, delivering solid results across the business. But before I turn this call over to the rest of our team to talk about this in more detail, I need to spend a moment to talk about the very sad fatality we had since our last call. Daniel Gero, partner of Michele and father of two teenage girls, tragically lost his life while on the job on May 1. Every fatality is devastating not only to the families involved, but to all the people they have touched in their lives, including friends and colleagues here at Agnico Eagle. In the almost 70 years of operation from 1960 to today we have had a total of 23 fatalities and three of these have occurred in the last year. I will repeat what I said last quarter: fatalities, every single one, is not acceptable. I want to assure all of you, and more importantly I want to assure all our people who come into work every day working hard for the company, that we are more focused on safety than ever and that taking care of all of you remains our number one responsibility. Again, and with great emphasis, there is nothing more important than the safety of our people and of our communities. I will now ask James R. Porter, our CFO, to discuss our Q2 financial results.
Thank you, Ammar. This was another solid quarter for Agnico Eagle reflecting our high-quality asset portfolio, solid operational execution, and continued leverage to the gold price. Strong operational performance and disciplined cost management combined with a favorable gold price environment to drive record free cash flow of over $1.3 billion for the quarter. We also delivered excellent financial results, generating adjusted net income of approximately $1.5 billion or $3.07 per share and adjusted EBITDA of approximately $2.7 billion. Gold production was ahead of plan at 856 thousand ounces, reflecting a very strong finish to the second quarter. This outperformance was led by Detour Lake, Kittilä and Fosterville, reflecting the benefits of continuous operational improvement at these sites. We are extremely proud of the work of our teams who remain focused on productivity initiatives, operational optimization, and disciplined cost control. These efforts translate into another quarter of solid cost performance. Total cash costs were $1,054 per ounce and all-in sustaining costs were $1,460 per ounce, below our costs in the first quarter, below the midpoint of our guidance ranges, and hundreds of dollars below the industry average. This cost control is particularly impressive given the inflationary pressures we are seeing across the industry. Overall, our business continues to demonstrate the consistency and resilience that have long differentiated Agnico Eagle, allowing us to translate strong gold prices into record cash generation and record shareholder returns this quarter. We turn to Slide 5. We remain in the strongest financial position in the company's history. Our strong balance sheet and record cash generation allows us to maintain a balanced and disciplined approach to capital allocation — creating value through shareholder returns, investment in future growth, and continued financial strength. As Ammar mentioned, and as I like to say, we are in a gold price environment where we are truly able to do it all. We generated approximately $3.5 billion of operating cash flow in the first half of the year. Approximately 30% of that was returned to shareholders through dividends and share buybacks, with a record $625 million of shareholder returns in the second quarter alone. Nearly 40% of the operating cash flow year-to-date was allocated to sustaining and growing our business through investments in our organic pipeline. We invested over $800 million in capital expenditures and capitalized exploration in the second quarter alone, advancing our five key value driver projects that will support long-term production growth of 20% to 30% over the next decade. Another 15% of our cash flow was used to support our acquisitions in Finland. These acquisitions strengthen an already high-quality regional business and create additional opportunities to generate value from our established operating presence in the region, which Jussi, our vice president of Europe, will discuss later in the presentation. The remaining 15% of our operating cash flow was applied to continue strengthening our balance sheet. We are paying healthy returns to our owners while positioning the company for long-term per-share value creation. Our balance sheet continues to grow stronger. At the end of the second quarter our net cash position increased to approximately $3.3 billion, reinforcing our position of having one of the strongest balance sheets in the sector. This financial strength was recognized in April when Fitch Ratings upgraded Agnico Eagle's long-term issuer default rating from BBB+ to A-. At the beginning of the year we set a target of returning approximately 40% of free cash flow to shareholders. Through the first half of the year we have exceeded that objective, returning approximately 48% of free cash flow through dividends and share repurchases. Given our strong free cash flow generation in the current gold price environment, we see the potential to exceed our original target for the full year. During the quarter we monetized a portion of our equity investment portfolio, creating additional flexibility to accelerate share repurchases. We continue to view buybacks as an attractive use of capital, and again at current gold prices we see the capacity to continue to buy back shares while investing in growth and maintaining a best-in-class balance sheet. Overall, we are exceptionally well positioned in the current gold price environment with record cash flow supporting record shareholder returns, continued balance sheet strength, and ongoing investment in our industry-leading growth pipeline. This balanced approach remains a key differentiator for Agnico Eagle and positions us well for long-term value creation. With that, I will turn the call over to Don.
Thank you, James. Good morning, everyone. In my section I will cover the highlights for Québec, Nunavut, and Finland. Overall, the quarter ended in line with plans and it is great to continue to see all initiatives ongoing to control costs. In Québec, Canadian Malartic is facing more challenges but thanks to the team, led by Daniel Serge and Justine, for their management of those challenges and their dedication. Overall, Canadian Malartic finished the first half on target even with some challenges. Concerning the Barnat pit wall, I will explain what the next steps are. First, all the rock that moved from the wall, approximately 1 million tons, is going to stay there. So the first step is to build some safety berms to allow us to get back to mining in the Barnat pit. Second is to build access ramps. We already built one along the south wall to get back to that mining area, but we still need to build some access inside the pit and also to finish the berms. The berm heights will be between 15 and 25 meters high to catch if there is ever other rock that comes from that location. So we are planning to do those mitigations in Q3, and we expect to resume mining in Q4. For Nunavut, the first half of the year production is also on plan. Good news: the spring migration is over and it went very well. Today, six of the nineteen vessels have already been received from our sealift. An interesting highlight Ammar mentioned: Meliadine achieved a quarterly record of over 7,000 tons-per-day average during the quarter; the target was 6,500. For Finland, Kittilä delivered an excellent quarter both on production and cost. Thanks to the entire team for their outstanding accomplishment. It is especially timely as we are expanding our presence in Finland; it is good timing to give them a bigger playground. Jussi will provide more details shortly. On the optimization initiative, I would like to highlight the LZ5 team that keeps improving performance when we do autonomous trucking. During the fully automated shifts — which are Friday, Saturday, Sunday night, when our employees would rather be at home — this is when we do automated trucking or mining. They managed to increase productivity by 65% in the first half of the year, meaning 65% more tons hauled per shift by the truck. They did that by improving the network communication, the software, and using better technology, such as a scanner that can see or analyze in 3D instead of 2D. Previously, we had to stop the sequence 1,700 times per shift; right now it is down to 700, and it keeps improving. Good job, team. Next page. On the project pipeline at Malartic, we continue to advance our field and mill vision to potentially grow the annual production towards 1 million ounces per year. Two important milestones: we completed the first phase of the shaft sinking three months ahead of schedule. The last bench was taken on July 9 reaching approximately 1.6 kilometers underground. So now we are moving to the hoist changeover to get back to production mode; that is starting in Q3, and we are still planning to start the commissioning of this production shaft in Q2 2027. Another important milestone: we extracted our first two stopes where the second stope is still ongoing, and the team is going through the typical learning of that first mining phase. We will mine another four stopes during the rest of 2026, and we are planning to mine 30 in 2027 and above 90 in 2028. So you can see the ramp up and this is why we need the production shaft to take those tons to the surface. At Hope Bay, we have reached our target of the detailed engineering, which was the trigger for us to give the green light for construction in May. I have the privilege to work with a great team led by Christopher, Kishan, Marc-André, and also working well with the exploration guys Conrad and Ashley who worked together to develop a very strong study, and this is where we are. We know we are going to deliver that project well. I am really confident we are going to deliver that project safely, on time, and on cost. We had the privilege to also expose the project and our people to the board of directors earlier this week. There is still a lot of work to do, but we are in a good position. And why do I feel we are in a good position? Because today we are over 70% of the engineering completed. Because the team that are building it and planning it already built Meliadine, Meadowbank, and Amaru projects in the Arctic, and we have more than 15 years of experience building and operating in the Arctic. One of the critical paths of the project is the logistics and currently we are ahead on the delivery at Bécancour of receiving the material, which is the port where the vessels start. The first vessel is going to leave the port to Hope Bay on the coming weekend, around August 10, and should be at Hope Bay soon after. So we are on target. We are going to have nine of those vessels going to Hope Bay. Also, as you can see in the picture, three new wings of the camp are ready so we can ramp up the workforce. The construction schedule is such that we will close the building before the winter and work internally. Right now we see good quality contractors at the construction site. We are looking more to the West, so half of the construction crew is now coming from the West, and we really welcome those new resources — this is helping us to deliver. Guy will give you more information on what we see in exploration, but Hope Bay is a world-class deposit and in the hands of a world-class team. Hope Bay will create value for decades to come for shareholders, employees, and the Nunavut community. On this, I will pass the mic to Jussi, who will talk about our Finland hub.
Thank you, Dominique, and good morning, everyone. I am Jussi Saaskilahti, Vice President of Europe, and I have been leading our European business over the last ten years. Today I will talk about our Finland platform and our growth plans in the region. As you know, the Kittilä Mine is the largest gold mine in Europe, and even after 17 years of operation it still has substantial upside potential. Marr Zone exploration continues to deliver exciting results. The deposit remains open both along strike and at depth, and I am confident that Kittilä can continue operating for another 20 years. Investment programs, including shaft, mill expansion, and surface infrastructure investments were completed in 2023. Since then we have focused on operational excellence, cost control, and productivity. Our results are very positive: comparable cost per ton excluding royalty and mining tax in 2025 was lower than in 2024, and again first half of 2026 unit costs are lower than first half 2025. Maintaining a declining unit cost trend despite inflationary pressures and a deepening underground operation is not easy, and is clear evidence that systematic productivity work makes a difference. One recent example of productivity gains in Q2 was all-time high mill throughput which helped us to achieve all-time high revenue, operating margin and cash flow in the history of Kittilä. All in all, I think that Kittilä is in the strongest position it has ever been. We have an experienced management team that has worked for Agnico for years, gaining experience not just in mining but also building strong relationships with local authorities, communities, and other key stakeholders. Based on that experience, we believe we are in a good position to move forward with growth opportunities also outside of Kittilä. Over the last ten years Agnico has made several strategic investments in promising exploration and development companies in Finnish Lapland, strongly strengthening Agnico's strategic position in the region. In Q2 the time was right for a more significant consolidation transaction which will solidify Agnico's position in Finland for decades to come. Based on years of work and thorough analysis, our conclusion was that the best potential for value creation can be achieved by acquiring three companies: Rupert Resources, Orex Minerals, and the Fingold JV. As a result of these transactions, Agnico gained a very strong position in the Central Lapland Greenstone Belt, which we believe is one of the most prospective areas for gold exploration. In addition to a highly prospective land package covering approximately 2.5 thousand square kilometers, a key component of this transaction is the Ikkari project, which is the most significant gold discovery in Finland since the Kittilä mine. In June, after closing the transactions, we welcomed 44 new colleagues and the integration work has started very well. The most important priority is that the field teams begin working seamlessly together while we also continue integrating business processes and systems. At Ikkari, consolidation transactions removed prior property boundary constraints, and we are now working on project optimization, including an unconstrained open-pit scenario. We expect the results of the optimization work will be available by the end of 2027. Condemnation drilling to support surface infrastructure planning started in June. Exploration drilling will continue near the Ikkari deposit with three diamond drill rigs in August, increasing to five rigs by the end of the year. In addition to project optimization and exploration activities, we are also advancing work on the environmental impact assessment and land use planning. Overall, we see great potential in Finland. By optimizing Kittilä, advancing Ikkari, and unlocking the exploration upside across our 2.5 thousand square kilometer land package, we are building a business with the potential to grow towards a half-a-million-ounce-per-year platform. Our team is excited for this opportunity and has the ability and the experience to deliver on the vision. With that, I will pass the call over to Natasha.
Good morning, everyone. I will cover the operational highlights for Ontario, Australia, and Mexico. The regions delivered another strong quarter led by excellent performances at Detour, Fosterville, and Pinos Altos, all of which exceeded the plan. The results reflected the operational and cost improvement efforts underway at each site, all aimed at extracting the full potential of our assets. All the initiatives that Dominique spoke about take time, effort, and persistence by the sites to implement, and now we are seeing the benefits of that work with the records achieved this quarter. We just want to say thank you to all our teams across the operations for their commitment in driving these results and for continuing to create long-term value for our shareholders. At Detour we achieved another consecutive quarterly record in tons mined, and this is the result of productivity initiatives started last year which are now paying off. An example is increasing shovel productivity by increasing the amount of blasted material inventory that is available, and getting higher shovel productivity by diligently improving our loading practices. Detour also had a record in tons per day at the mill as a result of incremental improvements now that the plant is operating at a stable state. Couple that with their lowest total medical aid injury frequency in the first half, and it made for a very strong first half for the site. At Detour we continue to advance initiatives to improve our overall mine-to-mill performance. We have the newly created Integrated Operating Center, the IOC, at Detour, aimed at improving the decision-making process by connecting the mine operations, the mill operations, the planning, and the maintenance. Basically, the IOC is an operational hub. The initiative here is to break down silos, to integrate people, processes, and technology, to enhance our safety, to enable quicker, better decisions, and to help optimize performance from the mine to the mill. Over at Macassa, the mill delivered another quarter of record throughput, which was expected as the team continues to work on optimization efforts as we ramp up towards 2,010 tons per day by the end of the year. Fosterville also performed well. The commissioning of the primary fans underground in the first quarter and significant step changes in development — a 514% increase in development rate year over year — reflect a number of productivity initiatives that started last year, including improving the ventilation system, training and retraining our operators, and enabling independent blasting when we can. Together, these initiatives are increasing development productivity and also increasing our operational flexibility by opening up more mining areas and positioning Fosterville to sustain higher throughput rates in the mill in the coming years. And these are just a few examples of our ongoing focus on productivity and operational improvement. What is particularly encouraging is that many of our initiatives are still in their early stages and we see additional opportunity to further optimize and improve our overall mine and mill performance in the periods ahead. Now moving to the projects in Ontario and Mexico. I will start with Detour and the site's progress towards becoming a 1-million-ounce producer annually. Of course, the Detour Underground project plays a big part in this plan. We are still in the early days of the project, but we are making good progress and advancing on schedule. We continue to advance the exploration ramp and have achieved just over 1,000 meters of development, reaching a depth of 180 meters. We also continue to excavate the overburden for the conveyor portal near the mill and progress the camp expansion. To complement the bulk sample that is planned, we continue to progress with the high intensity drill program in an area we are also considering to mine as early as 2028. Guy will speak to this program shortly. Over at Upper Beaver, progress on both the exploration ramp and shaft continued this quarter. The ramp development coupled with the lateral development advanced over 600 meters in the quarter, reaching a depth of 165 meters. Shaft sinking, which commenced in Q4 of last year, reached a depth of 470 meters. The high intensity drill program that is focused in Upper Beaver between the 500- and 600-meter depth was also completed during the quarter ahead of schedule, and we now have an improved understanding of the mineralized zones in this area. Following these results we are now evaluating the potential for an expanded exploration program by extending the shaft to support infill drilling and possible mineral resource expansion at depth. Finally, over to San Nicolás. We are very happy to share that we reached an important milestone: the joint venture received the approvals for both the change of land use and the environmental impact assessment permit. This now allows the joint venture to advance on supplementary permits needed before construction can commence. As part of that, the JV will of course take into account the terms within the EIA approval, and in parallel the JV will also continue to advance detailed engineering and work on critical infrastructure to reduce the execution risk and better refine our capital cost estimate. The team will also work to accelerate construction and operational readiness activities to position the project for a potential sanction decision. Overall, we continue to make really good progress across our projects this quarter, and we remain excited about the significant exploration upside emerging across our portfolio. With that, I will turn the call over to Guy.
Thank you, Natasha, and good morning, everyone. We had another very strong quarter in terms of exploration drilling, safely completing almost 400 kilometers of diamond drilling for the quarter for a year-to-date total of 760 thousand meters. We had 126 drill rigs operational across mine sites and key value driver projects, well on our way to achieving our ambitious budget of 1.4 million meters for the year, aiming to replace and grow our global mineral reserves and resources per share at the end of the year as we have been doing for the last several years in a row. Diving now into some specific projects on slide 11: In Malartic, 21 rigs are in operation, completing almost 61 kilometers of drilling in the second quarter and close to 140 kilometers year-to-date from underground drill platforms as well as surface drilling into the extension of the East Gouldie deposit, some regional targets around Canadian Malartic, and the adjacent Marban project. We continue to get strong exploration results in the East Gouldie deposit at depth with 3.8 grams over 19.2 meters in hole 354 at 1,950 meters below surface in the lower portion of the deposit, and in the upper eastern portion of East Gouldie in Drill Hole 62 with 5.1 grams over 14.3 meters at a 915-meter depth from level 75. To the north, in the Odyssey internal zone, we continue to get very exciting results in a structure known as the Artemis Zone in Hole 13 drilled from underground at Level 57, with multiple intercepts reported and the most significant returning 13.7 grams over 14.6 meters core length at around 1,000 meters below surface. This supports our view of additional exploration upside from the internal zone at Odyssey close to the mine infrastructure as we continue to add drilling from underground. On the adjacent project at Marban, four drill rigs completed 100 drill holes year-to-date, continuing condemnation and some exploration drilling to confirm the potential location of the surface infrastructure related to the project. Now on slide 12: At Detour Lake we completed close to 53 kilometers of drilling in the second quarter for a year-to-date total of 92 kilometers of drilling. Drilling was dedicated to advancing the high intensity drilling program in Domain 54 and to exploration close to the exploration ramp and continuing resource expansion towards the west at depth and in Domain 54 close to the exploration ramp west of the open pit. High intensity drilling is aiming to confirm the geological resource model by reducing the drill spacing to 20 meters. Some strong results were reported such as 2.5 grams over 62 meters including 15.2 grams over 5.9 meters in Drill Hole 1,130 at a 275-meter depth. While in exploration in the western extension of the deposit, towards the current extreme west of the ore body, Drill Hole 1,290 returned 20.8 grams over 4.8 meters at around an 840-meter depth, with a deposit that remains open towards the west and at depth. And finally at Hope Bay on slide 13, we drilled close to 37 kilometers of core in the second quarter with six drill rigs for a year-to-date total of close to 70 kilometers, ahead of our budget and well on our way to complete and exceed our 110 kilometers of drilling budgeted at Hope Bay for 2026. We were on-site earlier this week as mentioned by Ammar and Dominique with the board, and it was exciting to see some passionate people and the large number of exploration targets that are being developed across the belt, supporting our view of major long-term potential for this belt. Resource-to-reserve conversion in field and exploration drilling in the Patch 7 area continues to be the priority with some very exciting results such as in drill hole 478, which returned 28.8 grams over a 21-meter core length. When considering capping and estimated true width, it is about 15.2 grams over 15.6 meters, but it shows how spectacular local grade can be. It is quite significant to see those multiple double-digit grade and double-digit meter widths in that Patch 7 area. I am also pleased to report that we have remobilized two drill rigs at the Boston deposit and have reopened the camp with the aim to complete 7,000 meters this year. All of the drill holes so far that we have seen visually report strong visible mineralization with assays expected to be available for the third-quarter news release in October. So stay tuned for more news coming out of the exploration at Hope Bay. Before passing it back to Ammar, I would like to comment as well on the Finland consolidation. I share Jussi's excitement and the team enthusiasm around the acquisition. We are starting to ramp up activity with some condemnation drilling already underway and expect to have up to five drill rigs by the end of the year to initiate the investigation of the extension of the known ore body as well as the numerous exploration targets on the large land position. I would also like to take the opportunity to welcome our new colleagues from Rupert and Orex Resources who have joined the Agnico Eagle team in our quest to test the full potential of this underexplored greenstone belt that we consider to be the most prospective belt in Northern Europe. On that, I will return the microphone to Ammar.
Thank you, Guy. Very, very exciting stuff as always. Well done. And thank you to the rest of the team and to all of our people for delivering another strong quarter. As you can see, we continue to work hard for all of our stakeholders and will continue to build off the same foundational pillars that have defined our strategy and have served us well for almost 70 years. We will continue to focus on the best mining jurisdictions based on geologic potential and political stability. We will 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 high-quality project pipeline leveraging existing assets in the best regions in the world where we believe we have a competitive advantage, and importantly, we will continue to be focused on creating value on a per-share basis and on being leaders in our industry and returning capital to shareholders as evidenced by over 43 years of consecutive dividend payments and increasing share buybacks. We have a clear and executable strategy to create 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. 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 now ask that we open up the call for questions?
分析師問答
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number 2. And if you are using a speaker phone, please lift the handset before pressing any keys. We have our first question from Joshua Wolfson with RBC Capital Markets. Please go ahead.
Yes. Thank you very much, operator. Just going back to Barnat for a moment. You talked about the 1 million tons of material that slid. Is there any way the company can quantify the volume and grade of material that would be inaccessible as a result of that slip? And then when you think about maybe beyond remediation but any potential offsets, is there any way to incorporate more low-grade material in the mine plan to offset some of the impact over the course of the next three years? And even maybe beyond that, are there other assets in the portfolio that are being maybe rethought in some way to look at offsets? Thank you.
Well, maybe I will jump in there, Joshua, and thank you for the question. So clearly, we are going to be milling the low-grade stockpile, so the mill is going to be busy. We are going to be able to get back into parts of that pit. But I think it is worth noting, to your point of offsetting, that pit has already produced a lot more gold than the original plan had. The team has done a really good job of looking at opportunities. Based on everything you have heard, we are not only finding a lot more gold throughout the company, we are also improving our operations on a continuous basis. So it is disappointing — we are at the very end of the mine life for that pit — the team did everything right. And as I tried to say on the call, we do have a long track record of recovering from these operational issues when they happen.
Thank you.
We have our next question from Bennett Moore with J.P. Morgan. Please go ahead.
Good morning, Amar and team. Congrats on another strong quarter and thank you for taking my questions. Maybe a question for Guy: could you unpack the drill results a bit further? They looked quite positive — the upper eastern extension and the Artemis zone. I believe this is near existing underground infrastructure, so I am wondering if there is potential opportunity with more drilling to bring forward some of these higher-grade zones in the production profile?
Yeah. Thanks for the question. To start with, in the upper eastern portion of East Gouldie, that is an area that we had identified earlier as a higher-grade area that we are focusing on converting. That area to the east could offer maybe another mining area in the upper part of the mine, so that is currently why we are focusing on this specific area being closer and shallower to the current infrastructure. That is why we are making a big push to bring it to reserve progressively, and we are going to see some additions as well at year-end in this area as well as in the internal zone.
The internal zone is a bit more subtle. We know there was some potential between Odyssey North and Odyssey South. Now that we are underground with all of the access and we can conduct more drilling, we are starting to better understand the geometry of these zones in order to start putting additional thinking on how to approach them and mine them. But as you described, they are also fairly close to the north of the shaft, so they will provide optionality and another mining area in the near future. This gets exactly to the question about how do you replace things. Malartic is sort of unique in that there is a lot of gold and as we expand underground — and this is early, this is just us talking, so do not put it into your models yet — but to the extent you have high-grade underground ore close to surface that is accessible in shallow areas of the operation, you can move more of that high-grade tons into a mill and if you are bringing in material at 5 grams and displacing stockpile stuff at 0.5 grams, it gives you an awful lot of flexibility. Again, it is very early but it does show the quality of the asset and the quality of the team's thinking.
Thanks for that color. And then real quick on San Nicolás: it is nice to see the EIA and land use permit come in. I was wondering if you could walk us through where detailed engineering stands, if there were any contingencies tied to the approval, and how we should think about next steps in terms of permits and studies. Thank you.
Thanks for the question, Ben. Yes, the joint venture is very much appreciative of working with the Mexican authorities as they conducted a thorough assessment of the process and ensuring that our partnership is committed to the responsible development and construction of San Nicolás. That being said, it is a fairly large document and the approval process is extensive. We are looking at understanding the terms of the approval, so that will take some time before we apply for the supplementary permits. In the meantime, though, we are continuing to advance the engineering to de-risk the project. It is currently at 45% engineering, and at the same time we are continuing to accelerate the construction readiness plan and the operational readiness activities to ensure we have all the processes and resources in place before we make a sanction decision.
Thank you.
We have our next question from Fahad Tariq with Jefferies. Please go ahead.
Hi, thanks for taking my question. One of your peers talked about increased labor costs and contractor costs in Northern Ontario and I saw in your release there was a mention of higher labor costs but that is more year over year. Can you just touch on what the labor dynamics are looking like in Ontario specifically? And if you have the latest numbers on retention rates, attrition, etc., that would be super helpful. Thanks.
Sure. I can start. In Ontario, in terms of our internal labor we are running around a 4% year-over-year increase. Workforce is a challenge across our operations, and we have a focus on retention and we have a centralized recruitment hub to ensure we have a detailed plan and growth plan for specific personnel we need. We are working actively to hire internally. Of course, that being said, we do bring in contractors wherever needed. In terms of contractor costs, I do not see anything major in terms of an increase to our contractor labor costs at this time.
And I would add, Fahad, that's a very important question. We have been in these places for decades — labor is going to be a challenge over the next 10 or 15 years. We have put a lot of effort into it. We have the lowest turnover of any of our peers, probably half the turnover of our peers, and turnover over the last year we have reduced. But we are going beyond that. For example, in places where there is no housing we are working on projects to build permanent homes in communities, not just camps, which helps attract people. At Hope Bay the team has done a great job accessing not just the usual pools of people but we've put a big push to recruit from Western Canada and have had excellent results. It is a challenge for everyone, and I think Agnico is doing a really good job getting ahead of it.
Thank you very much.
We have our next question from Richard Garchiturina with Barclays. Please go ahead.
Great. Thanks. Good morning, Ammar and team, and thanks for taking my question. If I could just circle back to Canadian Malartic: you took the cash cost guidance up for the rest of this year for the second half. Just wondering how we should think about cash costs across the portfolio to mitigate that. And then also going forward to 2027 and 2028, does the higher cost in the second half of this year have any impact going forward? Thank you.
Yes. Thanks, Richard. It is James here. Very strong cost performance in the second quarter. We did take the cost guidance at Malartic up for the second half of the year, but we are seeing a much stronger U.S. dollar than we budgeted and guided at the start of the year, so we are getting benefit from that. You will recall we also guided at a $4,500 gold price, so we are seeing a bit of a hit on cash cost with respect to royalties. Thirdly, with respect to by-product credits, we have more conservative assumptions on our copper and silver pricing. Those are all influencing the cash cost profile. We are in the process of our multiyear budgeting and planning process now so it is premature to comment on future year costs, but we obviously will see slightly higher costs at Canadian Malartic given less production through 2027 and 2028. On an overall basis we will do what we can to offset inflation through continuous improvement and other efficiency initiatives.
Great. Thank you. And then as a follow-up, you maintained the target of 1 million ounces from Malartic. Did the Barnat incident impact the cadence in terms of how you get there? Are you looking at changes to sequencing at other deposits or pits, or how are you thinking about the bigger picture?
No. It is completely different deposits. There is no impact from the wall of Barnat to the future Odyssey underground. Barnat and Marban pit was running out, as everybody knows.
It would have run out in advance of the million-ounce ramp-up in the early thirties. Great. Thank you very much.
Thank you.
We have our next question from Lawson Winder with Bank of America. Please go ahead.
Thank you, operator, and good morning, Ammar and team. Nice to hear from you all and thanks for today's update. I guess I'll start on Detour. You have mentioned the potential to deliver some underground production in 2028 instead of the 2030 date in the last technical report. Could you give an idea of how material that could ultimately become? You also mentioned an updated mine plan for 2027 — what quarter in 2027 would you anticipate putting that out?
Hi, Lawson. In terms of ounces for Detour Underground we are looking at maybe 20 thousand to 30 thousand ounces for 2028 and 2029 each year. With respect to the update we are expecting by sometime in mid-2027 we will give an update on Detour Underground.
And James, you mentioned in your remarks about the multiyear budgeting process unfolding. Could you give a look at what you are seeing as a reasonable inflation assumption going into 2027?
Thanks, Lawson. It is pretty early as we are just starting the process. We start with our mine plans and then work through the costing. We are seeing CPI in Canada that will impact our labor and contractor costs, which is 40% to 50% of our overall cost structure. So, 3% to 4% for labor is probably not unreasonable at this time, but we will see as we get closer to the end of the year. Across the rest of our input costs there is nothing glaring, but the one thing that really stands out is diesel. We do have some exposure hedged for the back half of this year, but diesel will be the biggest cost pressure in 2027 relative to 2026. And diesel represents about 7% of our overall cost.
And then on M&A, particularly given the pullback in valuations and a derating in the sector, and on the back of the closing of the Finnish acquisition and considering your toehold equity positions, how is Agnico viewing the potential for further acquisitions and how do you perceive the current opportunity set?
Nice to hear from you. We are looking at it the way we always do: we have the best pipeline we have ever had, they are going really well, we are increasing production per share, and the business is strong. We focus on delivering the best for our owners, concentrating on per-share metrics. We have never had direction from the board to get bigger just for the sake of getting bigger. Our job is to look at opportunities to wisely invest our owners' money — in projects, in exploration, and in M&A opportunities all the time. Our toehold investments are not to have a portfolio of assets but to learn more about opportunities so that when we make decisions we make them based on knowledge. Our strategy for M&A is the same as always: look for opportunities to create value for our owners, but it has to make economic sense on a per-share basis. That continues to guide us today.
Thank you.
Our next question is from Daniel Major with UBS. Please go ahead.
Hi. Can you hear me okay? Great, thanks. A couple of questions. First on San Nicolás: can you give any specific milestones around the final permitting? Second, and I think I have asked this before, San Nicolás feels a bit subscale at 50% for both you and Teck. Are there any discussions about consolidation if the opportunity arose?
Hi Daniel. On San Nicolás we are still working through understanding the terms in the EIA, and based on that we will have a better understanding of which additional permits we will need. Supplementary permits could include construction permits, an explosives permit, alternate water solutions or power solutions, among others. Based on those requirements we will have a better timeline for additional permits.
Daniel, you are right that for a company the size of Agnico, San Nicolás is relatively smaller, but it is a good project with robust economics and it is in a part of Mexico that is the best part of Mexico to be mining. Strategically it puts us in an area that has a lot of potential. Would we buy it from Teck? That depends on a number of factors. Our job is to look for opportunities to make money for our shareholders and any such decision would be based on whether it makes economic sense for our owners.
Thank you.
And could you give a quick summary of the next catalyst for Finland we should be thinking about and your initial assessment relative to Rupert's feasibility study?
The first step is to look at the study without boundaries and determine where to put infrastructure with the known deposit. We are targeting end of 2027 to provide more information about that study — that is the next target.
Okay. And then two quick operational questions: on Detour, the 7 million-plus tons throughput — is that sustainable through the second half? It seems to be trending well relative to guidance. And similarly on Fosterville, grade performed well in the first half relative to guidance — is that still expected to come down or is there upside?
On Detour, in terms of throughput the mill throughput is still doing well. We still have a healthy stockpile. In terms of grade, our profile in the first half of the year was higher as scheduled, and it is higher. We are still tracking to be within our guidance.
So you think throughput stays well north of 7 million tons per quarter through the second half but the grade comes off?
Yes. We are still tracking to be within our guidance.
On Fosterville we are getting more comfortable with mining in Robbins Hill and Grains performing slightly better than expected. So it may result in results similar to Q2 moving forward, and we will look at how to capture that trend in future plans. It may end up with a slightly better grade than the original plan if the trend continues.
Thanks a lot.
Our next question is from Tanya Jakusconek with Scotiabank. Please go ahead.
Great. Good morning everybody and thank you for taking my questions. First for Dominique: do you think there is potential at Canadian Malartic to come back to the 370 thousand ounces that were left behind and recover them at the end of the open pit life and access them from underground?
We are understanding and redesigning the pit, but Tanya, I will not commit now that we are going to recover those ounces. We might see opportunities over time. I guess next February we might have a better view, but I do not expect for now to recover those ounces.
Okay. Thank you. And then circling back on costing, you have talked about productivity improvements in mills and equipment. All else being equal, do you think productivity can offset inflation? For example, if inflation is 4% overall, can your optimizations fully offset that or partially offset it?
Tanya, it is James. We would love to offset all of it — that is our objective. If you look back over the last three years inflation probably ran about 7% on average. If you back out royalties going up because of higher gold prices, our costs have been up around 3% to 4% on average. Over the last three years we have offset almost half of the inflation through continuous improvement and productivity initiatives, and that will be the target going forward.
Thank you. Final question on safety for Carol-Ann: can you share any insights from these tragic events and lessons learned that you have implemented within the Agnico operating system?
Hi Tanya. These were three very different accidents at three different sites and regions. For those less familiar: the first one happened in Fosterville back in December and involved a cable bolter. This was a risk that was unrecognized by ourselves and by the equipment manufacturer. Unfortunately, Francis was in the wrong place at the wrong time and lost his life in an unrecognized pinch point. Since that time, Sandvik has been working on a modification to the equipment to eliminate that risk; they have a prototype that will be tested at site later this year and, if effective, Sandvik will make it available to all owners of this machine. At Canadian Malartic this was an accident in the mill involving a conveyor; this was a risk that had been well recognized from the beginning of the mine and engineering controls were put in place to prevent contact with that conveyor. Over a decade since those controls were put in place there had been an erosion of the controls and they were not working properly, which exposed the hazard and led to a fatality in April. Since then, Canadian Malartic has made modifications in the mill to eliminate the need for the cleaning task the operator was performing and has reinserted the controls, ensuring they are in place where needed. The third accident happened in Upper Beaver at the shaft in early May. This was a situation where experienced miners had perceived a risk and changed their work practices to mitigate it but did not communicate that change sufficiently; the change had not been properly risk assessed and there was an unintended consequence exposing an employee to a different risk, resulting in Daniel losing his life. As Amar said, every fatality is unacceptable and we are committed to doing better. These losses have profoundly affected our teams at head office and sites, and our teams are motivated and engaged to do better. We are accelerating work to identify and implement critical controls to mitigate major hazards at all sites. We are strengthening supervision across the company and reinforcing organizational behaviors that promote safe production. This is a strong action plan with many detailed items being carried out across the company, and the teams are engaged to eliminate fatalities and life-changing accidents at our sites.
Is implementing all of this something that can be done quickly?
We have been working on our critical controls program with a world-class expert for over a year. Their advice to us is not to go too quickly; we can accelerate certain aspects but we must do the work to understand which controls are critical and which need reinforcement at each individual site. This takes time, and the work to identify and implement those critical controls is a major strength of the program. We are pushing it forward but not accelerating to the point of doing it poorly. We are supplementing resources where necessary, strengthening supervision, rolling out a training program in the next month, and ensuring supervisors are not stretched too thin. This work is ongoing and we are advancing at a pace that sites and resources can sustain to ensure lasting improvements.
Okay, thank you and good luck with all the work.
Thank you very much.
Thank you, Tanya.
Our next question is from Anita Soni with CIBC World Markets. Please go ahead.
Thank you and thank you for taking my question. I wanted to circle back to Odyssey. I read the commentary that the paste backfill plant is a little behind schedule but it is not on the critical path. You mentioned the shaft completion ahead of schedule — the last bench was taken on July 9 — and previously it was supposed to be completed at the end of the year. Is there still more to be done at the infrastructure at the bottom of the shaft and is commissioning still on schedule for next year? Also, there was commentary about the main ramp development being lighter than previously thought because of ground control issues — any update on that?
Thanks Anita. We took the last bench in July, but there is still remaining work to dismantle the gallows and do some infrastructure work underground at the 1,120 level and at the first loading level at 1,010. We are ahead of schedule on the shaft sinking but that does not mean we will be faster for Q2 next year for the commissioning. There is still lots of work to do and we might have some contingency from these advances, but it does not change the commissioning date — we are well-positioned. On ramp development we had a bit of a delay this quarter but the team is working to catch up in the coming quarters. Development is progressing and from the first stope we are learning and improving practices — we still have six to come this year and so far so good. We are around 1,800 meters per month currently and target 2,000 per month for Q4.
Okay, great. Thank you very much.
There are no further questions in the queue at this time. I will now turn the call over to Ammar Al-Joundi for closing remarks.
Thank you, operator, and thank you once again everyone for joining the call. For those of you who get to enjoy the long weekend, have a fabulous weekend. Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference. We thank you for your participation. You may now disconnect.