Caledonia Mining Corporation Plc press release

AGNICO EAGLE REPORTS SECOND QUARTER 2023 RESULTS - RECORD QUARTERLY GOLD PRODUCTION AND SOLID COST PERFORMANCE DRIVE STRONG QUARTERLY EARNINGS AND OPERATING CASH FLOW; WELL POSITIONED TO ACHIEVE ANNUAL PRODUCTION AND COST GUIDANCE

2023-07-26

NYSE - New York Stock Exchange · Jersey

Canada NewsWire

Stock Symbol: AEM (NYSE and TSX)

(All amounts expressed in U.S. dollars unless otherwise noted)

TORONTO , July 26, 2023 /CNW/ - Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) ("Agnico Eagle" or the "Company") today reported financial and operating results for the second quarter of 2023.

"Agnico Eagle delivered another strong operational quarter, with record quarterly gold production and better than expected costs driving solid financial results. With this excellent start to the year, we are tracking very well to meet our annual production and cost guidance. I would also like to commend our team for one of the best quarterly safety performances in the Company's history," said Ammar Al-Joundi , Agnico Eagle's President and Chief Executive Officer. "In June we released an update on the Odyssey project at Canadian Malartic, which highlighted an improved production profile, a mine life extension to 2042 and a significant geological upside. We continue to advance the various studies of our key pipeline projects in the Abitibi Gold Belt, with the objective of leveraging our existing infrastructure and generating value for our shareholders. We expect to report the results of these ongoing studies through the first half of 2024. Finally, in the second quarter, we had strong exploration results from Detour, Meliadine, Kittila and at Hope Bay, with the intersection of higher grade mineralization at the Madrid deposit," added Mr. Al-Joundi.

Second quarter 2023 highlights

Record quarterly gold production and solid cost performance – Record quarterly gold production reflects 100% ownership of Canadian Malartic for the full quarter, combined with a strong operational performance at all producing sites. Payable gold production 1 in the second quarter of 2023 was 873,204 ounces at production costs per ounce of $851 , total cash costs per ounce 2 of $840 and all-in sustaining costs ("AISC") per ounce 3 of $1,150 Operational performance drives strong quarterly financial results – The Company reported quarterly net income of $0.66 per share in the second quarter of 2023, with adjusted net income 4 of $0.65 per share. Operating cash flow was $1.46 per share Strong operating and safety performance at all mine sites – Gold production and costs in the second quarter of 2023 were better than anticipated, reflecting strong operating performance across the Company's mines, despite the challenges related to wildfires in northern Ontario and Quebec and the caribou migration in Nunavut . Lower than expected costs reflect a strong operating performance, favourable foreign exchange rates and the easing of certain inflationary pressures Important milestones achieved across the portfolio – At the Canadian Malartic complex, the team celebrated production of its seventh million ounce in June. In addition, Detour Lake, Goldex and Macassa each achieved record quarterly mill throughput rates, while Meliadine recorded its best ever monthly mill throughput in May 2023 Gold production, cost and capital expenditure guidance reiterated for 2023 – Expected payable gold production in 2023 remains unchanged at approximately 3.24 to 3.44 million ounces with total cash costs per ounce expected to be between $840 and $890 and AISC per ounce expected to be between $1,140 and $1,190 . Total capital expenditures (excluding capitalized exploration) for 2023 are still estimated to be approximately $1.42 billion . The Company's 2023 production guidance assumes Kittila operates at an annual rate of 1.6 million tonnes per annum ("Mtpa"). A decision by the Supreme Court of Finland (the "SAC") to either maintain the 1.6 Mtpa permit or revert to the 2.0 Mtpa permit is expected in the third quarter of 2023 Solid cash flow generation strengthens the Company's balance sheet and liquidity position – During the second quarter of 2023, the Company repaid $900 million of the amounts drawn on its unsecured revolving bank credit facility. The amount repaid on the unsecured revolving bank credit facility was repaid using $300 million in cash on hand and $600 million drawn on an unsecured term loan facility (the "Term Loan Facility") which the Company entered into in the quarter. Additionally on June 30, 2023 , the Company repaid the $100 million 4.54% Series A senior notes at maturity. As at June 30, 2023 , the Company's long term debt was $1,942.0 million and its net debt 5 was $1,509.5 million . Update on key value drivers and pipeline projects Positive exploration results at Detour, Meliadine, Kittila and Hope Bay A quarterly dividend of $0.40 per share has been declared

| _ | | 1 Payable production of a mineral means the quantity of a mineral produced during a period contained in products that have been or will be sold by the Company whether such products are shipped during the period or held as inventory at the end of the period. | | 2 Total cash costs per ounce is a non-GAAP ratio that is not a standardized financial measure under IFRS and, unless otherwise specified, is reported on a by-product basis in this news release. For the detailed calculation of production costs per ounce, the reconciliation of total cash costs to production costs and information about total cash costs per once on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". | | 3 AISC per ounce is a non-GAAP ratio that is not a standardized financial measure under the IFRS and, unless otherwise specified, is reported on a by-product basis in this news release. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". | | 4 Adjusted net income and adjusted net income per share are non-GAAP measures that are not standardized financial measures under IFRS. For a reconciliation to net income and net income per share see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". | | 5 Net debt is a non-GAAP measure that is not a standardized measure under IFRS. For a reconciliation to long-term debt, see "Reconciliation of non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". | | |

Second Quarter 2023 Results Conference Call and Webcast Tomorrow

Agnico Eagle's senior management will host a conference call on Thursday, July 27, 2023 at 11:00 AM (E.D.T.) to discuss the Company's second quarter 2023 financial and operating results.

Via Webcast:

A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com .

Via Telephone:

For those preferring to listen by telephone, please dial 1-416-764-8659 or toll-free 1-888-664-6392. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

Via URL Entry :

To join the conference call without operator assistance, you may register and enter your phone number at https://bit.ly/3CqLElb to receive an instant automated call back.

Replay Archive:

Please dial 1-416-764-8677 or toll-free 1-888-390-0541, access code 008251#. The conference call replay will expire on August 27, 2023.

The webcast, along with presentation slides, will be archived for 180 days on the Company's website.

Second Quarter 2023 Financial and Production Results

In the second quarter of 2023, net income was $326.8 million ( $0.66 per share). This result includes the following items (net of tax): derivative gains on financial instruments of $20.1 million ( $0.04 per share), a non-cash fair value adjustment on inventory sold during the quarter related to the acquisition of the remaining 50% of Canadian Malartic included in production costs of $13.7 million ( $0.03 per share), foreign currency translation gains on deferred tax liabilities of $9 .6 million ( $0.02 per share), non-cash foreign currency translation losses of $4.0 million ( $0.01 per share) and various other adjustment losses of $7 .5 million ( $0.01 per share).

Excluding the above items results in adjusted net income of $322.4 million or $0.65 per share for the second quarter of 2023. For the second quarter of 2022, the Company reported net income of $290.4 million ( $0.64 per share).

Included in the second quarter of 2023 net income, and not adjusted above, is a non-cash stock option expense of $2.5 million ( $0.01 per share).

In the first six months of 2023, the Company reported net income of $2,143 .7 million ( $4.45 per share) compared to the first six months of 2022, when net income was $409.5 million ( $0.97 per share).

The increase in net income in the second quarter of 2023 compared to the prior-year period is due to a gain on derivative financial instruments, higher mine operating margins 6 from higher sales volumes resulting from the acquisition of the remaining 50% of Canadian Malartic and lower income and mining tax expenses, partially offset by higher amortization.

The increase in net income in the first six months of 2023 is primarily due to a remeasurement gain resulting from the application of purchase accounting relating to a business combination attained in stages, which requires the remeasurement of the Company's previously held 50% interest in the Canadian Malartic complex to fair value. The fair value of the Company's previously held 50% interest and the resulting gain on remeasurement, along with the fair values allocated to assets acquired and liabilities assumed are preliminary, and are subject to adjustment based on further analysis and evaluation over the course of the measurement period which may not exceed 12 months from the acquisition date.

In the second quarter of 2023, cash provided by operating activities was $722.0 million ( $693.0 million before changes in non-cash components of working capital), compared to the second quarter of 2022 when cash provided by operating activities was $633 .3 million ( $706 .0 million before changes in non-cash components of working capital). Cash provided by operating activities (before changes in non-cash components of working capital) was slightly lower in the second quarter of 2023 when compared to the prior-year period as higher revenues from higher sales volumes and metals prices was more than offset by higher production costs and higher financing costs.

In the first six months of 2023, cash provided by operating activities was $1,371 .6 million ( $1,301 .8 million before changes in non-cash components of working capital), compared to the first six months of 2022 when cash provided by operating activities was $1,140 .7 million ( $1,072 .0 million before changes in non-cash components of working capital). Cash provided by operating activities (before changes in non-cash components of working capital) increased when compared to the prior-year period primarily due to higher sales volumes from a full six months contribution in 2023 from the Detour Lake, Macassa and Fosterville mines as opposed to 149 days in the first six months of 2022 following the closing of the merger (the "Merger") with Kirkland Lake Gold Ltd. and higher sales volumes from the acquisition of the remaining 50% of the Canadian Malartic complex.

| _ | | 6 Operating margin is a non-GAAP measure that is not a standardized measure under IFRS. For a reconciliation to net income see "Reconciliation of Non-GAAP Financial Performance Measures" below. See also "Note Regarding Certain Measures of Performance". | | |

In the second quarter of 2023, the Company's payable gold production was a record 873,204 ounces. This compares to quarterly payable gold production of 858,170 ounces in the prior-year period as the additional production from the acquisition of the remaining 50% of the Canadian Malartic complex was partially offset by lower production at the Detour Lake and LaRonde mines.

In the first six months of 2023, the Company's payable gold production was 1,686,017 ounces compared to the first six months of 2022 when payable gold production was 1,518,774 ounces. The increase in payable gold production is a result of additional days of production in 2023 at the Detour Lake, Macassa and Fosterville mines as described above and the additional production from the acquisition of the remaining 50% of the Canadian Malartic complex, partially offset by lower production at the Detour Lake and LaRonde mines.

In the second quarter of 2023, production costs per ounce were $851 , compared to $766 in the prior-year period and total cash costs per ounce were $840 , compared to $726 in the prior-year period. Production costs per ounce increased when compared to the prior-year period primarily due to higher minesite costs per tonne related to inflation. A detailed description of the minesite costs per tonne at each mine is set out below. Total cash costs per ounce increased when compared to the prior-year period primarily due to higher minesite costs per tonne related to inflation, higher royalties resulting from the acquisition of the remaining 50% of the Canadian Malartic complex and a lower fair value adjustment impacting inventory in the second quarter of 2023.

In the first six months of 2023, production costs per ounce were $828 , compared to $869 in the prior-year period and total cash costs per ounce were $836 , compared to $763 in the prior-year period. Production costs per ounce decreased when compared to the prior-year period primarily due to the increase in payable gold production during the period. Total cash costs per ounce increased when compared to the prior-year period primarily due to the lower fair value adjustment impacting inventory in the current year.

In the second quarter of 2023, AISC per ounce were $1,150 , compared to $1,026 in the prior-year period. AISC per ounce increased in the second quarter of 2023 when compared to the prior-year period primarily due to the same reasons that caused higher total cash costs per ounce.

In the first six months of 2023, AISC per ounce were $1,138 , compared to $1,051 in the prior-year period. AISC per ounce increased when compared to the prior-year period primarily due to the same reasons that caused higher total cash costs and higher sustaining capital expenditures per ounce.

Solid Cash Flow Generation Continues to Support Investment Grade Balance Sheet; Financial Flexibility Strengthened with Increased Liquidity

With the strong cash-flow generation during the second quarter, the Company used cash on hand to repay $300 million of the $1.0 billion drawn from its unsecured revolving bank credit facility used to fund the cash consideration paid in connection with the acquisition of Yamana's Canadian assets on March 31, 2023 (the "Yamana Transaction"). On April 20, 2023 , the Company entered into a credit agreement with a group of financial institutions that provides the $600 million Term Loan Facility. The Company drew down in full on the Term Loan Facility on April 28, 2023 and used the proceeds to partially repay the amounts drawn on the unsecured revolving bank credit facility. The Term Loan Facility matures and all indebtedness thereunder is due and payable on April 21 , 2025. The Term Loan Facility is available as a single advance in US dollars through SOFR and base rate advances, priced at the applicable rate plus a margin that ranges from 0.00% to 2.00% depending on the Company's credit rating. The Term Loan Facility may be prepaid without penalty.

As of June 30, 2023 , the outstanding balance on the Company's unsecured revolving bank credit facility was $100 million , and available liquidity under this facility was approximately $1.1 billion , not including the uncommitted $600 million accordion feature. Additionally on June 30, 2023 , the Company repaid out of available cash the $100 million 4.54% Series A senior notes at maturity, further reducing the Company's indebtedness.

Cash and cash equivalents decreased to $432.5 million at June 30, 2023 , from the March 31, 2023 balance of $744.6 million , primarily due to debt repayment, partially offset by higher cash flow from operations (higher sales volumes and realized gold prices). At June 30, 2023 the Company's long term debt was $1,942.0 million and net debt decreased to $1,509.5 million from the March 31, 2023 balance of $1,597.9 million .

On April 7, 2023 , Moody's upgraded its credit rating outlook for the Company to "positive" from "stable", while affirming the credit rating at Baa2. On June 20, 2023 , Fitch Ratings affirmed its credit rating for Agnico Eagle at BBB+ with a Stable Outlook. These investment grade credit ratings reflect the Company's strong business and credit profile, while maintaining low leverage and conservative financial policies and recognizing the benefits of the Company's size and scale and operations in favourable mining jurisdictions.

In May 2023 , the Company received approval from the TSX to renew its normal course issuer bid ("NCIB") pursuant to which the Company is permitted to purchase up to the lesser of (i) 5% of its issued and outstanding common shares and (ii) the number of common shares that may be purchased by the Company for an aggregate purchase price, excluding commissions, of $500.0 million . Purchases under the NCIB may continue for up to one year from the commencement date of May 4 , 2023. Purchases under the NCIB will be made through the facilities of the TSX, the NYSE or other designated exchanges and alternative trading systems in Canada and the United States in accordance with applicable regulatory requirements. All common shares purchased under the NCIB will be cancelled.

Agnico Eagle believes that the NCIB provides a flexible tool as part the Company's overall capital allocation program and objectives and generates value for shareholders. In the second quarter of 2023, no purchases were made under the NCIB.

Approximately 55% of the Company's estimated Canadian dollar exposure for the remainder of the year is hedged at an average floor price above 1.32 C$ /US$. Approximately 29% of the Company's estimated Euro exposure for the remainder of the year is hedged at an average floor price of approximately 1.03 US$ /EUR. Approximately 58% of the Company's estimated Australian dollar exposure for the remainder of the year is hedged at an average floor price above 1.45 A$ /US$. Approximately 33% of the Company's estimated Mexican peso exposure for the remainder of the year is hedged at an average floor price above 20.70 MXP /US$. The Company's full year 2023 cost guidance is based on assumed exchange rates of 1.32 C$ /US$, 1.10 US$ /EUR, 1.40 A$ /US$ and 20.00 MXP /US$.

With the completion of the initial diesel purchase for the Company's Nunavut operations on the 2023 sealift, approximately 64% of the Company's diesel exposure for the remainder of the year is hedged at an average price of $0.69 per litre, compared to the 2023 cost guidance assumption of $0.93 per litre. The sea-lift purchase, along with financial hedges, will continue to help mitigate operating cost risks and they are expected to provide protection against diesel price inflation for the remainder of the year.

The Company will continue to monitor market conditions and anticipates continuing to opportunistically add to its operating currency and diesel hedges to strategically support its key input costs. Current hedging positions are not factored into 2023 and future guidance.

Capital Expenditures

In the second quarter of 2023, capital expenditures were $382.4 million and capitalized exploration expenditures were $33.6 million , for a total of $416.0 million . Total expected capital expenditures (including capitalized exploration) remain in line with guidance for the full year 2023.

The following table sets out capital expenditures (including sustaining capital expenditures 7 and development capital expenditures 7 ) and capitalized exploration in the second quarter of 2023.

| _ | | 7 Sustaining capital expenditures and development capital expenditures are non-GAAP measures that are not standardized financial measures under IFRS. See "Note Regarding Certain Measures of Performance" and "Reconciliation of Non-GAAP Performance Measures – Reconciliation of Sustaining Capital Expenditures to Consolidated Statements of Cash Flow". |