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Form 6-K AGNICO EAGLE MINES LTD For: Mar 31

April 28, 2022 5:19 PM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2022
Commission File Number 001-13422
AGNICO EAGLE MINES LIMITED
(Translation of registrant’s name into English)
145 King Street East, Suite 400, Toronto, Ontario M5C 2Y7
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F   ☐
Form   40-F   ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)( 1):   ☐
Note: Regulation S-T Rule 101 (b)( 1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7):   ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  Yes ☐ No ☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82‑               .

 
EXHIBITS
Exhibit No.
Exhibit Description
99.1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AGNICO EAGLE MINES LIMITED
(Registrant)
Date: 04/28/2022
By:
/s/ Chris Vollmershausen
Chris Vollmershausen
Executive Vice-President, Legal, General
Counsel & Corporate Secretary
Exhibit Number 99.1 submitted with this Form 6-K is hereby incorporated by reference into Agnico Eagle Mines Limited’s Registration Statements on Form F-10 (Reg. No. 333-234778), Form F-3D (Reg. No. 333-249203) and Form S-8 (Reg. Nos. 333-130339 and 333-152004)
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 Exhibit 99.1
   
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First Quarter Report 2022

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
This Management’s Discussion and Analysis (“MD&A”) dated April 28, 2022 of Agnico Eagle Mines Limited (“Agnico Eagle” or the “Company”) should be read in conjunction with the Company’s condensed interim consolidated financial statements for the three months ended March 31, 2022 (the “First Quarter Financial Statements”) that were prepared in accordance with International Financial Reporting Standards (“IFRS”), International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). This MD&A should also be read in conjunction with the Company’s annual Management’s Discussion and Analysis (“Annual MD&A”) and annual consolidated financial statements (“Annual Financial Statements”) filed with Canadian securities regulators and included in the Company’s Annual Report on Form 40-F for the year ended December 31, 2021 (the “Form 40-F”), prepared in accordance with IFRS. The condensed interim consolidated financial statements and this MD&A are presented in United States dollars (“US dollars”, “$” or “US$”) and all units of measurement are expressed using the metric system, unless otherwise specified. Certain information in this MD&A is presented in Canadian dollars (“C$”), Australian dollars (“A$”), Mexican pesos or European Union euros (“Euros” or “€”). Additional information relating to the Company is included in the Company’s Annual Information Form for the year ended December 31, 2021 (the “AIF”). The AIF, Annual MD&A and Annual Financial Statements are available on the Canadian Securities Administrators’ (the “CSA”) SEDAR website at www.sedar.com and the Form 40-F is on file with the Securities and Exchange Commission (“SEC”) at www.sec.gov/edgar.
Forward Looking Statements
Certain statements contained in this MD&A referred to herein as “forward-looking statements”, constitute “forward-looking information” under the provisions of Canadian provincial securities laws and constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, the Company’s plans, objectives, expectations, estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as “anticipate”, “believe”, “budget”, “could”, “estimate”, “expect”, “forecast”, “likely”, “may”, “plan”, “project”, “schedule”, “should”, “target”, “will”, “would” or other variations of these terms or similar words. Forward-looking statements in this MD&A include the following:

the Company’s outlook for 2022 and future periods;

anticipated levels or trends for prices of gold and by-product metals mined by the Company or for exchange rates between currencies in which capital is raised, revenue is generated or expenses are incurred by the Company;

statements regarding the Company’s forward-looking production outlook, including estimated ore grades, recovery rates, project timelines, drilling results, metal production, life of mine estimates, total cash costs per ounce, all-in sustaining costs per ounce, minesite costs per tonne, other expenses, and cash flows;

statements regarding the impact of the COVID-19 pandemic and measures taken to reduce the spread of COVID-19 and its variants on the Company’s future quarters and annual basis;

statements regarding the estimated timing and conclusions of technical studies and evaluations;

statements regarding the methods by which ore will be extracted or processed;

statements concerning the Company’s expansion plans at the Kittila mine, Meliadine mine’s Phase 2 project, the Amaruq underground project and the Odyssey project, including the timing, funding, completion and commissioning thereof;

statements concerning other expansion projects, recovery rates, mill throughput, optimization and projected exploration, including costs and other estimates upon which such projections are based;
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022

statements regarding timing and amounts of capital expenditures, other expenditures and other cash needs, financing costs and expectations as to the funding or reductions thereof;

statements regarding estimates of future mineral reserves, mineral resources, effect of drill results on future mineral reserves and mineral resources, mineral production, and sales;

statements regarding the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production;

statements regarding the Company’s ability to obtain the necessary permits and authorizations in connection with its proposed or current exploration, development and mining operations and the anticipated timing thereof;

statements regarding anticipated future exploration;

statements about the Company’s plans at its Hope Bay mine;

statements regarding the anticipated timing of events with respect to the Company’s mine sites;

statements regarding the sufficiency of the Company’s cash resources;

statements regarding future activity with respect to the Company’s unsecured revolving bank credit facility;

statements regarding future dividend amounts and payment dates; and

statements regarding anticipated trends with respect to the Company’s operations, exploration and the funding thereof.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico Eagle upon which the forward-looking statements in this MD&A are based, and which may prove to be incorrect, include the assumptions set out elsewhere in this MD&A as well as: that governments, the Company or others do not take measures in response to the COVID-19 pandemic or otherwise that, individually or in the aggregate, materially affect the Company’s ability to operate its business; that measures taken in connection with the COVID-19 pandemic do not affect productivity; that measures taken relating to, or other effects of, the COVID-19 pandemic do not affect the Company’s ability to obtain necessary supplies and deliver them to its mine sites; that there are no significant disruptions affecting Agnico Eagle’s operations, whether due to labour disruptions, supply disruptions, damage to equipment, natural or man-made occurrences, pandemics, mining or milling issues, political changes, title issues, community protests, including by First Nations groups, or otherwise; that permitting, development, expansion and the ramp up of operations at each of Agnico Eagle’s mines, mine development projects and exploration projects proceed on a basis consistent with expectations and that Agnico Eagle does not change its exploration or development plans relating to such projects; that the exchange rates between the Canadian dollar, Australian dollar, Euro, Mexican peso and the U.S. dollar will be approximately consistent with Agnico Eagle’s expectations; that prices for gold, silver, zinc and copper will be consistent with Agnico Eagle’s expectations; that prices for key mining and construction supplies, including labour costs, remain consistent with Agnico Eagle’s expectations; that production meets expectations; that Agnico Eagle’s current estimates of mineral reserves, mineral resources, mineral grades and mineral recoveries are accurate; that there are no material delays in the timing for completion of development projects; that seismic activity at the Company’s operations at LaRonde, Goldex and other properties is as expected by the Company; that the Company’s current plans to optimize production are successful; and that there are no material variations in the current tax and regulatory environments that affect Agnico Eagle.
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
The forward-looking statements in this MD&A reflect the Company’s views as at the date of this MD&A and involve known and unknown risks, uncertainties and other factors which could cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based.
For a more detailed discussion of such risks and other factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this MD&A, see the AIF and Annual MD&A as well as the Company’s other filings with the Canadian securities regulators and the SEC. Other than as required by law, the Company does not intend, and does not assume any obligation, to update these forward-looking statements.
Meaning of “including” and “such as”: When used in this MD&A the terms “including” and “such as” mean including and such as, without limitation.
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE
This MD&A discloses certain financial performance measures, including “total cash costs per ounce”, “all-in sustaining costs per ounce”, “minesite costs per tonne”, “adjusted net income”, “adjusted net income per share”, “realized prices”, “sustaining capital expenditures”, “development capital expenditures” and “operating margin” that are not standardized measures under IFRS. These measures may not be comparable to similar measures reported by other gold producers. For a reconciliation of these measures to the most directly comparable financial information presented in the condensed interim consolidated financial statements prepared in accordance with IFRS, see Non-GAAP Financial Performance Measures in this MD&A.
The total cash costs per ounce of gold produced (also referred to as total cash costs per ounce) is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues). The total cash costs per ounce of gold produced is intended to provide information about the cash-generating capabilities of the Company’s mining operations. Total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the condensed interim consolidated statements of income (loss) for by-product revenues, inventory production costs, the impacts of purchase price allocation to inventory accounting, realized gains and losses on hedges of production costs, operational care and maintenance costs due to COVID-19, production costs associated with the retrospective adjustments from the application of the IAS 16 amendments and other adjustments, which include the costs associated with a 5% in-kind royalty paid by the Canadian Malartic mine, a 2% in-kind royalty paid by the Detour Lake mine as well as smelting, refining and marketing charges and then dividing by the number of ounces of gold produced excluding production prior to the achievement of commercial production. Certain line items such as operational care and maintenance costs due to COVID-19, and realized gains and losses on hedges of production costs were previously classified as “other adjustments” and have now been disclosed separately to provide additional detail about these reconciling items, allowing investors to better understand the impacts of such events on the cash operating costs per ounce and minesite cost per tonne. The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis, except that no adjustment is made for by-product metal revenues. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. Management uses this measure to, and believes it is helpful to investors so they can, understand and monitor the performance of the Company’s mining operations. The Company believes that total cash costs per ounce is useful to help investors understand the costs associated with gold production and the economics of gold mining. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management and investors to assess a mine’s cash-generating capabilities at various gold prices. Management is aware, and investors should note, that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs per ounce of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using, and investors should also consider, these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Management also performs sensitivity analysis in order to quantify the effects of fluctuating metal prices and exchange rates. Investors should note that total cash costs per ounce are not reflective of all cash expenditures as they do not include income tax payments, interest costs or dividend payments. This measure also does not include depreciation or amortization.
Agnico Eagle’s primary business is gold production and the focus of its current operations and future development is on maximizing returns from gold production, with other metal production being incidental to the gold production process. Accordingly, all metals other than gold are considered by-products.
In this MD&A, unless otherwise indicated, total cash cost per ounce of gold produced is reported on a by-product basis. Total cash costs per ounce of gold produced is reported on a by-product basis because (i) the
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
majority of the Company’s revenues are from gold (ii) the Company mines ore, which contains gold, silver, zinc, copper and other metals, (iii) it is not possible to specifically assign all costs to revenues from the gold, silver, zinc, copper and other metals the Company produce (iv) it is a method used by management and the Board to monitor operations, and (v) many other gold producers disclose similar measures on a by-product rather than a co-product basis. Investors should also consider these measures in conjunction with other data prepared in accordance with IFRS.
All-in sustaining costs (“AISC”) per ounce of gold produced (also referred to as all-in sustaining cost per ounce) on a by-product basis is used to reflect the Company’s total sustaining expenditures of producing and selling an ounce of gold while maintaining the Company’s current operations. AISC per ounce is calculated as the aggregate of total cash costs on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock options), lease payments related to sustaining assets and reclamation expenses, and then dividing by the number of ounces of gold produced (excluding production prior to the achievement of commercial production). These additional costs reflect the additional expenditures that are required to be made to maintain current production levels. AISC per ounce of gold produced on a co-product basis is calculated in the same manner as the AISC per ounce of gold produced on a by-product basis, except that the total cash costs on a co-product basis are used, meaning no adjustment is made for by-product metal revenues. Management is aware, and investors should note, that these per ounce measures of performance can be affected by fluctuations in foreign exchange rates and, in the case of AISC of gold produced on a by-product basis, by-product metal prices. Management compensates for this inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS. Investors should note that AISC per ounce is not reflective of all cash expenditures as it does not include income tax payments, interest costs or dividend payments. This measure also does not include depreciation or amortization. In this MD&A, unless otherwise indicated, AISC per ounce of gold produced is reported on a by-product basis.
The World Gold Council (“WGC”) is a non-regulatory market development organization for the gold industry. Although the WGC is not a mining industry regulatory organization, it has worked closely with its member companies to develop relevant non-GAAP measures. The Company follows the guidance on all-in sustaining costs released by the WGC in November 2018. Adoption of the all-in sustaining costs metric is voluntary and, notwithstanding the Company’s adoption of the WGC’s guidance, all-in sustaining costs per ounce of gold produced reported by the Company may not be comparable to data reported by other gold producers. The Company believes that this measure provides helpful information about operating performance. However, this non-GAAP measure should be considered together with other data prepared in accordance with IFRS as it is not necessarily indicative of operating costs or cash flow measures prepared in accordance with IFRS.
Minesite costs per tonne are calculated by adjusting production costs as recorded in the condensed interim consolidated statements of income (loss) for inventory production costs, operational care and maintenance costs due to COVID-19, and other adjustments, and then dividing by tonnage of ore processed (excluding the tonnage processed prior to the achievement of commercial production). As the total cash costs per ounce of gold produced can be affected by fluctuations in by-product metal prices and foreign exchange rates, management believes that minesite costs per tonne is useful measure for investors as it provides additional information regarding the performance of mining operations, eliminating the impact of varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware, and investors should note, that this per tonne measure of performance can be affected by fluctuations in processing levels. This inherent limitation may be partially mitigated by using this measure in conjunction with production costs prepared in accordance with IFRS.
Adjusted net income and adjusted net income per share are calculated by adjusting the net income as recorded in the condensed interim consolidated statements of income for the effects of certain non-recurring, unusual
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
and other items that the Company believes are not reflective of the Company’s underlying performance for the reporting period. Adjusted net income is calculated by adjusting net income for foreign currency translation gains or losses, realized and unrealized gains or losses on derivative financial instruments, impairment loss charges and reversals, environmental remediation, severance and transaction costs related to acquisitions, purchase price allocations to inventory, income and mining taxes adjustments as well as other items (which includes changes in estimates of asset retirement obligations at closed sites and gains and losses on the disposal of assets). Adjusted net income per share is calculated by dividing adjusted net income by the number of shares outstanding on a basic and diluted basis. The Company believes that these generally accepted industry measures are useful in that they allow for the evaluation of the results of continuing operations and in making comparisons between periods. Adjusted net income and adjusted net income per share are intended to provide investors with information about the Company’s continuing income generating capabilities. Management uses this measure to, and believes it is helpful to investors so they can, understand and monitor for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
Operating margin is not a recognized measure under IFRS and this data may not be comparable to data presented by other gold producers. The Company believes that operating margin is a useful measure that reflects the operating performance of its individual mines associated with the ongoing production and sale of gold and by-product metals without allocating company-wide overhead (including exploration and corporate development expenses, amortization of property, plant and mine development, general and administrative expenses, finance costs, gains and losses on derivative financial instruments, environmental remediation costs, foreign currency translation gains and losses, care and maintenance expenses, other income and expenses and income and mining tax expenses). This measure is calculated by deducting production costs from revenue from mining operations. In order to reconcile operating margin to net income as recorded in the condensed interim consolidated financial statements, the company adds the following items to the operating margin: Income and mining taxes expense; other expenses (income); care and maintenance expenses; foreign currency translation (gain) loss; gain (loss) on derivative financial instruments; finance costs; general and administrative expenses; amortization of property, plant and mine development; exploration and corporate development expenses; and impairment losses (reversals). Management uses this measure internally for planning purposes and to forecast future operating results. This measure is intended to provide investors with additional information about the Company’s underlying operating results and should be evaluated in conjunction with other data prepared in accordance with IFRS.
Realized prices are calculated as revenue from mining operations by metal divided by the volume of metal sold. Management uses realized prices to, and believes is helpful to investors so they can, evaluate the impact of changing metals prices on the Company’s revenue in each reporting period. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and foreign exchange rates.
Capital expenditures are classified into sustaining capital expenditures and development capital expenditures. Sustaining capital expenditures are expenditures incurred during the production phase to sustain and maintain the existing assets so they can achieve constant expected levels of production. This measure includes expenditures on assets so that they retain their existing productive capacity as well as expenditures that enhance performance and reliability of the operations. Development capital expenditures are expenditures incurred at new projects and expenditures at existing operations that are undertaken with the intention to increase net present value through higher production levels or extensions of mine life above the current plans. Management uses these measures in the capital allocation process and to assess the effectiveness of its investments, management believes these measures are useful so investors can assess the purpose and effectiveness of the capital expenditures split between sustaining and development in each reporting period. While the Company follows the World Gold Council guidance in its classification of capital expenditures into sustaining or development, the classification between sustaining and development capital expenditures does not have a standardized definition in accordance with IFRS and other companies may classify expenditures in a different manner.
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
This MD&A also contains information as to estimated future total cash costs per ounce, AISC per ounce and minesite costs per tonne. The estimates are based upon the total cash costs per ounce, AISC per ounce and minesite costs per tonne that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable IFRS measure.
Payable production (a non-GAAP non-financial performance measure) is the quantity of mineral produced during a period contained in products that have been or will be sold by the Company, whether such products are sold during the period or held as inventories at the end of the period.
Business Overview
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since its formation in 1972. The Company’s mines are located in Canada, Australia, Mexico and Finland, with exploration and development activities in Canada, Australia, Europe, Latin America and the United States. The Company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
Agnico Eagle earns a significant proportion of its revenue and cash flow from the production and sale of gold in both dore bar and concentrate form. The remainder of revenue and cash flow is generated by the production and sale of by-product metals, primarily silver, zinc and copper.
Agnico Eagle’s operating mines and development projects are located in what the Company believes to be politically stable countries that are supportive of the mining industry. The political stability of the regions in which Agnico Eagle operates helps to provide confidence in its current and future prospects and profitability. This is important for Agnico Eagle as it believes that many of its current mines and projects have long-term mining potential.
Recent Developments
Merger with Kirkland Lake Gold Ltd. (“Kirkland”)
The Company announced on September 28, 2021 that they had entered into an agreement with Kirkland to combine in a merger of equals (the “Merger”) and continue under the name “Agnico Eagle Mines Limited”. Agnico Eagle and Kirkland closed the transaction on February 8, 2022, with Agnico acquiring 100% of the issued and outstanding Kirkland shares. Each Kirkland shareholder received 0.7935 common shares of Agnico for each Kirkland share, which resulted in the issuance of 209,274,263 Agnico common shares. Agnico began consolidating the operating results, cash flows and net assets of Kirkland from February 8, 2022. Kirkland is now a subsidiary of Agnico Eagle. Kirkland was a publicly traded mining company with ownership interests in the Detour Lake and Macassa mines in Ontario, Canada and the Fosterville mine in Australia.
Impact of COVID-19 on the Company’s Business and Operations
In December 2019, a novel strain of coronavirus known as COVID-19 surfaced in Wuhan, China and has spread around the world, with resulting business and social disruption. COVID-19 was declared a worldwide pandemic by the World Health Organization on March 11, 2020. The speed and extent of the spread of COVID-19 and its variants, and the duration and intensity of resulting business disruption and related financial and social impact, remain uncertain. Further, the extent and manner in which COVID-19, and measures taken by governments, the Company or others to attempt to reduce the spread of COVID-19 and its variants, may affect the Company cannot be predicted with certainty.
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
COVID-19, its variants and these measures have had and may continue to have an adverse impact on many aspects of the Company’s business including, employee health, workforce productivity and availability, travel, contractor availability, availability of supplies, ability to sell or deliver gold doré bars or concentrate, the Company’s ability to maintain its controls and procedures regarding financial and disclosure matters and the availability of insurance and the costs thereof, some of which, individually or when aggregated with other impacts, may be material to the Company. Measures taken by governments, the Company or others in relation to COVID-19 and its variants could result in the Company reducing or suspending operations at one or more of its mines.
In December 2021, the Company experienced an increase in COVID-19 cases at its Nunavut operations given the increased spread and transmission of the Omicron variant of COVID-19. The Company took precautionary steps to protect the continued health of its Nunavut based workforce (“Nunavummiut”) and local residents in the communities in which they live. In collaboration with the Nunavut public health authorities, the Company again decided to send home the Nunavummiut from its Meliadine, Meadowbank and Hope Bay operations as well as its Nunavut exploration projects. These employees continued to receive their remuneration. As a result, there was a reduction of activities at the Company’s Nunavut operations from December 22, 2021 onward. Activities at the Meliadine mine were affected until mid-January 2022 and activities at the Meadowbank Complex were affected until early February 2022. Both operations are now back to operating at normal levels. In September and October of 2021, there were a significant number of COVID-19 cases identified at the Hope Bay minesite. As a precautionary measure, the Company decided to suspend mining and milling operations as it investigated opportunities to improve screening, testing and health protocols at site. On February 18, 2022, the Company announced that it decided to maintain the suspension of production activities at the Doris mine, in order to dedicate the infrastructure of the Hope Bay site to exploration activities. The Company ramped down the remaining operational activities in an orderly fashion while ensuring the safety of employees and the sustainability of the infrastructure over the remainder of the quater. The Company worked with the Nunavut public health authorities on a reintegration plan and the process to return the Nunavummiut to the Company’s Nunavut operations was completed in early April 2022. Most of the Company's operations were affected by COVID-19 during the first quarter of 2022, but production levels and costs were generally in line with expectations. All sites are maintaining health and safety protocols but the impact appears to becoming more manageable as the Omicron wave declines.
Inflationary cost environment
Costs pressures were relatively minor in the first quarter of 2022, largely due to cost savings initiatives, long-term agreements with local suppliers, existing fuel hedges and the predominantly locally sourced labour force. The inflationary cost environment is extremely dynamic given the changing political landscape and COVID-19. As such, the Company will continue to monitor and assess any impacts on forecasted costs in the coming months.
Financial and Operating Results
Results of Operations
Agnico Eagle reported net income of $109.8 million, or $0.29 per share, in the first quarter of 2022 compared with a net income of $145.2 million, or $0.60 per share, in the first quarter of 2021. Agnico Eagle reported adjusted net income(1) of $235.6 million, or $0.61 per share(1), in the first quarter of 2022 compared with adjusted net income of $172.0 million, or $0.71 per share, in the first quarter of 2021.
(1)
Adjusted net income and adjusted net income per share are non-GAAP measures that are not standardized financial measures under the financial reporting framework used to prepare the Company’s financial statements. For a reconciliation to net income and net income per share see “Non-GAAP Financial Performance Measures” below. See also “Note to Investors Concerning Certain Measures of Performance”.
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AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
In the first quarter of 2022, the operating margin(2) (revenues from mining operations less production costs) increased to $664.0 million compared with $532.2 million in the first quarter of 2021, primarily due to a 39.6% increase in revenues from mining operations as a result of the contribution of gold sales from the Detour Lake, Fosterville and Macassa mines since the completion of the Merger and a 5.6% increase in the average realized price of gold, partially offset by lower gold sales volume at the Nunavut mines.
Gold production increased to 660,604 ounces in the first quarter of 2022 compared with 516,804 ounces in the first quarter of 2021 primarily due to the contribution of the Detour Lake, Fosterville and Macassa mines as a result of the Merger. Partially offsetting the overall increase in gold production compared to the first quarter of 2021 was a decrease in gold production from the Meadowbank Complex and Meliadine, Hope Bay and Kittila mines.
Cash provided by operating activities amounted to $507.4 million in the first quarter of 2022 compared with $366.6 million in the first quarter of 2021.
The table below sets out variances in the key drivers of net income for the three months ended March 31, 2022, compared with the net income for the three months ended March 31, 2021:
(millions of United States dollars)
Three Months Ended
March 31, 2022 vs.
Three Months Ended
March 31, 2021
Increase in gold revenues
$ 381.1
Decrease in silver revenues
(4.2)
Increase in net copper revenues
0.9
Decrease in net zinc revenues
(1.7)
Decrease in production costs due to effects of foreign currencies
3.7
Increase in production costs
(248.1)
Increase in exploration and corporate development expenses
(37.1)
Increase in amortization of property, plant and mine development
(82.9)
Increase in general and administrative expenses
(22.6)
Increase in finance costs
(0.5)
Change in (gain) loss on derivative financial instruments
49.7
Change in non-cash foreign currency translation
(4.3)
Increase in other (income) expenses
(102.6)
Decrease in income and mining taxes
33.1
Total net income variance
$ (35.5)
Three Months Ended March 31, 2022 vs. Three Months Ended March 31, 2021
Revenues from mining operations increased to $1,325.7 million in the first quarter of 2022, compared with $949.6 million in the first quarter of 2021, primarily due to a 35% increase in the sales volume of gold primarily due to the contribution of gold sales from the Detour Lake, Fosterville and Macassa mines as a result of the Merger, and a 5.6% increase in the average realized price of gold, partially offset by lower gold sales volume at the Meadowbank Complex and Meliadine, Hope Bay and Kittila mines.
(2)
Operating margin is a non-GAAP measure. For a reconciliation to net income see “Non-GAAP Financial Performance Measures” below. See also “Note to Investors Concerning Certain Measures of Performance”.
9

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Production costs were $661.7 million in the first quarter of 2022, a 58.5% increase compared with $417.4 million in the first quarter of 2021, primarily due to the contribution of production costs from the Detour Lake, Fosterville and Macassa mines as a result of the Merger.
Weighted average total cash costs per ounce of gold produced amounted to $811 on a by-product basis(3) and $854 on a co-product basis(3) in the first quarter of 2022 compared with $734 on a by-product basis and $797 on a co-product basis in the first quarter of 2021, primarily due to increased total cash costs at the Meadowbank, Meliadine and Kittila mines, partially offset by the strengthening of the Canadian dollar and Euro relative to the US dollar.
Exploration and corporate development expenses increased to $65.8 million in the first quarter of 2022, compared with $28.7 million in the first quarter of 2021, primarily due to the contribution of exploration expenses at the Detour Lake, Macassa and Fosterville mines as a result of the Merger, as well as increased exploration expenses at Hope Bay.
Amortization of property, plant and mine development increased by $83.0 million to $260.7 million between the first quarter of 2021 and the first quarter of 2022, primarily due the contribution of amortization from the Detour Lake, Macassa and Fosterville mines as a result of the Merger.
General and administrative expenses increased to $67.5 million during the first quarter of 2022, compared with $44.9 million during the first quarter of 2021, primarily due to the contribution of expenses from Kirkland since the Merger.
Gain on derivative financial instruments increased to $28.7 million during the first quarter of 2022, compared with a loss of $21.1 million during the first quarter of 2021, primarily due to a decrease in unrealized losses on warrants and an increase in unrealized gains on currency and commodity derivatives. As a result of the increase of diesel spot prices and the strengthening of the Canadian dollar relative to the US dollar at the end of March 2022, the Company recognized an unrealized gain on currency and commodity derivatives of $24.1 million during the first quarter of 2022, compared to an unrealized gain of $0.7 million during the first quarter of 2021. In addition, the increase in the market value of outstanding warrants held by the Company resulted in an unrealized gain on warrants of $0.9 million in the first quarter of 2022, compared to an unrealized loss of $31.8 million in the first quarter of 2021. The Company holds warrants to acquire equity securities of certain issuers in the mining industry.
Other expenses increased to $91.9 million during the first quarter of 2022, compared with other income of $1.9 million during the first quarter of 2021, primarily due to transaction and severance costs of $80.8 million in connection with the Merger. In the first quarter of 2021, other income included a $10.0 million gain on the sale of certain non-strategic exploration properties.
In the first quarter of 2022, the Company recorded income and mining taxes expense of $64.8 million on income before income and mining taxes of $174.6 million, resulting in an effective tax rate of 37.1%. In the first quarter of 2021, the Company recorded income and mining taxes expense of $97.9 million on income before income and mining taxes of $243.2 million, resulting in an effective tax rate of 40.3%. The decrease in the effective tax rate between the first quarter of 2021 and the first quarter of 2022 was primarily due to foreign exchange rate movements and the overall lower effective tax rate from the operations of the Detour Lake, Macassa and Fosterville mines since the completion of the Merger.
There are several factors that can significantly impact the Company’s effective tax rate including varying rates in different jurisdictions, the non-recognition of certain tax assets, mining allowances, foreign currency exchange rate movements, changes in tax laws, the impact of specific transactions and assessments and the
(3)
Cash costs per ounce of gold produced on a by-product basis and cash costs per ounce of gold produced on a co-product basis are non-GAAP measures . For a reconciliation to production costs see “Non-GAAP Financial Performance Measures” below. See also “Note to Investors Concerning Certain Measures of Performance”.
10

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
relative distribution of income in the Company’s operating jurisdictions. As a result of these factors, the Company’s effective tax rate is expected to continue to fluctuate in future periods.
LaRonde mine
At the LaRonde mine, gold production increased by 16.1% to 87,549 ounces in the first quarter of 2022 compared with 75,389 ounces in the first quarter of 2021, primarily due to higher gold grades. Production costs at the LaRonde mine were $45.8 million in the first quarter of 2022, a decrease of 10.7% compared with production costs of $51.3 million in the first quarter of 2021 driven primarily by the timing of inventory sales.
LaRonde Zone 5 mine
At the LaRonde Zone 5 mine, gold production decreased by 1.1% to 17,488 ounces in the first quarter of 2022 compared with 17,689 ounces in the first quarter of 2021, primarily due to lower gold grades. Production costs at the LaRonde Zone 5 mine were $16.7 million in the first quarter of 2022, an increase of 31.9% compared with production costs of $12.7 million in the first quarter of 2021, driven primarily by higher underground service and maintenance costs as a result of increased fuel and component prices and the strengthening of the Canadian dollar relative to the US dollar between periods, partially offset by the timing of inventory sales.
Canadian Malartic mine
At the 50% owned Canadian Malartic mine, attributable gold production decreased by 10.1% to 80,509 ounces in the first quarter of 2022, compared with 89,550 ounces in the first quarter of 2021, primarily due to a planned reduction in mill throughput in order to optimize the production profile of the mine during the transition to the underground Odyssey project and lower gold grades. Attributable production costs at the Canadian Malartic mine were $56.9 million in the first quarter of 2022, an increase of 2.6% compared with production costs of $55.5 million in the first quarter of 2021 primarily due to lower capitalized deferred stripping and higher diesel costs.
Goldex mine
At the Goldex mine, gold production decreased by 0.6% to 34,445 ounces in the first quarter of 2022 compared with 34,650 ounces in the first quarter of 2021, primarily due to lower grades which were partially offset by higher throughput levels. Production costs at the Goldex mine were $26.2 million in the first quarter of 2022, an increase of 16.5% compared with production costs of $22.5 million in the first quarter of 2021, driven primarily by higher underground production costs as a result of higher contractor and consumable costs and the strengthening of the Canadian dollar relative to the US dollar between periods.
Detour Lake mine
The Company completed the Merger on February 8, 2022. For the period from February 8, 2022 to March 31, 2022, gold production at the Detour Lake mine was 100,443 ounces and production costs at the Detour Lake mine were $120.0 million.
Macassa mine
The Company completed the Merger on February 8, 2022. For the period from February 8, 2022 to March 31, 2022, gold production at the Macassa mine was 24,488 ounces and production costs at the Macassa mine were $32.3 million.
Meliadine mine
At the Meliadine mine, gold production decreased by 16.0% to 80,704 ounces in the first quarter of 2022 compared with 96,126 ounces of gold production in the first quarter of 2021 (which includes 8,123 ounces
11

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
produced prior to the achievement of commercial production at the Tiriganiaq open pit deposit), primarily due to lower gold grades. Due to the COVID-19 Omicron variant outbreak in December 2021, activities at the Meliadine mine focused on production and reduced the level of some supporting activities, including underground development, which affected the mining sequence. In mid-January 2022, the mine had returned to normal operating levels. Production costs at the Meliadine mine were $78.7 million in the first quarter of 2022, an increase of 21.5% compared with production costs of $64.7 million in the first quarter of 2021 primarily due to higher energy and logistics costs, the timing of inventory sales and the strengthening of the Canadian dollar relative to the US dollar between periods, partially offset by higher capitalized deferred stripping.
Meadowbank Complex
At the Meadowbank Complex, gold production decreased by 25.3% to 59,765 ounces in the first quarter of 2022 compared with 79,965 ounces in the first quarter of 2021, primarily due to decreased mill throughput and lower gold grades. In December 2021, activities at the Meadowbank Complex were reduced to essential services due to the COVID-19 Omicron variant outbreak. Production activities were restarted in mid-January 2022 and gradually ramped up to normal operating levels into February 2022. Production costs at the Meadowbank Complex were $96.7 million in the first quarter of 2022, an increase of 10.7% compared with production costs of $87.3 million in the first quarter of 2021 primarily due to higher energy and logistics costs, and the timing of inventory sales.
Hope Bay mine
In September and October of 2021, there were a significant number of COVID-19 cases identified at the Hope Bay minesite. As a precautionary measure, the Company decided to suspend mining and milling operations as it investigated opportunities to improve screening, testing and health protocols at site. The Company started to ramp-up exploration and underground activities in mid-November 2021. However, with increasing cases of COVID-19 in December, the Company again reduced all activities at site to essential services only.
In 2022, production activities will remain suspended and the primary focus at Hope Bay will be on exploration.
Fosterville mine
The Company completed the Merger on February 8, 2022. For the period from February 8, 2022 to March 31, 2022, gold production at the Fosterville mine was 81,827 ounces and production costs at the Fosterville mine were $88.0 million.
Kittila mine
At the Kittila mine, gold production decreased by 25.0% to 45,508 ounces in the first quarter of 2022 compared with 60,716 ounces in the first quarter of 2021, primarily due to decreased mill throughput resulting from a slower start-up of the mill following a planned 10-day shutdown of the autoclave for regular maintenance and lower gold grades due to a delay in reaching the higher grade stopes in the Roura zone. Production costs at the Kittila mine were $49.5 million in the first quarter of 2022, an increase of 1.6% compared with production costs of $48.7 million in the first quarter of 2021 driven primarily by higher energy, consumable and mill maintenance costs, partially offset by the weakening of the Euro relative to the US dollar between periods.
Pinos Altos mine
At the Pinos Altos mine, gold production decreased by 13.7% to 25,170 ounces in the first quarter of 2022 compared with 29,175 ounces in the first quarter of 2021, primarily due to decreased throughput resulting from lower open pit production following the depletion of the Sinter pit and higher rehabilitation requirements
12

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
at the Santo Nino and Cerro Colorado zones. Production costs at the Pinos Altos mine were $32.5 million in the first quarter of 2022, an increase of 1.7% compared with production costs of $32.0 million in the first quarter of 2021 driven primarily by the timing of inventory sales.
Creston Mascota mine
At the Creston Mascota mine, gold production decreased by 76.3% to 1,006 ounces in the first quarter of 2022 compared with 4,252 ounces in the first quarter of 2021 primarily due to decreased residual leaching. Production costs at the Creston Mascota mine were $0.6 million in the first quarter of 2022, a decrease of 74.5% compared with production costs of $2.4 million in the first quarter of 2021 primarily due to lower residual heap leaching production costs.
La India mine
At the La India mine, gold production increased by 27.4% to 21,702 ounces in the first quarter of 2022 compared with 17,033 ounces in the first quarter of 2021, primarily due to the processing of higher gold grades. Production costs at the La India mine were $17.7 million in the first quarter of 2022, an increase of 9.9% compared with production costs of $16.1 million in the first quarter of 2021, driven primarily by higher heap leach production costs due to higher cement and cyanide consumption related to the high clay content of the ore, partially offset by the timing of inventory sales.
Balance Sheet Review
Total assets of $23.3 billion at March 31, 2022 increased by 128.4%, or $13.1 billion, compared with total assets of $10.2 billion as at December 31, 2021 primarily due to the Merger. Cash and cash equivalents were $1,062.0 million at March 31, 2022, an increase of $876.2 million compared with December 31, 2021, due primarily to $838.7 million of cash acquired in the Merger and $507.4 million in cash provided by operating activities, partially offset by $293.2 million in additions to property, plant and mine development and $154.8 million in dividends paid. Inventories increased by $254.7 million from $878.9 million at December 31, 2021 to $1,133.6 million at March 31, 2022 primarily due to the addition of $259.7 million of inventories from the Kirkland operations at March 31, 2022. Net income taxes recoverable increased by $89.0 million between December 31, 2021 and March 31, 2022 as a result of payments to tax authorities exceeding the current tax expense and the additional income taxes recoverable due to the Company which were inherited upon the Merger. The increase in property, plant and mine development from $7.7 billion at December 31, 2021 to $17.7 billion at March 31, 2022 was primarily due to the Merger closing during the first quarter of 2022 and additions capitalized to property, plant and mine development of $293.2 million, partially offset by amortization expense of $260.7 million. Goodwill increased from $407.8 million at December 31, 2021 to $2,212.3 million at March 31, 2022. This resulted from the addition of goodwill in the preliminary purchase price allocation associated with the acquisition of Kirkland. The fair values allocated to assets acquired and liabilities assumed as part of the purchase price are preliminary, and are subject to adjustment based on further analysis and evaluation over the course of the measurement period which will not exceed twelve months from the acquisition date.
Total liabilities of $7,068.5 million at March 31, 2022 increased by $2,852.1 million from $4,216.3 million at December 31, 2021 primarily due to an increase in deferred income and mining tax liabilities of $2,639.4 million, an increase in accounts payable and accrued liabilities of $235.8 million and an increase in reclamation provisions of $175.8 million all assumed through the preliminary purchase allocation for the acquisition of Kirkland on February 8, 2022.
While the Company occasionally enters into contracts to limit the risk associated with decreased by-product metal prices, increased foreign currency costs (including capital expenditures) and input costs, the contracts act as economic hedges of underlying exposures and are not held for speculative purposes. Agnico Eagle does not use complex derivative contracts to hedge exposures. During the first three months of 2022, the Company
13

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
increased its currency hedge positions to support its key input costs used in budgeting and mine planning assumptions. As at March 31, 2022, the Company had outstanding currency derivative contracts related to $2,085.3 million of 2022 and 2023 expenditures (December 31, 2021 — $2,375.2 million) and diesel fuel derivative contracts related to 9.4 million gallons of heating oil (December 31, 2021 — 10.9 million).
Liquidity and Capital Resources
As at March 31, 2022, the Company’s cash and cash equivalents totaled $1,062.0 million compared with $185.8 million as at December 31, 2021. The Company’s policy is to invest excess cash in highly liquid investments of high credit quality to reduce risks associated with these investments. Such investments with remaining maturities of greater than three months and less than one year at the time of purchase are classified as short-term investments. Investments with remaining maturities of less than three months at the time of purchase are presented as cash equivalents. Decisions regarding the length of maturities are based on cash flow requirements, rates of return and various other factors.
Working capital (current assets less current liabilities) increased to $1,584.3 million as at March 31, 2022 compared with $540.6 million as at December 31, 2021 primarily due to an increase in cash and cash equivalents of $876.2 million and an increase in inventories of $254.7 million, partially offset by an increase in accounts payable and accrued liabilities of $230.1 million primarily due to the Merger.
Following completion of the Merger on February 8, 2022, the Company’s cash position increased to approximately $973.0 million. On February 9, 2022, Fitch Ratings Inc. announced that it changed the rating outlook on the Company’s investment grade credit rating to “positive” from “stable” and confirmed the rating at BBB reflecting the Company’s strong financial risk profile.
Subject to various risks and uncertainties, the Company believes it will generate sufficient cash flow from operations and has adequate cash and debt facilities available to finance its current operations, working capital requirements, contractual obligations, debt maturities, planned capital expenditure and exploration programs. While the Company believes its capital resources will be sufficient to satisfy all its mandatory and discretionary commitments, the Company may choose to decrease certain of its discretionary expenditure commitments, which include certain capital expenditures and exploration and corporate development expenses, should unexpected financial circumstances arise in the future. See Risk Profile in this MD&A.
Operating Activities
Cash provided by operating activities increased to $507.4 million in the first quarter of 2022 compared with $366.6 million in the first quarter of 2021 primarily due to higher average realized gold prices, a 35.0% increase in total payable gold sold between periods primarily due to the contribution from the Detour Lake, Fosterville and Macassa mines, and more favourable working capital changes, which was partially offset by an increase in production costs, exploration and corporate development expenses and general and administrative expenses between periods.
Investing Activities
Cash provided by investing activities increased to $535.7 million in the first quarter of 2022, compared with cash used in investing activities of $538.1 million in the first quarter of 2021, primarily due to $838.7 million in cash and cash equivalents acquired in the Merger and a decrease of $340.9 million of payments related to the acquisition of TMAC in the first quarter of 2021, partially offset by a $101.0 million increase in capital expenditures between periods. The increase in capital expenditures between periods is primarily attributable to $97.3 million related to the Detour Lake, Macassa and Fosterville mines.
In the first quarter of 2022, the Company purchased $13.4 million in equity securities and other investments compared with $5.5 million in the first quarter of 2021. The Company did not sell any equity securities and
14

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
other investments in the first quarter of 2022. The Company’s equity securities and other investments consist primarily of investments in common shares and share purchase warrants of entities in the mining industry.
Financing Activities
Cash used in financing activities increased to $167.9 million in the first quarter of 2022, compared with $100.1 million in the first quarter of 2021, primarily due to a $81.8 million increase in dividends paid as a result of the increased number of common shares issued as consideration for the Merger.
The Company issued common shares for net proceeds of $23.1 million in the first quarter of 2022, compared with $12.9 million in the first quarter of 2021, attributable to employee stock option plan exercises and issuances under the incentive share purchase plan and the dividend reinvestment plan.
On February 23, 2022, Agnico Eagle declared a quarterly cash dividend of $0.40 per common share paid on March 15, 2022 to holders of record of the common shares of the Company as of March 7, 2022. Agnico Eagle has declared a cash dividend every year since 1983. In the first quarter of 2022, the Company paid dividends of $154.8 million, an increase of $81.8 million compared to $73.0 million paid in the first quarter of 2021. Although the Company expects to continue paying dividends, future dividends will be at the discretion of the Board and will be subject to factors such as income, financial condition and capital requirements.
On December 22, 2021, the Company amended its unsecured revolving $1,200.0 million credit facility (the “Credit Facility”) to improve pricing, increase the uncommitted accordion feature from $300.0 million to $600.0 million and extend the maturity date from June 22, 2023 to December 22, 2026. In the first quarter of 2022, the Company drew down and repaid $100.0 million on its Credit Facility primarily to facilitate operating requirements. In the first quarter of 2021, the Company drew down and repaid $240.0 million from the Credit Facility primarily to facilitate the acquisition of TMAC. As at March 31, 2022, the Company’s outstanding balance under the Credit Facility was nil. Credit Facility availability is reduced by outstanding letters of credit at that date, which were $0.9 million as at March 31, 2022, resulting in $1,199.1 million available for future drawdown.
The Company has five uncommitted letter of credit facilities with certain financial institutions. The amount available under the first letter of credit facility is C$350.0 million, the amount available under the second letter of credit facility is C$200.0 million and the amount available under the third letter of credit facility is C$100.0 million, the amount available under the fourth letter of credit facility is C$100 million and the amount under the fifth letter of credit facility is C$120 million. As at March 31, 2022, the aggregate undrawn face amount of letters of credit under the letter of credit facilities was $549.6 million. Additionally the company has a standby guarantee facility with an available amount of $25 million. The aggregate undrawn face amount of guarantees under the guarantee facility at March 31, 2022 was $14.8 million.
The Company was in compliance with all covenants contained in the Credit Facility, the letter of credit facilities and its $1,575.0 million of guaranteed senior unsecured notes as at March 31, 2022.
Risk Profile
The Company is subject to significant risks, including fluctuations in commodity prices, foreign exchange rates and other risks due to the inherent nature of the business of exploration, development and mining of properties with precious metals. Changes in economic conditions and volatile financial markets may have a significant impact on Agnico Eagle’s cost and availability of financing and overall liquidity. The volatility in gold, silver, zinc and copper prices directly affects Agnico Eagle’s revenues, earnings and cash flow. Volatile energy, commodity and consumables prices and currency exchange rates impact production costs. The Company is subject to risks related to pandemics and other outbreaks of communicable diseases such as COVID-19, as well as the economic impacts that result therefrom. For a more comprehensive discussion of these and other risks, see “Risk Factors” in the AIF filed on the CSA’s SEDAR website and with the SEC as part of the Form 40-F.
15

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Disclosure Controls and Procedures and Internal Controls over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) and disclosure controls and procedures (“DC&P”).
ICFR is a framework designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management has used the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in order to assess the effectiveness of the Company’s ICFR.
DC&P form a broader framework designed to provide reasonable assurance that information required to be disclosed by the Company in its annual and interim filings and other reports filed under securities legislation is recorded, processed, summarized and reported within the time frame specified in securities legislation and includes controls and procedures designed to ensure that information required to be disclosed by the Company in its annual and interim filings and other reports submitted under securities legislation is accumulated and communicated to the Company’s management to allow timely decisions regarding required disclosure.
Together, the ICFR and DC&P frameworks provide internal control over financial reporting and disclosure. The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed in the Company’s annual and interim filings and other reports filed under securities legislation, is accumulated and communicated in a timely fashion. Due to their inherent limitations, the Company acknowledges that, no matter how well designed, ICFR and DC&P can provide only reasonable assurance of achieving the desired control objectives and as such may not prevent or detect all misstatements. Further, the effectiveness of ICFR is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change.
There have been no significant changes in our internal controls during the three months ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
Limitation on scope of design
The Company acquired Kirkland during the three months ended March 31, 2022. The financial information for this acquisition is included in this MD&A and in Note 5 to the condensed interim consolidated financial statements. The CSA’s National Instrument 52-109 and the SEC staff provide an exemption whereby companies undergoing acquisitions can exclude the acquired business in the year of acquisition from the scope of testing and assessment of design and operational effectiveness of controls over financial reporting. Due to the complexity associated with assessing internal controls during integration efforts, the Company plans to utilize the scope exemption as it relates to this acquisition in its management report on internal controls over financial reporting for the year ending December 31, 2022.
The tables below present summary financial information for Kirkland included in the Company’s condensed interim consolidated financial statements. Results of operations from Kirkland have been consolidated with those of the Company from February 8, 2022:
February 8, 2022 – 
March 31, 2022
Revenues from mining operations
$ 499,349
Income before income and mining taxes
$ 112,204
16

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
As at
  March 31, 2022  
Total assets
$ 13,434,608
Total liabilities
$ 3,075,928
Total net assets
$ 10,358,680
Non-GAAP Financial Performance Measures
This MD&A presents certain financial performance measures, including adjusted net income, adjusted net income per share, total cash costs per ounce of gold produced (on both a by-product and co-product basis), minesite costs per tonne, all-in sustaining costs per ounce of gold produced (on both a by-product and co-product basis), operating margin, realized prices, sustaining capital expenditures and development capital expenditures, that are not recognized measures under IFRS. These measures may not be comparable to similar measures reported by other gold producers. Non-GAAP financial performance measures should be considered together with other data prepared in accordance with IFRS. Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding such measures.
Adjusted Net Income and Adjusted Net Income Per Share
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding adjusted net income and adjusted net income per share.
The following table sets out the reconciliation of net income and net income per share for the three months ended March 31, 2022 and March 31, 2021 to adjusted net income and adjusted net income per share.
Three Months Ended March 31,
(thousands of United States dollars)
2022
2021(i)
Net income for the period
$ 109,752 $ 145,239
Foreign currency translation loss (gain)
1,210 (3,078)
Realized and unrealized (gain) loss on derivative financial instruments
(28,664) 21,066
Severance and transaction costs related to acquisitions
80,767 2,884
Environmental remediation
(2,299) (628)
Gain on sale of non-strategic exploration properties
(10,000)
Net loss on disposal of property. plant and equipment
1,081 1,823
Purchase price allocation to inventory(ii)
113,651
Multi-year health care donation
7,952
Income and mining taxes adjustments(iii)
(39,882) 6,756
Adjusted net income for the period
$ 235,616 $ 172,014
Net income per share – basic
$ 0.29 $ 0.60
Net income per share – diluted
$ 0.28 $ 0.59
Adjusted net income per share – basic
$ 0.61 $ 0.71
Adjusted net income per share – diluted
$ 0.61 $ 0.70
Notes:
(i)
The Company has adopted amendments to IAS 16 effective January 1, 2022 on a retrospective basis and the comparative amounts above have been adjusted accordingly. For more information please see Note 3 in the Company’s condensed interim consolidated financial statements. The Company finalized the purchase price allocation of TMAC during the year ended December 31, 2021 and
17

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
adjustments were made retrospectively back to the acquisition date of February 2, 2021 and the comparative amounts above have been adjusted accordingly.
(ii)
The Company determined that the transaction with Kirkland represented a business combination under IFRS 3 Business Combinations (“IFRS 3”), with Agnico identified as the acquirer and as such, the transaction was accounted for using the acquisition method of accounting in accordance with IFRS 3. As part of the preliminary purchase price allocation, the Company is required to determine the fair value of net assets acquired. The fair value of inventory acquired was estimated based on the selling cost less costs to be incurred plus a profit margin on those costs resulting in a fair value increase to the carrying value of inventories acquired from Kirkland. The revalued inventory sold during the three months ended March 31, 2022 resulted in additional production costs of approximately $113.7 million ($78.8 million after tax). Given the unusual nature of the fair value adjustment on inventory related to the Merger, this non-cash adjustment, which increased the cost of inventory sold during the quarter, was normalized from earnings per share in the first quarter of 2022.
(iii)
Income and mining taxes adjustments reflect items such as foreign currency translation recorded to the income and mining taxes expense, income and mining taxes impact on normalized items, recognition of previously unrecognized capital losses, the result of income and mining taxes audits, impact of tax law changes and reflective adjustments to prior period operating results.
Total Cash Costs per Ounce of Gold Produced and Minesite Costs per Tonne
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding total cash costs per ounce of gold produced and minesite costs per tonne.
The following tables set out a reconciliation of total cash costs per ounce of gold produced (on both a by-product basis and co-product basis) and minesite costs per tonne to production costs, exclusive of amortization, as presented in the condensed interim consolidated statements of income in accordance with IFRS.
Total Production Costs by Mine
Three Months Ended
March 31,
(thousands of United States dollars)
2022
2021
LaRonde mine
$ 45,841 $ 51,342
LaRonde Zone 5 mine
16,733 12,685
LaRonde Complex
62,574 64,027
Canadian Malartic mine(i)
56,937 55,468
Goldex mine
26,217 22,513
Detour Lake mine
119,965
Macassa mine
32,314
Meliadine mine
78,679 64,740
Meadowbank Complex
96,711 87,339
Hope Bay mine
24,075
Fosterville mine
88,001
Kittila mine
49,451 48,660
Pinos Altos mine
32,536 31,998
Creston Mascota mine
615 2,417
La India mine
17,735 16,139
Production costs per the condensed interim consolidated statements of income
$ 661,735 $ 417,376
18

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold Produced by Mine and Reconciliation of Production Costs to Minesite Costs per Tonne by Mine
(thousands of United States dollars, except as noted)
LaRonde mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
87,549 75,389
Production costs
$ 45,841 $   524 $  51,342 $   681
Inventory adjustments(ii)
10,927 125 929 12
Realized gains and losses on hedges of production costs
(485) (6) (2,256) (30)
Other adjustments(vi)
2,762 31 4,818 64
Cash operating costs (co-product basis)
$ 59,045 $ 674 $ 54,833 $ 727
By-product metal revenues
(17,218) (196) (17,899) (237)
Cash operating costs (by-product basis)
$ 41,827 $ 478 $ 36,934 $ 490
LaRonde mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
455 487
Production costs
$ 45,841 $   101 $  51,342 $   105
Production costs (C$)
C$ 58,015 C$ 128 C$ 66,403 C$ 136
Inventory adjustments (C$)(ii)
12,357 27 505 1
Other adjustments (C$)(vi)
(3,506) (8) (2,494) (5)
Minesite operating costs (C$)
C$ 66,866 C$ 147 C$ 64,414 C$ 132
LaRonde Zone 5 mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
17,488 17,689
Production costs
$ 16,733 $   957 $ 12,685 $   717
Inventory adjustments(ii)
465 27 1,369 77
Realized gains and losses on hedges of production costs
(113) (7) (533) (30)
Other adjustments(vi)
30 2 28 2
Cash operating costs (co-product basis)
$ 17,115 $ 979 $ 13,549 $ 766
By-product metal revenues
(91) (6) (89) (5)
Cash operating costs (by-product basis)
$ 17,024 $ 973 $ 13,460 $ 761
LaRonde Zone 5 mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
280 277
Production costs
$  16,733 $    60 $  12,685 $   46
Production costs (C$)
C$ 21,173 C$ 76 C$ 16,154 C$ 58
Inventory adjustments (C$)(ii)
576 2 1,643 6
Minesite operating costs (C$)
C$ 21,749 C$ 78 C$ 17,797 C$ 64
19

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
LaRonde Complex
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
105,037 93,078
Production costs
$ 62,574 $   596 $ 64,027 $   688
Inventory adjustments(ii)
11,392 108 2,298 25
Realized gains and losses on hedges of production costs
(598) (6) (2,789) (30)
Other adjustments(vi)
2,792 27 4,846 52
Cash operating costs (co-product basis)
$ 76,160 $ 725 $ 68,382 $ 735
By-product metal revenues
(17,309) (165) (17,988) (194)
Cash operating costs (by-product basis)
$ 58,851 $ 560 $ 50,394 $ 541
LaRonde Complex
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
735 764
Production costs
$ 62,574 $    85 $ 64,027 $    84
Production costs (C$)
C$ 79,188 C$ 108 C$ 82,557 C$ 108
Inventory adjustments (C$)(ii)
12,933 18 2,148 3
Other adjustments (C$)(vi)
(3,506) (5) (2,494) (3)
Minesite operating costs (C$)
C$ 88,615 C$ 121 C$ 82,211 C$ 108
Canadian Malartic mine
Per Ounce of Gold Produced(i)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
80,509 89,550
Production costs
$ 56,937 $   707 $ 55,468 $ 619
Inventory adjustments(ii)
728 9 1,689 19
Realized gains and losses on hedges of production costs
(78) (1)
Other adjustments(vi)
7,782 97 205 3
Cash operating costs (co-product basis)
$ 65,447 $ 813 $ 57,284 $ 640
By-product metal revenues
(1,662) (21) (2,030) (23)
Cash operating costs (by-product basis)
$ 63,785 $ 792 $ 55,254 $ 617
Canadian Malartic mine
Per Tonne(i)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
2,412 2,631
Production costs
$ 56,937 $    24 $ 55,468 $    21
Production costs (C$)
C$ 71,629 C$ 30 C$ 71,210 C$ 27
Inventory adjustments (C$)(ii)
1,010 2,211 1
Other adjustments (C$)(vi)
9,647 4
Minesite operating costs (C$)
C$ 82,286 C$ 34 C$ 73,421 C$ 28
20

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Goldex mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
34,445 34,650
Production costs
$ 26,217 $   761 $ 22,513 $    650
Inventory adjustments(ii)
710 21 20 1
Realized gains and losses on hedges of production costs
(215) (6) (1,002) (29)
Other adjustments(vi)
54 1 45 1
Cash operating costs (co-product basis)
$ 26,766 $ 777 $ 21,576 $ 623
By-product metal revenues
(16) (6)
Cash operating costs (by-product basis)
$ 26,750 $ 777 $ 21,570 $ 623
Goldex mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
743 727
Production costs
$ 26,217 $    35 $ 22,513 $    31
Production costs (C$)
C$ 33,220 C$ 45 C$ 28,558 C$ 39
Inventory adjustments (C$)(ii)
892 1 (27)
Minesite operating costs (C$)
C$ 34,112 C$ 46 C$ 28,531 C$ 39
Detour Lake Mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
100,443
Production costs
$ 119,965 $  1,194 $ $
Inventory adjustments(ii)
(16,621) (166)
Purchase price allocation to inventory(v)
(46,147) (459)
Other adjustments(vi)
4,285 43
Cash operating costs (co-product basis)
$ 61,482 $ 612 $ $
By-product metal revenues
(1,205) (12)
Cash operating costs (by-product basis)
$ 60,277 $ 600 $ $
Detour Lake Mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
3,270
Production costs
$ 119,965 $    37 $ $
Production costs (C$)
C$ 151,818 C$ 46 C$ C$
Inventory adjustments (C$)(ii)
(21,072) (6)
Purchase price allocation to inventory (C$)(v)
(58,400) (18)
Other adjustments (C$)(vi)
5,400 2
Minesite operating costs (C$)
C$ 77,746 C$ 24 C$ C$
21

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Macassa Mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
24,488
Production costs
$ 32,314 $  1,320 $ $
Inventory adjustments(ii)
(2,100) (86)
Purchase price allocation to inventory(v)
(10,827) (442)
Other adjustments(vi)
(44) (2)
Cash operating costs (co-product basis)
$ 19,343 $ 790 $ $
By-product metal revenues
(73) (3)
Cash operating costs (by-product basis)
$ 19,270 $ 787 $ $
Macassa Mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
47
Production costs
$ 32,314 $ 689 $ $
Production costs (C$)
C$ 40,830 C$ 871 C$ C$
Inventory adjustments (C$)(ii)
(2,644) (56)
Purchase price allocation to inventory (C$)(v)
(13,578) (290)
Other adjustments (C$)(vi)
(68) (2)
Minesite operating costs (C$)
C$ 24,540 C$ 523 C$ C$
Meliadine mine
Per Ounce of Gold Produced(vii)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
80,704 88,003
Production costs
$ 78,679 $ 975 $ 64,740 $ 736
Inventory adjustments(ii)
3,632 45 (1,700) (19)
Realized gains and losses on hedges of production costs
(1,311) (16) (2,634) (30)
IAS 16 amendments(iv)
(4,976) (57)
Other adjustments(vii)
95 1 43
Cash operating costs (co-product basis)
$ 81,095 $ 1,005 $ 55,473 $ 630
By-product metal revenues
(217) (3) (220) (2)
Cash operating costs (by-product basis)
$ 80,878 $ 1,002 $ 55,253 $ 628
Meliadine mine
Per Tonne(viii)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
432 338
Production costs
$ 78,679 $   182 $ 64,740 $   192
Production costs (C$)
C$ 99,437 C$ 230 C$ 82,771 C$ 245
Inventory adjustments (C$)(ii)
4,525 11 (2,508) (7)
IAS 16 amendments (C$)(iv)
(6,362) (19)
Minesite operating costs (C$)
C$ 103,962 C$ 241 C$ 73,901 C$ 219
22

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Meadowbank Complex
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
59,765 79,965
Production costs
$ 96,711 $  1,618 $ 87,339 $  1,092
Inventory adjustments(ii)
15,203 254 5,780 72
Realized gains and losses on hedges of production costs
(2,043) (34) (2,914) (36)
Operational care & maintenance due to COVID-19(iii)
(1,436) (24)
Other adjustments(vi)
66 1 72 1
Cash operating costs (co-product basis)
$ 108,501 $ 1,815 $ 90,277 $ 1,129
By-product metal revenues
(295) (4) (492) (6)
Cash operating costs (by-product basis)
$ 108,206 $ 1,811 $ 89,785 $ 1,123
Meadowbank Complex
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
892 924
Production costs
$ 96,711 $ 108 $ 87,339 $    95
Production costs (C$)
C$ 122,465 C$ 137 C$ 112,766 C$ 122
Inventory adjustments (C$)(ii)
18,808 21 7,102 8
Operational care and maintenance due to
COVID-19 (C$)(iii)
(1,793) (2)
Minesite operating costs (C$)
C$ 139,480 C$ 156 C$ 119,868 C$ 130
Hope Bay mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
12,259
Production costs
$ $ $ 24,075 $ 1,964
Inventory adjustments(ii)
(12,691) (1,035)
Cash operating costs (co-product basis)
$ $ $ 11,384 $ 929
By-product metal revenues
Cash operating costs (by-product basis)
$ $ $ 11,384 $ 929
Hope Bay mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
39
Production costs
$ $ $ 24,075 $   616
Production costs (C$)
C$ C$ C$ 30,477 C$ 780
Inventory adjustments (C$)(ii)
(16,306) (417)
Minesite operating costs (C$)
C$ C$ C$ 14,171 C$ 363
23

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Fosterville Mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
81,827
Production costs
$ 88,001 $  1,075 $ $
Inventory adjustments(ii)
(5,839) (71)
Purchase price allocation to inventory(v)
(56,677) (693)
Cash operating costs (co-product basis)
$ 25,485 $ 311 $ $
By-product metal revenues
(188) (2)
Cash operating costs (by-product basis)
$ 25,297 $ 309 $ $
Fosterville Mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
91
Production costs
$ 88,001 $   963 $ $
Production costs (A$)
A$ 117,226 A$ 1,283 A$ A$
Inventory adjustments (A$)(ii)
(8,205) (90)
Purchase price allocation to inventory (A$)(v)
(75,500) (826)
Minesite operating costs (A$)
A$ 33,521 A$ 367 A$ A$
Kittila mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
45,508 60,716
Production costs
$ 49,451 $  1,087 $ 48,660 $   801
Inventory adjustments(ii)
(2,791) (62) (295) (5)
Realized gains and losses on hedges of production costs
678 15 (6)
Other adjustments(vi)
54 1 172 3
Cash operating costs (co-product basis)
$ 47,392 $ 1,041 $ 48,531 $ 799
By-product metal revenues
(89) (2) (54) (1)
Cash operating costs (by-product basis)
$ 47,303 $ 1,039 $ 48,477 $ 798
Kittila mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore milled (thousands of tonnes)
461 494
Production costs
$ 49,451 $   107 $ 48,660 $   99
Production costs (€)
43,908 95 41,068 83
Inventory adjustments (€)(ii)
(2,274) (5) (337) (1)
Minesite operating costs (€)
41,634 90 40,731 82
24

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Pinos Altos mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
25,170 29,175
Production costs
$ 32,536 $  1,293 $ 31,998 $ 1,097
Inventory adjustments(ii)
799 31 2,160 74
Realized gains and losses on hedges of production costs
(234) (9) (548) (19)
Other adjustments(vi)
303 12 375 13
Cash operating costs (co-product basis)
$ 33,404 $ 1,327 $ 33,985 $ 1,165
By-product metal revenues
(6,263) (249) (9,538) (327)
Cash operating costs (by-product basis)
$ 27,141 $ 1,078 $ 24,447 $ 838
Pinos Altos mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore processed (thousands of tonnes)
384 493
Production costs
$ 32,536 $   85 $ 31,998 $   65
Inventory adjustments(ii)
799 2 2,160 4
Minesite operating costs
$ 33,335 $ 87 $ 34,158 $ 69
Creston Mascota mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
1,006 4,252
Production costs
$    615 $    611 $   2,417 $    568
Inventory adjustments(ii)
(87) (87) (477) (112)
Other adjustments(vi)
18 18 141 34
Cash operating costs (co-product basis)
$ 546 $ 542 $ 2,081 $ 490
By-product metal revenues
(135) (135) (1,263) (297)
Cash operating costs (by-product basis)
$ 411 $ 407 $ 818 $ 193
Creston Mascota mine
Per Tonne(ix)
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore processed (thousands of tonnes)
Production costs
$    615 $    — $   2,417 $     —
Inventory adjustments(ii)
(87) (477)
Other adjustments(vi)
(528) (1,940)
Minesite operating costs
$ $ $ $
25

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
La India mine
Per Ounce of Gold Produced
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per ounce)
(thousands)
($ per ounce)
Gold production (ounces)
21,702 17,033
Production costs
$  17,735 $    817 $  16,139 $    948
Inventory adjustments(ii)
568 26 242 14
Other adjustments(vi)
196 9 120 7
Cash operating costs (co-product basis)
$ 18,499 $ 852 $ 16,501 $ 969
By-product metal revenues
(708) (32) (562) (33)
Cash operating costs (by-product basis)
$ 17,791 $ 820 $ 15,939 $ 936
La India mine
Per Tonne
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
(thousands)
($ per tonne)
(thousands)
($ per tonne)
Tonnes of ore processed (thousands of tonnes)
1,563 1,642
Production costs
$  17,735 $     11 $  16,139 $     10
Inventory adjustments(ii)
568 1 242
Minesite operating costs
$ 18,303 $ 12 $ 16,381 $ 10
Notes:
(i)
The information set out in this table reflects the Company’s 50% interest in the Canadian Malartic mine.
(ii)
Under the Company’s revenue recognition policy, revenue from contracts with customers is recognized upon the transfer of control over metals sold to the customer. As the total cash costs per ounce of gold produced are calculated on a production basis, an inventory adjustment is made to reflect the portion of production not yet recognized as revenue.
(iii)
This adjustment reflects the costs associated with the temporary suspension of mining activities at the Company’s mine sites in response to the COVID-19 pandemic and includes primarily payroll and other incidental costs associated with maintaining the sites and properties, and payroll costs associated with employees who were not working during the period of reduced or suspended operations. These expenses also include payroll costs of employees who could not work following the period of temporary suspension or reduced operations due to the Company’s effort to prevent or curtail community transmission of COVID-19. These costs were previously classified as “other adjustments” and have now been disclosed separately to provide additional detail on the reconciliation, allowing investors to better understand the impact of such events on the cash operating costs per ounce and minesite cost per tonne.
(iv)
Certain previously reported line items have been restated to reflect the retrospective application of IAS 16. The Company consider the disclosure of the total cash cost per ounce of gold produced (by-product and co-product) without the incorporation of the impacts of the retrospective application of IAS 16 amendments is meaningful so investors can compare current performance to what management considers steady-state operational costs for the comparative period.
(v)
On February 2, 2022, the Company announced the completion of the merger of equals with Kirkland and this adjustment reflects the fair value allocated to inventory on the purchase price equation.
(vi)
Other adjustments consists of costs associated with a 5% in-kind royalty paid by the Canadian Malartic mine, a 2% in-kind royalty paid by the Detour Lake mine, smelting, refining and marketing charges to production costs.
(vii)
The Meliadine mine’s cost calculations per ounce of gold produced for the three months ended March 31, 2021 exclude 8,123 ounces of payable gold production which were produced prior to the achievement of commercial production at the Tiriganiaq open pit deposit on August 15, 2021.
(viii)
The Meliadine mine’s cost calculations per tonne for the three months ended March 31, 2021 exclude 77,037 tonnes of ore from the Tiriganiaq open pit deposit which were processed prior to the achievement of commercial production at the Tiriganiaq open pit deposit on August 15, 2021.
(ix)
The Creston Mascota mine’s cost calculations per tonne for the three months ended March 31, 2022 exclude approximately $0.5 million of production costs incurred during these periods following the ceasing of mining activities at the Bravo pit during the third quarter of 2020. The Creston Mascota mine’s cost calculations per tonne for the three months ended March 31, 2021 exclude approximately $2.4 million of production costs incurred during these periods following the ceasing of mining activities at the Bravo pit during the third quarter of 2020.
26

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
All-in Sustaining Costs per Ounce of Gold Produced
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding all-in sustaining costs per ounce of gold produced.
The following tables set out a reconciliation of production costs to all-in sustaining costs per ounce of gold produced for the three months ended March 31, 2022 and March 31, 2021 on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (without deducting by-product metal revenues).
Reconciliation of Production Costs to All-in Sustaining Costs per Ounce of Gold Produced
Three Months Ended
March 31,
(United States dollars per ounce of gold produced, except where noted)
2022
2021
Production costs per the condensed interim consolidated statements of income
(thousands of United States dollars)
$ 661,735 $ 417,376
Gold production (ounces)(i)
660,604 508,681
Production costs per ounce of adjusted gold production
$ 1,002 $ 821
Adjustments:
Inventory adjustments(ii)
10 (6)
Purchase price allocation to inventory(iii)
(172)
IAS 16 amendments(iv)
(10)
Realized gains and losses on hedges of production costs
(6) (20)
Operational care and maintenance costs due to COVID-19(v)
(2)
Other(vi)
22 12
Total cash costs per ounce of gold produced (co-product basis)(vii)
$ 854 $ 797
By-product metal revenues
(43) (63)
Total cash costs per ounce of gold produced (by-product basis)(vii)
$ 811 $ 734
Adjustments:
Sustaining capital expenditures (including capitalized exploration)
151 175
General and administrative expenses (including stock option expense)
102 88
Non-cash reclamation provision and sustaining leases(viii)
15 10
All-in sustaining costs per ounce of gold produced (by-product basis)
$ 1,079 $ 1,007
By-product metal revenues
43 63
All-in sustaining costs per ounce of gold produced (co-product basis)
$ 1,122 $ 1,070
Notes:
(i)
Gold production for the three months ended March 31, 2021 exclude 8,123 ounces of payable production of gold at the Meliadine mine which were produced prior to the achievement of commercial production at the Tiriganiaq open pit deposit on August 15, 2021.
(ii)
Under the Company’s revenue recognition policy, revenue from contracts with customers is recognized upon the transfer of control over metals sold to the customer. As the total cash costs per ounce of gold produced are calculated on a production basis, an inventory adjustment is made to reflect the portion of production not yet recognized as revenue.
(iii)
On February 2, 2022 the Company announced the completion of the merger of equals with Kirkland and this adjustment reflects the fair value allocated to inventory on the purchase price allocation.
(iv)
Certain previously reported line items have been restated to reflect the retrospective application of IAS 16. This adjustment eliminates the effects of the retrospective application of IAS 16 amendments on the total cash costs per ounce of gold produced (by-product and co-product) as well as all-in sustaining costs (by-product and co-product).
(v)
This adjustment reflects the costs associated with the temporary suspension of mining activities at the Company’s mine sites in
27

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
response to the COVID-19 pandemic which primarily includes payroll and other incidental costs associated with maintaining the sites and properties, and payroll costs associated with employees who were not working during the period of reduced or suspended operations. These costs were previously classified as “other adjustments” and have now been disclosed separately to provide additional detail on the reconciliation, allowing investors to better understand the impacts of such events on the cash operating costs per ounce and minesite cost per tonne.
(vi)
Other adjustments consists of costs associated with a 5% in-kind royalty paid by the Canadian Malartic mine, a 2% in-kind royalty paid by the Detour Lake mine, smelting, refining and marketing charges to production costs.
(vii)
The total cash costs per ounce of gold produced is not a recognized measure under IFRS and this data may not be comparable to data reported by other gold producers. See “Non-GAAP Financial Performance Measures — Total Cash Costs per Ounce of Gold Produced and Minesite Costs per Tonne” for more information on the Company’s use of total cash cost per ounce of gold produced.
(viii)
Sustaining leases are lease payments related to sustaining assets.
28

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Operating Margin
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding all-in sustaining costs per ounce of gold produced.
The following table sets out a reconciliation of net income to operating margin for the three months ended March 31, 2022 and March 31, 2021.
Three Months Ended March 31, 2022
Revenues from
Mining
Operations
Production
Costs
Operating
Margin
LaRonde mine
149,405 (45,841) 103,564
LaRonde Zone 5 mine
33,389 (16,733) 16,656
Canadian Malartic mine(ii)
136,239 (56,937) 79,302
Goldex mine
63,335 (26,217) 37,118
Detour Lake mine
248,023 (119,965) 128,058
Macassa mine
56,469 (32,314) 24,155
Meliadine mine
162,958 (78,679) 84,279
Meadowbank Complex
91,513 (96,711) (5,198)
Hope Bay mine
144 144
Fosterville mine
194,857 (88,001) 106,856
Kittila mine
95,562 (49,451) 46,111
Pinos Altos mine
51,967 (32,536) 19,431
Creston Mascota mine
1,792 (615) 1,177
La India mine
40,035 (17,735) 22,300
Segment totals
1,325,688 (661,735) 663,953
Corporate and other:
Exploration and corporate development 65,842
Amortization of property, plant, and mine development 260,748
General and administrative 67,542
Finance costs 22,653
Loss (gain) on derivative financial instruments (28,664)
Environmental remediation (2,299)
Foreign currency translation loss 1,210
Care and maintenance 10,456
Other expenses 91,898
Income and mining taxes expense 64,815
Net income per consolidated interim condensed statements of income 109,752
29

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
Revenues from
Mining
Operations
Production
Costs
Operating
Margin
LaRonde mine
145,070 (51,342) 93,728
LaRonde Zone 5 mine
25,283 (12,685) 12,598
Canadian Malartic mine(ii)
159,216 (55,468) 103,748
Goldex mine
61,252 (22,513) 38,739
Meliadine mine(i)
175,956 (64,740) 111,216
Meadowbank Complex
137,289 (87,339) 49,950
Hope Bay mine
35,305 (24,075) 11,230
Kittila mine
107,363 (48,660) 58,703
Pinos Altos mine
58,424 (31,998) 26,426
Creston Mascota mine
10,051 (2,417) 7,634
La India mine
34,414 (16,139) 18,275
Segment totals
949,623 (417,376) 532,247
Corporate and other:
Exploration and corporate development 28,709
Amortization of property, plant, and mine development 177,793
General and administrative 44,933
Finance costs 22,168
Loss on derivative financial instruments 21,066
Environmental remediation (628)
Foreign currency translation gain (3,078)
Other income (1,881)
Income and mining taxes expense 97,926
Net income per consolidated interim condensed statements of income 145,239
Notes:
(i)
Certain previously reported line items have been restated to reflect the retrospective application of IAS 16.
(ii)
The information set out in this table reflects the Company’s 50% interest in the Canadian Malartic mine.
Realized prices
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding realized prices.
Sustaining Capital Expenditures and Development Capital Expenditures
Refer to Note to Investors Concerning Certain Measures of Performance in this MD&A for details on the composition, usefulness and other information regarding sustaining capital expenditures and development capital expenditures.
30

 
AGNICO EAGLE MINES LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Prepared in accordance with International Financial Reporting Standards)
For the Three Months Ended March 31, 2022
Three Months Ended
March 31,
2022
2021
LaRonde mine
18,666 18,342
LaRonde Zone 5 mine
2,737 3,230
Canadian Malartic mine(ii)
10,734 19,555
Goldex mine
6,627 7,170
Detour Lake mine
12,642
Macassa mine
4,657
Meliadine mine(i)
9,081 10,208
Meadowbank Complex
10,804 7,342
Hope Bay mine
6,733
Fosterville mine
8,707
Kittila mine
11,350 10,644
Pinos Altos mine
4,907 4,118
Creston Mascota mine
La India mine
814 1,855
Sustaining capital expenditures
101,726 89,197
LaRonde mine
12,463 8,182
LaRonde Zone 5 mine
3,434 603
Canadian Malartic mine(ii)
22,752 7,648
Goldex mine
5,608 4,054
Detour Lake mine
28,860
Macassa mine
17,056
Meliadine mine(i)
13,605 24,105
Meadowbank Complex
819 4,031
Amaruq Underground Project
15,361 10,349
Hope Bay mine
1,434
Fosterville mine
8,483