Agnico Eagle Mines Limited (NYSE:AEM) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 11:00 am ET


Agnico Eagle Mines Limited (NYSE:AEM) Q3 2018 Earnings Conference Call Transcript


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Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Agnico Eagle Third Quarter 2018 Results Conference Call. (Operator Instructions)

Mr. Sean Boyd, CEO, you may begin your conference.

Sean Boyd

Thank you, operator, and good morning, everyone, and welcome to our third quarter 2018 conference call.

(Forward-Looking Cautionary Statements)

What we'd like to do is just give you a sense, as we have gone through Q3 of 2018, sort of our positioning as we close the balance of the year and enter 2019. And essentially, as we look at our operations and our strategy, we see a strategy that continues to be effective in driving growth, in driving value per share. And we're really focused now, just in the final stages of executing on the growth that we see in Nunavut as well as moving forward on several projects within the pipeline.

So our growth in production is important as it's going to drive cash flow per share and also drive free cash flow as we see a significant drop in our capital going forward and we'll go through some of those numbers. So we're fast approaching now the point where we'll be entering a phase where we're harvesting cash for the benefit of our shareholders while still being able to invest in the future of our business as we move some projects forward. And we'll talk a little bit about that.

As you saw, the quarter, a strong production quarter, resulted in our increasing our guidance. We'll go through that. We talked about the CapEx declining dramatically going forward from roughly $1.1 billion in 2018, which is the peak as we build out of the balance of the Nunavut platform, falling dramatically, as we said, in 2019. That drives, particularly in the back half of next year, a significant bump in net free cash flow. But I think the importance of the Nunavut growth, as we can see in the fact that the projects are on schedule and on budget, it really points to the in-house skills that we have here and the fact that we have a process that allows us to be our own general contractors and build these mines.

So we just had the opportunity and pleasure of being at the Meliadine site this week with our board. And it was great to see the sort of energy and excitement as we sort of round out the development plans and the construction phase of Meliadine going into next year. We're shifting gears a little bit now as we near the end of the big construction phase in Nunavut. We're now focused on the pipeline and the projects that could provide additional growth in production and cash flow per share, things like the Amaruq underground. And we'll talk a little bit about that in this presentation.

Focusing on the quarter, as we said, a strong quarter from a production standpoint, a little over 420,000 ounces. Good