Agnico Eagle Mines Limited (NYSE:AEM) Q4 2019 Earnings Conference Call - Final Transcript

Feb 14, 2020 • 11:00 am ET


Agnico Eagle Mines Limited (NYSE:AEM) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning, my name is Marcella, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Fourth Quarter Results 2019 Conference Call. [Operator Instructions]

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

Sean Boyd

Thank you, operator, and good morning everyone and thank you for calling into our fourth quarter and full-year 2019 results conference call. Before we get into the slides, please be aware that this presentation includes forward-looking statements.

I'd like to begin by just summarizing 2019 and the fourth quarter. In the fourth quarter, we had record gold production, as we brought on the two new mines in Nunavut. We also have record cash generation in 2019. With that added production, we see 18% production growth from 2019 out to 2022, and will provide some details on that production growth in a minute.

Although we had a very strong 2019 and fourth quarter 2019, we still have some work to do in Nunavut through the first quarter of this year, as we ramp up those two newly-built mines, so we'll also talk about that. When we look at the fourth quarter numbers in a bit more detail, we produced almost 500,000 ounces in the fourth quarter, which is record production. For the full year, we exceeded our full-year guidance, which has been increased during the year. We finished at 1.782 million ounces, at a total cash cost of $673 per ounce. Our unit costs in the fourth quarter were impacted by the slower-than-expected ramp up in Nunavut and we'll talk about the details as we said in a minute.

With the record cash generated from operations in 2019 and the ability to continue to grow production while generating free cash flow, our dividend was increased in the quarter to a quarterly rate of $0.20 a share. From the three-year guidance perspective, as we said, we've got production growing 18% off of the record production level in 2019. We should see cost decline in 2021, 2022. When we look at our 2020 guidance, our number is down 4% from previous guidance in terms of total production to 1.875 million ounces, which is largely driven by the Q1 -- expected Q1 impact, as we ramp up Nunavut and we do additional ground support at LaRonde and we'll get into the details of that in a minute.

In 2021, there is no change in the production guidance, although our cash cost guidance is up $50 an ounce, so that's due to increases in costs, but also just inflationary cost pressures in the business. When we look at Nunavut and LaRonde, starting with Nunavut, as we said, the ramp up was slower than we had expected. And that's clearly on all of us. We should have done a much better job in anticipating and reacting to some of these issues. We have high expectations and we didn't meet those expectations. Fortunately, we continue to make steady progress in productivity and efficiency