Agnico Eagle Mines Limited (NYSE:AEM) Q4 2023 Earnings Call Transcript

John Tumazos: Congratulations on the 900,000 ounces, was almost as much as Barrick made in the quarter. Getting big. There were a couple places in the press release and exploration release, where the pros and the numbers that I was trying to — the numbers in the release were kind of hard to put together consistently or reconcile. Let me just ask about Fosterville, where the 2025 guidance is a midpoint of a 150,000 ounces output and that seems like 700,000 tonnes milled, 7 grams, 94% recovery. The reserve is 6.1 grams, which is a little lower than 7 grams. And then the pros of the presentation talks about a 175,000 to 200,000 ounces. Is the 175,000 to 200,000 the average of ’24 and ’25 guidance? Or are you looking forward beyond 2026 expecting that you’re going to hit something a little better than 6 grams just reported in reserve?

Ammar Al-Joundi: Do you want me to take it, Natasha? The 175,000 to 200,000 is looking forward beyond that timeframe. I mean, you’re exactly right. Those are the numbers that we gave. Fosterville is a great asset, great people. We are looking at sort of a long-term steady state 175,000 to 200,000. That’s kind of what we’re working on. You may say, well, look, that’s only 175,000 to 200,000. Why are you guys in Australia? The answer is, we don’t have proof, but we think there’s more than one very high grade zone to be found there. Maybe it’s not a Swan, maybe it’s a half a Swan or maybe it’s a two times Swan, but it generates a lot of cash flow. If you’re us, what do you do? You position the mine to operate well, to operate consistently between 175,000 to 200,000 if you think you can have that steady and really give you the opportunity to find that next Swan zone. Guy, did you want to jump in?

Guy Gosselin: John, if you look at in detail, because when we do the life of mine like that, we do the stope by stope exercise. So there will be some variation. So yes, the average is 6, but you can assume that some year we’ll be at 7, some year we’ll be at 5 depending on the mining sequence averaging 6 for the rest of the life of mine according to what we have. But it’s not going to be stable at 6 over time. It’s going to fluctuate because there’s still some pocket of higher grade mineralization in the system that are smaller than this one. But it’s all about sequencing the extraction of the 6.

John Tumazos: If we were going to just jump through in the discussion today to Hope Bay. The inferred resource at Hope Bay rose by 158,000 ounces. The reserves stayed the same. We should interpret from your good drill results and a good qualitative narrative that the inferred resource and the reserves are going to increase a lot more than 158,000 ounces when you get more infill drilling and more data, I presume?

Guy Gosselin : Exactly. You’re right. There has been some small portion that have reached inferred resources classification. But also we are, I would say, making sure that the, for example, the dilution assumption. So we’ve been also adjusting the model to — so there’s been some pluses and minuses. And you’re right, the bottom line is net 170 million with a mixture of removing some of the lower grain material, addition of a more realistic dilution. We haven’t touched the reserve as well as you described. And you’re right, with the additional drilling we’re going to see in the Madrid, we’re expecting those ounces to show up later on in 2024 and 2025.

John Tumazos: And you talked about the ramp at Odyssey getting closer to the top of the East Gouldie deposit, if I understood that correctly? So in the second and third quarter, you’ll be able to visually expect to inspect the rock confidence and continuity of the very top of the East Gouldie Zone, which would put you in a position to add reserves at the end of 2024 or 2025 from those visual inspections different than the part of the reserve where you added from drilling last night. Is that fair?

Guy Gosselin: It’s fair, especially because, you know, there’s still the reserve, as you can see in the long section, goes basically from 800 meter to 1.8 kilometer below surface, and there’s still 300 meter of inferred resources at the top. So that access on the top of the orebody as you described will allow us to enter open up the deposit, but also will provide a better position for infilled drilling from much closer in the upper part upper and eastern part of the orebody where we see some quick win to potential reserve addition. And also if you put that in a bigger scheme of thing, back at the PEA that we produce with 9 million ounces, we are expecting that the rest of the ounces that were not convert this year in reserve will show up progressively over the next couple four, five years.