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Agnico Eagle Mines (TSX: AEM ) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. Access the full call at https://app.webinar.net/Bb8qmxrpYd6 Summary Agnico Eagle Mines Ltd reported a strong start to 2026 with production above budget and costs in line with guidance, driven by record operational margins and high gold prices. The company reiterated its 2026 production and cost guidance, with production expected to be 48% in H1 and 52% in H2. Operational highlights included record mill throughput at Macassar, record development rates at Meliadine, and record pit tonnage at Detour. The company strengthened its financial position by distributing $375 million to shareholders, investing $400 million in growth projects, and increasing cash reserves by $250 million. Agnico Eagle Mines Ltd plans to increase share repurchases, raising its normal course issuer bid to $2 billion. Key strategic initiatives include aggressive reinvestment in high-quality projects, aiming for 20-30% production growth over the next decade, with significant progress in projects such as Detour and Malartic. The company highlighted the importance of safety after two fatalities, emphasizing the need for improved safety measures and responsibility. Notable exploration results were reported at Detour and Malartic, with further potential in Northern Europe following land consolidation. Despite cost pressures, the company maintained strong financial performance with adjusted net income of $1.7 billion and adjusted EBITDA of over $3 billion in Q1. Management remains focused on disciplined capital allocation, operational excellence, and delivering shareholder value through dividends and buybacks. Full Transcript OPERATOR Good morning, My name is Vincent and I'll be your conference operator today. At this time I would like to welcome everyone to the Agnico Eagle Mines Ltd Q1 2026 conference call. All lines have been placed on me to prevent any background noise. After the speaker's remarks, there will be question and answer session. If you would like to ask a question during this time, simply press Star then the number one on your telephone keypad. If you would like to withdraw your question, please press the number two. Thank you Mr. Amar Al Jundi. You may begin your conference. Amar Al Jundi (Chief Executive Officer) Thank you Vincent. Good morning and thank you for joining our Agnico Eagle first quarter 2026 conference call. I'd like to remind everyone that we'll be making a number of forward looking statements, so please keep that in mind and refer to the disclaimers at the beginning of this presentation. Next slide, please. We're pleased to announce a solid start to the year with production slightly above budget and with costs in line with our guidance. This solid operating performance coupled with exceptional gold prices has allowed Agnico Eagle to announce yet another quarter of record net income driven by record operating margins. We are reiterating 2026 production guidance with production expected to be weighted approximately 48%, 52% between the first and second halves of the year. We're also pleased to reiterate our cost guidance for 2026. This is no small task given the uncertainties and pressures in the market over the past several weeks. As you will hear on this call, this has been a strong quarter across all of our businesses. Solid operations, strong progress on moving our growth pipeline forward, continued exceptional exploration results, and as mentioned, another quarter of record financial results. My team will go through all of this in more detail in a moment, but let me outline and summarize what I believe are the three key messages that are important to take away from this call. 1. As mentioned, we're off to a good start to the year with solid operating performance, delivering record operational and financial results, Record mill throughput at Macassa, record development rates at Meliadin, record pit tonnage at Detour. We're delivering these solid operating results while doing an excellent job controlling costs, leveraging off our relentless focus on cost control, while benefiting from certain structural cost advantages that derive from our business model, including, for example, in both Ontario and Quebec,, where we produce the majority of our gold, all of our electricity is either hydro or nuclear and really not exposed to changes in fuel and diesel prices. With regards to Nunavut,,, where we do generate our own power through diesel. We've got a lot of that diesel hedged both by necessity because we have to bring the diesel up in advance through a short barge season and we have it stored up there, but also by some very smart and proactive hedging by our Treasury Department with regards to diesel exposure. We've also got the benefit of lower employee turnover and the reliable supply chain that comes from being the best customer for decades in the safe regions in which we operate. 2. We continue to strengthen our financial position and to increase returns to shareholders. This quarter we paid a $1.3 billion 2025 tax catch up. We distributed $375 million to shareholders, we invested almost $400 million into our high quality growth projects, all while increasing our cash position by almost $250 million. At these gold prices we will increase our share repurchases and we are increasing our normal course issuer bid to $2 billion. And 3. And perhaps the most important takeaway, we continue to aggressively reinvest in our business into the best pipeline in the industry, into projects that deliver exceptional returns at relatively lower risk. And we are making steady progress, steady progress in many cases ahead of schedule. Dom and Natasha will spend some time talking about the projects. They're moving forward to increase production at Agnico Eagle by up to 20 to 30% over the next decade, including Detour to a million ounces, Malartic to a million ounces, Hope Bay,, Upper Beaver and San Nicolás. In addition, with the expected consolidation of our finished platform, we now see a path to further growth that comes from building a 500,000 ounce a year multi decade platform in what we believe to be the most prospective land package in Northern Europe. He will spend some time going over some of the continued great exploration results he and his team have generated focusing on Detour and Malartic. But he'll also spend a bit more time talking about this finished land consolidation and what he and his team see as a long term potential. Well beyond the ICARI project. Our strategy remains focused on safe, responsible mining, focused on operational excellence, delivering reliable low cost production. We have the best land packages in the most prospective and safest gold jurisdictions in the world. We have a path to industry leading production growth over the next decade. Our execution of delivering this growth remains on track and at these gold prices we think we can deliver this growth and reduce share count at the same time. Now before I turn the call over to Jamie, I need to spend a moment on safety. Tragically, we've had two fatalities over the past five months. This is not acceptable. I recognize and I accept that the responsibility for the safety of our people rests ultimately with myself and with my team. We've mobilized our teams to reinforce across our company and at all levels and to all employees our commitment to not only deliver on our guidance, but to do so safely and responsibly. There is nothing more important than the safety of our people and our communities, and we commit to do better. With that, I'll turn the call over to our cfo Jamie Porter to review our first quarter operating and financial results. Jamie Porter (Chief Financial Officer) Thank you, Omar as highlighted earlier, we delivered another strong financial quarter driven by solid operational performance and continued leverage to higher gold prices. We had several record financial results during the quarter, including adjusted net income of approximately 1.7 billion or $3.41 per share, and adjusted EBITDA of just over 3 billion. We generated about 730 million of free cash flow in the first quarter. This is particularly impressive given that we paid roughly 50% of our expected 2026 cash taxes totaling 1.8 billion in the quarter, of which 1.3 billion had been previously disclosed as related to our 2025 tax liability. First quarter gold production of approximately 825,000 ounces was actually slightly better than planned with the lower production year over year reflecting mine sequencing at La Ronde, Macassa and Fosterville. With the first quarter representing about 24% of the midpoint of our annual guidance in production weighted to the second half of the year were well positioned to meet our full year production targets. Total cash costs were $1,093 per ounce and all in sustaining costs were $1,483 per ounce, reflecting higher royalty costs associated with a significantly higher realized gold price, lower production volumes as expected and a stronger Canadian dollar compared to the first quarter of 2025. Importantly, costs continue to trend within our full year guidance ranges of $1,020 to $1,120 per ounce for total cash cost and $1,400 to $1,550 per ounce for all in sustaining costs. While we continue to monitor cost volatility, including diesel prices and foreign exchange movements, we believe our regional operating model, local procurement strategies and disciplined hedging program provide meaningful mitigation against potential cost pressures. Jamie Porter (Chief Financial Officer) With respect to diesel prices, our 2026 cost guidance assumes an average diesel price of $0.78 per liter. Direct diesel consumption covering mobile equipment and on site power generation in Nunavut is estimated at approximately 108 liters per ounce of gold produced, representing roughly 7% of our total operating cost base. We believe that our exposure to diesel price volatility is below industry average, reflecting the fact that the majority of our gold production comes from underground mines which are generally less diesel intensive than open pit mines. Further, the majority of our gold production is from mines located in Ontario and Quebec, which benefit from access to non oil based grid power. Overall, our sensitivity to diesel prices is estimated such that a 10% change in diesel prices results in roughly A$6 per ounce impact on annual total cash costs. After taking into account our hedge position, we do not currently anticipate any disruption to our procurement strategy for fuel or other key consumables and we remain comfortable with our full year cost guidance Jamie Porter (Chief Financial Officer) we turn to slide 5 we are in the strongest financial position in the company's history. We continue to deliver meaningful returns to our shareholders alongside further balance sheet strengthening and disciplined reinvestment in the business. During the quarter we returned approximately $375 million to shareholders through dividends and share repurch representing roughly half of free cash flow. As previously announced, we intend to renew the normal course issuer bid in May on substantially the same terms with an increased limit of up to 2 billion. Jamie Porter (Chief Financial Officer) And at current gold prices we are still targeting returning approximately 40% of annual free cash flow through dividends and buybacks. We will also look for opportunities to offset dilution from the proposed Rupert Resources acquisition, including potentially returning proceeds from portfolio investment sales through additional share repurchases. In parallel, the balance sheet keeps getting stronger. The end of the first quarter our net cash position increased to approximately 2.9 billion, giving us one of the strongest balance sheets in the sector. Jamie Porter (Chief Financial Officer) This strength was recognized recently by Fitch which upgraded Agnico Eagle's long term issuer rating to A with a stable outlook. At the same time we continue to reinvest in the business, advancing our five key pipeline projects that are expected to underpin long term production growth of 20 to 30% over the next decade. We are exceptionally well positioned in the current gold price environment with a continued focus on disciplined capital allocation and long term shareholder value creation. Jamie Porter (Chief Financial Officer) With that I'll turn the call over to Doc. Doc Thank you Jimmy Good morning everyone. In my section I'm going to talk about the update on operation and project for Quebec, Nunavut and Finland for the first quarter. A good start led by Malartic, and Meadowbank, on the production and we are in good position for the full year cost and production. An important milestone in the first quarter at Malartic, where we took the first stope at East Gouldie via the ramp, approximately 1 km underground. Why it's important. Doc Based on the 2023 study, we're going to mine there up to 2042. But based on what we know now, we're going to be mining there up to 2060. Most probably. Most probably I will not be the COO at that time, but we have good bench that's going to take this, Doc is going to take it from there. So it's very positive. And on the shaft sinking, I'm going to talk a bit about that next slide. Shaft sinking and also production hoist. It's also going well. The plan is to bring that ore to the surfaces. The other shaft, mid-2027, everything is aligned on the continuous improvement. An important milestone achieved at La Ronde. They were working on that since a couple of years to do autonomous hauling. So it's a good example of leveraging the synergy into the region using the LZ5 expertise. Doc So what is that autonomous hauling? We are taking the ore from the 3.2km underground up to 2.9km without drivers. So this is a real example of a positive impact using technology instead of operating, let's say using four trucks and eight operators, four day shift, four night shift. Those guys in the current situation, they are able to operate effectively 10 to 12 hours per shift just by the time to go underground. Using the technology. We're able to use two trucks operating by one person, one night shift, one day shift. So a total of two. And we're able to operate on a 20 hour basis. So it's a clear example of using technology to improve productivity. And very good job done at Larond on that. Also in Finland, what we did, we took three and four people, key people from each site from mainly Canadian operation. I mean the GMs, the key guys in the continuous improvement, the VP, we bring them to Finland to see what they did there. It was the first time for most of the people not just to see the reindeers, but also the Finland site. Doc And it was about how they did it in Finland, the mindset on continuous improvement, their leadership and the tools they were using. And it was also a very good opportunity to build relationships and sharing best practices through our key people into the company guy is going to talk about that, but very happy also about the icari. What's going on is very positive for the Finland team. Next slide on the growth project Small Arctic. The ramp and shaft as mentioned, going well. Doc The pilot hole for the first for the second shaft is done down to 1.8km underground. No issue related to that. And the study continue on the shaft two and Marban, in the Wasamac study. It's progressing well and we're looking to give you an update in September later Doc this year at Hope Bay. Look to the picture. So we are in good position. That was our goal. We are in good position to potentially announce the construction in May with the board. So the camp is ready, the fab shops are ready to welcome the construction team. The mill is empty, ready to go and we are in good position for the engineering. That was one of an important goal. So we're going to to be over 50% that guarantee and give us confidence into the cost, into the schedule. We're going to give you more detail at the visit at site for the lucky one that are coming because we're going to have muskox on barbecue, charcoal barbecue. So this is. The team is working on that. That's going to be a good thing. Before giving the mic to Natasha. The visit at Hope, you're going to see the picture over the first 10 years, but we're going to most probably be there for many 10 years and that's what Guy is going to show you into the car shop. Doc What is our vision onto the region? And also the last two years we focused on infilling the patch, the new deposit and to be ready for that study. But Guy is also gearing up to restart treasure hunting into the Hope Bay, site eventually more next year, in the years after. So on that I will pass the mic to my great colleague Natasha. Natasha Thanks Tom and good morning everyone. I'll cover the operational highlights for Ontario, Australia and Mexico. So the regions delivered good performance to start the year. At Detour, they hit a quarterly record in tonnes mined but they also had a record mill throughput for our first quarter with the lowest turnover, quarterly turnover that we have seen since the mine began open pit operations over at Macassar. The mill here also delivered record quarterly throughput as a result of the ongoing optimization initiatives as we ramp up that mill towards over 2000 tons per day by the end of the year. Now, despite this progress, total mill tonnage was below plan this quarter and this was mainly a function of challenges we faced with our old PACE plant while commissioning the new one which we expect to be fully operational in Q2 at Fosterville. They also performed very well this quarter. There was a significant step change in productivity and that's really due to ongoing mine optimization efforts. Improvements this quarter were seen in both development and stope cycling and it was the same with Pinos Altos. Natasha The team there continues to work very hard on initiatives to safely extract the most value from their assets. Now in terms of initiatives, this past quarter, DOM spoke about our knowledge sharing trip to Finland to help other sites understand their continuous improvement journey and really inspire them to do the same. And of course it was really great to network to gain alignment to collaborate with other sites. And another good example of collaboration between sites and really maximizing the value of our assets and of our infrastructure was between Macassa and La Ronde. I just want to take a quick second to recognize both teams here. They worked very closely together over the last few months and with a coordinated effort they were successful in receiving the approval to allow ore from the AK deposit to be transported and processed at the LZ5 facility at Macassa. We also successfully completed the installation of the LTE network underground. The connectivity is expected to support a range of optimization initiatives including including the implementation of a dispatch system and enabling the site to obtain short interval control. And this can enable us to make decisions quicker, to become more agile, to ... Full story available on Benzinga.com
