Since the beginning of 2006, we have spent more than $2 billion building five new mines. By year-end 2010, we expect to have increased annual gold production fourfold. While the process was challenging at times, it was also rewarding. Through much of this period, we continued to generate industry-leading returns for shareholders. We created opportunities for our employees to tackle new challenges and develop new skills, and we built a strong foundation for ongoing, mutually beneficial community relationships.

We also positioned the Company for continued growth. With the completion of our new mines come new opportunities to build even more value as we generate increased cash flow per share, step up exploration efforts and undertake smaller-scale, yet meaningful, production expansions.

Strong operating performance
Today, our production base is stronger and more diversified with six mines now operating. Together with LaRonde, these mines are expected to double AEM’s gold production in 2010. From 2011 to 2014, annual gold production is forecast to average more than 1.3 million ounces with total cash costs per ounce of approximately $400.

The Goldex mine in the Abitibi region of Quebec came on-stream in 2008. The mine operated at, and occasionally exceeded, design rates for most of 2009. It is thought to be one of the lowest-cost hard rock underground operations in the gold industry, with minesite costs per tonne expected to average $22 from 2011 to 2014.

The Lapa mine achieved commercial production on May 1, 2009. While we encountered start-up issues, primarily related to higher than expected ore dilution, we have applied our experience from the nearby LaRonde mine to maximize the profitability of Lapa, our highest-grade mine.

With the first gold poured at the Kittila mine in Finland in January 2009, production increased throughout the year as recoveries improved, and we anticipate operating at design rates throughout much of 2010. The Kittila mine is one of the largest known gold deposits in Europe and is expected to produce more than 150,000 ounces of gold, annually, from 2011 to 2014. Expansion studies are under way on this prolific deposit.

By year-end, the Pinos Altos mine in Mexico was pouring gold from both the heap leach and milling operations. Ramp-up to full production levels will continue in 2010. From 2011 to 2014, we expect Pinos Altos to produce, on average, more than 200,000 ounces of gold per year. Several satellite deposits are expected to add incrementally to gold production over this time. Further drilling is under way and driving economic studies.

In late February 2010, the most recent and largest of our mines poured its first gold. Meadowbank, our beachhead in the Canadian Arctic, is expected to produce approximately 400,000 ounces of gold, annually, from 2011 to 2014.

In addition to the new mines, our flagship mine, LaRonde, continued its solid performance in 2009, producing 203,494 ounces of gold at total cash costs per ounce of $103. Despite having produced approximately 4 million ounces of gold since operations began in 1988, LaRonde still has almost 5 million ounces of gold in proven and probable reserves, which are among the largest gold reserves at an operating Canadian mine.

The financial benefits of our expanded production base were reflected in dramatic improvements in earnings and cash flow in the final quarter of 2009. Record quarterly gold production of 163,276 ounces pushed earnings to $47.9 million. As gold output continues to expand in 2010 and beyond, the foundation is set for continued growth in earnings and cash flow per share. This puts us in a very strong position to continue to invest in growth opportunities and increase our longstanding dividend.

Compelling expansion opportunities
As the major building projects neared completion, we turned our attention to a number of compelling expansion opportunities at the existing properties, which have the potential to further increase production over 2010 levels.

In 2009, we approved a $10-million expansion at Goldex, which will result in the production of an additional 20,000 ounces of gold per year over the mine life. We also approved a $64-million project to construct a 4,000-tonne-per-day open pit, heap leach operation on the Creston Mascota deposit near the Pinos Altos mine. Production should begin in 2011 and last for at least five years at a rate of approximately 46,000 ounces of gold annually.

In addition, we have feasibility and scoping studies under way at Pinos Altos, Kittila and Meadowbank. At Pinos Altos, we are considering putting several satellite deposits into production and expanding the Pinos Altos plant. At Kittila, we are assessing the economic feasibility of increasing annual gold production by at least 50% through a mill expansion and the sinking of a mine shaft. At Meadowbank, we are looking at increasing the average mill throughput by approximately 18% by accelerating development of two open pits, increasing the mill throughput and building an underground operation.

Construction of a deep extension of the LaRonde mine began in 2006 to access higher-grade ore and extend the life of the operation through to 2022, at least. Shaft sinking was completed in 2009 and production is scheduled to commence in late 2011. Once full production levels are achieved, LaRonde is expected to produce approximately 380,000 ounces of gold annually.

Through these potential expansions, AEM anticipates that its gold production could grow by 50% over the next five years from the approximate 1 million ounces expected in 2010. It is anticipated that this growth will again place the Company among industry leaders in terms of gold production growth.

Exploration is a priority
Over the years, exploration success has been one of our core strengths and adding quality gold reserves through exploration remains a priority for AEM. Our focus is largely on our existing properties. With the new mines built, we have gained improved access to drill our gold deposits, and our team is excited by the opportunities before them.

In 2009, our exploration programs continued to increase the known size of the mineralized envelopes of several deposits, over and above the amount mined during the year, with particularly compelling results at Kittila, Pinos Altos and Meadowbank. At year-end, the Company’s gold reserves totalled a record 18.4 million ounces, an increase of 2% over 2008 levels. Our gold resources increased by 28%, demonstrating that we can expect to convert more gold resources to reserves at our operating mines.

For 2010, we increased our exploration budget by 40% to $76 million. This is our largest-ever exploration program and is an indication of the confidence we have in the quality and potential of our orebodies. These deposits are located in mining-friendly jurisdictions and have yet to be fully explored. In fact, we believe that four of our six mine deposits could ultimately exceed 5 million ounces of gold reserves – a level that we consider to be world-class.

Although gold prices have performed very well over the last few years, we expect prices to continue to move much higher, driven by increased investment demand. Gold will become increasingly sought after as a means of protecting wealth from the persistent debasement of paper money. In our view, this process is still in its early stages and, as a result, the bull market in gold has some way to go before running its course.

Positioned to perform
As we enter a new phase in our company’s development, AEM is positioned to continue to perform for shareholders. Our balance sheet is strong, with approximately $164 million in cash and cash equivalents, and available credit facilities of approximately $165 million at year-end 2009 – giving us the financial flexibility to carry out our growth plans. Our larger, low-cost gold production base and growing reserves enable us to provide greater leverage to higher gold prices and generate increasing cash flow. Furthermore, we remain committed to a strategy that is focused on per-share metrics, striving to be an industry leader in reserves per share, production per share and cash flow per share, as a means of creating exceptional shareholder value. This means that our measured approach to doing business will not change. It has worked well for our shareholders and employees for many years and it remains a good fit for our skill set.

Throughout our organization, there is great enthusiasm as we enter 2010. Our transformation to a multi-mine gold producer is complete and we are poised to capitalize on our hard work. Many of our people, myself included, have been with the Company for 20 years or more and take great pride in what we have accomplished and the value we have built. I would like to thank each and every employee, contractor, service provider and stakeholder for helping us achieve a significant milestone in our company’s history and positioning us strongly for the future.


Sean Boyd
Vice-Chairman and Chief Executive Officer
March 18, 2010