NORTHERN BUSINESS OPERATIONS
Our northern business operations include our wholly-owned LaRonde, Goldex, Meadowbank and Lapa mines in Canada and our Kittila mine in Finland, as well as our 50% interest in the Canadian Malartic mine in the Abitibi region. For the fourth consecutive year, with strong performance from our northern operations, Agnico Eagle reported annual gold production in excess of our market guidance. We are forecasting stable production and costs over the next three years, and we are currently evaluating a number of opportunities to further enhance production from our northern operations in 2018 and beyond.

LaRonde’s gold-rich lower mine boosts production output
In 2015, LaRonde increased its production to 267,921 ounces of gold at total cash costs per ounce of $590. This compares to 204,652 ounces of gold at total cash costs per ounce of $668 in 2014. The higher production and lower costs were mainly due to higher gold grades from the lower mine, improved recoveries, and favourable foreign exchange rates. In 2016, approximately 89% of LaRonde’s production is expected to come from the lower mine. The increase in forecast production through 2018 largely reflects an increase in grade closer to that of the average mineral reserves.

LaRonde’s new cooling and ventilation infrastructure, which was commissioned in 2015, has enhanced productivity in the deeper portions of the mine. A coarse ore conveyor system was also installed during the year and full commissioning is planned for the second quarter of 2016. This new system should also help improve mining flexibility and reduce congestion in the lower mine.

Exploration studies continue to assess the potential to extend LaRonde’s mineral reserves and mine below a depth of 3.1 kilometres. Evaluations are also underway on the potential to initially mine the Bousquet Zone 5, which is located adjacent to LaRonde, via an underground ramp. An internal technical study is expected to be completed by the end of 2016.

Canadian Malartic sets new production records
Canadian Malartic’s smooth consolidation into the business helped the operation set annual records for both the amount of ounces produced and tonnes milled at the mine. Agnico Eagle’s share of that production was 285,809 ounces of gold at total cash costs per ounce of $596. This compares to 143,008 ounces of gold at total cash costs per ounce of $701 in 2014 (Agnico Eagle and Yamana Gold acquired Canadian Malartic in June 2014). Production was higher primarily due to higher grades, while the lower costs were due to lower expenses, increased production and favourable foreign exchange rates, partially offset by higher shutdown costs for the planned mill maintenance.

We plan to evaluate a number of near pit/underground targets and further define the extent of the mineralization at the Odyssey zone. Additionally, we are jointly exploring with Yamana a portfolio of properties in the Kirkland Lake area and the Pandora and Wood-Pandora properties in the Abitibi region of Quebec.

Lapa posts strong performance and studies new opportunities to extend mine life
In 2015, Lapa produced 90,967 ounces of gold at total cash costs per ounce of $590, as compared to 92,622 ounces of gold at total cash costs per ounce of $667 in 2014. Production in 2015 was lower due to lower throughput, while costs were lower primarily due to favourable foreign exchange rates.

Under the current life of mine plan, Lapa is expected to operate until the fourth quarter of 2016. Two areas – Zone 8 East/Upper mine and the Zulapa 7/Deep 2 Zone – have been explored and identified as areas that could potentially support future mining activity beyond 2017.

Meadowbank proceeds with Vault expansion and extends mine life
Meadowbank moved forward with production and development decisions that extend its mine life by one year and provide additional mining flexibility. The mine produced 381,804 ounces of gold at total cash costs per ounce of $613 in 2015, as compared to 452,877 ounces at total cash costs per ounce of $599 in 2014. Performance in 2014 was positively impacted by higher tonnage, grades and recoveries from the Goose pit.

In July 2015, Agnico Eagle decided to proceed with the expansion of the Vault pit. This will result in reduced production in 2016 but add another year of production at the mine, through to at least the third quarter of 2018. This extension helps to partially bridge the production gap with the potential development of the Amaruq deposit.

Production levels are expected to gradually decline from 2016 to 2018 due to a decline in grade as the current mineral reserve base is depleted. In 2015, various optimization initiatives helped to significantly improve mining rates, which could prove to be sustainable and provide additional flexibility for the future.

Kittila posts strong mining performance and begins exploration of new mineralized zone

The newly expanded mill at Kittila continued to ramp up towards full capacity during the year. The mine produced 177,374 ounces of gold at total cash costs per ounce of $709. This compares to 141,742 ounces of gold at total cash costs per ounce of $845 in 2014. The lower costs are largely due to increased production and favourable foreign exchange rates.

In 2015, a key focus was on improving mill reliability, which could lead to higher throughput levels in the future. Kittila is currently evaluating the potential to maintain its strong year-end underground performance, as well as the potential to fast track production from the upper portions of the Rimpi Zone and the newly discovered Sisar Zone.

SOUTHERN BUSINESS OPERATIONS
Agnico Eagle’s southern business operations are focused in Mexico and include our wholly-owned Pinos Altos, Creston Mascota and La India mines. In 2015, performance from our southern business operations exceeded our expectations. In 2016, we will evaluate the potential to further enhance production in 2018 and beyond. A key focus will be on optimizing the satellite zones at Pinos Altos and Creston Mascota, and potentially expanding reserves at La India.

Pinos Altos 2016 shaft commissioning set to enhance efficiencies
Production significantly exceeded expectations during the year, primarily due to higher ore grades and better mill throughput and recoveries. In 2015, Pinos Altos produced 192,974 ounces of gold at total cash costs per ounce of $387, as compared to 171,019 ounces of gold at total cash costs per ounce of $533 in 2014. The decreased cash costs reflect higher by-product silver production and favourable foreign exchange rates.

Going forward, throughput, grades and recoveries are expected to remain relatively stable. The $106 million Pinos Altos shaft sinking project remains on schedule for completion in early 2016, with full commissioning expected in 2016. When the shaft is completed, it will allow better matching of the future mining capacity with the mill capacity once the open pit mining operation begins to wind down, as planned, over the next several years.

Creston Mascota stacks record tonnage and evaluates higher-grade mineralization
In 2015, Creston Mascota produced 54,703 ounces of gold at total cash costs per ounce of $430. This compares to 47,842 ounces at $578 per ounce in 2014. The higher than anticipated production was primarily due to more tonnes stacked at slightly higher grades, while costs were lower due to more ounces produced and favourable exchange rates.

During the year, infill drilling encountered higher grade mineralization below the Creston Mascota pit. Work is underway to evaluate the impact of this mineralization on the pit design and production planning. Additionally, further work is planned on the Bravo deposit to evaluate it as a potential source of additional production, while construction work on the Phase 4 leach pad is expected to be completed later in 2016.

La India increases both mineral reserves and mineral resources
La India marked its first full year of operation by producing 104,362 ounces of gold at total cash costs per ounce of $436, as compared to 71,601 ounces at total cash costs per ounce of $487 in 2014 when it only operated for 11 months. The higher production was mainly due to more ore tonnes stacked, while costs were lower due to more ounces produced and favourable foreign exchange rates.

La India’s 2015 exploration program resulted in a 28% increase in mineral reserves year-over-year, and a 21% increase in measured and indicated mineral resources. Studies are now underway to evaluate the potential of further expanding the mineral reserves at the Main and North Zones and consideration will be given to opportunities to increase production at La India based on the success of that program. In late 2015, construction was completed on the leach pad expansion and road construction in advance of the start-up of mining at the Main Zone pit.

Health, safety, environmental & regulatory matters
It was the safest year in our Company’s history with fewer lost time accidents. Additionally, La India, Meadowbank and Meliadine sites each recorded zero lost time accidents. In 2015, our combined lost-time accident (LTA) frequency was 1.23 – a 17% reduction from our performance in 2014 and significantly below our target rate of 1.70. This is the fourth year in a row we have posted our lowest ever combined LTA rate.

Agnico Eagle’s total overall greenhouse gas (GHG) emissions reached 407,471 tonnes of CO₂ equivalent in 2015, a 6% increase over 2014 [385,117 tonnes of CO₂ equivalent] due to higher production levels at our mines. However, our average overall GHG intensity decreased by 2% to 0.0800 [2014=0.0204] CO₂ equivalent per tonne of ore processed, partly because of higher tonnage produced from our mines where hydroelectricity is the primary energy source.

An external audit on the application of the Mining Association of Canada’s TSM protocols was carried out at our Goldex, Kittila, Lapa, LaRonde, Meadowbank and Pinos Altos mines. The audit results showed that our operations had achieved an ‘A’ rating or higher for 95% of the indicators in the six protocols. Three of our mines – Kittila, LaRonde and Meadowbank – each received an award for achieving an ‘A’ level or higher in all protocols.

The implementation of our internal Responsible Mining Management System (RMMS) continued in 2015 with the development of critical procedures to cover major risks identified and a system procedure to implement each of the 17 elements of RMMS. An internal audit of the system will be conducted in 2016.