Agnico Eagle Mines Limited (AEM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reflect positive sentiment overall. The company is on track with its production guidance and shareholder return plans, including potential dividend hikes and share buybacks. Exploration and resource expansion efforts are robust, and the company is optimistic about gold prices. While cost guidance is at the higher end, the focus on financial flexibility and growth projects is reassuring. The Q&A section did not reveal significant negative trends or uncertainties, and management's strategic focus on value creation is likely to support a positive stock price movement.
Key Financial Performance
Gold Price Increase Gold prices increased by $1,700 year-over-year. This contributed to higher revenues and shareholder returns.
Cash Costs Cash costs increased by $76 per ounce year-over-year. This was due to inflation and higher royalties.
Debt Repayment Nearly $1 billion in debt was repaid in 2025, improving the financial position of the company.
Cash Reserves Cash reserves increased to $3 billion, up $1.9 billion year-over-year, due to strong financial performance.
Shareholder Returns Returned $1.4 billion to shareholders through dividends and share buybacks, reflecting strong cash flow and profitability.
Gold Production Gold production reached 3.45 million ounces in 2025, exceeding the midpoint of guidance. This was achieved despite higher costs.
Total Cash Costs Total cash costs were $979 per ounce, slightly above guidance due to higher royalties and inflation.
All-in Sustaining Costs All-in sustaining costs were $1,339 per ounce, slightly above guidance due to similar reasons as total cash costs.
Free Cash Flow Generated $4.4 billion in free cash flow, a record for the company, driven by higher gold prices and operational efficiency.
Mineral Reserves Mineral reserves increased by 2% to 55.4 million ounces, reflecting successful exploration and resource conversion.
Mineral Resources Mineral resources increased by 10% to 47.1 million ounces, driven by exploration success.
Inferred Resources Inferred resources increased by 15.5% to 41.8 million ounces, showcasing strong exploration upside.
Adjusted Earnings Adjusted earnings reached $1.4 billion in Q4 2025, a record, driven by higher gold prices and operational efficiency.
Quarterly Dividend Quarterly dividend increased by 12.5% to $0.45 per share, reflecting strong financial performance.
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Operating Highlights
Gold production: Achieved 3.45 million ounces in 2025, exceeding guidance midpoint. Plans to increase production by 20%-30% over the next decade, targeting over 4 million ounces annually by early 2030s.
Exploration and reserves: Record reserves of 55.4 million ounces (up 2%), resources of 47.1 million ounces (up 10%), and inferred ounces of 41.8 million ounces (up 15.5%). Largest exploration budget in company history.
New projects: Advancing five key growth projects, including Detour Lake, Canadian Malartic, Upper Beaver, Hope Bay, and San Nicholas, with potential to add 1.3-1.5 million ounces of annual production.
Market positioning: Second largest gold producer globally. Leveraging high-quality projects in stable jurisdictions to grow production per share and deliver risk-adjusted returns.
Gold price leverage: Captured 95% of the $1,700 year-over-year gold price increase, delivering strong shareholder returns.
Cost management: 2025 cash costs were $979 per ounce, with a slight increase due to higher royalties and inflation. Peer-leading cost structure maintained.
Financial performance: Record adjusted earnings of $1.4 billion and free cash flow of $4.4 billion in 2025. Repaid $950 million in debt and increased cash position by $1.9 billion.
Shareholder returns: Returned $1.4 billion to shareholders through dividends and buybacks. Increased quarterly dividend by 12.5% to $0.45 per share.
Growth strategy: Focused on increasing production per share through disciplined investments in high-quality projects and leveraging existing infrastructure.
Sustainability and jurisdiction focus: Prioritizing operations in geologically rich and politically stable regions. Emphasis on responsible mining and long-term value creation.
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Risk or Challenges
Higher Cash Costs: Cash costs are forecasted to increase by over $100 per ounce in 2026 compared to 2025, driven by higher royalties and a stronger Canadian dollar. This could impact profitability.
Inflationary Pressures: Expected inflation of 4%-5% in 2026 could increase operational costs, potentially affecting margins.
Declining Reserve Grades: Declining reserve grades at Macassa and Fosterville mines may require increased throughput to maintain production levels, which could lead to higher costs and operational challenges.
Higher Royalties: Higher royalties due to increased gold prices are contributing to rising costs, which could impact financial performance.
Supply Chain and Infrastructure Risks: The development of new projects like Detour Underground and Upper Beaver involves significant capital investment and potential delays, which could disrupt timelines and budgets.
Regulatory and Permitting Risks: Projects like Hope Bay and San Nicholas are dependent on obtaining necessary permits, which could face delays or denials, impacting project timelines.
Economic Volatility: Volatility in gold prices and currency exchange rates, particularly the Canadian dollar, could affect revenue and cost structures.
Operational Risks: Challenges in ramping up production at new projects and optimizing existing operations, such as at Detour and Fosterville, could impact production targets and costs.
Tax Liabilities: A significantly higher cash tax liability of $1.3 billion related to 2025 fiscal year could strain cash flow in the short term.
Exploration and Resource Conversion Risks: While exploration has added significant inferred resources, converting these to reserves involves risks and uncertainties, which could impact long-term production goals.
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Guidance & Outlook
Annual Production: Stable annual production profile of 3.3 to 3.5 million ounces over the next 3 years, with a potential increase of 20% to 30% over the next decade, targeting over 4 million ounces annually by the early 2030s.
Cost Projections: 2026 cash costs are forecast to increase by over $100 per ounce compared to 2025, primarily due to higher royalties and a stronger Canadian dollar. Excluding these factors, the cost increase is estimated at 4% to 5%, aligning with industry inflation.
Reserves and Resources: Record reserves of 55.4 million ounces (up 2%), resources of 47.1 million ounces (up 10%), and inferred ounces of 41.8 million ounces (up 15.5%).
Detour Lake Project: Potential to deliver an additional 300,000 to 350,000 ounces per year through underground mine development, with production potentially starting in 2028. Investment increased from $100 million to $300 million, with a go-ahead decision expected by mid-2027.
Canadian Malartic Complex: Opportunity to add 400,000 to 500,000 ounces per year through the fill-the-mill strategy. First production from East Gouldie expected this quarter, with a second shaft commissioning in 2027 and potential production from additional projects by 2033.
Upper Beaver Project: Expected to produce over 200,000 ounces per year, with production targeted for 2030. Investment increased from $200 million to $300 million to accelerate development.
Hope Bay Project: Study supports a 400,000 to 425,000 ounce per year operation, with a 46% increase in inferred resources. Project approval and study update expected by May 2026.
Capital Expenditures: Accelerated capital investments at Detour Underground and Upper Beaver through mid-2027. Hope Bay may require an additional $300 million if approved.
Long-Term Growth: Exploration and development projects aim to support a decade of production growth, with potential additional projects like Hammond Reef, Timmins East, and Northern Territory under early evaluation.
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Shareholder Return Plan
Dividends paid in 2025: Over $1.4 billion returned to shareholders through dividends and share buybacks.
Quarterly dividend increase: Increased by 12.5% to $0.45 per share.
Future dividend plans: Potential to increase shareholder returns to 40% or higher of free cash flow, depending on gold prices and business needs.
Share buybacks in 2025: Approximately $500 million in Q4 and a record $1.4 billion for the full year.
Future share buyback plans: Intend to renew normal course issuer bid in May with an increased purchase limit up to $2 billion.
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Key Q&A
Q:Has Agnico decided if they would tender their shares to the offer currently out on Foran?
A:The CEO, Ammar Al-Joundi, stated that decisions regarding M&A activity are up to the various shareholders and declined to discuss further.
Q:What is Agnico's current view on M&A, particularly with respect to jurisdiction and urgency?
A:Ammar Al-Joundi explained that M&A is a capital allocation decision aimed at creating value for shareholders. Agnico is well-positioned to identify and assess opportunities but will only pursue M&A if it creates value per share. The focus is not on getting bigger but on creating shareholder value.
Q:Are the cost productivity initiatives already incorporated in the 2026 ASIC guidance?
A:Dominique Girard stated that the initiatives are partially included in the guidance but not entirely, leaving some flexibility.
Q:What is the underlying cost inflation, and how does it break down between consumables and labor?
A:James Porter mentioned that labor, which constitutes 45% of costs, has seen 4% inflation. Consumables like chemicals and equipment have seen 5.5%-6% inflation. Fuel is currently a tailwind.
Q:Should we expect CapEx to increase in future years or plateau?
A:James Porter indicated that CapEx will remain elevated at around $2.4-$2.5 billion annually, including $300-$350 million for Hope Bay, until production increases in 2030, after which CapEx is expected to decline.
Q:How does Agnico plan to allocate excess cash if gold prices remain high?
A:James Porter stated that financial flexibility is a priority to support growth. Excess cash could be used for further capital spending or retained as 3%-5% of market cap in cash. Special dividends or extending the buyback facility are also options.
Q:What would make an M&A opportunity compelling compared to internal projects?
A:Ammar Al-Joundi emphasized that internal projects are preferred due to better knowledge. For M&A, exploration upside is key, as it provides significant returns beyond the initial view of the asset.
Q:What is the approximate cost estimate for ounces from the life extension at Meadowbank?
A:The cost is estimated at $2,200-$2,300 ASIC per ounce. These are additional ounces that generate significant cash flow at current gold prices.
Q:Would Agnico consider special dividends or extending the buyback facility in a high gold price scenario?
A:James Porter confirmed that both options are under consideration depending on cash generation and profitability.
Q:Does Agnico feel it is reaching a limit in terms of technical and human capital for its projects?
A:Ammar Al-Joundi acknowledged that the organization is using a lot of its resources but is comfortable with the current workload. Selling assets to other owners is an option if it benefits shareholders.
Q:How does Agnico determine its dividend levels?
A:James Porter explained that the dividend level is set conservatively to ensure it can be maintained even if gold prices drop significantly. The current increase is modest relative to free cash flow.
Q:What is the expected CapEx for the Hope Bay project?
A:Dominique Girard stated that CapEx is expected to be around $2 billion, with significant preparation and engineering work already underway to ensure smooth execution.
Q:What is the estimated total growth CapEx for Agnico's projects through 2030?
A:James Porter estimated $5-$6 billion in growth CapEx for projects like Detour underground, Upper Beaver, and Hope Bay.
Q:How important is it for Agnico to own 100% of its assets?
A:Ammar Al-Joundi stated that owning 100% is not a priority unless it creates value for shareholders. For example, Agnico would consider acquiring Teck's 50% interest in San Nicholas if it made financial sense.
Q:What is the pace of converting inferred resources to reserves at Malartic?
A:Guy Gosselin stated that the pace is about 0.5 million ounces per year, with a shift towards more cost-effective underground drilling for reserve conversion.
Q:What is the timeline for the Detour Lake mill ramp-up and its implications?
A:Natasha Nella Vaz stated that the mill is expected to reach 29 million tonnes by 2030, with a focus on stabilizing throughput and ensuring sustainable operations.
Q:What is the potential for Meadowbank beyond 2030?
A:Dominique Girard mentioned that the team is exploring underground mining and smaller pushbacks, with potential extensions depending on exploration results and gold prices.
Q:What is the progress on Hope Bay permitting and spending?
A:Dominique Girard confirmed that all necessary permits are in place for the $300 million planned spending in 2026, which will focus on procurement, ramp development, and site preparation.
Q:Review of Unclear Management Responses
A:The CEO avoided directly answering whether Agnico would tender its shares to the offer on Foran, citing shareholder decisions. Additionally, the response to the question about the importance of owning 100% of assets was vague, stating it depends on shareholder value without providing specific criteria.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beaver project
Detour
Malartic
Marban
Meadowbank
Nunavut
Upper Beaver
acquisition
addition
drill
drilling
exploration
extension
fill mill
gold price
grade
infrastructure
meter
mid
mine life
mineral reserve
mineral resource
mining
operation
ounce mineral
ounce resource
owner
pit
potential
production
ramp
record ounce
reserve ounce
resource ounce
shaft
slide
study ounce
tonne
AEM Transcript
Agnico Eagle Mines Limited (AEM) Q4 2025 Earnings Call Transcript
Positive2-13
The earnings call summary and Q&A reflect positive sentiment overall. The company is on track with its production guidance and shareholder return plans, including potential dividend hikes and share buybacks. Exploration and resource expansion efforts are robust, and the company is optimistic about gold prices. While cost guidance is at the higher end, the focus on financial flexibility and growth projects is reassuring. The Q&A section did not reveal significant negative trends or uncertainties, and management's strategic focus on value creation is likely to support a positive stock price movement.
D2L Inc. (DTOL:CA) Q3 2026 Earnings Call Transcript
Positive12-11
The earnings call summary shows strong financial metrics, a healthy project pipeline, and positive market conditions for gold. The company is confident in achieving growth targets, advancing key projects, and increasing shareholder returns. Despite higher costs, the optimistic guidance and strategic investments in exploration and resource expansion are likely to positively impact the stock price. The Q&A section supports this sentiment, with management expressing optimism about pipeline growth and competitive advantages. Overall, the positive outlook and strategic initiatives suggest a positive stock price movement over the next two weeks.
Agnico Eagle Mines Limited (AEM) Presents at Emerging Growth Conference 88 Transcript
Neutral12-11
Agnico Eagle Mines Limited (AEM) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call highlights record revenue and earnings, debt repayment, and increased shareholder returns, suggesting strong financial health. Positive operational performance and a net cash position bolster the outlook. While cash costs are slightly higher, excluding royalties they remain within guidance. The Q&A reveals strategic focus on gold, potential in critical minerals, and positive government relations, further enhancing sentiment. However, inflation concerns and lack of detailed responses on some operational aspects slightly temper enthusiasm. Overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
AEM Slides
Agnico Eagle Q4 2025 slides: record results and ambitious growth pipeline2026-02-12
Agnico Eagle Q2 2025 slides: Record profits and net cash position despite lower output2025-10-29
Agnico Eagle Q2 2025 slides: record results as miner transitions to net cash position2025-07-30
Agnico Eagle Q1 2025 slides: record margins, debt nearly eliminated2025-04-24
AEM Report
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