Agnico Eagle Reports Fourth Quarter and Full Year 2017 Results - Record Annual Gold Output; Production Guidance Increased for 2018 and 2019; Reserves Increase Year-Over-Year

Not included in the fourth quarter of 2017 adjusted net income above is non-cash stock option expense of $4.1 million ($0.02 per share).

Fourth quarter 2017 cash provided by operating activities was $166.9 million ($209.5 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $120.6 million in the fourth quarter of 2016 ($120.3 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in non-cash components of working capital during the current period, as compared to the prior period, was mainly due to higher gold sales (up 5%) and a higher realized gold price (up 7%).

"In 2017, we had another strong year of operating performance exceeding our production forecast and beating our cost guidance for the sixth consecutive year.  We set a new annual production record while recording the fewest number of lost time accidents, and we also increased our gold reserves", said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "Furthermore, we continue to make excellent progress on our Nunavut development projects which has allowed us to advance the expected start-up of Meliadine and increase our production guidance for 2018 and 2019.  With projected production on track to reach approximately 2.0 million ounces with lower unit costs in 2020, the Company will be focusing on increasing its reserve base and advancing its development pipeline to enhance the production profile and grow free cash flow", added Mr. Boyd.

Fourth quarter and full year 2017 highlights include:

• Gold production and costs better than forecast for sixth consecutive year – Payable production² in 2017 was 1,713,533 ounces of gold on production costs per ounce of gold of $621, with total cash costs per ounce³ of $558, compared to most recent guidance of 1,680,000 ounces of gold at total cash costs per ounce of $585. All-in sustaining costs per ounce⁴ ("AISC") for 2017 were $804, compared to most recent guidance of $845 per ounce
  
  
• Gold production forecasts increased for 2018 and 2019 as Meliadine start up advanced and Meadowbank extended into 2019; production guidance for 2020 is unchanged at 2.0 million ounces – The production forecast for 2018 is now 1.53 million ounces, compared to previous guidance of 1.5 million ounces. The midpoint of production guidance for 2019 is now 1.7 million ounces, compared to previous guidance of 1.6 million ounces. First production at Meliadine is now expected in the second quarter of 2019, which is approximately one quarter ahead of the initial schedule. The midpoint of production guidance for 2020 is 2.0 million ounces, which is unchanged from previous guidance
  
  
• Transitioning to lower unit costs by 2020 as production ramps up – In 2018, total cash costs per ounce are forecast to be between $625 and $675 and AISC are forecast to be between $890 and $940 per ounce. The increased unit costs over the 2017 period are largely due to lower expected gold production in 2018 than in 2017. As the Nunavut business transitions from the Meadowbank deposit to Amaruq and Meliadine, with much higher gold production expected in 2020, total cash costs per ounce are forecast to decline to between $600 and $650, while AISC are forecast to decline to between $825 and $875 per ounce
  
  
• Gold Reserves continue to grow as average grade increases – 2017 mineral reserves, net of 2017 production, increased by 3.1% to 20.6 million ounces (257 million tonnes grading 2.49 grams per tonne ("g/t") gold), while the gold reserve grade increased by approximately 7.7% from the previous year. A large portion of the increase comes from mineral resource conversion at Amaruq. Measured and indicated mineral resources declined by 2.6% and inferred mineral resources declined by 4.3%, however, grades of these mineral resources increased.
  
  
• Kittila Shaft Approved for Construction – The Company's Board of Directors has approved an expansion to add a 1,044 metre deep shaft and increase expected mill throughput by 25 percent to 2.0 million tonnes per annum ("mtpa") at Kittila. The expansion will be phased in over four years at a capital cost of approximately 160 million euros and is expected to result in a 50,000 to 70,000 ounce annual increase in gold production at reduced operating costs beginning in 2021. The shaft is expected to provide access to the mineral resource areas below 1,150 metres which could further extend the mine life
  
  
• A quarterly dividend of $0.11 per share has been declared

Fourth Quarter and Full Year 2017 Financial and Production Highlights

In the fourth quarter of 2017, strong operational performance continued at the Company's mines.  Payable production in the fourth quarter of 2017 was 413,212 ounces of gold, compared to 426,433 ounces in the fourth quarter of 2016.  A detailed description of the production performance of each mine is set out below.

Production costs per ounce for the fourth quarter of 2017 were $697, compared to $598 in the fourth quarter of 2016.  Total cash costs per ounce for the fourth quarter of 2017 were $592, compared to $552 in the fourth quarter of 2016.  The increase in production costs per ounce and cash costs per ounce for the fourth quarter, when compared to the prior-year period, is as a result of higher minesite costs and lower production in the quarter.  AISC for the fourth quarter of 2017 were $905, compared to $832 in the fourth quarter of 2016 due to higher total cash costs and increased sustaining capital spending.  A detailed description of the cost performance of each mine is set out below.

For the full year 2017, the Company recorded net income of $243.9 million, or $1.06 per share.  In 2016, the Company recorded net income of $158.8 million, or $0.71 per share.  The increase was primarily due to higher revenue as a result of higher realized metal prices and higher metal sales volumes.

For the full year 2017, cash provided by operating activities was $767.6 million ($839.4 million before changes in non-cash components of working capital), as compared with the full year 2016, when cash provided by operating activities was $778.6 million ($714.2 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in working capital for the full year 2017 were mainly due to higher revenue as a result of higher realized metal prices and higher metal sales volumes.

For the sixth consecutive year, Agnico Eagle has reported annual gold production in excess of annual guidance.  The Company's payable production for the full year 2017 was 1,713,533 ounces of gold, compared to most recent guidance of 1,680,000 ounces.  In 2016, full year production was 1,662,888 ounces.  A detailed description of the production performance of each mine is set out below.

Production costs per ounce for the full year 2017 were $621, which was the same as 2016.  Total cash costs per ounce for the full year 2017 were $558, below most recent guidance of between $570 and $600.  In 2016, total cash costs per ounce were $573.  The decrease in cash costs per ounce for full year 2017, when compared to the prior-year period, is primarily due to higher production in 2017. 

AISC for 2017 was $804 per ounce, below most recent guidance of between $820 and $870.  This compares with AISC of $824 per ounce in 2016.  The lower AISC in 2017 period is primarily due to lower total cash costs per ounce and higher production.  A detailed description of the cost performance of each mine is set out below.

Capital Spending and Liquidity - Existing Cash and Undrawn Credit Facility Provide Financial Flexibility

The Company continues to maintain its investment grade balance sheet and has adequate financial flexibility to finance capital requirements at its various mines and development projects from operating cash flow, cash and cash equivalents, short term investments and undrawn credit lines.

Cash and cash equivalents and short term investments increased to $643.9 million at December 31, 2017, from the December 31, 2016 balance of $548.4 million.

The outstanding balance on the Company's credit facility remained nil at December 31, 2017.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

In the first quarter of 2018, the Company marketed notes to institutional investors on a private placement basis.  The Company expects to issue $350 million of notes with a weighted average maturity of 13.9 years and a weighted average interest rate of 4.57% in April.  The other terms of the notes are expected to be substantially the same as the terms of the existing outstanding notes of the Company.

Total capital expenditures for the full year 2017 were $875 million, compared to most recent guidance of $895 million.  The lower capital expenditures largely related to a reduction in development capital spending at LaRonde Zone 5 and Goldex, offset by higher development capital spending at Canadian Malartic.  A portion of the capital not spent in 2017 has been rolled forward into the 2018 capital forecast.

Quarterly Dividend Declared

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.11 per common share, payable on March 15, 2018 to shareholders of record as of March 1, 2018.  Agnico Eagle has now declared a cash dividend every year since 1983.

Expected Dividend Record and Payment Dates for 2018

Dividend Reinvestment Plan

Shareholders should use the following link for information on the Company's dividend reinvestment plan: Dividend Reinvestment Plan

Conference Call Tomorrow

The Company's senior management will host a conference call on Thursday, February 15, 2018 at 11:00 AM (E.S.T.) to discuss the Company's fourth quarter and full-year financial and operating results.

Via Webcast:

A live audio webcast of the conference call will be available on the Company's website www.agnicoeagle.com.

Via Telephone:

For those preferring to listen by telephone, please dial 647-427-7450 or toll-free 1-888-231-8191.  To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

Replay Archive:

Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 5699104.  The conference call replay will expire on Thursday, March 15, 2018.

The webcast along with presentation slides will be archived for 180 days on the Company's website www.agnicoeagle.com.

New Three Year Guidance – Production Forecasts Increased for 2018 and 2019; while 2020 Remains on Track for Production of Approximately 2.0 million ounces

The Company is announcing its detailed production and cost guidance for 2018, and mine by mine production forecasts for 2018 through 2020.  Production in 2018 is now forecast to be 1.53 million ounces (previously 1.5 million ounces).  Given the expected start up of several new operations, the Company is now providing a range of production guidance for 2019 and 2020.  Production in 2019 is now forecast to be between 1.63 and 1.77 million ounces (mid point of 1.7 million ounces), which compares to previous guidance of 1.6 million ounces.  Production in 2020 is now forecast to be between 1.95 and 2.05 million ounces (mid point of 2.0 million ounces), which compares to previous guidance of approximately 2.0 million ounces.

The increased production guidance for 2019 is partly due to advancing the expected start-up of production at Meliadine to the second quarter of 2019 (previously the third quarter of 2019), and extension of production at Meadowbank (largely through the processing of stockpiles).

Total cash costs per ounce in 2018 are expected to be between $625 and $675 using a C$/US$ foreign exchange rate assumption of 1.25.  Total cash costs per ounce in 2018 are expected to be higher than in the 2017 period primarily due to lower production volumes, stronger operating currencies (Canadian dollar and euro), and slightly higher minesite costs per tonne⁵ at several operations (Meadowbank, Pinos Altos and Creston Mascota).  In 2020, using a C$/US$ foreign exchange rate assumption of 1.25, total cash costs per ounce are forecast to decline to between $600 and $650, largely due to higher production volumes.

AISC for 2018 are expected to be between $890 and $940 per ounce.  The AISC per ounce in 2018 are expected to be higher than in the 2017 period due to lower production and higher total cash costs.  In 2020, using a C$/US$ foreign exchange rate assumption of 1.25, AISC are forecast to decline to between $825 and $875 per ounce, largely due to higher production and lower total cash costs per ounce.

By 2019, the Company expects to have four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex, which includes the Amaruq satellite deposit) each with annual production rates of approximately 250,000 to 400,000 ounces of gold.  Beyond 2019, the Company anticipates the Meadowbank Complex production levels to increase as gold grades mined are expected to rise at the Amaruq satellite deposit.  In addition, at Kittila, with the proposed expansion, annual production in 2021 and beyond is expected to increase by approximately 25-30% over current levels, to more than 250,000 ounces as new sources of ore are developed underground.

Following a period of increased development capital spending, largely due to the construction of the Meliadine and Amaruq projects in Nunavut, the Company is forecasting a return to free cash generation in the second half of 2019.  At current foreign exchange rate assumptions (1.25 C$/US$, 1.20 EUR/US$, 18.00 US$/MXP) total capital expenditures are forecast to be approximately $1.08 billion in 2018 and between $650 and $700 million in 2019 and 2020.  Annual sustaining capital expenditures (included in the above) for 2019 and beyond are expected to remain stable at approximately $300 to $325 million.

"We are excited to transition into a larger production base in Nunavut next year. We have also built a platform to drive further production growth beyond 2020.  We expect that this increase in production will result in growth in free cash flow per share, which could potentially translate into higher dividends", said David Smith, Agnico Eagle's Senior Vice President, Finance and Chief Financial Officer.

Additional Near-Term Production Potential (2019 to 2022)

The Company is evaluating several potential opportunities (none of which has yet been approved for construction with the exception of the Kittila shaft) at a number of existing operations to build further value and enhance the production profile in 2019 through 2022.  These opportunities are summarized in the table below.

Development Pipeline Expected to Provide Further Production Growth Beyond 2022

Agnico Eagle has a strong pipeline of development projects that could provide further production growth beyond 2022.  These opportunities are typically at an earlier stage than those outlined above.  A summary of the longer term opportunities are presented in the table below.

Three-Year Guidance Plan Outlines a Growing Production Profile with Declining Unit Costs

Mine by mine production and cost guidance for 2018, and mine by mine production forecasts for 2019 and 2020 are set out below.  Evaluation of opportunities to further optimize and improve production and unit cost forecasts is ongoing.

Total cash costs per ounce on a by-product basis of gold produced ($ per ounce):

Currency and commodity assumptions used for 2018 cost estimates and sensitivities are presented in the table below:

In 2019, the estimated mid-point production level is currently forecast to be approximately 1.70 million ounces of gold, increased from the 1.60 million ounces in the February 2017 forecast.  The Company is currently evaluating potential opportunities to further optimize and improve production levels in 2019 and beyond (see discussion below for additional details).

In 2020, the estimated mid-point production level is currently forecast to be approximately 2.0 million ounces of gold, which is in line with the February 2017 forecast.

In 2019 and 2020, the Company expects total cash costs per ounce and AISC to be below the 2018 ranges when using the same currency and commodity assumptions as described above.

Depreciation Guidance

Agnico Eagle expects its 2018 depreciation and amortization expense to be between $525 and $575 million.

General & Administrative Cost Guidance

Agnico Eagle expects 2018 general and administration expense to be between $75 and $85 million, excluding share based compensation.  In 2018, share based compensation expense is expected to be between $30 and $40 million (including non-cash stock option expense of between $15 and $20 million).

Please see the supplemental financial data section of the Financial and Operating Database on the Company's website for additional historical financial data.

Tax Guidance for 2018

For 2018, the Company expects its effective tax rates to be:

Canada - 40% to 50%
Mexico - 35% to 40%
Finland - 20%

The Company's overall tax rate is expected to be between 40% and 45%.

Updated Three Year Guidance Plan

Since the prior three-year gold production guidance of February 15, 2017 ("Previous Guidance"), there have been several operating developments resulting in changes to the overall three-year production profile.  Descriptions of these changes are set out below.

Northern Business

ABITIBI REGION, QUEBEC

At LaRonde, the slightly lower production guidance for 2018 and 2019 (as compared to Previous Guidance) is primarily due to minor changes in the mining sequence.  The year-over-year production forecasts through 2020 largely reflect an increase in grade closer to that of the average mineral reserves as mining fully transistions to the higher grade areas in the lower mine.

LaRonde Zone 5 was approved for development in February 2017 and full permits were received in 2017.  During the third quarter of 2017, a 7,700 tonne bulk sample of development ore was processed at the Lapa gold circuit (part of the LaRonde metallurgical complex) yielding 515 ounces of gold. This bulk sample validated the metallurgical and pastefill parameters.  The revenue from the pre-commercial production was deducted from the capital expenditures of the project.

Commercial production is expected to be achieved in the third quarter of 2018.  For additional technical details on the project see the Company's news release dated February 15, 2017.

Mining operations at Lapa continued through year-end 2017 and into the first quarter of 2018, with ore being stockpiled for processing in 2018.  Milling operations are now expected to resume in March 2018 with processing of Lapa ore expected to continue through to the commencement of production from LaRonde Zone 5.

At Canadian Malartic (in which Agnico Eagle has 50% ownership), guidance for 2018 and 2019 is essentially unchanged from Previous Guidance.  Production in 2020 is expected to increase primarily due to the mining of higher grades in the Barnat pit (part of the Barnat expansion project).

At Goldex, guidance in 2018 and 2019 is essentially unchanged from Previous Guidance.  Production in 2020 is expected to increase with the proposed start-up of operations at the Akasaba West deposit.

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to create flexibility and synergies for the Company's operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs.  The permitting process is ongoing and the Company expects to begin sourcing open pit ore from Akasaba West in 2020.

NUNAVUT REGION

At Meadowbank, guidance for 2018 has increased over Previous Guidance and production has been extended into 2019, which bridges the gap between the cessation of mining activities at Meadowbank and the expected start of operations at Amaruq in the third quarter of 2019.  The additional production comes from an extension of the mine plan at the Vault and Phaser pits in 2018 and the Portage pit in 2018 and 2019.  In addition, production will be supplemented from stockpiles in 2018 and 2019.

The Amaruq satellite deposit at Meadowbank was approved for development in February 2017, pending the receipt of the required permits that are currently expected to be received late in the secondquarter of 2018.  In late 2017, the Company completed an internal technical study on the Amaruq deposit.  The results of this study are being incorporated into a new National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") technical report for the Meadowbank Complex, which is expected to be filed in March 2018.

Production is currently forecast to begin in the third quarter of 2019 (approximately four to five months of production in 2019).  Production in 2019 is expected to be between 135,000 and 190,000 ounces, with a mid-point of 162,500 ounces.  In 2020, production is expected to be between 260,000 and 270,000 ounces, with a mid-point of 265,000 ounces, which is a slight improvement over Previous Guidance.  In 2019 and 2020, the increase over Previous Guidance is largely due to a more robust mining plan outlined in the updated technical study.  The Company continues to investigate additional opportunities to optimize the mining plan at Amaruq.

Additional details on the project (including updated operational parameters) are described below.

The Meliadine project was approved for development in February 2017.  Given the progress of construction and development activities in 2017, and the acceleration of capital spending from 2019 into 2018, the mine is now expected to begin production in the second quarter of 2019, which is approximately one quarter ahead of previous forecasts.  The production forecast has the potential to further increase in 2019 depending on the progress of development at the Meliadine project.

FINLAND

At Kittila, guidance for 2018 and 2019 is slightly below the Previous Guidance due to a re-evaluation of the block model based on reconciliation data.  This has resulted in slightly lower grades in the planned mining areas for 2018 and 2019, which has led to a reduction in expected production levels over the next two years.  In 2017, the Company validated the potential to increase throughput rates to 2.0 mtpa from the then current rate of 1.6 mtpa.  As a result, the Company's Board of Directors has approved the expansion of the Kittila mine, which will include a mill modification and installation of a 1,044 metre deep shaft.

The increased throughput rate is further supported by additional drilling that has yielded favourable results in the Rimpi and Sisar zones (see the Kittila operational section below for recent drill results).

The new production guidance for 2020 reflects the partial impact of the expansion (starting in late 2020).  Additional details on the expansion project (including operational parameters) are described below.

Southern Business

At Pinos Altos, guidance for 2018 is slightly lower than Previous Guidance as open pit mining activities are expected to be completed by mid-year.  The decrease in 2019 production compared to Previous Guidance reflects the introduction of lower grade ore from the Sinter deposit.  Studies are ongoing to evaluate the potential to develop other satellite zones such as Cubiro and Reyna de Plata.

At Creston Mascota, guidance in 2018 and 2019 reflects the addition of the Bravo deposit into the mine plan (due to conversion of mineral resources to mineral reserves).  The increase in the minesite cost per tonne at Creston Mascota in 2018 (as compared to prior years) is affected by increased waste stripping (primarily at Bravo) and higher fuel costs relating to longer trucking distances.  Costs are expected to return to levels that are more typical in 2019.  Exploration is focused on expanding mineral reserves and mineral resources to sustain and grow production past 2019.

At La India, guidance in 2018 and 2019 is below Previous Guidance reflecting changes in the grade, mining sequence and lower recoveries.  Production in 2020 is expected to return to levels that are more in line with average historical production.

Studies are ongoing to evaluate the potential to develop other satellite zones such as El Cochi and El Realito.

Amaruq Project – Initial Mineral Reserves Declared; Budget and Schedule Remain on Track for Start-up in the Third Quarter of 2019

Agnico Eagle has a 100% interest in the Amaruq project at Meadowbank, which includes the Whale Tail and V Zone deposits. The project is located on a large 99,878 hectare property, approximately 50 kilometres northwest of the Meadowbank mine.  A significant gold discovery was made on the property in 2013, and activities since that time have focused on the development of satellite mineralization to feed the existing Meadowbank mill.

In February 2017, the Company's Board of Directors approved the Amaruq project for development pending the receipt of the required permits.  During the course of 2017, activities continued with the intent of bringing the project into production in the third quarter of 2019.

A conventional open pit mining operation is forecast to begin on the Whale Tail deposit in the third quarter of 2019.  Other satellite deposits, such as the V Zone, are expected to be included into the mine plan pending receipt of additional permitting.  This mining operation will utilize the existing infrastructure at the Meadowbank mine (mining equipment, mill, tailings, camp and airstrip).  Additional infrastructure will be built at the Amaruq site (truck shop/warehouse, fuel storage and a larger camp facility).  In addition, a new truck fleet will be required for hauling ore to the Meadowbank mill.

The project will be accessed by a 64-kilometre road from the Meadowbank site.  This road was completed as an exploration road in August 2017, and the Company expects to expand it to a production road once all of the necessary permits are received.  The ore will be hauled to the Meadowbank mill using off-road type trucks and the mill is expected to operate at 9,000 tonnes per day ("tpd").  The mill will require minor modifications, specifically the addition of a continuous gravity and regrind circuit.

The initial plan calls for the production of approximately 2.1 million ounces of gold between 2019 and 2024, with pre-mining activities starting in 2018 at the Whale Tail deposit, leaving approximately 60% of the current mineral reserve and mineral resource base uncovered by the mine plan. 

The Whale Tail Project is currently in the permitting process.  Once the Federal Minister of Indigenous and Northern Affairs Canada ("INAC") approves the project, the Nunavut Impact Review Board will be in a position to finalize the Whale Tail Project Certificate (the "WTPC").  Once the WTPC is finalized, the Company expects the Nunavut Water Board will finalize the Whale Tail Water License A for submission to INAC for final approval.  The Company expects that the final approvals for the Whale Tail project will be received late in the second quarter of 2018.

In 2017, capital expenditures at Amaruq were $89 million, compared to guidance of $100 million.  Amaruq capital expenditures were included with Meadowbank development capital expenditures disclosed for 2017.  Key activities included the completion of the exploration road from the Meadowbank mine, approximately 98,000 metres of exploration drilling (details are provided in the Meadowbank operational section below), the construction of a portal for the development of an underground ramp starting in 2018, testing of ore haulage trucks and completion of the updated technical study.

Amaruq Operating Parameters Updated in New Technical Study

In late 2017, the Company completed an updated technical study on the Amaruq deposit, the results of which are being incorporated into a new NI 43-101 technical report for the Meadowbank Complex, that is expected to be filed in March 2018. 

At December 31, 2017, the Amaruq satellite deposit at Meadowbank was estimated to contain an open pit mineral reserve of 2.4 million ounces (20.1 million tonnes grading 3.67 g/t gold), an open pit and underground indicated mineral resource of 1.0 million ounces (8.8 million tonnes grading 3.62 g/t gold) and an open pit and underground inferred mineral resource of 1.7 million ounces (8.7 million tonnes grading 6.25 g/t gold).  Further details on the mineral resources are set out in the mineral reserve and mineral resource section of this news release.

Updated Amaruq operating parameters from the NI 43-101 technical report and the updated guidance for 2018 are set out in the table below.

The main differences in the new operating parameters compared to the 2017 guidance (see the Company's news release dated February 15, 2017) are slightly higher minesite costs per tonne, which results in slightly higher total cash costs.  The increase in minesite costs per tonne relates primarily to the need to mine additional waste tonnes in the updated 2017 mining plan, and a slight increase in labour costs and materials.

The Company has also provided more conservative production guidance for 2019 and 2020 compared to the NI 43-101 technical report in order to reflect the start-up of mining activities.  However, the new guidance for 2019 and 2020 is higher than the forecasts presented in the Company's news release dated February 15, 2017.

Initial capital costs and sustaining capital costs are unchanged from previous 2017 guidance at approximately $330 million, and approximately $25 million per year respectively.  Mine reclamation costs are now estimated to be approximately $25 million (an increase of $9 million over the 2017 estimate).

2018 Amaruq Activities – Continued Focus on Exploration, Site Development Activities and Installation of the Underground Exploration Ramp

Capital expenditures at Amaruq in 2018 are forecast to be approximately $175 million, which is an increase of approximately $15 million over the previous guidance.  The increase largely relates to the accelerated procurement of additional equipment and materials for the 2018 sealift.

Given the exploration drilling success at depth below the planned open pits (see the summary of Amaruq 2017 exploration activities in the Meadowbank operations section below), it was decided to begin excavation of a portal and underground ramp in late 2017.  The first round of the ramp was blasted in early January 2018, and approximately 1,210 metres of underground development is planned for 2018 at a cost of approximately $21 million, which will be expensed and not included in capital costs.  The main purpose of building the ramp is to carry out additional exploration drilling and evaluate the potential for underground mining activities at both the Whale Tail and V zones.

The first phase of a planned 67,000-metre exploration drill program (costing approximately $14.2 million) and a 14,900-metre delineation drill program (costing approximately $2.4 million) commenced in February 2018.  The goals of the exploration drill program are to:

• Infill and expand the known mineral resource at the V Zone
• Test for westerly extensions of the Whale Tail deposit
• Further evaluate the underground potential of the Whale Tail deposit and the V Zone
• Test other favourable targets to potentially outline additional sources of open pit ore

The estimated capital budget for the Amaruq satellite deposit at Meadowbank in 2019 is approximately $66 million.  Work will be focused on site development (primarily dykes and surface infrastructure) and pre-stripping activities ahead of the proposed commencement of mining in the third quarter of 2019.

Meliadine Project – Production Now Expected to Begin in the Second Quarter of 2019, Approximately One Quarter Ahead of Previous Forecasts; Project Remains On Budget

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010, and is Agnico Eagle's largest gold deposit in terms of mineral resources.  The Company owns 100% of the 111,757 hectare property.

The forecast parameters surrounding the Company's proposed Meliadine operations below were based on a preliminary economic assessment, which is preliminary in nature and include inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the forecast production amounts will be realized.  The basis for the preliminary economic assessment and the qualifications and assumptions made by the qualified person who undertook the preliminary economic assessment are set out in this news release.  The results of the preliminary economic assessment had no impact on the results of any pre-feasibility or feasibility study in respect of Meliadine.

In February 2017, Company's Board of Directors approved the construction of the Meliadine project.  The mine was forecast to begin operations in the third quarter of 2019.  However, given the progress of construction and development activities in 2017, the Meliadine project is now expected to begin production in the second quarter of 2019.

With the advancement of the production schedule, new guidance estimates 2019 gold production of approximately 170,000 ounces, compared to previous guidance of 125,000 ounces.  In 2020, production guidance has been increased to 385,000 ounces of gold from the previous guidance of 375,000 ounces.

At December 31, 2017, the Meliadine property was estimated to contain proven and probable mineral reserves of 3.7 million ounces of gold (16.0 million tonnes grading 7.12 g/t gold), indicated mineral resources of 3.1 million ounces of gold (25.3 million tonnes grading 3.77 g/t gold) and inferred mineral resources of 2.7 million ounces of gold (13.8 million tonnes grading 6.04 g/t gold).  In addition, there are numerous other known gold occurrences along the 80-kilometre-long greenstone belt that require further evaluation.

In a comparison with the 2016 mineral reserve and mineral resources estimate, the increase in mineral reserves relates primarily to the conversion of indicated mineral resources, while the slight decline in grade is primarily due to a change in reserve parameters.  The decrease in indicated mineral resources relates primarily to the conversion to mineral reserves, while the decline in grade is mainly due to the application of the Mine Stope Optimization ("MSO") process, which removes small and isolated blocks from various deposits.  The decline in the grade and the contained ounces of the inferred mineral resources is mainly due to the application of the MSO process.

Production is now forecast to be approximately 5.7 million ounces of gold over a 15 year mine life.  This compares to previous production guidance in 2017 of approximately 5.3 million ounces of gold over a 14 year mine life.  The current production forecast represents approximately 60% of the known mineral reserve and mineral resource base.  For additional technical details on the project see the Company's news release dated February 15, 2017.

Update on Meliadine Development Activities in 2017

The total initial capital cost of the Meliadine project remains unchanged at $900 million.  Last year the Company spent approximately $372 million, which was in line with the updated guidance set out in the Company's new release dated October 25, 2017.

Key activities in 2017 included:

• Full enclosure of the mill, administration/warehouse and generator buildings
• All arctic corridors in place with glycol heating system operational
• Completion of the camp complex with nine wings
• Installation of underground ventilation and heating completed in December
• Completion of a fuel storage tank in Rankin Inlet and onsite
• Successful commissioning of surface utilities (potable water, sewage and effluent treatment plant, boilers, heating system, generators and incinerator)
• 5,551 metres of underground development (including the start of a second ramp system from underground)
• Construction of second ramp portal from surface
• Approximately 18,000 metres of conversion drilling (focused on the Pump and Wesmeg zones) and approximately 12,000 metres of delineation drilling
• Over 55% of the 2018 and 2019 stopes have been delineated

2018 Activities and Additional Opportunities to Create Value at Meliadine

Given the strong progress made on the project in 2017, capital spending in 2018 is now forecast to be approximately $398 million, which is an increase of approximately $18 million over the 2018 forecast presented last year.  This acceleration of capital spending is expected to result in the commencement of production in the second quarter of 2019, approximately one quarter ahead of previous forecast.  The remaining project capital to be spent in 2019 is forecast to be approximately $130 million.

Key activities in 2018 are planned to include:

• Approximately 9,475 metres of underground development
• Accelerated conversion drill program at Tiriganiaq from surface using a directional drill rig
• Approximately 19,000 metres of conversion drilling and approximately 10,000 metres of minesite exploration drilling
• Award remaining procurement packages by the first quarter of 2018, with follow up for delivery on the 2018 sealift
• Completion of Rankin Inlet by-pass road before the 2018 sealift
• Continue installation of mechanical, piping, electrical wiring and instrumentation in the process plant for commissioning in the first quarter of 2019
• Completion of the multi services building
• Installation of SAG mill and completion of CIL tanks following the 2018 sealift
• A 7,000 metre regional exploration drill program

The Company believes that there are numerous opportunities to create additional value, both at the mine and on the large land package.  These include:

• Optimization of the current mine plan (advance Phase 2 pit implementation)
• Potential to optimize labour costs once the mine is in operation (via improved use of telecommunications)
• Minesite exploration upside through mineral resource conversion and expansion of known ore zones (most zones are open below a vertical depth of 450 metres)
• Potential for the discovery of new deposits along the 80 kilometre-long greenstone belt

Kittila Expansion Approved for Construction – Increased Production and Lower Operating Costs Expected By 2021

In 2017, the Company reviewed the potential to increase throughput rates at Kittila to 2.0 mtpa from the current rate of 1.6 mtpa.  Based on this review, the Company's Board of Directors has approved the expansion, which includes the construction of a 1,044 metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades.

The expansion project is expected to increase the efficiency of the mine and decrease or maintain current operating costs while providing access to the deeper mining horizons.  In addition, the shaft is expected to provide access to the mineral resource areas below 1,150 metres, where recent exploration programs have shown promising results (see Kittila operating section for recent exploration drill results).

The total capital cost for the expansion project is approximately 160 million euros with phased expenditures from 2018 through 2021.  Additional details on the project include:

• Installation of a 1,044 metre deep shaft with hoisting capacity of 2.7 mtpa (2.0 mtpa of ore and 0.7 mtpa of waste)
• Four phase mill expansion to increase throughput from the current level of 1.6 mtpa to 2.0 mtpa by 2021
• Mill expansion will involve installation of a secondary crushing circuit, new thickener and reactor capacity, and minor modifications to the existing grinding circuit and autoclave
• Total capital cost to first ounce is approximately 160 million euros (which includes approximately 120 million euros for the shaft and 40 million euros for the mill expansion)
• Average annual gold production is expected to increase by 50,000 to 70,000 ounces per year starting in 2021

Kittila Expansion Parameters

Capital Expenditures Expected to Decline Significantly After Startup of Nunavut Operations in 2019; Sustaining Capital Costs Stable through 2020

Based on the Company's budget assumptions, the Company expects to fund this year's capital expenditures, which are estimated to total approximately $1.08 billion, from operating cash flow and expected cash balances.

The estimated capital expenditures for 2018 include approximately $267 million of sustaining capital at the Company's operating mines and $796 million on growth projects, as set out in the table below.  Additionally, approximately $22 million is estimated to be spent on capitalized exploration and approximately $137 million on expensed exploration and project evaluation.

2018 Exploration Program and Budget – Main Focus on Amaruq, Canadian Malartic mine, New Zone at LaRonde 3, Barsele, the Sisar Zone at Kittila, Satellite Targets at Pinos Altos and La India, Santa Gertrudis and El Barqueno

A large component of the 2018 exploration program will be focused on the Amaruq satellite deposit at Meadowbank in Nunavut, the LaRonde 3 deep deposit, the Barsele project in Sweden, the Sisar Zone at the Kittila mine in Finland, satellite targets at the Pinos Altos and La India mines in Mexico, the Santa Gertrudis project in Sonora State, Mexico and the El Barqueno project in Jalisco State, Mexico.  The goal of these exploration programs is to delineate mineral reserves and mineral resources that can supplement the Company's existing production profile.

At the Amaruq satellite deposit at Meadowbank, the first phase of a planned 67,000-metre drill program (costing approximately $14.2 million) commenced in January, 2018.  The goals of this program are to:

• Infill and expand the known mineral resource at the V Zone
• Test for westerly extensions of the Whale Tail deposit
• Further evaluate the underground potential of the Whale Tail deposit
• Test other favourable targets to potentially outline additional sources of open pit ore

At the Canadian Malartic mine the exploration will be focused on the Odyssey and East Malartic deposits, drilling 140,000 metres at an estimated cost of $8.6 million (50% basis for costs).

At the LaRonde 3 deposit, approximately 16,900 metres of drilling is expected for both conversion and exploration drilling.  Exploration expenditures in 2018 are expected to total approximately $2.7 million.

At Barsele, approximately 35,000 metres of drilling (costing approximately $6.9 million) will be carried out with a focus on expanding the mineral resources along strike and at depth, and testing the gap between the Central and Avan zones.

At Kittila, approximately $7.6 million will be spent on 31,000 metres of further deep drilling (including the Sisar Zone).  The goal of this program is to expand the mineral resources in the Northern part of the property and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.

At Pinos Altos and Creston Mascota, approximately 27,000 metres of drilling is planned to explore satellite mining opportunities, like Cubiro, Reyna de Plata and Calera with the objective of sustaining and expanding production through mineral resource expansion.  Exploration expeditures in 2018 are expected to total approximately $5.0 million.

At La India, approximately 38,000 metres of drilling (costing approximately $8.8 million) will target mineral resource expansion (at El Realito and Los Tubos) and conversion (at El Cochi) to extend minelife.

Approximately 35,000 metres of additional drilling is expected to be completed by the end of 2018 at the El Barqueno project, principally at the El Rayo, Tolteca, Mortero, Tierra Blanca, and Cebollas areas within the south area of the El Barqueno project.  Exploration expenditures in 2018 are expected to total approximately $9.7 million.  The objective is to expand the mineral resource and define an initial development plan.

At the recently acquired Santa Gertrudis project in Sonora, Mexico, approximately 28,000 metres of drilling will be focused on the evaluation of known mineralized at this past producing heap leach mine. Exploration expenditures are expected to be $7.2 million.

2018 Global Exploration program and budget including expenditures and metres of drilling

Successful Conversion at Key Projects Results in a 3.1% Increase to the 2017 Mineral Reserves; Gold Reserve Grade Increases

At December 31, 2017, the Company's proven and probable mineral reserves (net of 2017 production) totalled 257 million tonnes of ore grading 2.49 g/t gold, containing approximately 20.6 million ounces of gold.  This is an increase of approximately 600,000 ounces of gold (3.1%) compared with the prior year.  The Company's overall mineral reserve gold grade improved to 2.49 g/t from 2.31 g/t, largely due to the higher-than-average grade of new mineral reserves at Amaruq, as well as an increase in the cut-off grade at several of the Company's mining operations.  Agnico Eagle has one of the highest mineral reserve grades among its North American peers.

Highlights from the December 31, 2017 Mineral Reserve statement include:

• Initial mineral reserves at Amaruq satellite deposit at Meadowbank of 2.4 million ounces of gold (20.1 million tonnes grading 3.67 g/t gold) at open pit depth.  This brings the complement of mineral reserves at the Meadowbank Complex (including Amaruq) to 2.7 million ounces of gold (24.8 million tonnes grading 3.40 g/t gold)
• Meliadine mine project's mineral reserve increased by 260,000 ounces to 3.7 million ounces of gold (16.1 million tonnes grading 7.12 g/t gold) as a result of conversion from indicated mineral resources
• Mineral reserves at Goldex mine's Deep 1 deposit increased by approximately 138,000 ounces of gold (3.5 million tonnes at 1.24 g/t gold) as a result of drilling, partially offset by production from this zone in 2017
• Initial mineral reserves of 100,000 ounces of gold (2.0 million tonnes grading 1.57 g/t gold) have also been estimated at the Bravo Zone, more than offsetting the mine depletion at Creston Mascota in 2017
• Initial mineral reserves of 100,000 million ounces of gold (1.6 million tonnes grading 1.90 g/t) at Pinos Altos' Sinter deposit

The Company's December 31, 2017 gold reserves are set out below, compared with the gold reserves a year earlier:

Amounts set out in the table and in this news release have been rounded to the nearest thousand.  See "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2017)" at the end of this news release for more details.

In prior years, economic parameters used to estimate mineral reserves and mineral resources for all properties were determined using historic three-year average metals prices and foreign exchange rates in accordance with the U.S. Securities and Exchange Commission (the "SEC") guidelines.  These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve estimation, which the SEC has interpreted to mean historic three-year average prices.  Given the current commodity price environment, Agnico Eagle has decided to continue to use more conservative gold and silver prices.

Assumptions used for the December 31, 2017 mineral reserves estimate at all mines and advanced projects reported by the Company

The above metal price assumptions are below the three-year historic gold and silver price averages (from January 1, 2015 to December 31, 2017) of approximately $1,223 per ounce and $16.62 per ounce, respectively.  The mineral resources at all properties are estimated using 75% of the cut-off grades used to estimate the mineral reserves.

The increase in the Company's mineral reserves is largely the result of initial mineral reserves declared at the Amaruq satellite deposit at Meadowbank and at the Bravo Zone at Creston Mascota, successful drill programs and the reduction in cut-off grade at Meliadine.  Mineral reserves of 2.4 million ounces of gold (20 million tonnes grading 3.67 g/t gold) are estimated at the Amaruq satellite deposit at Meadowbank, the result of conversion of indicated and inferred mineral resources.  The mineral reserves are in the Whale Tail deposit (88%) and the IVR Zone (12%), all at open pit depths.  The Bravo Zone at the Creston Mascota mine has declared initial mineral reserves of 101,000 ounces of gold (2.0 million tonnes grading 1.57 g/t gold and 34.74 g/t silver), which more than offset the 87,000 ounces of in-situ gold mined at Creston Mascota in 2017.

Successful infill drilling and conversion from indicated mineral resources led to a 138,000-ounce increase (3.5 million tonnes grading 1.24 g/t gold) in gold reserves in the Deep 1 Zone at the Goldex mine, more than offsetting the 127,000 ounces of in-situ gold mined at Goldex in 2017.  Both conversion and a lower cut-off grade contributed to increasing the mineral reserves at the Meliadine mine project, partially offset by reclassification of marginal ore, for an overall increase of 260,000 ounces of contained gold.

At the Kittila mine, 59,000 ounces of gold resource ounces were converted to mineral reserves, mainly at the Suuri and Roura zones; this was more than offset by a reduction of 204,000 gold reserve ounces due to a higher cut-off grade, as well as the 225,000 ounces of gold mined in 2017, leading to an overall reduction of 389,000 ounces of gold in mineral reserves at Kittila.

The LaRonde mine extracted 366,000 ounces of in-situ gold and had an overall reduction of 34,000 ounces from the Zone 20 North as a result of drilling.

At the Pinos Altos mine, the mineral reserves declined by 151,000 ounces of gold in 2017 as a result of 194,000 ounces of in-situ gold mined and a 156,000 ounce reduction due to the new design of the Santo Nino pit and the crown pillar interpretation, partially offset by successful conversion at the Cerro Colorado deposit and initial mineral reserves at the Sinter deposit (97,000 ounces gold in 1.6 million tonnes grading 1.90 g/t gold, mostly at underground mining depths).

The reconciliation of ore mined compared with the deposit model led to a change of parameters at La India.  These factors, together with the 145,000 ounces of in-situ gold mined, resulted in an overall decrease of 342,000 ounces of gold in mineral reserves at the mine.

It is the Company's goal to maintain its global mineral reserves at approximately 10 to 15 times its annual gold production rate.  The current mineral reserves are within this range when compared to the Company's projected annual 2018 production guidance.

In addition to gold, Agnico Eagle's proven and probable mineral reserves include by-product metals of approximately 47 million ounces of silver at the Pinos Altos, LaRonde, La India and Creston Mascota mines (64.8 million tonnes grading an average of 22.7 g/t silver), plus 134,000 tonnes of zinc and 35,000 tonnes of copper at the LaRonde mine (15.3 million tonnes grading 0.88% zinc and 0.23% copper), 26,000 tonnes of copper at the Akasaba West project (5.2 million tonnes grading 0.49% copper) and 10,000 tonnes of copper at the Upper Beaver project (4.0 million tonnes grading 0.25% copper). 

At a gold price of $1,250 per ounce (leaving all other assumptions unchanged), there would be an approximate 5.5% increase in the gold contained in proven and probable mineral reserves.  Conversely, using a gold price of $1,050 (leaving all other assumptions unchanged), there would be an estimated 4.2% decrease in the gold contained in proven and probable mineral reserves.  For the Canadian Malartic mine only, the above sensitivity was calculated using a 10% variation in the assumed price of $1,200 per ounce gold.

Successful Conversion Decreases Measured and Indicated Mineral Resources by 400,000 Ounces Gold With Grade Improved to 1.60 g/t; Inferred Mineral Resources Decrease by 700,000 Ounces Gold With Gold Grade Increased to 2.87 g/t

Highlights from the December 31, 2017 Mineral Resource statement include:

• At the LaRonde mine below the 311 level, conversion drilling led to the reclassification of approximately 800,000 ounces of gold from inferred into indicated mineral resources
• Initial indicated mineral resources of 138,000 ounces of gold (3.5 million tonnes grading 1.25 g/t gold) at the Barsele project in Sweden (reflecting Agnico Eagle's 55% interest)
• Initial inferred mineral resources containing 1.2 million ounces of gold (19.0 million tonnes grading 2.02 g/t gold) at the East Malartic project at the Canadian Malartic mine property (reflecting Agnico Eagle's 50% interest)
• Initial inferred mineral resources containing 876,000 ounces of gold (6.0 million tonnes grading 4.50 g/t gold) at the Upper Canada deposit at Kirkland Lake (reflecting Agnico Eagle's 50% interest as at the date hereof)

The Company's measured and indicated mineral resources now total approximately 310 million tonnes grading 1.60 g/t gold, or 16.0 million ounces of gold.  This represents approximately a 3% decrease in ounces of gold (0.4 million ounces), a 7% decrease in tonnage (24 million tonnes) and an improvement in grade to 1.60 g/t gold compared with 1.53 g/t gold in the December 2016 measured and indicated mineral resource (see the Company's new release dated February 15, 2017 for details).

Successful conversion to mineral reserves resulted in decreases in measured and indicated mineral resources, particularly at Amaruq, with smaller amounts at the Goldex Deep 1 Zone, Creston Mascota's Bravo Zone, and the Sinter Zone at Pinos Altos.  This loss was more than offset by successful conversion of inferred to indicated mineral resources, particularly at Amaruq, the LaRonde mine below Level 311, Meliadine, Kittila, La India and the Barsele project.  The LaRonde mine below level 311 now has indicated mineral resources of 1.1 million ounces of gold (4.6 million tonnes grading 7.17 g/t gold).

In order to improve the quality of the mineral resources, Agnico Eagle continues to review its processes and protocols used for estimating mineral resources.  The application of preliminary mine plans, even for inferred mineral resources, is expected to result in a better conversion ratio from mineral resources to mineral reserves.  As an example, the Tarachi mineral resources are reported separately from La India for the first time this year.  A potential resource pit has been redefined at Tarachi, which has led to a decrease in its indicated and inferred resources.

The Company's inferred mineral resources now total 164 million tonnes grading 2.87 g/t gold, or approximately 15.2 million ounces of gold.  This represents an approximate 4% decrease in ounces of gold (0.7 million ounces), a 22% decrease in tonnage (48 million tonnes) and an increase in grade to 2.87 g/t gold compared with 2.23 g/t gold in the December 2016 inferred mineral resources (see the Company's news release dated February 15, 2017 for details).

Substantial initial inferred mineral resources have been declared on the East Malartic and Upper Canada projects.  The East Malartic deposit, which lies on the Canadian Malartic mine property close to the Odyssey Zone, has inferred mineral resources of 1.2 million ounces of gold (19.0 million tonnes grading 2.02 g/t gold) at underground depths above the 1,000-metre elevation.  At the Kirkland Lake project, the Upper Canada project has underground and open pit inferred mineral resources of 876,000 ounces of gold (6.0 million tonnes grading 4.50 g/t gold).  These numbers reflect Agnico Eagle's current 50% ownership of Canadian Malartic mine and the Kirkland Lake properties.

New drilling has also enhanced the inferred mineral resources at Goldex, particularly at the Deep 2 and South zones, as well as at the Odyssey Zone ( at the Canadian Malartic mine property).

Successful drilling campaigns to convert inferred to indicated mineral resources, mentioned above, resulted in a reduction of the inferred mineral resources, particularly at Amaruq where the inferred mineral resources decreased by approximately 380,000 ounces to 1.7 million ounces of gold (8.7 million tonnes grading 6.25 g/t gold), mainly at depth in the Whale Tail deposit (51%) and IVR Zone (42%), and the rest at open pit depths in the Whale Tail deposit (6%) and the IVR Zone (1%).  At LaRonde, 723,000 ounces of gold was converted from inferred to indicated mineral resources, mainly below level 311.  Inferred mineral resources at LaRonde are now 932,000 ounces of gold (5.3 million tonnes grading 5.49 g/t gold).

The change of protocols in the estimation process resulted in an improved quality but reduced quantity of inferred mineral resources at Meliadine of 2.7 million ounces of gold (13.8 tonnes grading 6.04 g/t gold).  A more conservative resource estimation strategy resulted in decreased inferred mineral resources at Tarachi.  An increased cut-off grade resulted in a small decrease to the inferred mineral resources at Kittila.

The distribution of mineral resources by property is set out in the following table.  For full details including tonnage and grade, see the "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2017)" below.

December 31, 2017 Mineral Resources

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

Agnico Eagle is currently Quebec's largest gold producer with a 100% interest in three mines (LaRonde, Goldex and Lapa) and a 50% interest in the Canadian Malartic mine.  These mines are located within 50 kilometres of each other, which provide operating synergies and allows for the sharing of technical expertise.

LaRonde Mine – Higher Tonnage and Grades Drive Record Annual Gold Production

The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.

Production costs per tonne in the fourth quarter of 2017 increased when compared to the prior-year period due to increased labour costs, higher underground and mill maintenance costs and the timing of unsold concentrate.  Production costs per ounce in the fourth quarter of 2017 increased when compared to the prior-year period due to the reasons described above, partially offset by higher gold production due to higher grades.

Minesite costs per tonne in the fourth quarter of 2017 increased when compared to the prior-year period due to increased labour costs and higher underground and mill maintenance costs.  Total cash costs per ounce in the fourth quarter of 2017 decreased when compared to the prior-year period due to higher gold production and higher by-product metal revenues.

Production was higher in the fourth quarter of 2017 when compared to the prior-year period as a result of slightly higher throughput and higher grades due to the mining sequence in the lower portion of the mine.

Production costs per tonne for the full year 2017 increased slightly when compared to the prior-year period due to increased labour costs and higher underground and mill maintenance costs.  Production costs per ounce for the full year 2017 decreased due to higher gold production.

Minesite costs per tonne for the full year 2017 increased slightly when compared to the prior-year period due to increased labour costs and higher underground and mill maintenance costs.  Total cash costs per ounce for the full year 2017 decreased when compared to the prior-year period due to higher gold production and higher by-product metal revenues.  In 2017, the LaRonde mine produced approximately 6,510 tonnes of zinc (39% more than in 2016), 1.3 million ounces of silver (27% more than in 2016) and 4,501 tonnes of copper (2% more than in 2016).

Production was higher for the full year of 2017 when compared to the prior-year period primarily due to higher grades mined from stopes in the lower portion of the mine.

At the LaRonde 3 project, the Company is evaluating a phased approach to development between the 311 level (a depth of 3.1 kilometres) and the 340 level (a depth of 3.4 kilometres).  Under this phased approach, an additional two to three levels will be developed per year in either the east or west areas of the mine through 2022.  This is expected to result in the conversion of approximately 1.0 million ounces of mineral resources into mineral reserves, with full mining activities to be initiated in 2022.  The Company believes that this phased approach is a lower risk, less capital intensive option for developing the deeper levels of the LaRonde mine.

Canadian Malartic Mine –Record Annual Production and Mill Throughput

In June 2014, Agnico Eagle and Yamana acquired all of the issued and outstanding common shares of Osisko Mining Corporation and created the Canadian Malartic General Partnership (the "Partnership").  The Partnership owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee.  Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership.  All volume numbers in this section reflect the Company's 50% interest in the Canadian Malartic mine except as noted.

Production costs per tonne in the fourth quarter of 2017 slightly increased when compared to the prior-year period primarily due to the use of additional contractors, partially offset by higher throughput levels.  Production costs per ounce in the fourth quarter of 2017 increased when compared to the prior-year period due the reason described above, partially offset by higher production.

Minesite costs per tonne in the fourth quarter of 2017 were the same when compared to the prior-year period.  Total cash costs per ounce in the fourth quarter of 2016 decreased when compared to the prior-year period due to higher production.

Production was higher in the fourth quarter of 2017 when compared to the prior-year period as a result of record quarterly mill throughput and higher grades.

Production costs per tonne for the full year 2017 were the same when compared to the prior-year period.  Production costs per ounce for the full year 2017 decreased when compared to the prior-year period due to higher gold production.

Minesite costs per tonne for the full year 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2017 decreased when compared to the prior-year period due to higher gold production.

Production was higher for the full year of 2017 when compared to the prior-year period as a result of record annual mill throughput and higher grades.

The Barnat extension project continues to progress on schedule and on budget.  Since the beginning of the fourth quarter of 2017, the following activities were completed:

• An acoustic screen (noise barrier) for the road deviation was put in place
• A temporary bridge was being constructed (and became operational in January 2018)
• Overload (new road bed foundation) preparation

Tree cutting has been completed over the Barnat deposit and overburden stripping is ongoing.  Production activities at Barnat are scheduled to begin in late 2019.

At the Canadian Malartic mine, exploration programs are ongoing to evaluate a number of near pit/underground targets.  In addition, the Partnership is exploring the East Malartic and the Odyssey properties, which are located to the east of the Canadian Malartic open pit.  These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.

Updated Mineral Resource at Odyssey and New Mineral Resource Reported at East Malartic

The Odyssey property is composed of multiple mineralized bodies spatially associated with a porphyritic intrusion close to the contact of the Pontiac Group sediments and the Piché Group of volcanic rocks.  They are grouped into two elongated zones, the Odyssey North and Odyssey South zones, that strike east-southeast and dip steeply south.  Odyssey North has been traced from a depth of 600 to 1,300 metres below surface along a strike length of approximately 1.5 kilometres.  Odyssey South currently has a strike length of 0.5 kilometres and has been located between approximately 200 and 550 metres below surface.

During 2017, a total of 125 holes (86,051 metres) were completed at the Odyssey property.  The 2017 results have been incorporated with previous work to update the mineral resource for the Odyssey property (inclusive of the North and South zones).  Inferred mineral resources (on a 50% basis) are estimated at 838,000 ounces of gold (11.2 million tonnes grading 2.32 g/t gold).

The inferred mineral resource includes a small contribution from the Jupiter Zone, which is an internal zone that extends from the Odyssey North Zone.  Drilling carried out to date suggests that these internal zones could increase mineral resources and enhance the economics of the project by adding higher grade ounces that would require minimal additional infrastructure to access.  Additional drilling is required to fully understand the complex nature of these zones so that they can be integrated into the mineral resource model.

In 2017, an initial inferred mineral resource was declared on the East Malartic property, which was a historical gold producer directly adjacent to the Canadian Malartic Mine.  Inferred mineral resources at East Malartic (on a 50% basis) are estimated at 1.2 million ounces of gold (19.0 million tonnes grading 2.02 g/t gold) to a depth of 1,000 metres.

Further details on mineral resources at the Odyssey and East Malartic properties are set out in the mineral reserve and mineral resource section of this news release.

In 2018, the exploration focus will be on the shallower portions of the Odyssey South and East Malartic Zone and further drilling to better define the geometry of the higher-grade internal zones.  The 2018 exploration program consists of 140,000 metres of drilling with a budgeted cost (50% basis) of $8.6 million.

In addition, permitting activities are underway for an exploration ramp to provide underground access to the shallower portions of the Odyssey South and East Malartic deposits.  Development of the ramp, which will provide access for underground drilling, and collection of a bulk sample, is expected to begin in late 2018.  The goal of the underground development program is to provide higher grade feed to the Canadian Malartic mill and extend the current mine life.

Canadian Malartic Corporation

In addition to the Partnership, each of Agnico Eagle and Yamana has an indirect 50% interest in CMC, which holds a portfolio of exploration properties that includes properties in the Kirkland Lake area of Ontario and the Hammond Reef property in Northern Ontario.

In December 2017, the Company announced that it had reached an agreement to acquire all of Yamana's indirect 50% interest in the Canadian exploration assets of CMC (the "CMC Projects").  The transaction will not affect the Canadian Malartic mine and related assets including Odyssey, East Malartic, Midway and East Amphi, which will continue to be jointly owned and operated by the Company and Yamana through CMC and the Partnership.  The transaction is expected to close by the end of March 2018.  As a result of this transaction, the Company expects to record an increase in the Company's mineral reserve and mineral resource statement at year-end 2018.  For additional details on the transaction see the Company's news release dated December 21, 2017.

At December 31, 2017, an initial inferred mineral resource was reported for the Upper Canada property.  The Company's 50% interest was 876,000 ounces of gold (6.0 million tonnes grading 4.50 g/t gold).  The inferred mineral resource consists of 155,000 ounces of gold (2.4 million tonnes grading 1.97 g/t gold) of material at open pit depths and 721,000 ounces of gold (3.6 million tonnes grading 6.22 g/t gold) of material at underground depths.

The 2018 exploration program consists of 20,000 metres of drilling at an estimated cost of $7.5 million⁸.  This program will be reviewed upon completion of the proposed transaction with Yamana.

Lapa – Processing of Stockpiles Provides Additional Production Until Start Up of LaRonde Zone 5

The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.

Mining operations at Lapa continued during the fourth quarter of 2017 and into the first quarter of 2018 at a reduced rate with ore being stockpiled for processing in 2018.

Production costs per tonne for the full year 2017 increased when compared to the prior-year period primarily due to lower throughput levels.  Production costs per ounce for the full year 2017 increased when compared to the prior-year period primarily due to lower production.

Minesite costs per tonne for the full year 2017 were essentially the same when compared to the prior-year period.  Total cash costs per ounce for the full year 2017 increased when compared to the prior-year period due to lower production.

Production was lower for the full year of 2017 when compared to the prior-year period as a result of lower throughput and lower grades as the mine approaches the end of operations.

Milling operations are forecast to resume in March 2018 with processing expected to continue through to the commencement of production from the LaRonde Zone 5 in the third quarter of 2018.

Goldex – Deep 1 Ramp Up Progressing Well; Deep 2 Exploration Plan Accelerated

The 100% owned Goldex mine in northwestern Quebec began operation from the M and E satellite zones in September 2013.

Production costs per tonne in the fourth quarter of 2017 increased when compared to the prior-year period due to an unplanned temporary hoist and mill shutdown in December, higher consumable costs and adjustments to the mining sequence.  Production costs per ounce in the fourth quarter of 2017 increased when compared to the prior-year period due the reasons described above, partially offset by higher gold production.

Minesite costs per tonne in the fourth quarter of 2017 increased when compared to the prior-year period due to an unplanned temporary hoist and mill shutdown in December, higher consumable costs and adjustments to the mining sequence.  Total cash costs per ounce in the fourth quarter of 2017 increased when compared to the prior-year period due to the reasons described above, partially offset by higher gold production.

Production was higher in the fourth quarter of 2017 when compared to the prior-year period as a result of slightly higher throughput, higher grades and slightly higher recoveries.

Production costs per tonne for the full year 2017 increased when compared to the prior-year period (after deducting pre-commercial tonnage) primarily due to lower throughput levels related to smaller stope size.  Production costs per ounce for the full year 2017 increased when compared to the prior-year period due to lower production and the reason described above (after deducting pre-commercial ounces).

Minesite costs per tonne for the full year 2017 increased when compared to the prior-year period (after deducting pre-commercial tonnage) primarily due to lower throughput levels related to smaller stope size.  Total cash costs per ounce for the full year 2017 increased when compared to the prior-year period due to lower production and the reason described above (after deducting pre-commercial ounces).

Production was lower for the full year 2017 when compared to the prior-year period as a result of lower throughput and lower grades, offset by slightly higher recoveries.

The Deep 1 ramp-up is on schedule with average daily throughput expected to be approximately 3,500 tpd in 2018 as the establishment of the mining pyramid progresses.  Development of an exploration ramp into the Deep 2 Zone commenced in December 2017, with exploration drilling expected to continue throughout 2018.

Studies are ongoing to evaluate the potential to increase throughput from the Deep 1 Zone and the potential to accelerate mining activities on a portion of the Deep 2 Zone, both of which could enhance production levels or extend the current mine life at Goldex and reduce operating costs.

At the South Zone, drilling in the fourth quarter of 2017 was used to interpret the zone and resulted in a significant increase in the mineral resources.  The South Zone is now estimated to contain indicated mineral resources of 57,000 ounces of gold (432,000 tonnes grading 4.09 g/t gold) and inferred mineral resources of 169,000 ounces of gold (1.1 million tonnes grading 4.74 g/t gold).  Metallurgical testing of the South Zone ore is ongoing, but initial results indicated that it is compatible with the Manitou tailings.  The first test stope in the South Zone is expected to be in place in June 2018.  Ore from the South Zone could potentially provide supplemental feed to the Goldex mill.

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to create flexibility and synergies for the Company's operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs.

The public hearing process was completed on Akasaba in 2017 and the project was deemed to be acceptable under certain conditions.  Provincial and Federal recommendations are expected in the second half of 2018.  The Company expects to start-up the project in 2020.

NUNAVUT REGION

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential.  With the Company's Meadowbank mine and two significant development assets (Meliadine and the Amaruq satellite deposit at Meadowbank) and other exploration projects, Nunavut has the potential to be a strategic operating platform with the ability to generate strong production and cash flows over several decades.

Meadowbank – Production Extended into Early 2019

The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010.