Josh Wolfson 00:06
Welcome to Innovators and Ideas, an audio series from RBC Capital Markets, where we engage with visionary leaders shaping the future. I'm your host, Josh Wolfson, Head of Global Mining Research. Today we're today we're coming to you from RBC’s Global Mining and Materials Conference in New York City, speaking to Jamie Porter, CFO of Agnico Eagle Mines Limited, a Canadian gold mining company.
Josh Wolfson 00:26
Jamie, thanks for joining us. Agnico Eagle has long emphasized building a high quality, low risk, sustainable business. How do you see these core values influencing your financial strategy and decision making as CFO?
Jamie Porter 00:37
I think from my perspective, any opportunity to really strengthen our balance sheet and set the company up for the future we want to take. We happen to be in one of those environments now where, you know, the gold price is at record highs. We've been successful at managing our costs, our margins have expanded, so indirectly benefiting shareholders and directly benefiting shareholders through the dividend and the share buyback. Mining is a tough business. It's capital intensive and it's a cyclical industry. And again, in periods such as the one we're in now, we want to really bulletproof the balance sheet and position ourselves for future growth.
Josh Wolfson 01:11
With fluctuating commodity prices and evolving geopolitical factors, how is Agnico Eagle adapting its financial strategies to external pressures?
Jamie Porter 01:19
I'd say we remain conservative with respect to our reserve and resource price estimates. I mean, we want to maintain the integrity of our mine plan, certainly in the short-term. So we don't want to dramatically increase our pricing assumptions, which, of course, would result in reducing cut-off grades and ultimately mining less profitable ounces. So we try to remain conservative from that perspective. The other thing we do, when we look at growing the company and expanding through organic growth projects, is we use a conservative gold price assumption relative to the current spot gold price. I'll give you an example. The five key growth projects that we have within our portfolio, currently, expanding Detour by going underground, getting Canadian Malardic to a million ounces a year, building Upper Beaver, Building Hope Bay and building the San Nicolas project in Mexico. Those projects all have a 15% IRR gold prices, $1,000 or more below where we are currently.
Josh Wolfson 02:18
Agnico has invested in advanced technologies across its operations. Can you discuss how these innovations are enhancing financial performance and operational efficiency?
Jamie Porter 02:27
We are investing significantly in automation initiatives and autonomous equipment. We are certainly recognized as a leader in automation in an underground mining environment. I'll give you an example, at our LZ5 mine on production activities through the weekend, from Friday night until Sunday night, are done fully remotely from surface, with operators controlling two to three pieces of equipment each. So that ensures no personnel underground, obviously lower labor costs and certainly a better overall safety profile. At our LaRonde mine, all of the mucking activities at depth are done remotely from surface as well, to prevent exposing any personnel to seismicity. So, those are a couple examples of where we're using automation to make our mines more productive and efficient. Another big initiative that we have this year is with respect to a fleet management system. So, this is common in big open pit mines, but we're looking at actually rolling this out underground where, once we have the underground fully networked and live, we can, through basically GPS technology, automate the process flow underground, ensure we know exactly where the equipment is and how and where material is moving. So, that should make our operations more efficient. There's lots of other examples where we're using, you know, aspects of AI in optimizing our mills and how we process ore. With respect to exploration, there's a new technology around optical core scanning, where, again, we use a computer to basically process our core and it gives us more reliable results over time. So there's lots of examples of how we're applying technology to try to make our mines more productive and efficient, ultimately keep our costs in check.
Josh Wolfson 04:08
On the M&A side of things, how does Agnico evaluate potential partnerships or acquisitions from a financial perspective and ensuring that aligns with the company's long-term strategy and shareholder returns ultimately?
Jamie Porter 04:19
The Agnico strategy is fairly straightforward. I like to summarize it as regional consolidation to create a competitive advantage. So, we focus on regions with high geologic potential, where we see the political stability to be able to operate multiple mines in those regions for multiple decades. So, the strategy is fairly straightforward. It's been consistent over the majority of the company's history. When we look at opportunities, it's within that framework. So, we look at opportunities in the regions where we operate that will improve the overall quality of our business. If we can lend our technical expertise, you know, the benefit of our supplier relationships, the benefit of our workforce to make a project better, than it's something that we'll consider. We do have those five organic growth projects, expansions and new mines that are very high return in the current gold price environment. So, any external opportunity has to be weighed against those. And again, at these gold prices, that's a high bar to cross.
Josh Wolfson 05:15
With over two decades in the mining industry and including your tenure at Alamos, what key lessons have you brought to your role at Agnico?
Jamie Porter 05:22
I'd say I was very fortunate in that the culture, the values and even the strategy between Alamos and Agnico were quite simple. So it was a very easy transition for me. I think throughout my career, I've certainly learned that having a strong balance sheet is a massive competitive advantage. Again, the gold industry is cyclical, and if your positioned with the best balance sheet in the industry, it creates opportunity in periods of volatility. So that was a lesson learned at Alamos that I think I brought over to Agnico. The other learning that I brought to Agnico is again that focus on cost control. We can't control the gold price, so we need to, as much as possible, control the cost side of the business. And, being uniquely positioned at the lower end of the cost curve, again, creates great opportunities in any gold price environment.
Josh Wolfson 06:08
When you think about your financial priorities for the company, how do you how do you navigate some of those advantages going forward for the mining sector?
Jamie Porter 06:13
At this gold price environment, we're generating significant free cash flow. We are committed to delivering increasing returns to shareholders over time. Over the course of the past five quarters, on average, we've returned 43% of our free cash flow to shareholders through the dividend and the share buyback. And I think, as we look forward, at least a third of our free cash flow will continue to accrue directly to shareholders. But I also see the strengthening of our balance sheet as an indirect form of return to shareholders. I think, by, again, fortifying the balance sheet, increasing our financial flexibility and strength, positions the company for long-term success, and will help to allow us to grow shareholder returns over the long-term.
Josh Wolfson 06:56
Thank you very much.
Jamie Porter 06:57
Thanks, Josh.
Josh Wolfson 06:58
Thanks again for listening to Innovators and Ideas, brought to you by RBC Capital Markets. This episode was recorded on June 12, 2025. Subscribe now to get insights delivered straight to your inbox on the economy, markets and industry trends at rbccm.com/insights.
Disclaimer 07:15
This content is based on information available at the time it was recorded and is for informational purposes only. It is not an offer to buy or sell or a solicitation, and no recommendations are implied. It is outside the scope of this communication to consider whether it is suitable for you and your financial objectives.