EX-99.1 2 a2231316zex-99_1.htm EX-99.1
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Exhibit 99.1

 
 
 
 
 
 
 
 
 

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Annual Information Form
for the year ended December 31, 2016

Dated as of March 27, 2017



AGNICO EAGLE MINES LIMITED

ANNUAL INFORMATION FORM

Table of Contents

   
    Page
   
INTRODUCTORY NOTES   ii

  Currency and Exchange Rates   ii

  Forward-Looking Statements   ii

  Presentation of Financial Information   iv

  Note to Investors Concerning Estimates of Mineral Reserves and Mineral Resources   iv

  Note to Investors Concerning Certain Measures of Performance   iv

SELECTED FINANCIAL DATA   1

GLOSSARY OF SELECTED MINING TERMS   2

CORPORATE STRUCTURE   9

DESCRIPTION OF THE BUSINESS   11

GENERAL DEVELOPMENT OF THE BUSINESS   12

OPERATIONS AND PRODUCTION   17

  Business Units and Foreign Operations   17

  Northern Business   17

  Southern Business   59

  Regional Exploration Activities   71

  Mineral Reserves and Mineral Resources   71

  Principal Products and Distribution   85

  Employees   86

  Competitive Conditions   86

  Sustainable Development   86

  Employee Health and Safety   87

  Community   87

  Environmental Protection   88

RISK FACTORS   89

DIVIDENDS   101

DESCRIPTION OF CAPITAL STRUCTURE   101

RATINGS   101

MARKET FOR SECURITIES   102

DIRECTORS AND OFFICERS OF THE COMPANY   103

  Directors   103

  Committees   104

  Officers   105

  Shareholdings of Directors and Officers   106

  Cease Trade Orders, Bankruptcies, Penalties or Sanctions   106

  Conflicts of Interest   107

AUDIT COMMITTEE   107

  Composition of the Audit Committee   107

  Relevant Education and Experience   107

  Pre-Approval Policies and Procedures   107

  External Auditor Service Fees   108

LEGAL PROCEEDINGS AND REGULATORY ACTIONS   108

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS   109

TRANSFER AGENT AND REGISTRAR   109

MATERIAL CONTRACTS   109

INTERESTS OF EXPERTS   112

ADDITIONAL INFORMATION   113

SCHEDULE "A" AUDIT COMMITTEE CHARTER OF THE COMPANY   A-1

i




INTRODUCTORY NOTES

Currency and Exchange Rates

Currencies:    Agnico Eagle Mines Limited ("Agnico Eagle" or the "Company") presents its consolidated financial statements in United States dollars. All dollar amounts in this Annual Information Form ("AIF") are stated in United States dollars ("U.S. dollars", "$" or "US$"), except where otherwise indicated. Certain information in this AIF is presented in Canadian dollars ("C$") or European Union euros ("Euro" or "€").

Exchange Rates:    The following tables set out, in Canadian dollars, the exchange rates for the U.S. dollar, based on the noon buying rate as reported by the Bank of Canada (the "Noon Buying Rate"). On March 22, 2017, the Noon Buying Rate was US$1.00 equals C$1.3347.

    Year Ended December 31,  
   
    2016   2015   2014   2013   2012  
   

 

 

 

 

 

 

 

 

 

 

 

 
High   1.4589   1.3990   1.1643   1.0697   1.0418  

Low   1.2544   1.1728   1.0614   0.9839   0.9710  

End of Period   1.3427   1.3840   1.1601   1.0636   0.9949  

Average   1.3248   1.2787   1.1045   1.0299   0.9996  

 
    2017   2016  
   
    March
(to March 22)
  February   January   December   November   October   September  
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
High   1.3505   1.3248   1.3438   1.3556   1.3582   1.3403   1.3248  

Low   1.3316   1.3004   1.3030   1.3120   1.3337   1.3104   1.2843  

End of Period   1.3347   1.3248   1.3030   1.3427   1.3426   1.3403   1.3117  

Average   1.3406   1.3110   1.3191   1.3329   1.3438   1.3251   1.3109  

On December 30, 2016 and March 22, 2017, US$1.00 equaled €1.0541 and €1.0807, respectively, as reported by the European Central Bank.

Forward-Looking Statements

Forward-Looking Statements:    Certain statements in this AIF, referred to herein as "forward-looking statements", constitute "forward-looking information" under the provisions of Canadian provincial securities laws and constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, the Company's plans, objectives, expectations, estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "anticipate", "believe", "budget", "could", "estimate", "expect", "forecast", "likely", "may", "plan", "project", "schedule", "should", "target", "will", "would" or other variations of these terms or similar words. Forward-looking statements in this AIF include, but are not limited to, the following:

    the Company's outlook for 2017 and future periods;

    statements regarding future earnings, and the sensitivity of earnings to gold and other metal prices;

    anticipated levels or trends for prices of gold and by-product metals mined by the Company or for exchange rates between currencies in which capital is raised, revenue is generated or expenses are incurred by the Company;

    estimates of future mineral production and sales;

ii


    estimates of future costs, including mining costs, total cash costs per ounce, all-in sustaining costs per ounce, minesite costs per tonne and other costs;

    estimates of future capital expenditures, exploration expenditures and other cash needs, and expectations as to the funding thereof;

    statements regarding the projected exploration, development and exploitation of ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such exploration, development and production or decisions with respect thereto;

    estimates of mineral reserves and mineral resources and their sensitivities to gold prices and other factors, ore grades and mineral recoveries and statements regarding anticipated future exploration results;

    estimates of cash flow;

    estimates of mine life;

    anticipated timing of events at the Company's mines, mine development projects and exploration projects;

    estimates of future costs and other liabilities for environmental remediation;

    statements regarding anticipated legislation and regulations, including with respect to climate change, and estimates of the impact on the Company; and

    other anticipated trends with respect to the Company's capital resources and results of operations.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico Eagle upon which the forward-looking statements in this AIF are based, and which may prove to be incorrect, include the assumptions set out elsewhere in this AIF as well as: that there are no significant disruptions affecting Agnico Eagle's operations, whether due to labour disruptions, supply disruptions, damage to equipment, natural or man-made occurrences, mining or milling issues, political changes, title issues or otherwise; that permitting, development and expansion at each of Agnico Eagle's mines, mine development projects and exploration projects proceed on a basis consistent with expectations, and that Agnico Eagle does not change its exploration or development plans relating to such projects; that the exchange rates between the Canadian dollar, Euro, Mexican peso and the U.S. dollar will be approximately consistent with current levels or as set out in this AIF; that prices for gold, silver, zinc and copper will be consistent with Agnico Eagle's expectations; that prices for key mining and construction supplies, including labour costs, remain consistent with Agnico Eagle's expectations; that production meets expectations; that Agnico Eagle's current estimates of mineral reserves, mineral resources, mineral grades and mineral recoveries are accurate; that there are no material delays in the timing for completion of development projects; and that there are no material variations in the current tax and regulatory environments that affect Agnico Eagle.

The forward-looking statements in this AIF reflect the Company's views as at the date of this AIF and involve known and unknown risks, uncertainties and other factors which could cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risk factors set out in "Risk Factors" below. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. This AIF contains information regarding estimated total cash costs per ounce, all-in sustaining costs per ounce and minesite costs per tonne in respect of the Company or at certain of the Company's mines and mine development projects. The Company believes that these generally accepted industry measures are realistic indicators of operating performance and are useful in allowing year over year comparisons. Investors are cautioned that this information may not be suitable for other purposes.

Meaning of "including" and "such as":    When used in this AIF, the terms "including" and "such as" mean including and such as, without limitation.

iii


Presentation of Financial Information

International Financial Reporting Standards:    The Company reports its financial results using International Financial Reporting Standards ("IFRS"). The Company adopted IFRS as its basis of accounting, replacing United States generally accepted accounting principles ("US GAAP") effective July 1, 2014. As a result, Agnico Eagle's consolidated financial statements for 2015 and 2016 are reported in accordance with IFRS, with comparative information for prior periods restated under IFRS and a transition date of January 1, 2013. The Company's transition to IFRS reporting had no significant impact on the design or effectiveness of the Company's internal controls over financial reporting. The Company adopted IFRS as its basis of accounting to maintain comparability with other gold mining companies. Unless otherwise specified, all references to financial results herein are to those calculated under IFRS.


Note to Investors Concerning Estimates of Mineral Reserves and Mineral Resources

The mineral reserve and mineral resource estimates contained in this AIF have been prepared in accordance with the Canadian securities regulatory authorities' (the "CSA") National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). These standards are similar to those used by the United States Securities and Exchange Commission's (the "SEC") Industry Guide No. 7, as interpreted by Staff at the SEC ("Guide 7"). However, the definitions in NI 43-101 differ in certain respects from those under Guide 7. Accordingly, mineral reserve information contained or incorporated by reference herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC does not recognize measures of "mineral resource".

The mineral reserve and mineral resource data presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. The Company does not include equivalent gold ounces for by-product metals contained in mineral reserves in its calculation of contained ounces.

Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources

This document uses the terms "measured mineral resources" and "indicated mineral resources". Investors are advised that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into mineral reserves.

Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources

This document uses the term "inferred mineral resources". Investors are advised that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred mineral resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that any part or all of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian regulations, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legally mineable.


Note to Investors Concerning Certain Measures of Performance

This AIF discloses certain measures, including "total cash costs per ounce", "all-in sustaining costs per ounce" and "minesite costs per tonne" that are not recognized measures under IFRS. These measures may not be comparable to similar measures reported by other gold producers. For a reconciliation of these measures to the most directly comparable financial information presented in the Annual Financial Statements (as defined below) prepared in accordance with IFRS, and for an explanation of how management uses these measures, please see the Company's management discussion and analysis for the period ended December 31, 2016 (the "Annual MD&A").

The total cash costs per ounce of gold produced is reported on both a by-product basis (deducting by-product metal revenues from production costs) and co-product basis (before deducting by-product metal revenues). The total cash costs per ounce of gold produced on a by-product basis is calculated by adjusting production costs as recorded in the consolidated statements of income (loss) for by-product revenues, unsold concentrate inventory production costs, smelting, refining and marketing charges and other adjustments, and then dividing by the number of ounces of gold

iv



produced. The total cash costs per ounce of gold produced on a co-product basis is calculated in the same manner as the total cash costs per ounce of gold produced on a by-product basis, except that no adjustment is made for by-product metal revenues. Accordingly, the calculation of total cash costs per ounce of gold produced on a co-product basis does not reflect a reduction in production costs or smelting, refining and marketing charges associated with the production and sale of by-product metals. The total cash costs per ounce of gold produced is intended to provide information about the cash-generating capabilities of the Company's mining operations. Management also uses these measures to monitor the performance of the Company's mining operations. As market prices for gold are quoted on a per ounce basis, using the total cash costs per ounce of gold produced on a by-product basis measure allows management to assess a mine's cash-generating capabilities at various gold prices.

All-in sustaining costs per ounce is used to show the full cost of gold production from current operations. The Company calculates all-in sustaining costs per ounce of gold produced on a by-product basis as the aggregate of total cash costs per ounce on a by-product basis, sustaining capital expenditures (including capitalized exploration), general and administrative expenses (including stock options) and reclamation expenses, and then dividing by the number of ounces of gold produced. The all-in sustaining costs per ounce of gold produced on a co-product basis is calculated in the same manner as the all-in sustaining costs per ounce of gold produced on a by-product basis, except that the total cash costs per ounce on a co-product basis is used, meaning no adjustment is made for by-product metal revenues. The Company's methodology for calculating all-in sustaining costs per ounce may differ from the methodology used by other producers that disclose all-in sustaining costs per ounce. The Company may change the methodology it uses to calculate all-in sustaining costs per ounce in the future, including in response to the adoption of formal industry guidance regarding this measure by the World Gold Council.

Management is aware that these per ounce measures of performance can be affected by fluctuations in exchange rates and, in the case of total cash costs per ounce of gold produced on a by-product basis, by-product metal prices. Management compensates for these inherent limitations by using these measures in conjunction with minesite costs per tonne as well as other data prepared in accordance with IFRS.

Management also performs sensitivity analyses in order to quantify the effects of fluctuating exchange rates and metal prices. This AIF also contains information as to estimated future total cash costs per ounce, all-in sustaining costs per ounce and minesite costs per tonne. The estimates are based upon the total cash costs per ounce, all-in sustaining costs per ounce and minesite costs per tonne that the Company expects to incur to mine gold at its mines and projects and, consistent with the reconciliation of these actual costs referred to above, do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable IFRS measure.

v



SELECTED FINANCIAL DATA

The following selected financial data for each of the years in the five-year period ended December 31, 2016 are derived from the consolidated financial statements of Agnico Eagle audited by Ernst & Young LLP. The selected financial data should be read in conjunction with the Company's operating and financial review and prospects set out in Agnico Eagle's annual audited consolidated financial statements as of and for the period ended December 31, 2016, including the notes thereto (the "Annual Financial Statements") and the Annual MD&A.

    Year Ended December 31,    
   
    2016(1)   2015(1)   2014(1)(2)   2013(1)   2012(3)    
   
    (in thousands of U.S. dollars, other than share and per share information)    
Income Statement Data                        
Revenues from mining operations   2,138,232   1,985,432   1,896,766   1,638,406   1,917,714    

Production   1,031,892   995,295   1,004,559   866,082   897,712    

Exploration and corporate development   146,978   110,353   56,002   44,236   109,500    

Amortization of property, plant and mine development   613,160   608,609   433,628   313,890   271,861    

General and administrative   102,781   96,973   118,771   113,809   119,085    

Impairment loss on available-for-sale securities     12,035   15,763   32,476   12,732    

Loss (gain) on derivative financial instruments   (9,468 ) 19,608   6,156   268   819    

Provincial capital tax           4,001    

Finance costs   74,641   75,228   73,393   62,455   57,887    

Other expenses (income)   16,233   12,028   (7,004 ) 3,396   2,389    

Environmental remediation   4,058   2,003   8,214   3,698      

Impairment (reversal) loss   (120,161 )     1,014,688      

Gain on sale of available-for-sale securities   (3,500 ) (24,600 ) (5,635 ) (74 ) (9,733 )  

Foreign currency translation (gain) loss   13,157   (4,728 ) 3,781   1,769   16,320    

Income (loss) before income and mining taxes   268,461   82,628   189,138   (818,287 ) 435,141    

Income and mining taxes expense (recovery)   109,637   58,045   106,168   (131,582 ) 124,225    

Net income (loss) for the year   158,824   24,583   82,970   (686,705 ) 310,916    

Net income (loss) per share – basic   0.71   0.11   0.43   (3.97 ) 1.82    

Net income (loss) per share – diluted   0.70   0.11   0.39   (3.97 ) 1.81    

Weighted average number of common shares outstanding – basic   223,736,595   216,167,950   195,222,905   172,892,654   171,250,179    

Weighted average number of common shares outstanding – diluted   225,753,589   217,101,431   196,201,626   172,892,654   171,485,615    

Cash dividends declared per common share   0.36   0.32   0.32   0.66   1.02    


Balance Sheet Data (at end of period)

 

 

 

 

 

 

 

 

 

 

 

 
Property, plant and mine development   5,106,036   5,088,967   5,155,865   3,694,461   4,067,456    

Total assets   7,107,951   6,683,180   6,809,255   4,580,081   5,256,119    

Long-term debt   1,072,790   1,118,187   1,322,461   987,356   830,000    

Reclamation provision   265,308   276,299   249,917   184,009   101,753    

Net assets   4,492,474   4,141,020   4,068,490   2,717,406   3,410,212    

Common shares   4,987,694   4,707,940   4,599,788   3,294,007   3,241,922    

Shareholders' equity   4,492,474   4,140,020   4,068,490   2,717,406   3,410,212    

Total common shares outstanding   224,965,140   217,650,795   214,236,234   173,953,975   172,102,870    

(1)
Figures reported for 2016, 2015, 2014 and 2013 are presented in accordance with IFRS.

(2)
As set out in note 5 of the annual audited consolidated financial statements as of and for the period ended December 31, 2015, certain previously reported December 31, 2014 consolidated balance sheet line items were updated to reflect adjusted final estimates of fair value related to the June 16, 2014 joint acquisition of Osisko Mining Corporation ("Osisko") by the Company and Yamana Gold Inc. ("Yamana").

(3)
Figures reported for 2012 have not been restated to conform to IFRS and are presented in accordance with US GAAP.

AGNICO EAGLE        1
ANNUAL INFORMATION FORM            



GLOSSARY OF SELECTED MINING TERMS


 

 

 

 

"alteration"

 

Any physical or chemical change in the mineral composition of a rock subsequent to its formation, generally produced by weathering or hydrothermal solutions. Milder and more localized than metamorphism.

 

"anastomosing"

 

A network of branching and rejoining fault or vein surfaces or surface traces.

 

"andesite"

 

A dark-coloured, fine-grained calc-alkaline volcanic rock of intermediate composition.

 

"assay"

 

To analyze the proportions of metals in an ore; to test an ore or mineral for composition, purity, weight or other properties of commercial interest.

 

"banded iron formation"

 

An iron formation that shows marked banding, generally of iron-rich minerals and chert or fine-grained quartz.

 

"bedrock"

 

Solid rock exposed at the surface of the Earth or overlain by unconsolidated material, weathered rock or soil.

 

"bench"

 

A ledge in an open pit mine that forms a single level of operation above which minerals or waste rock are excavated. The ore or waste is removed in successive layers (benches), several of which may be in operation simultaneously.

 

"breccia"

 

A rock in which angular rock fragments are surrounded by a mass of fine-grained minerals.

 

"brittle"

 

Of minerals, proneness to fracture under low stress. A quality affecting behaviour during comminution of ore, whereby one species fractures more readily than others in the material being crushed.

 

"bulk emulsion"

 

Water resistant explosive material pumped into a drilled blast hole and ignited remotely in order to fracture rock in the mining cycle. Emulsion products are particularly well suited to wet conditions.

 

"by-product"

 

A secondary metal or mineral product recovered from the processing of rock.

 

"carbon-in-leach" or "CIL"

 

A precious metals recovery step in the mill. Gold and silver are leached from the ground ore and at the same time adsorbed onto granules of activated carbon, which is then separated by screening and processed to remove the precious metals.

 

"carbon-in-pulp" or "CIP"

 

A precious metals recovery step in the mill. After gold and silver have been leached from ground ore, they are adsorbed onto granules of activated carbon, which is then separated by screening and processed to remove the precious metals. A CIP circuit comprises a series of tanks through which leached slurry flows. Gold is captured onto captive activated carbon that will periodically be moved counter-currently from tank to tank. Head tank carbon is extracted periodically to further recover adsorbed gold before being returned to the circuit tails tank.

 

"chalcopyrite"

 

A sulphide mineral of copper and iron.

 

"concentrate"

 

The clean product recovered by froth flotation in the plant.

 

"conglomerate"

 

A coarse-grained sedimentary rock composed of rounded fragments set in a fine-grained cemented matrix.

 

"contact"

 

A plane or irregular surface between two types or ages of rock.

 

"counter-current decantation"

 

The clarification of washery water and the concentration of tailings by the use of several thickeners in series. The water flows in the opposite direction from the solids. The final products are slurry that is removed and clear water that is reused in the circuit.

 

2        AGNICO EAGLE
           ANNUAL INFORMATION FORM



"crosscut"

 

An underground passage driven from a shaft towards the ore, at (or near) right angles to the strike of a vein or other orebody.

 

"cut-off grade"

 

The minimum metal grade in an ore that can be mined economically.

 

"cyanidation"

 

A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving (leaching) it in a weak cyanide solution. May be carried out in tanks inside a mill or in heaps of ore out of doors (heap leach).

 

"deposit"

 

A natural occurrence of mineral or mineral aggregate, in such quantity and quality to invite exploitation.

 

"development"

 

The preparation of a mining property or area so that an orebody can be analyzed and its tonnage and quality estimated. Development is an intermediate stage between exploration and mining.

 

"diamond drill"

 

A drilling machine with a rotating, hollow, diamond-studded bit that cuts a circular channel around a core, which can be recovered to provide a more-or-less continuous and complete columnar sample of the rock penetrated.

 

"dilution"

 

The contamination of ore with barren wall rock in stoping, increasing tonnage mined and lowering the overall ore grade.

 

"dip"

 

The angle at which a vein, structure or rock bed is inclined from the horizontal as measured at right angles to the strike.

 

"disseminated"

 

Said of a mineral deposit (especially of metals) in which the desired minerals occur as scattered particles in the rock, but in sufficient quantity to make the deposit an ore. Some disseminated deposits are very large.

 

"dore"

 

Unrefined gold and silver bullion bars, which will be further refined to almost pure metal.

 

"drift"

 

A horizontal opening in or near an orebody and parallel to the long dimension of the orebody, as opposed to a crosscut that crosses the orebody.

 

"ductile"

 

Of rock, able to sustain, under a given set of conditions, 5% to 10% deformation before fracturing or faulting.

 

"dyke"

 

An earthen embankment, as around a drill sump or tank, or to impound a body of water or mill tailings. Also, a tabular body of igneous rock that cuts across the structure of adjacent rocks.

 

"electrowinning"

 

An electrochemical process in which a metal dissolved within an electrolyte is plated onto an electrode. Used to recover metals such as copper and gold from solution in the leaching of concentrates.

 

"envelope"

 

1. The outer or covering part of a fold, especially of a folded structure that includes some sort of structural break.

 

 

 

2. A metamorphic rock surrounding an igneous intrusion.

 

 

 

3. In a mineral, an outer part different in origin from an inner part.

 

"epigenetic"

 

Orebodies formed by hydrothermal fluids and gases that were introduced into the host rocks from elsewhere, filling cavities in the host rock.

 

"epithermal"

 

Referring to a mineral deposit that formed later than the enclosing rocks consisting of veins and replacement bodies, containing precious metals or, more rarely, base metals.

 

"extensional-shear vein"

 

A vein put in place in an extension fracture caused by the deformation of a rock.

 

"fault"

 

A fracture or a fracture zone in crustal rocks along which there has been displacement of the two sides relative to one another parallel to the fracture. The displacement may be a few inches or many kilometres long.

 

AGNICO EAGLE        3
ANNUAL INFORMATION FORM            



"feasibility study"

 

A comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations, together with any other relevant operational factors and a detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a pre-feasibility study.

 

"felsic"

 

A term used to describe light-coloured rocks containing feldspar, feldspathoids and silica.

 

"flotation"

 

The method of mineral separation in which a froth created by a variety of reagents floats some finely crushed minerals, whereas other minerals sink. The metal-rich flotation concentrate is then skimmed off the surface.

 

"flowsheet"

 

A diagram showing the progress of material through a treatment plant.

 

"foliation"

 

A general term for a planar arrangement of features in any type of rock, especially the planar structure that results in a metamorphic rock.

 

"footwall"

 

The rock beneath an inclined vein or ore deposit (opposite of a hanging wall).

 

"fracture"

 

Any break in a rock, whether or not it causes displacement, due to mechanical failure by stress; includes cracks, joints and faults.

 

"free gold"

 

Gold not combined with other substances.

 

"glacial till"

 

Dominantly unsorted and unstratified, unconsolidated rock debris, deposited directly by and underneath a glacier.

 

"grade"

 

The relative quantity or the percentage of metal content of an orebody (
e.g., grams of gold per tonne of rock or percent copper).

 

"greenstone belt"

 

An area underlain by metamorphosed volcanic and sedimentary rocks, usually in a continental shield.

 

"grouting"

 

The process of sealing off a water flow in rocks by forcing a thin slurry of cement or other chemicals into the crevices, usually done through a diamond drill hole.

 

"hanging wall"

 

The rock on the upper side of a vein or ore deposit.

 

"head grade"

 

The average grade of ore fed into a mill.

 

"horst"

 

An up-faulted block of rock.

 

"hydrothermal alteration"

 

Alteration of rocks or minerals by reaction with hydrothermal (magmatic) fluids.

 

"igneous rock"

 

Rock formed by the solidification of molten material that originated within the Earth.

 

"indicated mineral resource"

 

That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

 

 

 

While this term is recognized and required by Canadian regulations, the SEC does not recognize it. Investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into mineral reserves.

 

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"inferred mineral resource"

 

That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

 

 

 

While this term is recognized and required by Canadian regulations, the SEC does not recognize it. Investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be upgraded to a higher category. Investors are cautioned not to assume that part of or all of an inferred mineral resource exists, or is economically or legally mineable.

 

"infill drilling"

 

Drilling within a defined mineralized area to improve the definition of known mineralization.

 

"intrusive"

 

A body of igneous rock formed by the consolidation of magma intruded below surface into other rocks, in contrast to lavas, which are extruded upon the Earth's surface.

 

"iron formation"

 

A chemical sedimentary rock, typically thin-bedded or finely laminated, containing at least 15% iron of sedimentary origin and commonly containing layers of chert.

 

"ITH drill"

 

A type of rock drill in which a hammer is mounted in the hole, applying percussive force directly to the drill bit.

 

"leaching"

 

A chemical process for the extraction of valuable minerals from ore; also, a natural process by which ground waters dissolve minerals.

 

"lens"

 

A geological deposit that is thick in the middle and tapers towards the ends, resembling a convex lens.

 

"lithologic groups"

 

Groups of rock formations.

 

"lode"

 

A mineral deposit consisting of a zone of veins, veinlets or disseminations.

 

"longitudinal retreat"

 

An underground mining method where the ore is excavated in horizontal slices along the orebody and the stoping starts below and advances upwards. The ore is recovered underneath in the stope.

 

"mafic"

 

Igneous rocks composed mostly of dark, iron- and magnesium-rich silicate minerals.

 

"massive"

 

Said of a mineral deposit, especially of sulphides, characterized by a great concentration of ore in one place, as opposed to a disseminated or vein-like deposit. Said of any rock that has a homogeneous texture or fabric over a large area, with an absence of layering or any similar directional structure.

 

"matrix"

 

The fine-grained rock material in which a larger mineral is embedded.

 

"measured mineral resource"

 

That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

 

 

 

While this term is recognized and required by Canadian regulations, the SEC does not recognize it. Investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into mineral reserves.

 

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"Merrill-Crowe process"

 

A separation technique for removing gold from a cyanide solution. The solution is separated from the ore by methods such as filtration and counter-current decantation, and then the gold is precipitated onto zinc dust. Silver and copper may also precipitate. The precipitate is filtered to capture the gold slimes, which are further refined (
e.g., by smelting, to remove the zinc and by treating with nitric acid to dissolve the silver).

 

"metamorphism"

 

The process by which the form or structure of sedimentary or igneous rocks is changed by heat and pressure.

 

"mill"

 

A mineral treatment plant in which crushing, wet grinding and further treatment of ore is conducted; also a revolving drum used for the grinding of ore in preparation for treatment.

 

"mineral reserve"

 

The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.

 

"mineral resource"

 

A concentration or occurrence of diamonds, natural solid inorganic material or natural solid fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Investors are cautioned not to assume that any part or all of the mineral deposits in any category of resources will ever be converted into mineral reserves.

 

"muck"

 

Finely blasted rock (ore or waste) underground.

 

"net smelter return royalty"

 

A royalty payment made by a producer of metals based on the proceeds from the sale of mineral products after deducting off-site processing and distribution costs including smelting, refining, transportation and insurance costs.

 

"ounce"

 

A measurement of weight, especially used for gold, silver and platinum group metals. 1 troy ounce = 31.1035 grams.

 

"outcrop"

 

The part of a rock formation that appears at the surface of the Earth.

 

"oxidation"

 

A chemical reaction caused by exposure to oxygen, which results in a change in the chemical composition of a mineral.

 

"pillar"

 

A block of ore or other rock entirely surrounded by stoping, left intentionally for purposes of ground control or on account of low value.

 

"plunge"

 

The inclination of a fold axis or other linear structure from a horizontal plane, measured in the vertical plane.

 

"polydeformed"

 

A rock that has been subjected to more than one instance of folding, faulting, shearing, compression or extension as a result of various tectonic forces.

 

"porphyritic"

 

Rock texture in which one or more minerals has a larger grain size than the accompanying minerals.

 

"porphyry"

 

Any igneous rock in which relatively large crystals are set in a fine-grained groundmass.

 

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"preliminary feasibility study" or "pre-feasibility study"

 

A comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method (in the case of underground mining) or the pit configuration (in the case of an open pit) is established, and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations and the evaluation of any other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.

 

"pressure oxidation"

 

A process by which sulphide minerals are oxidized in order to expose gold that is encapsulated in the mineral lattice. The main component of a pressure oxidation circuit consists of a pressurized vessel (autoclave) where the oxygen level, process temperature and acidity are the primary control parameters.

 

"probable mineral reserve"

 

The economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study.

 

"proven mineral reserve"

 

The economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study.

 

"pyrite"

 

A yellow iron sulphide mineral, FeS2, normally of little value. It is sometimes referred to as "fool's gold".

 

"pyroclastic"

 

Rocks produced by explosive or aerial ejection of ash, fragments and glassy material from a volcanic vent.

 

"recovery"

 

The percentage of valuable metal in the ore that is recovered by metallurgical treatment.

 

"rock burst"

 

A sudden and often violent breaking of a mass of rock from the walls of a mine, caused by failure of highly stressed rock and the rapid release of accumulated strain energy.

 

"run-of-mine ore"

 

The raw, mined material as it is delivered, prior to sorting, stockpiling or treatment.

 

"sandstone"

 

A sedimentary rock consisting of grains of sand cemented together.

 

"schist"

 

A strongly foliated crystalline rock that can be readily split into thin flakes or slabs due to the well-developed parallelism of more than 50% of the minerals present in it, such as mica or hornblende.

 

"sedimentary rocks"

 

Rocks resulting from the consolidation of loose sediment that has accumulated in layers. Examples are limestone, shale and sandstone.

 

"semi-autogenous grinding" or "SAG"

 

A method of grinding rock whereby larger chunks of the rock itself and steel balls form the grinding media.

 

"shear" or "shearing"

 

The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure and producing metamorphic structures such as cleavage and schistosity.

 

"shear zone"

 

A tabular zone of rock that has been crushed and brecciated by many parallel fractures due to shear stress. Such an area is often mineralized by ore-forming solutions.

 

"sill"

 

An intrusive sheet of igneous rock of roughly uniform thickness that has been forced between the bedding planes of existing rock.

 

"slurry"

 

Fine rock particles in circulating water in a treatment plant.

 

"stope"

 

1. Any excavation in a mine, other than development workings, made for the purpose of extracting ore.

 

 

 

2. To excavate ore in an underground mine.

 

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"strike"

 

The direction, or bearing from true north, of a horizontal line on a vein or rock formation at right angles to the dip.

 

"stringers"

 

Mineral veinlets or filaments occurring in a discontinuous subparallel pattern in a host rock.

 

"sulphide"

 

A mineral characterized by the linkage of sulphur with a metal, such as pyrite, FeS2.

 

"tabular"

 

Said of a feature having two dimensions that are much larger or longer than the third, such as a dyke.

 

"tailings"

 

Material discharged from a mill after the economically and technically recoverable valuable minerals have been extracted.

 

"tailings dam" or "tailings impoundment" or "tailings pond"

 

Area closed at the lower end by a constraining wall or dam to which mill effluents are sent, the prime function of which is to allow enough time for metals to settle out or for cyanide to be naturally destroyed before the water is returned to the mill or discharged into the local watershed.

 

"tenement"

 

The right to enter, develop and work a mineral deposit. Includes a mining claim or a mining lease. A synonym of mineral title.

 

"thickener"

 

A vessel for reducing the proportion of water in a pulp by means of sedimentation.

 

"thickness"

 

The distance at right angles between the hanging wall and the footwall of a lode or lens.

 

"tonne"

 

A metric measurement of mass. 1 tonne = 1,000 kilograms = 2,204.6 pounds = 1.1 tons.

 

"transfer fault"

 

A structure that can accommodate lateral variations of deformation and strain.

 

"transverse open stoping"

 

An underground mining method in which the ore is excavated in horizontal slices perpendicular to the orebody length and the stoping starts below and advances upwards. The ore is recovered underneath the stope through a drawpoint system.

 

"trench"

 

A narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure for sampling or observation.

 

"vein"

 

A mineral filling of a fault or other fracture in a host rock.

 

"wacke"

 

A "dirty" sandstone that consists of a mixture of poorly sorted mineral and rock fragments in an abundant matrix of clay and fine silt.

 

"winze"

 

An internal mine shaft.

 

"Zadra elution circuit"

 

The process in this part of a gold mill strips gold and silver from carbon granules and puts them into solution.

 

"zone"

 

An area of distinct mineralization (
i.e., a deposit).

 

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CORPORATE STRUCTURE

Agnico Eagle Mines Limited is a corporation organized under the Business Corporations Act (Ontario). The Company was formed by articles of amalgamation under the laws of the Province of Ontario on June 1, 1972, as a result of the amalgamation of Agnico Mines Limited ("Agnico Mines") and Eagle Gold Mines Limited ("Eagle"). Agnico Mines was incorporated under the laws of the Province of Ontario on January 21, 1953 under the name "Cobalt Consolidated Mining Corporation Limited" and changed its name to Agnico Mines Limited on October 25, 1957. Eagle was incorporated under the laws of the Province of Ontario on August 14, 1945.

Since 1972, several corporate alterations have taken place. On August 22, 1972, the Company's articles were amended to permit the Company to: (i) borrow money on the credit of the Company, (ii) issue, sell or pledge debt obligations and (iii) charge, mortgage or pledge the Company's property. On June 27, 1980, Articles of Amendment were filed to allow the Company to use the name "Mines Agnico-Eagle Limitée". On July 5, 1984, the Company's articles were amended to delete all of the objects of the Company listed and specify that no restrictions apply to the business or powers that the Company may exercise. On July 3, 1986, Articles of Amendment were filed to set the minimum number of directors of the Company at five and the maximum at nine. On July 29, 1988, the Company's articles were amended to provide that the Company is authorized to issue an unlimited number of shares.

On December 31, 1992, the Company amalgamated with Lucky Eagle Mines Limited. On June 30, 1993, the maximum number of directors of the Company was increased from nine to 12. On January 1, 1996, the Company amalgamated with Goldex Mines Limited and 1159885 Ontario Limited. On October 17, 2001, the Company filed Articles of Arrangement which provided for the amalgamation of the Company and Mentor Exploration and Development Co. On July 12, 2002, the name of the Company was changed to "Agnico-Eagle Mines Limited/Mines Agnico-Eagle Limitee". On August 1, 2007, the Company amalgamated with Cumberland Resources Ltd., Agnico-Eagle Acquisition Corporation and Meadowbank Mining Corporation. On May 4, 2010, the maximum number of directors of the Company was increased from 12 to 15.

On January 1, 2011, the Company amalgamated with 1816276 Ontario Inc. (the ultimate successor entity to Comaplex Minerals Corp.). On January 1, 2013, the Company amalgamated with 1886120 Ontario Inc. (the successor corporation to 9237-4925 Québec Inc.). On April 26, 2013, Articles of Amendment were filed to eliminate the hyphen between "Agnico" and "Eagle" and the official name of the Company became "Agnico Eagle Mines Limited/Mines Agnico Eagle Limitée".

The Company's head and registered office is located at Suite 400, 145 King Street East, Toronto, Ontario, Canada M5C 2Y7; telephone number (416) 947-1212; website: www.agnicoeagle.com. The information contained on the Company's website is not part of this AIF. The Company's principal place of business in the United States is located at 1675 E. Prater Way, Suite 102, Sparks, Nevada 89434.

AGNICO EAGLE     9
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The following chart sets out the corporate structure of the Company, each of its significant subsidiaries and certain other entities, together with the jurisdiction of organization of the Company and each such subsidiary or entity as at March 22, 2017 (all of which are directly or indirectly wholly-owned by the Company, unless otherwise indicated).

LOGO

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DESCRIPTION OF THE BUSINESS

The Company is an established Canadian-based international gold producer with mining operations in northwestern Quebec, northern Mexico, northern Finland and Nunavut and exploration activities in Canada, Europe, Latin America and the United States. The Company's operating history includes over three decades of continuous gold production, primarily from underground operations. Since its formation on June 1, 1972, the Company has produced approximately 14.4 million ounces of gold.

The Company's strategy is to deliver high quality growth while maintaining high performance standards in health, safety, environmental matters and social acceptability; build a strong pipeline of projects to drive future production; and employ the best people and motivate them to reach their potential. Over the past eight years, the Company transformed itself from a regionally focused, single mine producer to a multi-mine international gold producer with seven operating, 100% owned mines, one operating 50% owned mine, and the Meliadine advanced development project.

The Company announced on February 15, 2017 that it intends to build mining operations at the Amaruq satellite deposit at Meadowbank and the Meliadine project, both of which are expected to commence mining operations in the third quarter of 2019.

The following table sets out the date of acquisition, the date of commencement of construction, the date of achieving commercial production and the estimated mine life for the Company's mines.

    Date of Acquisition(1)   Date of Commencement
of Construction
  Date of achieving
Commercial Production
  Estimated
Mine Life(2)
 
   

 

 

 

 

 

 

 

 

 

 
LaRonde mine   1992   1985   1988   2024  

Lapa mine   June 2003   June 2006   May 2009   2017  

Goldex mine(3)   December 1993   July 2012   October 2013   2025  

Canadian Malartic mine   June 2014   n/a   May 2011   2026  

Kittila mine   November 2005   June 2006   May 2009   2034  

Meadowbank mine   April 2007   Pre-April 2007   March 2010   2025  

Pinos Altos mine   March 2006   August 2007   November 2009   2023  

La India mine   November 2011   September 2012   February 2014   2022  

Notes:

(1)
Date when 100% ownership was acquired, other than the Canadian Malartic mine, which is the date when 50% ownership was acquired.

(2)
Estimated end date for gold production based on the Company's current life of mine plans. The estimated mine life at Meadowbank includes production from the Amaruq satellite deposit at Meadowbank.

(3)
Construction of infrastructure for purposes of mining the Goldex Extension Zone (the "GEZ") commenced in July 2005 and the GEZ achieved commercial production in August 2008. Mining operations on the GEZ have been suspended since October 2011. In late 2013, mining and production began from the M and E Zones of the Goldex mine.

Since 1988, the LaRonde mine, in the Abitibi region of Quebec, has been the Company's flagship operation, producing approximately 5.3 million ounces of gold as well as valuable by-products. The Lapa mine is 11 kilometres east of the LaRonde mine, and the Goldex mine, which achieved commercial production from the M and E Zones in October 2013, is 60 kilometres east of the LaRonde mine. The synergies between these sites contribute to the Company's efforts to reduce costs. The Company's 50% owned Canadian Malartic mine, also in the Abitibi region of Quebec, was acquired in June 2014. The Kittila mine in Finland, has a long reserve life and has significant production expansion potential. The Company's Meadowbank mine, in Nunavut, is expected to produce the most gold (approximately 320,000 ounces) of any of the Company's mines in 2017. The Pinos Altos mine, in Mexico, has significant production expansion potential. In addition, the Company plans to pursue opportunities for growth in gold production and gold reserves through the prudent acquisition or development of exploration properties, development properties, producing properties and other mining businesses in the Americas and Europe.

In 2016, the Company produced 1,662,888 ounces of gold at production costs per ounce of gold of $621 and total cash costs per ounce of gold on a by-product basis of $573 and at all-in sustaining costs per ounce of $824 on a by-product basis. For 2017, the Company expects to produce approximately 1,555,000 ounces of gold at total cash costs per ounce

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of gold on a by-product basis between $595 and $625 and at all-in sustaining costs per ounce between $850 and $900 on a by-product basis. See "Introductory Notes – Note to Investors Concerning Certain Measures of Performance" for a discussion of the use of the non-GAAP measures total cash costs per ounce and all-in sustaining costs per ounce. The Company has traditionally sold all of its production at the spot price of gold due to its general policy not to sell forward its future gold production.


GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

2014

As of February 1, 2014, commercial production was achieved at the La India mine.

On June 16, 2014, the Company and Yamana jointly acquired 100% of the outstanding shares of Osisko pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act (the "Osisko Arrangement") for consideration of approximately C$3.9 billion, consisting of approximately C$1.0 billion in cash and a combination of common shares of the Company, common shares of Yamana and shares of a new company that was spun-off under the Osisko Arrangement. Osisko was a Canadian based producing gold mining company that was, at the time, listed on the Toronto Stock Exchange (the "TSX"). Osisko was 100% owner of the Canadian Malartic mine in the Abitibi region of Quebec. Under the Osisko Arrangement, each Osisko share was exchanged for: (i) C$2.09 in cash (C$1.045 per share from each of the Company and Yamana); (ii) 0.07264 of a common share of the Company; (iii) 0.26471 of a common share of Yamana; and (iv) 0.1 of one common share of Osisko Gold Royalties Ltd ("New Osisko"), the newly formed spun-off company that commenced trading on the TSX immediately following the Osisko Arrangement.

In connection with the Osisko Arrangement, substantially all of the assets and obligations relating to the Canadian Malartic mine in Quebec were transferred to Canadian Malartic GP (the "Partnership"), a newly formed general partnership in which the Company and Yamana each own an indirect 50% interest. The Company and Yamana formed a joint management committee to operate the Canadian Malartic mine. On June 17, 2014, Osisko and the acquisition corporation formed by the Company and Yamana to acquire Osisko amalgamated to form "Canadian Malartic Corporation" in which Agnico and Yamana each hold an indirect 50% interest. Canadian Malartic Corporation continues to hold, among other things, Osisko's Kirkland Lake, Hammond Reef, Pandora and Wood-Pandora (50% interest) assets and properties. The Company and Yamana are jointly exploring and may potentially develop the Kirkland Lake assets, and continue exploration at the Hammond Reef project and the Pandora and Wood-Pandora properties, in each case through Canadian Malartic Corporation.

Pursuant to the Osisko Arrangement, the following assets of Osisko were transferred to New Osisko: (i) a 5.0% net smelter royalty on the Canadian Malartic mine; (ii) C$157.0 million in cash; (iii) a 2.0% net smelter royalty on the Kirkland Lake assets, the Hammond Reef project, and certain other exploration properties retained by Canadian Malartic Corporation; (iv) all assets and liabilities of Osisko relating to the Guerrero camp in Mexico; and (v) certain other investments and assets.

The Company's and Yamana's relationship with respect to the Canadian Malartic mine is governed by a unanimous shareholders agreement with respect to Canadian Malartic Corporation and a general partnership agreement with respect to the Partnership.

Direct transaction costs totaling C$16.7 million were included in the cost of the investment in Osisko. The Company's share of Osisko's June 16, 2014 purchase price was comprised of 33,923,212 of the Company's common shares issued to former holders of Osisko shares, C$502,059,784.01 in cash and 871,680 of the Company's common shares issued and held by the depositary in respect of unsecured convertible debentures previously issued by Osisko that remained outstanding following the Osisko Arrangement. On June 30, 2015, the negotiated early settlement of all of the outstanding unsecured convertible debentures was completed. As a result of this settlement, 871,680 common shares of the Company with a fair value of approximately $24.8 million were released by the depositary to the debentureholders, along with a cash payment of approximately $10.1 million. Additional cash consideration of $3.2 million was paid to the holders of the convertible debentures upon settlement.

A business acquisition report in respect of the Osisko Arrangement was filed by the Company on the System for Electronic Document Analysis and Retrieval ("SEDAR") on August 22, 2014.

On November 28, 2014, the Company completed its acquisition of all of the issued and outstanding common shares of Cayden Resources Inc. ("Cayden"), a Canadian based gold exploration company that was, at the time, listed on the TSX

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Venture Exchange (the "TSX-V"), pursuant to a court-approved plan of arrangement under the Business Corporations Act (British Columbia). Cayden indirectly held a 100% interest, or an option to earn a 100% interest, in certain mining properties in Jalisco and Guerrero, Mexico, including the El Barqueno property. Under the terms of the arrangement, each shareholder of Cayden received 0.09 of a common share of the Company and C$0.01 in cash.

Capital expenditures by the Company in 2014 were $475.4 million. This included $76.6 million at the LaRonde mine, $20.2 million at the Lapa mine, $34.3 million at the Goldex mine, $36.1 million at the Canadian Malartic mine, $106.2 million at the Kittila mine, $48.4 million at the Pinos Altos mine, $10.9 million at the Creston Mascota deposit at Pinos Altos, $22.7 million at the La India mine, $65.9 million at the Meadowbank mine, $48.3 million at the Meliadine project and $5.9 million at other properties. In addition, the Company incurred $25.9 million of expenditures on mine site exploration and $56.0 million on exploration activities at the Company's exploration properties and on corporate development activities.

2015

On February 23, 2015, Agnico Eagle entered into a binding letter of intent (the "LOI") with Canadian Malartic GP, Yamana and Abitibi Royalties Inc. ("Abitibi Royalties") regarding the Malartic CHL prospect which abuts the Canadian Malartic mine and in which Canadian Malartic Corporation held a 70% interest, with the remaining 30% interest held by Abitibi Royalties. On March 19, 2015, Abitibi Royalties sold its 30% interest in the Malartic CHL prospect to Canadian Malartic GP (the "CHL Transaction") in exchange for 459,197 common shares of the Company and 3,549,685 Yamana common shares, with a value of approximately C$35 million (based on the respective closing prices of such shares on the TSX on February 20, 2015, the date immediately prior to the public announcement by Abitibi Royalties of entering into the LOI), and 3% net smelter return royalties to Abitibi Royalties and New Osisko on the prospect. In addition, as part of the CHL Transaction all prior agreements, claims and proceedings relating to the Malartic CHL prospect, including those previously instituted by Abitibi Royalties against Osisko prior to the Company and Yamana completing the Osisko Arrangement, were terminated, settled and released.

Prior to completion of the Osisko Arrangement on June 6, 2014, Clifton Star Resources Inc. ("Clifton") instituted proceedings against Osisko (now Canadian Malartic Corporation) seeking, among other things, an order that Osisko pay Clifton C$22.5 million in damages. In the proceedings, Clifton alleged, among other things, that Osisko was obligated to lend Clifton C$22.5 million on or around December 1, 2012 pursuant to a December 10, 2009 commitment letter and a December 10, 2009 option and joint venture agreement, each between Clifton and Osisko, and that Osisko's failure to advance such loan resulted in damages to Clifton. Clifton further alleged that such loan was intended to be used to make payments under certain option agreements between Clifton and third parties which entitled Clifton to acquire shares of such third parties that owned interests in the concessions comprising the "Duparquet Project". Following the joint acquisition of Osisko by the Company and Yamana on June 16, 2014, the Company and Yamana engaged in discussions with Clifton to advance the settlement of such claims. Effective March 2, 2015, Canadian Malartic Corporation (as the successor to Osisko) entered into a settlement agreement with Clifton, pursuant to which Canadian Malartic Corporation paid Clifton approximately C$5.27 million in consideration for a full and final release of all claims arising from the facts described in the Clifton proceedings. Concurrently, under two separate non-brokered private placements, each of the Company and Yamana subscribed for 4,772,786 common shares of Clifton at a price of C$0.60 per share, for total proceeds to Clifton of approximately C$5.73 million.

On June 9, 2015, the Company completed its acquisition of all of the issued and outstanding common shares of Soltoro Ltd. ("Soltoro"), a Canadian based gold exploration company that was, at the time, listed on the TSX-V, pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act. Soltoro indirectly held a 100% interest, or an option to earn a 100% interest, in certain mining properties in Jalisco, Mexico, including the El Rayo property which is contiguous with the Company's El Barqueno property. Under the terms of the arrangement, each shareholder of Soltoro received 0.00793 of a common share of the Company, C$0.01 in cash and one common share of a newly formed Ontario company named Palamina Corp. valued at C$0.02 per share.

On June 11, 2015, the Company acquired from Orex Minerals Inc. ("Orex") 55.0% of the issued and outstanding common shares of Gunnarn Mining AB ("Gunnarn"), which holds the Barsele project in northern Sweden. Consideration for the acquisition was comprised of $6 million paid to Orex at closing and additional payments of $2 million in cash or Agnico Eagle common shares (at the Company's sole discretion) due to Orex on each of the first and second anniversaries of the closing. The Company has also committed to incurring $7.0 million in exploration expenditures associated with the Barsele project by June 11, 2018, and may earn an additional 15.0% interest in Gunnarn if the Company completes a pre-feasibility study related to the Barsele project. The Company holds a majority of the seats on the board of directors of Gunnarn and is the sole operator of the Barsele project.

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On September 30, 2015, the Company entered into a note purchase agreement with Ressources Québec Inc., a subsidiary of Investissement Québec, providing for the issuance of $50 million principal amount of 4.15% senior unsecured notes due 2025 (the "2015 Note Purchase Agreement"). The Company agreed to apply an amount equal to or greater than the net proceeds from the issuance of the notes towards the expansion, development, upgrade or maintenance of mining projects in the Province of Québec. For additional details see "Material Contracts – Note Purchase Agreements" below.

Capital expenditures by the Company in 2015 were $449.8 million. This included $67.3 million at the LaRonde mine, $6.5 million at the Lapa mine, $48.8 million at the Goldex mine, $43.4 million at the Canadian Malartic mine, $56.4 million at the Kittila mine, $61.8 million at the Pinos Altos mine, $4.2 million at the Creston Mascota deposit at Pinos Altos, $23.4 million at the La India mine, $65.2 million at the Meadowbank mine, $66.7 million at the Meliadine project and $6.0 million at other properties. In addition, the Company incurred $10.2 million of expenditures on mine site exploration and $100.2 million on exploration activities at the Company's exploration properties and on corporate development activities.

2016

On June 30, 2016, the Company entered into a note purchase agreement with certain institutional investors, providing for the issuance of notes consisting of $100 million 4.54% Series A senior notes due 2023, $200 million 4.84% Series B senior notes due 2026 and $50 million 4.94% Series C senior notes due 2028. For additional details see "Material Contracts – Note Purchase Agreements" below.

The following table sets out the Company's capital expenditures in 2016.

    2016 Capital Expenditures
(thousands of $)
 
   
 
    Sustaining   Development  
   

 

 

 

 

 

 
LaRonde   64,288    
Canadian Malartic   58,174   2,260  
Meadowbank   38,248   503  
Kittila   62,008   13,896  
Goldex   22,030   59,237  
Lapa      
Pinos Altos   47,410   12,162  
Creston Mascota deposit Pinos Altos   9,287    
La India   10,021   486  
Meliadine     130,942  
Other     4,361  
Total Expenditures   311,466   223,847  
   
 

2017

The Company announced on February 15, 2017 that it intends to build mining operations at the Amaruq satellite deposit at Meadowbank and the Meliadine project, both of which are expected to commence mining operations in the third quarter of 2019.

The Company is currently marketing notes to institutional investors on a private placement basis and expects to receive bids from prospective purchasers prior to the end of March 2017. At this time, the principal amount of the offering, interest rates and tenor of the notes have not been determined, though the Company currently anticipates that the notes will be issued in tranches with maturities of approximately 8, 10 and 12 years from issuance. All other terms of the notes are expected to be substantially the same as the terms of the existing notes of the Company issued under note purchase agreements in 2010, 2012, 2015 and 2016. See "Material Contracts — Note Purchase Agreements" below. The Company expects that the issuance of the notes would close within the next six months and the proceeds would be used for working capital and general corporate purposes. However, until the Company receives bids from, and enters into a definitive agreement with, investors, there can be no assurance that the offering will be completed.

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The following table sets out the Company's expected capital expenditures for 2017.

    Estimated 2017 Capital Expenditures
(thousands of $)
 
   
 
    Sustaining   Development   Capitalized
Exploration
 
   

 

 

 

 

 

 

 

 
LaRonde   67,700     1,700  
LaRonde Zone 5     35,000   400  
Canadian Malartic   65,900   1,700   2,300  
Meadowbank   20,300      
Amaruq     73,100   5,100  
Kittila   52,700   24,100   3,200  
Goldex   17,000   55,800   3,800  
Lapa        
Pinos Altos   48,400   5,800   500  
Creston Mascota deposit Pinos Altos   5,500      
La India   6,900     800  
Meliadine     355,800   3,900  
Other     2,000    
   
 
Total Expenditures   284,400   553,300   21,700  
   
 

Pre-2014

In the second quarter of 2004, the Company acquired an approximate 14% ownership interest in Riddarhyttan Resources AB ("Riddarhyttan"), a Swedish precious and base metals exploration and development company that was at the time listed on the Stockholm Stock Exchange. In November 2005, the Company completed a tender offer (the "Riddarhyttan Offer") for all of the issued and outstanding shares of Riddarhyttan that it did not own. The Company issued 10,023,882 of its common shares and paid and committed an aggregate of $5.1 million cash as consideration to Riddarhyttan shareholders in connection with the Riddarhyttan Offer. On March 28, 2011, Riddarhyttan was merged with Agnico Eagle AB and Agnico Eagle Sweden AB, with Agnico Eagle Sweden AB as the continuing entity. The Kittila mine is currently 100% owned by Agnico Eagle Finland Oy, which is wholly-owned by Agnico Eagle Sweden AB, an indirect subsidiary of the Company.

In the first quarter of 2005, the Company entered into an exploration and option agreement with Industrias Penoles S.A. de C.V. ("Penoles") to acquire the Pinos Altos property in northern Mexico. The Pinos Altos property is comprised of approximately 11,000 hectares in the Sierra Madre gold belt, approximately 225 kilometres west of the city of Chihuahua in the state of Chihuahua in northern Mexico. In February 2006, the Company exercised its option and acquired the Pinos Altos property on March 15, 2006. Under the terms of the exploration and option agreement, the purchase price of $66.8 million was comprised of $32.5 million in cash and 2,063,635 common shares of the Company.

In February 2007, the Company made an exchange offer for all of the outstanding shares of Cumberland Resources Ltd. ("Cumberland") not already owned by the Company. At the time, Cumberland was a pre-production development stage company listed on the TSX and American Stock Exchange whose primary asset was the Meadowbank property. In May 2007, the Company acquired approximately 92% of the issued and outstanding shares of Cumberland that it did not previously own and, in July 2007, the Company completed the acquisition of all Cumberland shares by way of a compulsory acquisition. The Company issued 13,768,510 of its common shares and paid $9.6 million in cash as consideration to Cumberland shareholders in connection with its acquisition of Cumberland.

In April 2010, the Company entered into an agreement in principle with Comaplex Minerals Corp. ("Comaplex") to acquire all of the outstanding shares of Comaplex that it did not already own. At the time, Comaplex owned a 100% interest in the advanced stage Meliadine gold property, which is located approximately 300 kilometres southeast of the Company's Meadowbank mine. In May 2010, the Company executed the definitive agreements with Comaplex and, in July 2010 by plan of arrangement, the Company acquired 100% of the Meliadine gold property through the acquisition of Comaplex, which was renamed Meliadine Holdings Inc. Pursuant to the arrangement, Comaplex transferred to Geomark

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Exploration Ltd. all assets and related liabilities other than those relating to the Meliadine project. In connection with the arrangement, the Company issued 10,210,848 of its common shares as consideration to Comaplex shareholders.

In September 2011, the Company entered into an acquisition agreement with Grayd Resource Corporation ("Grayd"), a Canadian-based natural resource company that was, at the time, listed on the TSX-V, pursuant to which the Company agreed to make an offer to acquire all of the issued and outstanding common shares of Grayd. At the time, Grayd held a 100% interest in the La India property located in the Mulatos Gold Belt of Sonora, Mexico and had recently discovered the Tarachi gold porphyry prospect located approximately ten kilometres north of the La India property. In October 2011, the Company made the offer by way of a take-over bid circular, as amended and supplemented, and, in November 2011, acquired approximately 95% of the outstanding common shares of Grayd. In January 2012, the Company completed a compulsory acquisition of the remaining outstanding common shares of Grayd and Grayd became a wholly-owned subsidiary of the Company. In aggregate, the Company issued 1,319,418 of its common shares and paid C$179.7 million in cash as consideration to Grayd shareholders in connection with the transaction.

In May 2013, the Company completed its acquisition of all of the issued and outstanding common shares of Urastar Gold Corp. ("Urastar"), a Canadian-based gold exploration company that was, at the time, listed on the TSX-V, pursuant to a court-approved plan of arrangement under the Business Corporations Act (British Columbia). Urastar held a 100% interest in certain mining properties in Sonora, Mexico. Under the terms of the arrangement, each shareholder of Urastar received C$0.25 per common share and holders of unexercised in-the-money warrants of Urastar received C$0.15 per warrant. In aggregate, the Company paid $10.1 million in cash to Urastar shareholders and warrantholders in connection with the transaction.

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OPERATIONS AND PRODUCTION

Business Units and Foreign Operations

The Company operates through three business units: Northern Business, Southern Business and Exploration.

The Company's Northern Business is comprised of the Company's operations in Canada and Finland. The Company's Canadian properties include the LaRonde mine, the Lapa mine, the Goldex mine, the Meadowbank mine (including the Amaruq satellite deposit) and the Meliadine project, each of which is a 100% interest held directly by the Company, and a 50% interest in the Canadian Malartic Mine, which is held indirectly through a wholly-owned subsidiary of the Company and Canadian Malartic Corporation. The Company's operations in Finland are conducted through its indirect subsidiary, Agnico Eagle Finland Oy, which owns the Kittila mine. In 2016, the Northern Business accounted for approximately 79% of the Company's gold production. In 2017, the Company anticipates that the Northern Business will account for approximately 80% of the Company's gold production.

The Company's Southern Business is comprised of the Company's operations in Mexico. The Company's Pinos Altos mine, including the Creston Mascota deposit, is held through its indirect subsidiary, Agnico Eagle Mexico, S.A. de C.V. The La India mine is owned by the Company's indirect subsidiary, Agnico Sonora, S.A. de C.V. In 2016, the Southern Business accounted for approximately 21% of the Company's gold production. In 2017, the Company anticipates that the Southern Business will account for approximately 20% of the Company's gold production.

The Company's Exploration group focuses primarily on the identification of new mineral reserves and mineral resources and new development opportunities in politically stable and proven gold producing regions. Current exploration activities are concentrated in Canada, Europe, Latin America and the United States. Several projects were evaluated during 2016 in these regions where the Company believes the potential for gold occurrences is excellent and which the Company believes to be politically stable and supportive of the mining industry. The Company currently manages 79 properties in Canada, four properties in the United States, four groups of properties in Finland, two properties in Sweden and 18 properties in Mexico. Exploration activities are managed from offices in: Val d'Or, Quebec; Reno, Nevada; Chihuahua, Hermosillo and Jalisco, Mexico; Kittila, Finland; Storuman, Sweden; and Vancouver, British Columbia.

Northern Business

LaRonde Mine

The LaRonde mine is situated approximately halfway between Rouyn-Noranda and Val d'Or in northwestern Quebec (approximately 470 kilometres northwest of Montreal, Quebec) in the municipalities of Preissac and Cadillac. At December 31, 2016, the LaRonde mine was estimated to have proven and probable mineral reserves containing approximately 3.05 million ounces of gold comprised of 17.6 million tonnes of ore grading 5.40 grams per tonne. The LaRonde mine consists of the LaRonde property and the adjacent El Coco and Terrex properties, each of which is 100% owned and operated by the Company. The LaRonde mine can be accessed either from Val d'Or in the east or from Rouyn-Noranda in the west, each of which are located approximately 60 kilometres from the LaRonde mine via Quebec provincial highway No. 117. The LaRonde mine is situated approximately two kilometres north of highway No. 117 on Quebec regional highway No. 395. The Company has access to the Canadian National Railway at Cadillac, Quebec, approximately six kilometres from the LaRonde mine.

The Company first acquired an interest in the LaRonde property in 1974 through an indirect investment in Dumagami Mines Limited ("Dumagami"). The Company acquired 100% of the outstanding shares of Dumagami on December 19, 1989 and, on December 29, 1992, Dumagami transferred all of its property and assets, including the LaRonde mine, to the Company and subsequently dissolved.

The LaRonde mine operates under mining leases obtained from the Ministry of Energy and Natural Resources (Quebec) and under certificates of approval granted by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec). The LaRonde property consists of 36 contiguous mining claims and one provincial mining lease. The El Coco property consists of 22 contiguous mining claims and one provincial mining lease. The Terrex property consists of 21 mining claims and one provincial mining lease that was acquired in July 2014. The mining leases on the LaRonde, El Coco and Terrex properties expire in 2018, 2021 and 2034, respectively, and are automatically renewable for three further ten-year terms upon payment of a small fee. The Company also has three surface rights leases that relate to the water pipeline right of way from Lake Preissac and the eastern extension of the LaRonde tailings pond #7 on the El Coco property. The surface rights leases are renewable annually.

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Location Map of the LaRonde Mine (as at December 31, 2016)

LOGO

The LaRonde mine includes underground operations at the LaRonde and El Coco properties that can both be accessed from the Penna Shaft, a mill, a treatment plant, a secondary crusher building and related facilities. In 2003, exploration work started to extend outside of the LaRonde property onto the Terrex property where a down-plunge extension of Zone 20 North was discovered. The Terrex property is subject to a 5% net profits royalty in favour of Delfer Gold Mines Inc. The Company does not expect to pay royalties in respect of this part of the property in 2017. In addition, the Company owns 100% of the Sphinx property immediately to the east of the El Coco property. In 2016, 86% of the ore processed from the LaRonde mine was extracted from the deeper portion of the LaRonde mine (that is, below Level 245) or the "LaRonde mine extension". In 2017, the Company anticipates that approximately 87% of the ore processed will be from this deeper part of the mine.

The Company expects future by-product metal production at the LaRonde mine to decline as operations continue to shift towards deeper sections of the mine where gold grades are higher and by-product metals are less prevalent. The associated decrease in by-product revenues is expected to result in higher total cash costs per ounce on a by-product basis attributable to ore extracted from these parts of the mine.

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Map of the Abitibi region showing the location of the LaRonde, Lapa, Goldex and Canadian Malartic Mines

LOGO

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Mining and Milling Facilities

Surface Plan of the LaRonde Mine (as at December 31, 2016)

LOGO

The LaRonde mine was originally developed with a 1,207-metre shaft (Shaft #1) and an underground ramp access system. The ramp access system is available down to Level 25 of Shaft #1 and continues down to Level 299 at the Penna Shaft. The mineral reserve accessible from Shaft #1 was depleted in September 2000 and Shaft #1 is no longer in use. A second production shaft (Shaft #2), located approximately 1.2 kilometres to the east of Shaft #1, was completed in 1994 to a depth of 525 metres and was used to mine Zones 6 and 7. Both ore zones were depleted in March 2000 and the workings were allowed to flood up to Level 6 (approximately 280 metres). A third shaft (the Penna Shaft), located approximately 800 metres to the east of Shaft #1, was completed down to a depth of 2,250 metres in March 2000. The Penna Shaft is used to mine Zones 20 North, 20 South, 6 and 7.

In 2006, the Company initiated construction of the LaRonde mine extension. Hoisting from this deeper part of the LaRonde mine began in the fourth quarter of 2011 and commercial production was achieved in November 2011. Access to the deeper part of the LaRonde mine is provided through a 823-metre internal shaft (Shaft #4) starting from Level 203, for a total depth of 2,858 metres below the surface which was completed in November 2009. A ramp is used to access the lower part of the orebody down to 3,110 metres below the surface. An internal winze system is used to hoist ore from depth to facilities on Level 215, approximately 2,150 metres below the surface, where it is transferred to the Penna Shaft hoist.

Production from the LaRonde mine extension continues to move towards anticipated steady-state levels. Most of the delays encountered during 2016 were related to seismicity, as some areas of the mine were under periodic closure to mitigate seismicity risk. The Company expects the levels of seismicity to continue to evolve and the Company adjusts the mining methods, ground support, protocols and monitoring to adapt to the evolving levels.

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In 2016, the development of the western portion of the mine continued to advance and two silos (excavation and construction) were delivered and are currently in commissioning. These silos are expected to increase the flexibility surrounding the coarse ore conveyor system that extends from Level 292 to the crusher on Level 280. In 2017, the Company expects to reach Level 311 in the eastern part of the mine. The Company expects to mine the first stopes in the western portion of the mine in 2017, following the commissioning of the coarse ore conveyor.

Mining Methods

The primary source of ore at the LaRonde mine continues to be from underground mining methods. During 2016, two mining methods were used: longitudinal retreat with paste backfill and transverse open stoping with paste or unconsolidated backfill. In addition, to address concerns regarding the frequency and intensity of seismic events encountered at the lower levels of the LaRonde mine, a hybrid of these two methods has been used. In the underground mine, sublevels are driven at between 30-metre and 40-metre vertical intervals, depending on the depth. Stopes are undercut in 15-metre wide panels. In the longitudinal method, panels are mined in 15-metre sections and backfilled with 100% cemented rock backfill or cemented paste backfill. The paste backfill plant was completed in 2000 and is located on the surface at the processing facility. In the transverse open stoping method, approximately 50% of the ore is mined in the first pass and filled with cemented paste backfill. On the second pass, the remainder of the ore is mined and filled with unconsolidated waste rock backfill or cemented paste backfill.

The throughput at LaRonde in 2016 averaged 6,171 tonnes per day, compared with 6,141 tonnes per day in 2015. The increased throughput in 2016 was due to the maturity of the new mining horizon in the deepest portion of the mine.

The Company's operations at the LaRonde mine reach more than three kilometres below the surface. There are very few resources available to model the geomechanical conditions at this depth, where operations are subject to high stress levels. The Company conducts periodic technical reviews of its operations at these levels using consultants with experience in deep mining. The Company uses the results of these technical reviews to adapt best mining practices and adjust the mining sequence for its operations at these levels. The Company believes that the experience it has gained mining at those levels has provided a successful model for future mining at depth.

Surface Facilities

Surface facilities at the LaRonde mine include a processing plant with a daily capacity of 7,200 tonnes of ore, which has been expanded four times since 1987 from the original rate of 1,630 tonnes per day. Beginning in 1999, transition to the LaRonde mine's polymetallic massive sulphide orebody required several modifications to the processing plant. In 2008, the installation of a limited copper/lead separation flotation circuit, following the copper flotation circuit, was completed. Also in 2008, a cyanidation plant began operation for the treatment of sulphide concentrate from the Goldex mine. A CIL circuit was completed and began operation in April 2013 to replace the existing LaRonde precious metal Merrill-Crowe circuit. The LaRonde mine is also the site for the Lapa mine ore processing plant (1,500 tonnes per day), which was commissioned in the second quarter of 2009.

The ore requires a series of grinding, copper/lead flotation and separation, zinc flotation and zinc tails precious metals leaching circuits, now followed by CIP recovery. Paste backfill and cyanide destruction plants operate intermittently. The tailings area has a dedicated cyanide destruction and metals precipitation plant that water passes through prior to recirculating to the mill. A biological water treatment plant addresses the presence of thiocyanate in the tailings ponds at the LaRonde mine. The plant uses bacteria to oxidize and destroy thiocyanate in the water and removes phosphate prior to its release to the environment.

The Goldex concentrate circuit consists of pulp received from the Goldex mill via truck. The material is sent to the LaRonde leaching/CIP circuit for gold recovery along with LaRonde residual pulp.

The Lapa mine ore processing plant consists of a two-stage grinding circuit to reduce the granularity of the ore. A gravity recovery circuit that is incorporated into the grinding circuit recovers up to 45% of the available gold, depending on feed grades. The residual pulp is leached in a conventional CIL circuit to dissolve the balance of the precious metal. A carbon strip circuit recovers the gold from the carbon which is recycled to the leach circuit.

Production and Mineral Recoveries

During 2016, the LaRonde mine had payable production of 305,788 ounces of gold, 987,918 ounces of silver, 4,687 tonnes of zinc and 4,416 tonnes of copper from 2.24 million tonnes of ore grading 4.44 grams of gold per tonne and 17.75 grams of silver per tonne, 0.37% zinc and 0.24% copper. The production costs per ounce of gold produced at

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LaRonde in 2016 were $587. The total cash costs per ounce of gold produced at LaRonde in 2016 were $501 on a by-product basis and were $668 on a co-product basis. The LaRonde processing facility averaged 6,137 tonnes of ore per day and operated 92% of available time. Gold and silver recovery averaged 95.60% and 85.39%, respectively. Zinc recovery averaged 66.85% with a concentrate quality of 53.61% zinc. Copper recovery averaged 86.50% with a concentrate quality of 20.01% copper. The production costs per tonne at LaRonde were C$106 and the minesite costs per tonne were C$106 in 2016.

The following table sets out the metal recoveries and concentrate grades at the LaRonde mine in 2016.

        Copper
Concentrate
(23,350 tonnes
produced)
  Zinc
Concentrate
(10,303 tonnes
produced)
         
       
         
    Head
Grades
  Grade   Recovery   Grade   Recovery   Overall
Metal
Recoveries
  Payable
Production
 
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Gold   4.44 g/t   297.90 g/t   69.91%   12.40 g/t   1.29%   95.60%   305,788 oz  

Silver   17.75 g/t   816.55 g/t   47.95%   243.37 g/t   6.40%   85.39%   987,918 oz  

Copper   0.24%   20.01%   86.50%   –%   –%   86.50%   4,687 t  

Zinc   0.37%   0.98%   5.53%   53.61%   66.85%   66.85%   4,416 t  

Annual production at the LaRonde mine in 2017 is expected to be approximately 315,000 ounces of gold, 1,072,000 ounces of silver, 4,482 tonnes of copper and 7,286 tonnes of zinc from 2.2 million tonnes of ore grading 4.77 grams per tonne of gold, 20.03 grams per tonne of silver, 0.25% copper and 0.51% zinc. The total cash costs per ounce of gold produced in 2017 on a by-product basis are expected to be $510, with estimated gold recovery at 95.6%, silver recovery of 77.5%, copper recovery of 82.0% and zinc recovery of 66.9%. Gold recovery at the LaRonde mine is distributed approximately as follows: 72% in the copper concentrate, 2% in the zinc concentrate and 22% via leaching. Minesite costs per tonne of C$115 are expected in 2017.

Environmental, Permitting and Social Matters

Currently, water is treated at various facilities at the LaRonde mine. Water contained in the tailings that is to be used as underground backfill is treated to degrade cyanide using a sulphur dioxide and air process. The tailings entering the tailings pond are first decanted and the clear water subjected to natural cyanide degradation. This water is then transferred to polishing pond #1 to undergo a secondary treatment at a plant located between polishing ponds #1 and #2 that uses a peroxy silicate process to destroy cyanide, and lime and coagulant (ferric sulfate) are used to precipitate metals. The tailings pond occupies an area of approximately 175 hectares. Waste rock that is not used underground for backfill is brought up to the surface and stored in close proximity to the tailings pond to be used to build cofferdams and berms inside the pond to increase storage capacity. A waste rock pile containing less than 100,000 tonnes of waste and occupying approximately nine hectares is located north of the mill.

Due to the high sulphur content of the LaRonde mine ore, the Company has to address toxicity issues in the tailings ponds. This problem was resolved by the commissioning of a biological treatment plant in 2004, and the effluent has remained non-toxic since 2006. In 2006, the Company commenced an ammonia stripping operation involving an effluent partially treated by the biological treatment plant which allowed an increase in treatment flow rate, while keeping the final effluent free of toxicity. An increase in biological treatment efficiency allowed the ammonia treatment plant to be placed out of service in 2015. In 2016, final effluent was fully compliant and treatment of the backlog of water in the tailings pond that had been accumulating between 2000 and 2004, when the effluent was shutdown while determining a treatment solution, was completed. In 2017, the Company expects to maintain in the tailings pond the minimum quantity of water required to feed the mill with recirculation water. In addition, water from acid rock drainage around the mills and the waste stockpile are treated to remove metals prior to discharge at a high density sludge lime treatment plant located at the LaRonde mill.

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Capital Expenditures

Capital expenditures at the LaRonde mine during 2016 were approximately $64.3 million, which included sustaining capital expenditures, deferred expense and included capitalized drilling. Budgeted 2017 capital expenditures at the LaRonde mine are $102.7 million, excluding capitalized drilling.

Development

In 2016, a total of 13.9 kilometres of lateral development was completed. Development was focused on the preparation of the lower mine production horizon. More than 90% of the development work has been completed for the LaRonde mine extension infrastructure and the ramp to access the LaRonde mine extension.

Following the completion of a positive internal technical study, LaRonde Zone 5 (formerly referred to as Bousquet Zone 5) has been approved for development (subject to permitting approval). The mining method will be similar to that currently employed at the Goldex and LaRonde mines (long-hole stoping, with cemented paste backfill), and processing will use excess capacity from the Lapa circuit at LaRonde. Permits are expected to be received by mid-2018, with mining expected to commence shortly thereafter.

A total of 12.4 kilometres of lateral development is planned for 2017. The main focus of development remains the lower mine (LaRonde extension area), the development toward the lowest levels and the West mine portion.

Geology, Mineralization, Exploration and Drilling

Geology

The LaRonde property is located near the southern boundary of the Archean-age (2.7 billion years old) Abitibi Subprovince and the Pontiac Subprovince within the Superior Geological Province of the Canadian Shield. The most important regional structure is the Cadillac-Larder Lake ("CLL") fault zone, marking the contact between the Abitibi and Pontiac Subprovinces, located approximately two kilometres to the south of the LaRonde property.

The geology that underlies the LaRonde mine consists of three east-west-trending, steeply south-dipping and generally south-facing regional groups of rock formations. From north to south, they are: (i) 400 metres (approximate true thickness) of the Kewagama Group, which is made up of a thick band of interbedded wacke; (ii) 1,500 metres of the Blake River Group, a volcanic assemblage that hosts all the known economic mineralization on the property; and (iii) 500 metres of the Cadillac Group, made up of a thick band of wacke interbedded with pelitic schist and minor iron formation.

Zones of strong sericite and chlorite alteration that enclose massive to disseminated sulphide mineralization (including the ore that is mined for gold, silver, zinc and copper at the LaRonde mine) follow steeply dipping, east-west-trending, anastomosing shear zone structures within the Blake River Group volcanic units across the property. These shear zones are part of the larger Doyon-Dumagami Structural Zone that hosts several important gold occurrences (including the Doyon gold mine, the Westwood project and the former Bousquet mines) and has been traced for over ten kilometres within the Blake River Group, from the LaRonde mine westward to the Mouska gold mine.

Mineralization

The LaRonde deposit is a gold-rich volcanogenic massive sulphide (VMS) deposit. LaRonde lenses were formed mainly by sulphide precipitation from hydrothermal fluids on the seafloor and by replacement below lenses. The stacking of the LaRonde lenses is the result of successive volcanic events, intercalated by cycles of hydrothermat activity associated with reactivation of synvolcanic faults.

The gold-bearing zones at the LaRonde mine are lenses of disseminated stringers through to massive aggregates of coarse pyrite with zinc, copper and silver content. Ten zones that vary in size from 50,000 to 40,000,000 tonnes have been identified, of which four are (or are believed to be) economic. Gold content is not proportional to the total sulphide content but does increase with copper content. Gold values are also higher in areas where the pyrite lenses are crosscut by tightly spaced north-south fractures.

These historical relationships, which were noted at LaRonde Shaft #1's Main Zone, are maintained at the Penna Shaft zones. The zinc-silver (i.e. Zone 20 North) mineralization with lower gold values, common in the upper mine, grades into gold-copper mineralization within the lower mine. The predominant base metal sulphides within the LaRonde mine are chalcopyrite (copper) and sphalerite (zinc).

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The Company believes that Zone 20 North is one of the largest gold-bearing massive sulphide mineralized zones in the world and one of the largest known mineralized zones in the Abitibi region of Ontario and Quebec. Zone 20 North contains the majority of the mineral reserves and mineral resources at the LaRonde mine, including 17.3 million tonnes of proven and probable mineral reserves grading 5.44 grams of gold per tonne, representing 98% of the total proven and probable mineral reserves at the LaRonde mine, 5.1 million tonnes of indicated mineral resources grading 3.32 grams of gold per tonne, representing 90% of the total measured and indicated mineral resources at the LaRonde mine, and 6.5 million tonnes of inferred mineral resources grading 7.4 grams of gold per tonne, representing 84% of the total inferred mineral resources at the LaRonde mine.

Zone 20 North extends between 700 metres below the surface and at least 3,700 metres below the surface, and remains open at depth. With increased access on the lower levels of the mine (i.e., below Level 215 and from the internal shaft on levels 257 and 278), the transformation from a zinc/silver orebody to a gold/copper deposit is expected to continue during 2017. The development of the western part of the mine, between Levels 278 and 314, is expected to give access to a new zinc/silver rich sector.

Zone 20 North can be divided into an upper zinc/silver enriched gold poor zone and a lower gold/copper enriched zone. The zinc/silver zone has been traced over a vertical distance of 1,700 metres and a horizontal distance of 570 metres, with thicknesses approaching 40 metres. The gold/copper zone has been traced over a vertical distance of over 2,200 metres and a horizontal distance of 900 metres, with thicknesses varying from three to 40 metres. The zinc/silver zone consists of massive zinc/silver mineralization containing 50% to 90% massive pyrite and 10% to 50% massive light brown sphalerite. The gold/copper zone mineralization consists of 30% to 70% finely disseminated to massive pyrite containing 1% to 10% chalcopyrite veinlets, minor disseminated sphalerite and rare specks of visible gold. Gold grades are generally related to the chalcopyrite or copper content. At depth, the massive sulphide lens becomes richer in gold and copper.

Exploration and Drilling

The combined amount of gold in proven and probable mineral reserves at the LaRonde mine at the end of 2016 was 3.05 million ounces (17.6 million tonnes of ore grading 5.40 grams of gold per tonne, 19.14 grams of silver per tonne, 0.24% copper and 0.87% zinc), which represents a reduction of 55,759 contained ounces of gold from the end of 2015, after producing 305,788 ounces of gold (319,887 ounces in situ gold mined in 2016). The reduction in mineral reserves is principally associated with ore mined during 2016 and delineation and definition drilling done at the edges and in the deepest part of the orebody, but was partly offset by the conversion of mineral resources into mineral reserves located on three levels below 3.1 km depth in the eastern part of the mine, referred to as LaRonde 3. Underground indicated mineral resources at the LaRonde mine decreased by 1.2 million tonnes of ore to a total of 5.7 million tonnes of ore grading 3.27 grams of gold per tonne, 20.51 grams of silver per tonne, 0.21% copper and 0.93% zinc, primarily due to the conversion of mineral resources into mineral reserves in the eastern portion of the mine, as described above. Underground inferred mineral resources at the LaRonde mine decreased by 1.4 million tonnes of ore to a total of 7.7 million tonnes of ore grading 6.68 grams of gold per tonne, 14.48 grams of silver per tonne, 0.25% copper and 0.60% zinc.

Diamond drilling is used for exploration on the LaRonde property. In 2016, 35 holes (13,327 metres) were drilled for definition (conversion) drilling and 15 holes (10,011 metres) were for exploration. Expenditures on diamond drilling at the LaRonde mine during 2016 were approximately C$4.9 million, including C$1.7 million in drilling expenses charged to capital costs at the LaRonde mine, and C$3.2 million expensed as exploration drilling.

The main focus of the 2016 exploration program was continuing the investigation and conversion of Zone 20 North at depth and exploration of the Zone 6 and 7 horizons at depth from the new accesses developed toward the west on Levels 290 and 293. The 2016 conversion program on Zone 20 North was focused on conversion from inferred to indicated mineral resources below Level 311 at depth, in the centre and western portions of the deposit (below the actual limit of mineral reserves). The positive results obtained in this program allowed the addition of indicated mineral resources below 3.1 kilometres on the eastern portion and continued to confirm the extension of the orebody to 3.4 kilometres below the surface, or 300 metres below the current maximum depth of mineral reserves, in the western portion, and also confirmed some high grade intersections and the extension of a massive lens that had been previously identified. The conversion program will continue in 2017 through 2018, and will investigate the continuity of the orebody to 3.7 kilometres below the surface and to the west. Another drilling access is currently being developed to provide better positioning for an extensive diamond drilling program on Zone 6 to a depth of 3.7 kilometres.

In 2017, the Company expects to spend C$2.1 million on 15,200 metres of definition (conversion) drilling and C$2.4 million on 12,850 metres of exploration drilling, for a total of C$4.5 million at the LaRonde mine.

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Lapa Mine

At December 31, 2016, the Lapa mine was estimated to contain proven and probable mineral reserves of 38,000 ounces of gold comprised of 259,000 tonnes of ore grading 4.58 grams per tonne. The Lapa property is made up of the Tonawanda property, which consists of 44 contiguous mining claims and one provincial mining lease, and the Zulapa property, which consists of one mining concession. The mining lease at Lapa expires in 2029. Based on the life of mine plan, production is expected to cease in 2017.

Location Map of the Lapa Mine (as at December 31, 2016)

LOGO

During 2016, the Lapa mine had payable production of 73,930 ounces of gold from 0.59 million tonnes of ore grading 4.64 grams of gold per tonne. The production costs per ounce of gold produced at Lapa in 2016 were $717. The total cash costs per ounce of gold produced at Lapa in 2016 were $732 on a by-product basis and on a co-product basis. The Lapa processing facility averaged 1,619 tonnes per day and operated approximately 89.5% of available time. Gold recovery averaged 83.82%. The production costs per tonne at Lapa were C$118 and the minesite costs per tonne were C$121 in 2016. In 2016, the Company incurred no capital expenditures at the Lapa mine. No capital expenditures at the Lapa mine are expected in 2017.

The following table sets out the metal recoveries at the Lapa mine in 2016.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   

 

 

 

 

 

 

 

 
Gold   4.64 g/t   83.82%   73,930 oz  

Gold production during 2017 at the Lapa mine is expected to be approximately 15,000 ounces from 0.14 million tonnes of ore grading 4.0 grams of gold per tonne at estimated total cash costs per ounce of approximately $1,002 on a by-product basis, and estimated gold recovery of 82.5%. Minesite costs per tonne of approximately C$134 are expected in 2017.

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Goldex Mine

The Goldex mine is located in the City of Val d'Or, Quebec, approximately 60 kilometres east of the LaRonde mine, and is accessible by Quebec provincial highway No. 117. The proven and probable mineral reserves at Goldex as at December 31, 2016 were estimated at approximately 0.89 million ounces of gold comprised of 16.8 million tonnes of ore grading 1.64 grams per tonne.

The Goldex mine operates under a mining lease obtained from the Ministry of Energy and Natural Resources (Quebec) and under certificates of approval granted by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec). The Goldex property consists of 22 contiguous mining claims and, since April 2008, one provincial mining lease. The property is made up of three blocks: the Probe block; the Dalton block; and the Goldex Extension block. The claims are renewable every second year upon payment of a small fee. The mining lease expires in 2028 and is automatically renewable for three further ten-year terms upon payment of a small fee. The Company also has one surface lease that is used for the auxiliary tailings pond. This lease is renewable annually upon payment of a fee.

Location Map of the Goldex Mine (as at December 31, 2016)

LOGO

Agnico Eagle has held a 100% interest in the Goldex property since December 1993, when the Company acquired the remaining 46.3% interest in Goldex Mines Limited that it did not already own. In February 2005, a mineral reserve and mineral resource estimate was completed for the GEZ (which was the deposit on which the Company was focusing its production efforts before production was suspended on October 19, 2011) which, coupled with a feasibility study, led to a probable mineral reserve estimate of 1.6 million ounces of gold contained in 20.1 million tonnes of ore grading 2.54 grams of gold per tonne. The GEZ resource model was revised and, in March 2005, the Company approved a feasibility study and the construction of the Goldex mine. The mine achieved commercial production on August 1, 2008.

Based on the results of a scoping study completed in July 2009, the Company decided to expand the mine and mill operations at Goldex to 8,000 tonnes per day. This project was completed in 2010. Capital costs in connection with the expansion totaled $10 million. The crusher for the expansion was commissioned at the end of the first quarter of 2010 at a rate of 7,811 tonnes per day.

On October 19, 2011, the Company suspended mining operations and gold production from the GEZ, following the receipt of recommendations from independent consultants to halt underground mining operations during the investigation into

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geotechnical concerns with the rock above the mining horizon. The Company does not expect to produce more gold from the GEZ until the geotechnical concerns with the rock above the mining horizon are resolved, which may never occur.

In July 2012, the Company approved the development of the M and E Zones of the Goldex mine. Production from these zones began in the fourth quarter of 2013 and commercial production was achieved in October 2013. Development work is continuing underground on the M and E Zones.

In 2015, following the completion of a positive internal technical study, the Goldex Deep 1 project was approved for production by Agnico Eagle's board of directors (the "Board" or "Board of Directors") and is on schedule for commissioning in early 2018. The study focused on mining the lower part of the Dx Zone and the top part of the D Zone,from a depth of 850 metres to 1,200 metres. The Company plans to undertake development from the current Goldex infrastructure, with existing equipment and personnel. The planned mining method is long-hole stoping with cemented paste backfill, which is the same method as currently used at the M and E Zones.

Mining and Milling Facilities

Surface Plan of the Goldex Mine (as at December 31, 2016)

LOGO

The surface facilities at Goldex include a head frame, a hoist room, an ore storage facility, a processing plant, a paste backfill plant and a surface building containing a mechanical shop, a warehouse and an office. In addition, the Goldex property has a 790-metre deep shaft (Shaft #1), which historically was used to provide access to underground workings. Shaft #1 is now predominantly used for getting material into the mine and serves as an emergency exit from the mine.

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The sinking of a new production shaft was completed in 2007. This shaft (Shaft #2) is a 5.5-metre diameter shaft with a 50-centimetre thick concrete lining and is used for ventilation as well as hoisting purposes. Shaft #2 is 865 metres deep and includes five stations. A refurbished friction hoist was installed for production and service duties, and an auxiliary hoist was installed for emergency and personnel service.

Rehabilitation of the old ramp near Shaft #1 was completed in 2015 to access the upper portion of the M Zone. The ramp will be used for getting material into the mine and as an emergency exit. In addition, a new heating system at surface was installed in early 2015.

Mining Method

The Company mines the M and E Zones using primary and secondary stope methods. Drilling is carried out with ITH drills. Production holes are either 4.5 or 6.5 inches in diameter. Bulk emulsion is used as the primary explosive for stope blasting. For both zones, stopes are approximately 55 metres high. The width and length of individual stopes vary based on local rock mass quality, but an average stope is expected to range between 60,000 and 120,000 tonnes. Ore handling in the M Zone is done with 15 yard load-haul-dump machines. This equipment unloads into an ore pass accessible from each level. In the E Zone, located below the bottom of Shaft #2, ore handling is done with 15 yard load-haul-dump machines and 45 tonne trucks.

All stopes are supported with 10-15 metre cable bolts. In addition, the stability of certain stopes is remotely monitored in real time. The Company also uses paste backfill to allow for a high extraction ratio and to increase long term stability.

The same mining method will be used in the Deep 1 Zone as is used in the M and E Zones, except that a Rail-Veyor system will be used for ore handling between the lowermost level of Deep 1 (Level 120) and the current ore handling facilities (Level 76). The Rail-Veyor loading system on Level 120 will be fed via a rock breaker room at Level 115. For Levels 85 to 115, 15 yard load haul dump machines will unload into an ore pass reporting to the rock breaker room on Level 115. For the stopes on Level 120, 45 tonne trucks will be used for ore handling to Level 115.

Surface Facilities

Plant construction at Goldex commenced in the second quarter of 2006 and was completed in the first quarter of 2008. The plant reached design capacity in the second quarter of 2009. Grinding at the Goldex mill was initially done through a two-stage circuit comprised of a SAG mill and a ball mill. In 2009, a surface crusher was added to reduce the size of ore transferred to the surface from 150 millimetres to 50 millimetres. A lamellar decanter was also added to recover small particles present in the water overflow of the concentrate thickener. The underflow pump for this thickener was upgraded following flotation circuit modification to increase the pull rate of the small particles. Approximately two-thirds of the gold is recovered through a gravity circuit, passed over shaking tables and smelted on site. The remainder of the gold and pyrite is recovered through a flotation process. The concentrate is then thickened and trucked to the mill at the LaRonde mine where it is further treated by cyanidation. Gold recovered is consolidated with precious metals from the LaRonde and Lapa mines.

In 2013, a new backfill plant was built on the site. The tailing thickener underflow feeds the backfill plant and two disk filters increase the density before the continuous mixer where binder is added at a ratio of approximately 3.6% before being sent to the underground mine with a positive displacement pump. Currently, the capacity of the backfill plant is approximately 6,200 tonnes per day.

In 2013, metallurgical testing on ore from the M and E Zones showed that the cement in the backfill would have a negative impact on the efficiency of the flotation circuit. As a result, a pH control (using carbon dioxide), a reservoir and control valves were added to the mill.

Production and Mineral Recoveries

During 2016, the Goldex mine had payable production of 120,704 ounces of gold from 2.55 million tonnes of ore grading 1.60 grams of gold per tonne. The production costs per ounce of gold produced at Goldex in 2016 were $525. The total cash costs per ounce of gold produced at Goldex in 2016 were $532 on a by-product basis and on a co-product basis and the processing facility averaged 6,954 tonnes of ore per day and operated 95.8% of available time. During 2016, gold recovery averaged 92.36%. The production costs per tonne at Goldex were C$33 and the minesite costs per tonne were C$33 in 2016.

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The following table sets out the metal recoveries at the Goldex mine in 2016.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   
Gold   1.60 g/t   92.36%   120,704 oz  

Gold production during 2017 at the Goldex mine is expected to be approximately 105,000 ounces from 2.36 million tonnes of ore grading 1.51 grams of gold per tonne at estimated total cash costs per ounce of approximately $667 on a by-product basis, with estimated gold recovery of 92.0%. Minesite costs per tonne of approximately C$38 are expected in 2017.

Environmental, Permitting and Social Matters

Environmental permits for the construction and operation of the Goldex mine were received from the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec) in October 2005. The permits also covered the construction and operation of a sedimentation pond for mine water treatment and sewage facilities. In June 2011, the permits were revised to allow for the expansion of the mine and mill operations to 9,500 tonnes per day. In June 2012, environmental permits were received for the construction and operation of a paste backfill plant in connection with the development of the M and E Zones.

In November 2006, the Company and the Quebec government signed an agreement permitting the Company to dispose Goldex tailings at the Manitou site, a tailings site formerly used by an unrelated third party and abandoned to the Quebec government. The Manitou tailings site has issues relating to acid drainage, and the construction of tailings facilities by the Company and the deposition of tailings from Goldex on the Manitou tailings site was accepted by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec) as a valid rehabilitation method to address the acid generation problem at Manitou. Under the agreement, the Company manages the construction and operation of the tailings facilities and contributes an amount equivalent to the Company's budget for tailings facilities set out in the Goldex feasibility study. The Quebec government pays for all costs in excess of this amount and retains responsibility for all environmental contamination at the Manitou tailings site and for final closure of the facilities. The Company has also built a separate tailings deposit area (auxiliary tailings pond) near the Goldex mine to be used during tailings pipeline work. Environmental permits for the construction and operation of the auxiliary tailings pond were received in March 2007. The rehabilitation of the Manitou tailings site is expected to continue during the mining of the M and E Zones and additional mining zones, including the Deep 1 Zone.

Internal dykes are used at the Manitou tailings site to make optimal use of the available tailings for rehabilitation of the Manitou site.

As at December 31, 2016, the estimated remaining reclamation costs relating to the Goldex mine are approximately $6.1 million.

Capital Expenditures

Capital expenditures at the Goldex mine during 2016 were approximately $81.3 million, which included sustaining capital expenditures, expansion construction and deferred expenses, but excluded capitalized drilling. Total estimated capital expenditures for 2017 are $72.8 million, excluding capitalized drilling.

Development

During 2016, approximately 12,421 metres of lateral development were completed at the Goldex mine. A total of 806 metres of vertical development was also completed in order to establish both the ore pass system servicing the M Zone and the ventilation network servicing the M and Deep 1 Zones.

A total of 8,660 metres of lateral development is planned for all zones in 2017, while 555 metres of vertical development will be necessary to extend the ore pass system and to ensure proper ventilation of the Deep 1 Zone. In 2017, 2,500 metres of additional drilling is planned for the Deep 1 Zone.

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Geology, Mineralization, Exploration and Drilling

Geology

The Goldex property is located near the southern boundary of the Archean-age (2.7 billion years old) Abitibi Subprovince, a typical granite-greenstone terrane located within the Superior Province of the Canadian Shield. The southern contact of the Abitibi Subprovince with the Pontiac Subprovince is marked by the east-southeast trending CLL fault zone, the most important regional structural feature. The Goldex deposit is hosted within a quartz diorite sill, the "Goldex Granodiorite", located in a succession of mafic to ultramafic volcanic rocks that are all generally oriented west-northwest.

The M Zone has an approximate length of 440 metres, a height of 350 metres and a thickness of 130 metres. The E Zone, adjacent to the eastern end of the GEZ, has an approximate length of 250 metres, a height of 290 metres and a thickness of 130 metres. The Deep 1 Zone is approximately 90 metres below the GEZ and extends to 1,500 metres below the surface. It appears to have an approximate strike length of 350 metres, a height of 600 metres and thickness of 120 metres.

Mineralization

Gold mineralization at Goldex corresponds to the classical quartz-tourmaline vein lode-gold deposit type. The gold-bearing quartz-tourmaline pyrite veins and vein stockwork, hosted within a quartz-diorite dyke, are the result of a strong structural control, related to ductile shearing and brittle faulting. The most significant structure directly related to mineralization is a discrete shear zone, the Goldex Mylonite, which is up to five metres wide and occurs within the Goldex Granodiorite, just south of the Deep 1 Zone and north of the M Zone.

A couple of vein sets exist within the M, E, Deep 1 and P Zones, of which the main set consists of extensional-shear veins dipping approximately 30 degrees south. The vein sets and associated alteration halos combine to form stacked envelopes up to 30 metres thick.

Moderate to strong albite-carbonate alteration of the host-rock quartz diorite surrounds the quartz-tourmaline-pyrite veins and covers almost 80% of the mineralized zone; outside of the envelopes, prior chlorite alteration affects the quartz diorite and gives it a darker grey-green colour. Occasionally, enclaves of relatively unaltered medium grey-green-coloured quartz diorite (with no veining or gold) are found within the M, E and Deep 1 Zones. They are removed with the rest of the stope's ore to allow for a smooth stope shape, required for mining purposes.

Most of the gold occurs as microscopic particles that are almost always associated with pyrite, generally adjacent to grains and crystals but also 20% included within the pyrite. The gold-bearing pyrite occurs in the quartz-tourmaline veins and in narrow fractures in the albite-carbonate-altered quartz diorite (generally immediately adjacent to the veins).

Exploration and Drilling

Exploration on the Goldex property was concentrated in three periods from 1963 to 1996. During the period from 1985 to 1996, Shaft #1 was sunk to 457 metres, followed by 3,810 metres of lateral development and 520 metres of slashing, a bulk sample of roughly 55,886 tonnes and approximately 32,000 metres of diamond drilling in the Main Zone. Concurrently, widely spaced drilling, comprised of approximately 50 diamond drill holes, led to the discovery and beginning of the development of the GEZ. In 1996, Shaft #1 was deepened to 790 metres, followed by 853 metres of lateral development, cross-cuts and slashing, two bulk samples for 136,200 tonnes and 23,000 metres of underground drilling in GEZ.

The combined amount of gold in proven and probable mineral reserves at the Goldex mine at the end of 2016 was 0.89 million ounces (16.8 million tonnes of ore grading 1.64 grams of gold per tonne), which represents an increase of approximately 0.2 million ounces of gold in reserves from the end of 2015, after producing 120,704 ounces of gold (130,687 ounces in situ gold mined). The increase is largely due to the successful conversion of mineral resources to mineral reserves, mainly in the D Zone as well as in the M and E Zones. The mineral reserve grade increased from 1.61 grams of gold per tonne at the end of 2015 to 1.64 grams of gold per tonne at the end of 2016. Underground measured and indicated mineral resources at the Goldex mine decreased by 4.12 million tonnes of ore to 30.3 million tonnes of ore grading 1.82 grams of gold per tonne, primarily due to conversion of indicated to measured mineral resources, positive drilling results in the Deep 1 Zone and the removal of non-recoverable resources in the M and E Zones, primarily due to mining sequencing. In 2016, there was a decrease in inferred mineral resources of approximately 2.75 million tonnes of ore to 21.88 million tonnes of ore grading 1.60 grams of gold per tonne. This decrease in the inferred mineral resources was primarily due to the conversion of inferred to indicated mineral resources and positive

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drilling results in the E, M, Dx and Deep 1 Zones and the removal of non-recoverable resources in the M and E Zones primarily due to mining sequencing.

Diamond drilling at Goldex in 2016 totaled 373 holes for a total length of 62,210 metres. Of this total, 84 holes (17,438 metres) were for exploration of the M, Deep 1 and South Zones at a cost of $0.83 million, 248 holes (41,254 metres) were for conversion drilling, principally in the Deep 1 and M Zones, at a cost of $2.33 million, 24 holes (1,596 metres) were delineation drilling in the M and E Zones at a cost of $0.07 million and 17 holes (1,922 metres) were drilled for the engineering and mining departments at a cost of $0.15 million.

In 2017, the Company expects to spend $1.26 million on 18,150 metres of exploration drilling, $2.54 million on 33,350 metres of conversion drilling, $0.77 million on 10,000 metres of delineation drilling and $0.3 million on 3,000 metres of expensed drilling.

Canadian Malartic Mine

The Canadian Malartic mine is located approximately 25 kilometres west of the City of Val-d'Or and 80 kilometres east of City of Rouyn-Noranda. The mine lies within the town of Malartic. It straddles the townships of Fournière, Malartic and Surimau. At December 31, 2016, the Canadian Malartic mine was estimated to have proven and probable mineral reserves containing approximately 3.55 million ounces of gold comprised of 101.8 million tonnes of ore grading 1.08 grams per tonne (representing the Company's 50% interest).

The Company acquired its 50% interest in the Canadian Malartic mine on June 16, 2014 through its joint acquisition of Osisko with Yamana. See "General Development of the Business – Three-Year History – 2014" for further details of the Company's acquisition of its 50% interest in the Canadian Malartic mine.

The Canadian Malartic mine operates under mining leases obtained from the Ministry of Energy and Natural Resources (Quebec) and under certificates of approval granted by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec). The Canadian Malartic property is comprised of the East Amphi property, the CHL Malartic prospect, the Canadian Malartic mine and the Fourniere, Midway and Piche-Harvey properties. The Canadian Malartic property consists of a contiguous block comprising one mining concession, five mining leases and 199 mining claims.

Expiration dates for the mining leases on the Canadian Malartic property vary between March 23, 2019 and February 17, 2034, and are automatically renewable for three further ten-year terms upon payment of a small fee.

The Canadian Malartic mine can be accessed either from Val d'Or in the east or from Rouyn-Noranda in the west via Quebec provincial highway No. 117. A paved road running north-south from the town of Malartic towards Mourier Lake cuts through the central area of the Canadian Malartic property. The Canadian Malartic property is further accessible by a series of logging roads and trails. The Canadian Malartic mine is also serviced by a rail-line which cuts through the middle of the town of Malartic. The nearest airport is located in Val-d'Or.

A buffer zone 135 metres wide has been developed along the northern limit of the open pit to mitigate the impacts of mining activities on the citizens of Malartic. Inside this buffer zone, a landscaped ridge was built primarily using rock and topsoil produced during pre-stripping work. The height of this landscaped ridge is 15 metres where the concentration of residents is higher and five to six metres near less populated areas.

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Location Map of the Canadian Malartic Mine (as at December 31, 2016)

GRAPHIC

The Canadian Malartic mine includes open pit operations, an administration/warehouse building, a mine office/truck shop building, a process plant and the crushing plant.

Following the joint acquisition of the Canadian Malartic mine by the Company and Yamana, most of the mining claims are subject to a 5% net smelter return royalty payable to New Osisko. The mining claims comprising the CHL Malartic prospect are subject to 3% net smelter return royalties payable to each of New Osisko and Abitibi Royalties Inc. In addition, of the mining claims constituting the Canadian Malartic property, 101 are also subject to other net smelter return royalties that vary between 1% and 2%, payable under varying circumstances. In 2016 the Partnership, which is the operator of the Canadian Malartic mine, paid C$61.1 million in the aggregate with respect to these net smelter return royalties, and expects to pay approximately C$60.6 million in 2017.

Gold was first discovered in the Malartic area in 1923. Gold production on the Canadian Malartic property began in 1935 and continued uninterrupted until 1965. Following various ownership changes over the ensuing years, Osisko acquired ownership of the Canadian Malartic property in 2004. Based on a feasibility study completed in December 2008, Osisko completed construction of a 55,000 tonne per day mill complex, tailings impoundment area, five million cubic metre polishing pond and road network by February 2011, and the mill was commissioned in March 2011.

As of December 31, 2010, the Canadian Malartic mine had received all formal government permits required for its construction and related activities, with the exception of the authorization for the mill and mine operations. The official certificate of authorization for the mill and operations was granted on March 31, 2011, at which point the Canadian Malartic mine was fully permitted. The Canadian Malartic mine achieved commercial production on May 19, 2011.

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Mining and Milling Facilities

Surface Plan of the Canadian Malartic Mine (as at December 31, 2016)

GRAPHIC

The Canadian Malartic mine is a large open pit operation comprised of the Canadian Malartic pit. The Partnership continues to work with the Quebec Ministry of Transport and the town of Malartic on the deviation of Quebec provincial highway No. 117 to gain access to the higher grade Barnat and Jeffrey deposits. The final layout and an environmental impact assessment were completed at the end of January 2015. The environmental impact assessment is under review by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec). The Quebec Bureau d'audiences publiques sur l'environment ("BAPE") issued its report on the Canadian Malartic pit extension on October 5, 2016. The BAPE report concluded that the project is acceptable and provides several recommendations intended to enhance social acceptability.

Mining Methods

Mining at the Canadian Malartic mine is done by open pit method using excavators and trucks. In order to maximize productivity and limit the number of units operating in the pit, large scale equipment was selected for the mine operation. The primary loading tools are hydraulic excavators, with wheel loaders used as a secondary loading tool. The mine production schedule was developed to feed the mill at a nominal rate of 55,000 tonnes per day. The continuity and consistency of the mineralization, coupled with tight definition drilling, and confirmed by seven years of mining operations, demonstrate the amenability of the mineral reserves and mineral resources to the selected mining method.

The throughput at the Canadian Malartic mine in 2016 averaged 53,665 tonnes per day compared with 52,300 tonnes per day in 2015. The increased throughput in 2016 was largely due to mill optimization, additional crushed ore from the portable crusher and mill stability.

Surface Facilities

Surface facilities at the Canadian Malartic mine include the administration/warehouse building, the mine office/truck shop building, the process plant and the crushing plant. The processing plant has a daily capacity of 55,000 tonnes of ore.

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Ore is processed through conventional cyanidation. Ore blasted from the pit is first crushed by a gyratory crusher followed by secondary crushing prior to grinding. Ground ore feeds successively into leach and CIP circuits. A Zadra elution circuit is used to extract the gold from the loaded carbon. Pregnant solution is processed via electrowinning and the resulting precipitate is smelted into gold/silver dore bars. Mill tails are thickened and detoxified using a Caro acid process, reducing cyanide levels below 20 parts per million. Detoxified slurry is subsequently pumped to a conventional tailings facility.

Production and Mineral Recoveries

Since the June 16, 2014 acquisition of Osisko, Agnico Eagle and Yamana have each held a 50% interest in the Canadian Malartic mine. During 2016, Agnico Eagle's share of the Canadian Malartic mine's payable production was 292,514 ounces of gold and 339,974 ounces of silver from 9,620,697 tonnes of ore grading 1.038 grams of gold per tonne and 1.35 grams of silver per tonne. The production costs per ounce of gold produced at Canadian Malartic in 2016 were $628. The total cash costs per ounce of gold produced at Canadian Malartic in 2016 were $606 on a by-product basis and were $626 on a co-product basis. The Canadian Malartic processing facility averaged 53,665 tonnes per day and operated approximately 95.0% of available time. Gold and silver recovery averaged 89.3% and 79.6%, respectively. The production costs per tonne at Canadian Malartic were C$25 and the minesite costs per tonne were C$25 in 2016.

The following table sets out the metal recoveries at the Canadian Malartic mine on a 100% basis in 2016.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   
Gold   1.038 g/t   89.3%   585,027 oz  

Silver   1.352 g/t   79.6%   679,948 oz  

The Company's 50% share of annual production at the Canadian Malartic mine in 2017 is expected to consist of approximately 300,000 ounces of gold and 324,000 ounces of silver from 9.4 million tonnes of ore grading 1.11 grams of gold per tonne and 1.34 grams of silver per tonne. The total cash costs per ounce in 2017 are expected to be approximately $578 per ounce on a by-product basis, with estimated gold recovery of 89.3% and silver recovery of 80.0%. Minesite costs per tonne of approximately C$24 are expected in 2017.

Environmental, Permitting and Social Matters

In 2015, an action plan was developed and implemented by the Partnership to mitigate noise, vibrations, atmospheric emissions and ancillary issues. Mitigation measures were put in place to improve the process and avoid any environmental non-compliance. As a result, in 2016, the Partnership improved its environmental performance compared to previous years. With respect to activities in 2016, the Partnership received one non-compliance blast notice and ten non-compliance noise notices (which included notices received in instances where noise levels were otherwise within the municipal noise limits). The mine's team of on-site environmental experts continue to monitor regulatory compliance in terms of approvals, permits and observance of directives and requirements and continue to implement improvement measures.

On August 2, 2016, the Partnership was served with a class action lawsuit with respect to allegations involving the Canadian Malartic mine. See "Legal Proceedings and Regulatory Actions" for further details on the class action lawsuit.

Beginning in the spring of 2015, the Partnership has been working collaboratively with the community of Malartic and its citizens to develop a "Good Neighbour Guide" that addresses the allegations contained in the lawsuit. Implementation of the recommendations in the Good Neighbour Guide began on September 1, 2016.

The original design of the waste rock pile was developed to accommodate approximately 326 million tonnes of mechanically placed waste rock requiring a total storage volume of approximately 161 million cubic metres.

In December 2015, the Partnership completed the construction of a new polishing pond east of dyke A, which has been operational since May 2016. The existing polishing pond, with a capacity of approximately 48 million tonnes, has been converted into the eighth cell of the tailings management facility, adding 2.5 years of operation to the tailings management facility capacity for a total of 148 million tonnes and 7.5 years of operation. The total capacity of the current tailings management facility is estimated at 198 million tonnes. The expansion of the open pit, with the production from the

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Canadian Malartic pit extension (Barnat deposit), will increase the total amount of tailings to 342 million tonnes, requiring an additional 144 million tonnes in tailings storage capacity. The Partnership plans to store tailings in an extended tailings facility and in the Canadian Malartic pit at the end of its operations. According to the mine plan, at the end of mine life, 50 to 100 million tonnes of tailings will be deposited in the pit. The rest of the tailings, comprising a minimum of 59 and a maximum of 109 million tonnes, will be deposited in the extended tailings facility.

Regulatory approval for the proposed tailings deposition in the Canadian Malartic pit and the expansion of the currently authorized tailings area are part of the approval process for the Canadian Malartic pit extension (Barnat deposit) subject to the environmental impact assessment process of the Quebec Environment Quality Act. The environmental impact assessment has been completed and is under review by the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec). Golder Associates Ltd. is designing the tailings extension component and is preparing a hydrogeological study to demonstrate that the Canadian Malartic pit would provide a hydraulic trap and contain the tailings with minimum environmental risk. Delay in the expected timing of the permits required for the Canadian Malartic pit extension could have a negative impact on the mining sequence at Canadian Malartic.

The public hearings (BAPE process) took place in June and July 2016 for the Canadian Malartic pit extension and the BAPE issued their report in October 2016, with a recommendation to the Minister that the project be accepted with certain conditions. A decision by the Minister is expected in the first half of 2017.

An annual hydrological site balance is maintained to provide a yearly estimate of water volumes that must be managed in the different structures of the water management system of the Canadian Malartic mine during an average climatic year (in terms of precipitation). Results of this hydrological balance indicate that excess water from the southeast pond will eventually need to be released into the environment. A water treatment plant was commissioned in 2015 to ensure that the water to be released to the environment meets water quality requirements. This water treatment plant reduces the risks associated with surface water management and adds flexibility to the system. In 2016, modifications on water management were made in order to improve water quality segregation and reduce the volumes of water potentially requiring treatment.

Reclamation and closure costs have been estimated for rehabilitating the tailings facility and waste dump, vegetating the surrounding area, dismantling the plant and associated infrastructure, and performing environmental inspection and monitoring for a period of ten years. The reclamation and closure cost is estimated to be C$65.5 million. Financial assurance has been provided based on the closure plan.

Capital Expenditures

The Company's portion of capital expenditures at the Canadian Malartic mine during 2016 were approximately $60.4 million, which included sustaining capital expenditures and deferred expense, but excluded capitalized drilling. Budgeted 2017 capital expenditures at the Canadian Malartic mine are $67.6 million, excluding capitalized drilling.

Development

Development activities at the Canadian Malartic mine in 2016 primarily consisted of minor stripping activities. Development activities in 2017 are expected to include additional stripping activities. Permitting activities are ongoing.

Geology, Mineralization, Exploration and Drilling

Geology

The Canadian Malartic property straddles the southern margin of the eastern portion of the Abitibi Subprovince, an Archean greenstone belt situated in the southeastern part of the Superior Province of the Canadian Shield. The Abitibi Subprovince is limited to the north by gneisses and plutons of the Opatica Subprovince, and to the south by metasediments and intrusive rocks of the Pontiac Subprovince. The contact between the Pontiac Subprovince and the rocks of the Abitibi greenstone belt is characterized by a major fault corridor, the east-west trending Larder Lake – Cadillac Fault Zone ("LLCFZ"). This structure runs from Larder Lake, Ontario through Rouyn-Noranda, Cadillac, Malartic, Val-d'Or and Louvicourt, Québec, at which point it is truncated by the Grenville Front.

The regional stratigraphy of the southeastern Abitibi area is divided into groups of alternating volcanic and sedimentary rocks, generally oriented at N280 – N330 and separated by fault zones. The main lithostratigraphic divisions in this region are, from south to north, the Pontiac Group of the Pontiac Subprovince and the Piché, Cadillac, Blake River, Kewagama and Malartic groups of the Abitibi Subprovince. The various lithological groups within the Abitibi Subprovince are metamorphosed to greenschist facies. Metamorphic grade increases toward the southern limit of the Abitibi belt, where

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rocks of the Piché Group and the northern part of the Pontiac Group have been metamorphosed to upper greenschist facies.

The majority of the Canadian Malartic property is underlain by metasedimentary units of the Pontiac Group, lying immediately south of the LLCFZ. The north-central portion of the property covers an approximately 9.5 kilometre section of the LLCFZ corridor and is underlain by mafic-ultramafic metavolcanic rocks of the Piché Group cut by intermediate porphyritic and mafic intrusions. The Cadillac Group covers the northern part of the property (north of the LLCFZ). It consists of greywacke containing lenses of conglomerate.

Mineralization

Surface drilling by Lac Minerals Ltd. in the 1980s defined several near-surface mineralized zones now included in the Canadian Malartic deposit (the F, P, A, Wolfe and Gilbert zones), all expressions of a larger, continuous mineralized system located at depth around the historical underground workings of the Canadian Malartic and Sladen mines. In addition to these, the Western Porphyry Zone occurs one kilometre northeast of the main Canadian Malartic deposit and the Gouldie mineralized zone occurs approximately 1.2 kilometres southeast of the main Canadian Malartic deposit, although the relationship between these zones and the main deposit is presently unknown.

Mineralization in the Canadian Malartic deposit occurs as a continuous shell of 1% to 5% disseminated pyrite associated with fine native gold and traces of chalcopyrite, sphalerite and tellurides. The gold resource is mostly hosted by altered clastic sediments of the Pontiac Group (70%) overlying an epizonal dioritic porphyry intrusion. A portion of the deposit also occurs in the upper portions of the porphyry body (30%).

The South Barnat deposit is located to the north and south of the old South Barnat and East Malartic mine workings, largely along the southern edge of the LLCFZ. The disseminated/stockwork gold mineralization at South Barnat is hosted both in potassic-altered, silicified greywackes of the Pontiac Group (south of the fault contact) and in potassic-altered porphyry dykes and schistose, carbonatized and biotitic ultramafic rocks (north of the fault contact).

Several mineralized zones have been documented within the LLCFZ (South Barnat, Buckshot, East Malartic, Jeffrey, Odyssey, East Amphi, Fourax), most of which are generally spatially associated with stockworks and disseminations within mafic or intermediate porphyritic intrusions.

Exploration and Drilling

Gold was first discovered in the Malartic area in 1923 by the Gouldie Brothers at what is now designated the Gouldie Zone. During the period from 1935 to 1983, the Canadian Malartic, Barnat/Sladen and East Malartic mines produced approximately 5.5 million ounces of gold and 1.9 million ounces of silver, mostly from underground operations.

The combined amount of gold in proven and probable mineral reserves at the Canadian Malartic mine at the end of 2016 was 3.55 million ounces (101.8 million tonnes of ore grading 1.08 grams per tonne of gold), which represents a decrease of approximately 314,000 ounces of gold as compared to the end of 2015, after producing 292,514 ounces of gold (335,665 ounces in situ gold mined). The reduction in mineral reserves was principally associated with ore mined during 2016. Measured and indicated mineral resources at the Canadian Malartic mine increased by 0.35 million tonnes of ore in 2016 to 13.1 million tonnes grading 1.53 grams of gold per tonne, due to a reduction in the cut-off grade related to gold price and exchange rate movements. Inferred mineral resources at the Canadian Malartic mine increased by 10.5 million tonnes in 2016 to 14.9 million tonnes grading 1.93 grams of gold per tonne, due to the initial inferred mineral resources at the Odyssey zone. All numbers shown for Canadian Malartic reflect Agnico Eagle's indirect 50% ownership in the mine.

Diamond drilling is used for exploration on the Canadian Malartic property. In 2016, 155 holes (119,393 metres) were drilled for definition (conversion) drilling and 39 holes (24,496 metres) were for exploration. Exploration expenditures at the Canadian Malartic mine during 2016 were approximately C$10.9 million (50% basis), which includes the purchase of the Midway property located 6 kilometres from the Canadian Malartic mine. The main focus of the 2016 exploration program concentrated on drill definition of the Odyssey deposit located 1.5 kilometres east of the current limit of the Canadian Malartic pit.

In 2017, the Partnership expects to spend approximately C$4.7 million on exploration drilling at Canadian Malartic. Exploration programs are planned to identify and extend already known mineralized zones below the pit.

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Kittila Mine

The Kittila mine, which commenced commercial production in May 2009, is located in northern Finland approximately 900 kilometres north of Helsinki and 50 kilometres northeast of the town of Kittila. At December 31, 2016, the Kittila mine was estimated to contain proven and probable mineral reserves of 4.48 million ounces of gold comprised of 30.1 million tonnes of ore grading 4.64 grams of gold per tonne. The Kittila mine is accessible by paved road from the village of Kiistala, which is located on the southern portion of the main claim block. The gold deposit is located near the small village of Rouravaara, approximately ten kilometres north of the village of Kiistala.

The total landholdings surrounding and including the Kittila mine comprise two mining licences and 172 tenements. The tenements form a continuous block around the Kittila and Kuotko mining licences. The block has been divided into the Suurikuusikko area (which includes the Rouravaara area), the Suurikuusikko West area, the Suurikuusikko East area, and the Kittila and Kuotko mining licences. The Kuotko mining licence is located approximately 15 kilometres north of the Kittila mine. The Kuotko mining licence is currently in the environmental review process.

The boundary of the mining licence is determined by ground-surveyed points, whereas the boundaries of the tenements are not required to be surveyed. All of the tenements at the Kittila mine are registered in the name of Agnico Eagle Finland Oy, an indirect, wholly-owned subsidiary of the Company. The expiry dates of the tenements vary, with the earliest expiry date being April 2017. Tenements are initially valid for four years, provided exploration work in the area is reported annually and a small annual fee is paid to maintain title. Extensions of titles can be granted for 11 additional years upon payment of a slightly higher fee and active exploration in the area. Agnico Eagle Finland Oy also holds the mining licence in respect of the Kittila mine. The mine is subject to a 2.0% net smelter return royalty payable to the Republic of Finland.

The mine is located within the Arctic Circle, but the climate is moderated by the Gulf Stream off the coast of Norway, such that northern Finland's climate is comparable to that of eastern Canada. Winter temperatures range from minus ten to minus 30 degrees Celsius, whereas summer temperatures range from ten degrees Celsius to the mid-20s. Exploration and mining work can be carried out year-round. Because of its northern latitude, winter days are extremely short with a brief period of 24-hour darkness around the winter solstice. Conversely, summer days are very long with a brief period of 24-hour daylight around the summer solstice.

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Location Map of the Kittila Mine (as at December 31, 2016)

GRAPHIC

The Company acquired its 100%, indirect interest in the Kittila mine through the acquisition of the Swedish company Riddarhyttan Resources AB in November 2005. In June 2006, on the basis of an independently reviewed feasibility study, the Company approved construction of the Kittila mine. Mining at Kittila started initially as open pit mining. Open pit mining ended in November 2012 and all mining is currently carried out from the underground via ramp access. The initial underground stope was mined in early 2010. Ore is processed in a 3,750-tonne per day surface processing plant that was commissioned in late 2008, and expanded from 3,000 to 3,750 tonnes per day in 2014. Limited gold concentrate production started in September 2008 and gold dore bar production commenced in January 2009.

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Mining and Milling Facilities

Surface Plan of the Kittila Mine (as at December 31, 2016)

GRAPHIC

The orebodies at Kittila were initially mined from two open pits, followed by underground operations to mine the deposits further beneath the surface. Smaller additional open pits may be used to mine any remaining mineral reserves close to the surface in the future. Open pit mining started in May 2008 and the extracted ore was stockpiled. As of December 31, 2016, a total of 9.86 million tonnes of ore have been processed, including ore from the open pits and underground,

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0.44 million tonnes of ore are currently stockpiled and 39.9 million tonnes of waste rock have been excavated, including both open pit and underground excavation. Work continued throughout 2016 to develop the exploration and Rimpi ramps, as well as other work to access the underground mineral reserves, including development of a ramp towards the Sisar Zone. Total underground (lateral and vertical) development at the end of 2016 was approximately 85 kilometres. Underground mining commenced in the fourth quarter of 2010 and, at the end of 2016, a total of 6.5 million tonnes of ore has been mined from the underground portion of the mine.

Mining Methods

At the Kittila mine, the Suurikuusikko and the Rouravaara orebodies are currently mined by underground mining methods and access to the underground mine is via ramp. Approximately 5,000 tonnes of ore per day are fed to the concentrator, exceeding the nominal capacity of 3,750 tonnes per day. The underground mining method is open stoping with delayed backfill. Stopes are between 25 and 40 metres high and yield between 8,000 and 40,000 tonnes of ore per stope. To ensure sufficient ore production is available in the future to supply the mill, over 15,000 metres of tunnels will be developed each year. After extraction, stopes are filled with paste backfill or cemented backfill to enable the safe extraction of ore in adjacent stopes. Ore is trucked to the surface crusher via the ramp access system.

Surface Facilities

Construction of the processing plant and associated equipment was completed in 2008. Facilities at the Kittila mine include office buildings, a maintenance facility for mining equipment, a warehouse, a second maintenance shop, an oxygen plant, a processing plant, a paste backfill plant, a tank farm, a crusher, conveyor housings, an ore bin and a sulfate removal plant at the NP3 tailings area. In addition, there are some temporary structures for contractor offices and work areas.

The ore at the Kittila mine is treated by grinding, flotation, pressure oxidation and CIL circuits. After grinding, ore processing consists of two stages. In the first stage, ore is enriched by flotation and, in the second stage, the gold is extracted by pressure oxidation and CIL processes. At the end of the second stage, gold is recovered from the carbon in a Zadra elution circuit and recovered from the solution using electrowinning and finally poured into dore bars using an electric induction furnace.

Production and Mineral Recoveries

In 2016, the Kittila mine had payable production of 202,508 ounces of gold from 1.67 million tonnes of ore grading 4.41 grams of gold per tonne. The production costs per ounce of gold produced at Kittila in 2016 were $701. The total cash costs per ounce of gold produced at Kittila in 2016 were $699 on a by-product basis and were $701 on a co-product basis and the processing facility averaged 5,251 tonnes of ore per day and operated 86.7% of available time. During 2016, flotation recoveries averaged 93.0%. Recoveries in the second stage of the process in 2016 averaged 92.1% and global recoveries were 85.7%. The production costs per tonne at Kittila were €77 and the minesite costs per tonne were €77 in 2016.

The following table sets out the metal recoveries at the Kittila mine in 2016.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   
Gold   4.41 g/t   85.7%   202,508 oz  

In 2017, the Kittila mine is expected to produce approximately 190,000 ounces of gold from 1.6 million tonnes of ore grading 4.30 grams of gold per tonne at estimated total cash costs per ounce of approximately $728 on a by-product basis, with estimated gold recovery of 86.0%. Minesite costs per tonne of approximately €78 are expected in 2017.

Environmental, Permitting and Social Matters

Agnico Eagle Finland Oy currently holds a mining licence, an environmental permit and operational permits in respect of the Kittila mine.

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The construction of the first phase of the tailings dam was completed in the fall of 2008. Work on the second phase was completed in 2010 and included the expansion of the tailings area. Work on the third phase began in 2013 and includes work to heighten the dam. Work on the third phase is expected to continue for several years.

On September 14, 2015, during routine inspections of the dam, water seepage was discovered from a holding pond (NP3). A detailed action plan for a permanent solution was developed by a team of internal and external experts and this plan and has been implemented. The action plan consisted of filling the entire area where the water seepage had occurred with tailings. In the beginning of 2016, all seepage beneath the dam had stopped and the Company expects no further risk of seepage occurring through the liner.

Water from dewatering the mine and water used in the mine and mill is collected and treated by sedimentation. Emissions and environmental impact are monitored in accordance with the comprehensive monitoring program that has been approved by the Finnish environmental authorities. Work on enhancing the scrubbing of mill gases has resulted in a design to recover heat loss and use it to heat buildings, and this work is continuing. Financial assurance is provided to the environmental authorities on an annual basis in the amount prescribed by the environmental permit.

The environmental permit renewal was received in July 2013. This renewal contains additional effluent criteria and the Company has appealed the timing of compliance with such criteria to allow for studies and design to take place for new water treatment as required. A decision by the Administrative Court reviewing the appeal was received in the first quarter of 2015, granting the Company's appeal in part. The Company has also responded to another appeal lodged by a third party. The final decision from the Supreme Administrative Court was received in May 2016, and to comply with the requirements of the new permit, a water treatment plant for sulfate was built and commissioned in the fourth quarter of 2016.

Capital Expenditures

Capital expenditures at the Kittila mine during 2016 totaled approximately $75.9 million, which included mill modification, mine site exploration, Rimpi and Sisar area development, underground development and sustaining capital costs, but excludes capitalized drilling.

The Company expects capital expenditures during 2017 at the Kittila mine to be approximately $76.8 million, excluding capitalized drilling.

Development

In 2016, underground development continued in both the Suurikuusikko and Rouravaara mining areas. A total of 14,415 metres of ramp and sublevel access development were completed during the year. A total of 187,790 tonnes of ore from development and 1,465,184 tonnes of stope ore were mined in 2016. The Company expects to complete approximately 17,084 metres of lateral development (excluding the Rimpi area) and 1,258 metres of vertical development during 2017.

Geology, Mineralization, Exploration and Drilling

Geology

The Kittila mine is situated within the Kittila Greenstone belt, part of the Lapland Greenstone belt in the Proterozoic-age Svecofennian geologic province. The appearance and geology of the area is similar to that of the Abitibi region of the Canadian Shield. In northern Finland, the bedrock is typically covered by a thin but uniform blanket of unconsolidated glacial till. Bedrock exposures are scarce and irregularly distributed.

The mine area is underlain by mafic volcanic and sedimentary rocks metamorphosed to greenschist assemblages and assigned to the Kittila group. The major rock units trend north to north-northeast and are near-vertical. The volcanics are further sub-divided into iron-rich tholeiitic basalts located to the west and magnesium-rich tholeiitic basalt, coarse volcaniclastic units, graphitic schist and minor chemical sedimentary rocks located to the east. The contact between these two rock units consists of a transitional zone (the "Porkonen Formation") varying between 50 and 200 metres in thickness. This zone is strongly sheared, brecciated and characterized by intense hydrothermal alteration and gold mineralization, features consistent with major brittle-ductile deformation zones. The zone is part of a major north-northeast-oriented shear zone (the "Suurikuusikko Trend").

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Mineralization

The Porkonen Formation hosts the Kittila gold deposit, which contains multiple mineralized zones stretching over a strike length of more than 25 kilometres. Most of the work at the Kittila mine has been focused on the 4.5-kilometre stretch that hosts the known gold in mineral reserves and mineral resources. From north to south, the zones are Rimminvuoma ("Rimpi-S"), the deep extension of Rimminvuoma ("Rimpi Deep"), North Rouravaara ("Roura-N"), Central Rouravaara ("Roura-C"), depth extension of Rouravaara and Suurikuusikko ("Suuri/Roura Deep"), Suurikuusikko ("Suuri"), Etela and Ketola. The Suuri and Suuri/Roura Deep zones include several parallel sub-zones that have previously been referred to as Main East, Main Central and Main West. The Suuri zone hosts approximately 15% of the current probable gold reserve estimate on a contained-gold basis, while Suuri Deep has approximately 21%, Roura-C approximately 4%, Roura Deep approximately 27%, Rimpi Deep approximately 28% and Rimpi-S approximately 5%.

Gold mineralization in these zones is associated with intense hydrothermal alteration (carbonate-albite-sulphide), and is almost exclusively refractory, locked inside fine-grained sulphide minerals: arsenopyrite (approximately 73%) or pyrite (approximately 23%). The rest is free gold, which is manifested as extremely small grains of gold in pyrite.

Exploration and Drilling

In 2016, proven and probable gold reserves increased by approximately 125,915 ounces to 4.48 million ounces of gold (30.06 million tonnes of ore grading 4.64 grams per tonne), after producing 202,508 ounces of gold (236,317 ounces in situ gold mined). This increase was primarily due to successful conversion of mineral resources to mineral reserves in the Sisar Zone. Measured and indicated mineral resources at December 31, 2016 increased by 4.8 million tonnes from 2015 to 20.7 million tonnes of ore grading 2.92 grams of gold per tonne due to successful exploration and conversion drilling in the Roura and Rimpi deep zones. Inferred mineral resources decreased by 0.77 million tonnes from 2015 to 11.06 million tonnes of ore grading 4.05 grams of gold per tonne.

Diamond drilling is used for exploration on the Kittila property. In 2016, all of the work on the mining licence area focused on the Roura, Rimpi and Sisar areas. From 1987 through the end of 2016, a total of 4,520 drill holes, totaling 895,000 metres, have been completed on the property. A total of 486 drill holes were completed in 2016 for a length of 59,900 metres. Of these drill holes, 399 holes (26,585 metres) were for delineation drilling, 26 holes (6,922 metres) were for conversion drilling and 55 holes (24,930 metres) were related to mine exploration. Total expenditures for diamond drilling in 2016 were €8.3 million, including €0.73 million for conversion drilling and €5.52 million for exploration.

In 2016, a total of 19 exploration drill holes, totaling 4,634 metres, were drilled on the Kuotko mining licence area. Total expenditures for the exploration drilling carried out in the Kuotko area in 2016 were $€0.67 million. At the end of 2016, the Kuotko deposit contained inferred mineral resources of 0.4 million tonnes of ore grading 2.88 grams of gold per tonne.

Outside of the Kittila and Kuotko mining licence areas, systematic diamond drilling and target-focused ground geophysics continued along the Suurikuusikko Trend, and a number of new targets were tested by diamond drilling in 2016. A total of 19 diamond drill holes, totaling 4,479 metres, were drilled on exploration targets outside of the mining licence area in 2016, at a cost of $2.2 million.

The 2017 exploration budget for the Kittila mine is approximately €8.38 million (for 40,000 metres of minesite exploration drilling and 8,000 metres of resource conversion drilling). This drilling is planned to further explore the Kittila mineral reserve and mineral resource potential and to evaluate the potential to develop the Sisar Zone as a new mining horizon at Kittila. In addition, €0.62 million of exploration expenditures, including 6,000 metres of diamond drilling, is planned in 2017 for further exploration on the Kuotko area. Outside of the mining licence areas, $3.7 million of exploration expenditures, including 7,000 metres of diamond drilling, is planned in 2017 for exploration along the Suurikuusikko, Kapsa and Hanhimaa Trends.

Meadowbank Mine

The Meadowbank mine, which achieved commercial production in March 2010, is located in the Third Portage Lake area in the Kivalliq District of Nunavut in northern Canada, approximately 70 kilometres north of Baker Lake. At December 31, 2016, the Meadowbank mine was estimated to contain proven and probable mineral reserves of 0.71 million ounces of gold comprised of 8.2 million tonnes of ore grading an average of 2.69 grams of gold per tonne. The Company acquired its 100% interest in the Meadowbank mine in 2007 as the result of the acquisition of Cumberland Resources Ltd.

In 2016, the Company completed an internal technical study on the Amaruq satellite deposit at Meadowbank, which is located 50 kilometres northeast of the Meadowbank mine. Based on this study, the Company has approved the project for

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development pending the receipt of the required permits, which are currently expected to be received by the second quarter of 2018.

Location Map of the Meadowbank Mine, Including Amaruq (as at December 31, 2016)

LOGO

The Meadowbank mine is held under ten Crown mining leases, four exploration concessions and 40 Crown mineral claims. The Crown mining leases, which cover the Portage, Goose and Goose South deposits, are administered under federal legislation. The Crown mining leases, which have renewable ten-year terms, have no annual work commitments but are subject to annual rent fees that vary according to their renewal date. The production lease with the Kivalliq Inuit Association ("KIA") is a surface lease and requires the payment of C$158,865 annually. Production from subsurface lease areas is subject to a royalty of up to 14% of the adjusted net profits, as defined in the Northwest Territories and Nunavut Mining Regulations. In order to conduct exploration on the Inuit-owned lands at Meadowbank, the Company must receive approval for an annual work proposal from the KIA, the body that holds the surface rights in the Kivalliq District and administers land use in the region through various boards. The Nunavut Water Board (the "NWB"), one such board, provided the recommendation to the Department of Aboriginal Affairs and Northern Development Canada to grant the Meadowbank mine's construction and operating licences in July 2008. The Company has obtained all of the approvals and licences required to build and operate the Meadowbank mine.

Meadowbank holds two mineral exploration agreements granted by Nunavut Tunngavik Inc. ("NTI"), the corporation responsible for administering subsurface mineral rights on Inuit owned lands in Nunavut. In 2017, exploration concessions covering the Vault and Amaruq deposits will require annual rental fees of C$113,442 and C$81,678,

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respectively. During the exploration phase, the concessions can be held for up to 20 years and the concessions can be converted into production leases with annual fees of C$1 per hectare, with no annual work commitments.

In 2012, the Company signed a production lease with NTI covering the extraction and processing of gold from the Vault deposit. This lease authorizes the Company to mine and process gold from the Vault deposit and sets in place royalty payments that are equivalent to those being paid by the Company at the Portage and Goose pits. Production from the concessions is subject to a 12% net profits interest royalty from which annual deductions are limited to 85% of the gross revenue. This production lease is in the process of being amended to include a part of the Phaser Lake and BB Phaser pits.

The 40 Crown mineral claims are subject to land fees and work commitments. Land fees are payable only when work is filed. The most recent filing was in 2012, when approximately $7,254 in land fees were paid and $4,426,941 in assessment work was submitted.

In December 2016, the Amaruq project received an amended type B water license authorizing the development and construction of a portal/ramp and associated infrastructure. A commercial lease with the KIA authorizes the construction and operation of the exploration camp and exploration activities in a defined area. An exploration permit with the KIA authorizes the exploration activities that are located outside the commercial lease area.

The Meadowbank area is considered to have an arid arctic climate with temperatures ranging from five to minus 40 degrees Celsius in the winter (from October to May) and from minus five to 25 degrees Celsius throughout the summer (from June to September). Surface geological work can be carried out from mid-May to mid-October, while mining, milling and exploration drilling can take place throughout the year, though outdoor work can be hampered in December and January by the cold and darkness.

The Meadowbank mine is accessible from Baker Lake, located 70 kilometres to the south, over a 110-kilometre all-weather road completed in March 2008. Baker Lake provides 2.5 months of summer shipping access via Hudson Bay and year-round airport facilities. The Meadowbank mine also has a 1,752-metre long gravel airstrip, permitting access by air. Fuel, equipment, bulk materials and supplies are shipped by barge and ship from Montreal, Quebec (or Hudson Bay port facilities) into Baker Lake during the summer port access period that starts at the end of July each year. Fuel and supplies are transported year-round to the site from Baker Lake by conventional tractor trailer units. Scheduled and chartered flights provide transportation for personnel and air cargo.

The Company is currently building a 64-kilometre road from the Meadowbank site to the Amaruq deposit. This road is expected to be completed as an exploration road by the fourth quarter of 2017, with expansion to a production road once all of the necessary permits are received. The Company expects that the ore from the Amaruq deposit 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. The mill will require minor modifications, specifically the addition of a continuous gravity and regrind circuit, in order to process the ore from the Amaruq deposit.

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Mining and Milling Facilities

Surface Plan of the Meadowbank Mine (as at December 31, 2016)

LOGO

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Surface Plan of the Vault Deposit (as at December 31, 2016)

LOGO

All required aggregates used in the mining process are produced from waste material taken from the Portage and Vault pits. In 2008, a dewatering dyke was constructed in order to access the north half of the Portage pit in preparation for production in 2010. Construction of the Bay-Goose dyke, a major dewatering dyke required to access the southern portion of the Portage and the Goose pits, commenced in 2009 and was completed in 2011. Three tailings impoundment dykes: Saddle Dam 1, Saddle Dam 2 and Stormwater Dyke, were built in 2009 and 2010. The final elevation of Stormwater dyke was completed in 2014. Construction of the main tailings impoundment dyke, Central Dyke, began in 2012. Additional phases of construction on the Central Dyke are expected to continue throughout the mine life. Construction of the eight-kilometre long access road to the Vault pit began in 2012 and was completed in 2013.

Mining Methods

Mining at the Meadowbank mine is done by open pit method using excavators and trucks. The ore is extracted conventionally using drilling and blasting, then hauled by trucks to a primary gyratory crusher adjacent to the mill. The marginal-grade material (material grading under the cut-off grade at a gold price of $1,100 per ounce, but which has the potential to increase the mineral reserves at the end of the mine life if the then current metal prices makes its processing economical) is stockpiled separately. Also, stockpiles of low-grade material currently lower than the mill feed grade have been created. The majority of this low-grade material was processed in 2014. The remainder will be processed at the end of the mine life. Waste rock is hauled to one of three waste storages areas on the property, used for dyke construction material or backfilled into the mined out area.

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Mining first commenced in the Portage pit in 2010 and in the Goose pit in March 2012, and commercial production at the Vault pit was achieved in April 2014. The area surrounding the Vault pit has two smaller areas that are being developed as future pits: the Phaser and BB Phaser pits. These pits are expected to begin operation in the third quarter of 2017. Mining operations at the Goose pit ceased in 2015. Mining operations at the Vault pit are expected to cease in 2018 and at the Portage pit (including the Portage extension) are expected to cease in 2019.

Mining at the Amaruq satellite deposit at Meadowbank will be done by open pit method using excavators and trucks and ore will be hauled by truck to the mill at Meadowbank for processing. Commercial production is expected to be achieved in the third quarter of 2019 at Amaruq for the Whale Tail pit.

Surface Facilities

Site facilities include a mill building, a mechanical shop, a powerhouse building, an assay lab and a heavy vehicle maintenance shop. A structure comprised of two separate crushers flank the main process complex. Power is supplied by a 26.4-megawatt diesel electric power generation plant with heat recovery and an onsite fuel storage (5.6 million litres) and distribution system. The mill-service-power complex is connected to the accommodations complex by enclosed corridors.

The accommodations complex at the Meadowbank mine consists of a permanent camp and a temporary camp to accommodate additional workers. The camp is supported by a sewage treatment, solid waste disposal and a potable water plant.

Facilities constructed at Baker Lake include a barge landing site located three kilometres east of the community and a storage compound. A fuel storage and distribution complex with capacity for 60-million litres of diesel fuel and 2-million litres of jet fuel is located next to the barge landing facility.

In 2013, new facilities were built near the Vault deposit, which is located approximately eight kilometres from the mine complex. These facilities include a heated shelter for employees, a storage area, a fuel farm, an electrical power generation plant and a water treatment plant.

In 2015, the exploration group was relocated to the Amaruq satellite deposit to a separate camp with a 125-person capacity. The camp is supported by sewage treatment, solid waste disposal and a potable water plant. In addition, three temporary buildings act as a warehouse, a maintenance shop and a core shack.

The process design at Meadowbank is based on a conventional gold plant flowsheet consisting of two-stage crushing, grinding, gravity concentration, cyanide leaching and gold recovery in a CIP circuit. The mill was designed to operate year-round, with an annual design capacity of 3.1 million tonnes (8,500 tonnes per day). The addition of a secondary crusher in early summer 2011 increased the overall processed tonnes capacity in the mill to 3.6 million tonnes per year (9,840 tonnes per day). Since the installation of the permanent secondary crusher in June 2011, the plant has consistently exceeded 8,500 tonnes per day. Based on projections from metallurgical tests work, the overall gold recovery is projected to be approximately 91.2% for the life-of-mine, with approximately 18% gold recovered from the gravity circuit.

The run-of-mine ore is transported to the crusher using off-road trucks. The ore is dumped into the gyratory crusher or into stockpiles designated by ore-type. The feed from the primary crusher is conveyed to the cone crusher in closed circuit with a vibrating screen. The crushed ore is delivered to the coarse ore stockpile and ore from the stockpile is conveyed to the mill. The grinding circuit is comprised of a primary SAG mill operated in open circuit and a secondary ball mill operated in closed circuit with cyclones. A portion of the cyclone underflow stream is sent to the concentrator, which separates the heavy minerals from the ore. The grinding circuit incorporates a gravity process to recover free gold and the free gold concentrate is leached in an intensive cyanide leach-direct electrowinning recovery process.

The cyclone overflow is sent to the grinding thickener. The clarified overflow is recycled to the grinding circuit and thickened underflow is pumped to a pre-aeration and leach circuit. The cyanide circuit consists of seven tanks, providing approximately 42 hours of retention time. The leached slurry flows to a train of six CIP tanks. Gold in the solution flowing from the leaching circuit is adsorbed into the activated carbon. Gold is recovered from the carbon in a Zadra elution circuit and is recovered from the solution using an electrowinning recovery process. The gold sludge is then poured into dore bars using an electric induction furnace.

The CIP tailings are treated for the destruction of cyanide using the standard sulphur-dioxide-air process. The detoxified tailings are then pumped to the permanent tailings facility. The tailings storage is designed for zero discharge, with all process water being reclaimed for re-use in the mill to minimize water requirements.

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Production and Mineral Recoveries

During 2016, the Meadowbank mine had payable production of 312,214 ounces of gold from 3.92 million tonnes of ore grading 2.70 grams of gold per tonne. The production costs per ounce of gold produced at Meadowbank in 2016 were $701. The total cash costs per ounce of gold produced at Meadowbank in 2016 were $715 on a by-product basis and were $727 on a co-product basis. The Meadowbank processing facility averaged 10,697 tonnes per day and operated approximately 94.9% of available time. Gold recovery averaged 91.93%. The production costs per tonne at Meadowbank were C$73 and the minesite costs per tonne were C$74 in 2016.

The following table sets out the metal recoveries at the Meadowbank mine in 2016. Mill processing exceeded extraction from the mine in 2016 as 0.23 million tonnes came from the marginal stockpile.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   
Gold   2.70 g/t   91.93%   312,214 oz  

Gold production during 2017 at Meadowbank is expected to be approximately 320,000 ounces from 3.9 million tonnes of ore grading 2.85 grams of gold per tonne at estimated total cash costs per ounce of approximately $683 on a by-product basis, with estimated gold recovery of 90.0%. Minesite costs per tonne of approximately C$73 are expected in 2017.

Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters

The development of the Meadowbank mine was subject to an extensive environmental review process under the Nunavut Land Claims Agreement (the "NLCA") administered by the Nunavut Impact Review Board (the "NIRB"). On December 30, 2006, a predecessor to the Company received the Project Certificate from the NIRB, which included the terms and conditions to ensure the environmental integrity of the development process. In July 2008, the Company received a water licence from the NWB for construction and operation of the mine subject to additional terms and conditions. Both authorizations were approved by the then Minister of Aboriginal Affairs and Northern Development Canada. This water licence was renewed in 2015 for a period of ten years.

In February 2007, a predecessor to the Company and the Nunavut government signed a Development Partnership Agreement (the "DPA") with respect to the Meadowbank mine. The DPA provides a framework for stakeholders, including the federal and municipal governments and the KIA, to maximize the long-term socio-economic benefits of the Meadowbank mine to Nunavut.

An Inuit Impact and Benefit Agreement for the Meadowbank mine (the "Meadowbank IIBA") was signed with the KIA in March 2006. This agreement was renegotiated and an amended Meadowbank IIBA was signed on October 18, 2011. The Meadowbank IIBA ensures that local employment, training and business opportunities arising from all phases of the project are accessible to the Kivalliq Inuit. The Meadowbank IIBA also outlines the special considerations and compensation that must be provided to the Inuit regarding traditional, social and cultural matters.

In July 2008, the Company signed a production lease for the construction and the operation of the mine, the mill and all related activities. This production lease was amended on May 2, 2013 to expand the surface area granted under the lease. In April 2008, the Company and the KIA signed a water compensation agreement for the Meadowbank mine addressing Inuit rights under the Land Claims Agreement respecting compensation for water use and water impacts associated with the mine.

Permitting for the operation of the Amaruq satellite deposit at Meadowbank is ongoing with the NIRB and the NWB. Public hearings are expected to be held in the third quarter of 2017 and the project certificate and water licence are expected to be approved by the third quarter of 2017.

A series of four dykes have been built to isolate the mining activities at the Portage and Goose deposits from neighbouring lakes. An additional dyke was built in 2013 to isolate the mining activities at the Vault deposit. Waste rock from the Portage, Goose and Vault pits is primarily stored in the Portage and Vault rock storage facilities, and a portion of the waste is placed in the Portage Pit. The control strategy for waste rock storage includes freeze control of the waste rock through permafrost encapsulation and capping with an insulating convective layer of neutralizing rock (ultramafic and non-acid generating volcanic rocks). The Vault rock storage facility does not require an insulating convective layer due to the non-acid

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generating nature of the rock in that area. Waste rock deposited in the Portage pit will be covered with water during the closure phase of the pit, which will prevent any acid generation. Because the site is underlain by greater than 400 metres of permafrost, the waste rock below the capping layer is expected to freeze, resulting in low (if any) rates of acid rock drainage generation in the long term.

Tailings are stored in the dewatered portion of the Second Portage Lake. The tailings are deposited on tailings beaches within a two-cell tailings storage facility isolated by the central dyke and a series of five saddle dams. A reclamation pond is located within the tailings storage facility. Deposition of tailings began in the south cell in the fourth quarter of 2014. Tailings deposition was completed in the north cell in 2015 and reclamation capping has commenced. The control strategy to minimize water infiltration into the tailings storage facility and the migration of constituents out of the facility includes freeze control of the tailings through permafrost encapsulation and through comprehensive, engineered dyke liners. A minimum two-metre thick dry cover of acid neutralizing ultramafic rock backfill will be placed over the tailings as an insulating convective layer to confine the permafrost active layer within relatively inert tailings materials.

The water management objective for the project is to minimize the potential impact on the quality of surface water and groundwater resources at the site. Diversion ditches were constructed in 2012 to divert clean runoff water away from areas affected by the mine or mining activities. Following a field investigation in 2014, a contact water interception trench was constructed to collect seepage water downgradient from the mill prior to entering into the nearby lake. All contact water originating from the mine site or mill is intercepted, collected and conveyed to the tailings storage facility for reuse in process. There is no discharge of contact water from the mine site or the Portage pit area to offsite receiving water bodies. All contact water generated at the Vault pit area, including the Vault Waste Rock Storage Facility, is conveyed to the Vault Attenuation Pond and discharged to nearby Wally Lake. There is treatment for removal of solids (if needed) prior to release to Wally Lake.

In January 2012, the Company identified naturally occurring asbestos fibres in dust samples taken from the secondary crusher building at the Meadowbank mine and subsequently found small concentrations of fibres in the ore coming from certain areas of the open pit mines. The Company has instituted additional monitoring and an asbestos management program at the site.

An interim closure and reclamation plan was submitted in 2014 as a requirement of part of the NWB Type A water licence and financial assurance was provided and updated in July 2015 as part of the water licence renewal process. In 2013, the Company applied to the NWB for an increase in freshwater consumption and received the amendment to the Type A licence on July 23, 2014.

In 2015, an amendment to the project certificate was requested for the mining of the Phaser pit, a satellite pit in the Vault pit area and the approval was received in the third quarter of 2016.

In 2015, Environment Canada charged the Company with two infractions under the Fisheries Act in relation to a seepage incident at the Meadowbank mine that was identified during a July 2013 on-site inspection. Monitoring data indicated that the 2013 seepage event did not affect the water quality of the downstream Second Portage Lake. Discussions are underway to attempt to resolve the matter but, if unsuccessful, a trial would not likely occur until 2018.

Capital Expenditures/Development

In 2016, the Company incurred approximately $38.8 million in capital expenditures at the Meadowbank mine excluding capitalized drilling. In addition, approximately $40 million was spent on exploration studies, road construction and permitting at the Amaruq satellite deposit at Meadowbank.

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In 2016, the Company completed an internal technical study on the Amaruq satellite deposit at Meadowbank. The following table sets out a summary of key estimates and parameters of the Amaruq satellite deposit at Meadowbank.

Indicated mineral resources (Open Pit)   16.9 million tonnes of ore grading 3.88 g/t gold (2.1 million oz)  

Inferred mineral resources (Open Pit)   4.9 million tonnes of ore grading 4.81 g/t gold (763,000 oz)  

Inferred mineral resources (Underground)   6.8 million tonnes of ore grading 6.22 g/t gold (1.4 million oz)  

       

Estimated production over mine life   1,980,000 oz  

Estimated average metallurgical recovery   Approximately 93%  

Estimated average annual gold production   Approximately 135,000 ounces based on 4 to 5 months of production (year 1)  

    Approximately 255,000 ounces (year 2)  

    Approximately 300,000 ounces (year 3)  

    Approximately 430,000 ounces (years 4 – 6)  

       

Estimated average annual mill throughput   Approximately 1,279,000 tonnes based on 4 to 5 months of production (year 1)  

    Approximately 2,987,000 tonnes (year 2)  

    Approximately 3,265,000 tonnes (year 3)  

    Approximately 3,285,000 tonnes (years 4 – 6)  

       

Estimated mine life   Approximately 6 years  

Estimated initial capital costs to the first ounce produced   Approximately $330 million  

Estimated sustaining capital costs   Approximately $25 million per year  

Estimated reclamation costs   Approximately $16 million  

       

    Economic Analysis:  

    $1,200 per ounce gold  

    US$/C$ exchange rate of $1.25  

    Statutory income tax rate: Approximately 26%  

In 2017, a total of $93.4 million has been budgeted to be spent at the Meadowbank mine, excluding capitalized drilling, which includes $73.1 million at the Amaruq deposit.

Geology, Mineralization, Exploration and Drilling

Geology

The Meadowbank mine comprises a number of Archean-age gold deposits hosted within polydeformed volcanic and sedimentary rocks of the Woodburn Lake Group, part of the Western Churchill supergroup in northern Canada.

Three mineable gold deposits, Goose, Portage and Vault, have been discovered along the 25-kilometre long Meadowbank gold trend, and the PDF deposit (a fourth deposit) has been outlined on the northeast gold trend. These known gold resources are within 225 metres of the surface, making the deposits attractive for open pit mining. In addition, the Amaruq property will be developed as a satellite operation to the Meadowbank mine.

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Mineralization

The predominant gold mineralization found in the Portage and Goose deposits is associated with iron sulphides, mainly pyrite and pyrrhotite, which occur as a replacement of magnetite in the oxide facies iron formation host rock. To a lesser extent, pyrite and chalcopyrite may be found and, on rare occasions, arsenopyrite may be associated with the other sulphides. Gold is mainly observed in native form (electrum), occurring in isolated specks or as plating around sulphide grains. The ore zones are typically six to seven metres wide, following the contacts between the iron formation units and the surrounding host rock. Zones extend up to several hundred metres along strike and at depth. The sulphides primarily occur as replacement of the primary magnetite layers, as well as narrow stringers or bands of disseminated sulphides that almost always crosscut the main foliation and/or bedding which would imply an epigenetic mode of emplacement. The percentage of sulphides is quite variable and may range from trace to semi-massive amounts over several centimetres to several metres in length. The higher gold grades and the occasional occurrence of visible gold are almost always associated with greater than 20% sulphide content.

The main mineralized banded iron formation unit is bounded by an ultramafic unit to the west which locally occurs interlayered with the banded iron formation and to the east by an intermediate to felsic metavolcaniclastic unit.

In the Vault deposit, pyrite is the principal ore-bearing sulphide. The disseminated sulphides occur along sheared horizons that have been sericitized and silicified. These zones are several metres wide and may continue for hundreds of metres along strike and down dip.

The Goose and Portage deposits are hosted within highly deformed, magnetite-rich iron formation rocks, while intermediate volcanic rock assemblages host the majority of the mineralization at the more northerly Vault deposit. An additional deposit, PDF, shows the same characteristics as Vault, though it is not currently anticipated to be a mineable deposit.

Defined over a 1.85-kilometre strike length and across lateral extents ranging from 100 to 230 metres, the geometry of the Portage deposit consists of general north-northwest striking ore zones that are highly folded. The mineralization in the lower limb of the fold is typically six to eight metres in true thickness, reaching up to 20 metres in the hinge area.

The Goose deposit is located just south of the Portage deposit and is also associated with iron formation but exhibits different geometry, with a north-south trend and a steep westerly dip. Mineralized zones typically occur as a single unit near surface, splaying into several limbs at depth. The deposit is currently defined over a 750-metre strike length and down to 500 metres at depth (mainly in the southern end), with true thicknesses of three to 12 metres (reaching up to 20 metres locally). The Goose underground resource (100 to 500 metres at depth) extends 700 metres to the south of the Goose pit. The ore zones show the same characteristics as the Goose pit, which is two to five main zones sub-parallel and undulating. The average thickness rarely exceeds three to five metres.

The Vault deposit is located seven kilometres northeast of the Portage and Goose deposits. It is planar and shallow-dipping with a defined strike of 1,100 metres. The deposit has been disturbed by two sets of normal faults striking east-west and north-south and dipping moderately to the southeast and steeply to the east, respectively. The main lens has an average true thickness of eight to 12 metres, reaching as high as 18 metres locally. The hanging wall lenses are typically three to five metres, and up to seven metres, in true thickness.

The Amaruq deposit is located 50 kilometres northwest of the Meadowbank complex. It is a folded deposit with a defined strike of 1.6 kilometres. Three contrasting styles of mineralization coexist on the Amaruq property. In all three styles, gold is found associated with pyrrhotite and/or arsenopyrite as 25- to 50-micron inclusions or grains along fractures, or simply as free grains in a quartz-rich gangue.

The first mineralization style corresponds to occurrences of pyrrhotite-quartz-amphibole-carbonate as layers, lenses and/or disseminations, mostly restricted to the silicate-sulphide iron formations of Whale Tail's north domain. The second mineralization style comprises silica flooding with significant pyrrhotite, arsenopyrite, and local pyrite stockwork and disseminations, within a gangue of amphibole-carbonate. The third mineralization style is between decimeters and several meters thick, quartz-sulphide-native gold veins cutting through the whole Mammoth-Whale Tail-IVR rock sequence. These veins are best developed in the mafic and ultramafic volcanics, where they are hosted in biotite-altered and moderately-to-strongly schistose zones. The overall sulphide content of these veins is generally low (1-5% maximum) and most commonly comprises arsenopyrite, galena, sphalerite, and/or chalcopyrite. These veins seem more abundant and best developed in the hinge zone of the regional fold and seem to be restricted to shallow southeast-dipping, high-strain corridors therein.

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Exploration and Drilling

Exploration efforts on the Meadowbank property have been extensive since 1985, including geophysics, prospecting, till sampling and drilling, mainly by diamond drill but also reverse circulation. From 1985 until Agnico Eagle acquired the property in 2007, 126,796 metres were drilled in 916 diamond and reverse circulation drill holes on the property. In 2005, Cumberland (the previous owner) estimated mineral resources in the Portage, Goose and Vault deposits combined as follows: measured and indicated mineral resources of 23.3 million tonnes of ore grading 4.40 grams per tonne of gold (containing 3.3 million ounces of gold) and inferred mineral resources of 3.5 million tonnes of ore grading 4.20 grams per tonne of gold (containing 0.5 million ounces of gold).

In 2016, the amount of gold in proven and probable mineral reserves decreased by approximately 215,000 ounces to 0.71 million ounces of gold (8.2 million tonnes of ore grading 2.69 grams per tonne) after producing 312,214 ounces of gold (304,000 ounces of in situ gold mined). The net decrease was primarily due to the mine depletion, partially offset by the conversion of mineral resources to mineral reserves in the extensions of Portage Pit E3 and Vault South Pit. Measured and indicated mineral resources at the Meadowbank mine decreased by 3.3 million tonnes to 3.7 million tonnes grading 2.07 grams of gold per tonne. Inferred mineral resources decreased by 2.3 million tonnes to 1.1 million tonnes grading 3.13 grams of gold per tonne.

In 2016, diamond drilling at Meadowbank was conducted in both the Vault and the Portage pits. At Vault, 20 holes were drilled for a total length of 975 metres in order to complete 25 × 25 metre drill spacing in the Phaser and BB Phaser pits. This drilling confirmed the previous mineral resource estimate. At Portage, 14 holes were drilled in Pit E3 for a total length of 981 metres to convert indicated mineral resources to probable mineral reserves in the E4 pushback of the pit and 11 holes were drilled in Pit A for a total of 501 metres to confirm high grade intersections in previous drill holes. The total cost of drilling in 2016 amounted to $0.43 million. In 2017, 1,500 metres of infill drilling is planned in the Vault, Phaser and BB Phaser pits.

Also in 2016, diamond drilling was conducted at the Amaruq satellite deposit at Meadowbank. 520 holes were drilled for a total length of 127,751 metres. Within the IVR area, 267 holes were completed (65,797 metres) on extension and conversion of V zones and exploration targets. Drilling along the Mammoth trends included 125 holes (25,235 metres). Drilling at Whale Tail included 128 holes (36,720 metres) for conversion, extension and exploration drilling. In addition, 11 engineering drill holes were completed (2,222 metres). In 2017, 75,000 metres of diamond drilling are planned for exploration, conversion and engineering purposes.

Meliadine Project

The Meliadine project is an advanced exploration/development property located near the western shore of Hudson Bay in the Kivalliq region of Nunavut, approximately 25 kilometres north of the hamlet of Rankin Inlet and 290 kilometres southeast of the Meadowbank mine. The closest major city is Winnipeg, Manitoba, approximately 1,500 kilometres to the south. In February 2017, the Company's Board of Directors approved the construction of a mine at the Meliadine project. Commercial production at Meliadine is expected in the third quarter of 2019.

The Company acquired its 100% interest in the Meliadine project through its acquisition of Comaplex in July 2010.

The mineral reserves and mineral resources of the Meliadine project are estimated at December 31, 2016 to contain proven and probable mineral reserves of 3.4 million ounces of gold comprised of 14.5 million tonnes of ore grading 7.32 grams of gold per tonne. In addition, the project has 20.8 million tonnes of indicated mineral resources grading 4.95 grams of gold per tonne and 14.7 million tonnes of inferred mineral resources grading 7.51 grams of gold per tonne.

The Meliadine property is a large land package that is nearly 80 kilometres long. It consists of mineral rights, a portion of which are held under the Northwest Territories and Nunavut Mining Regulations and administered by Aboriginal Affairs and Northern Development Canada and referred to as Crown Land. The Crown Land is made up of mining claims and mineral leases. There are also subsurface NTI concessions administered by a division of the Nunavut territorial government. In 2016, approximately C$125,000 was paid to Indigenous and Northern Affairs Canada for the mining lease. NTI requires annual rental fees of approximately C$75,000 and exploration expenditures of approximately C$250,000.

The Kivalliq region has an arid arctic climate. Surface geological work can be carried out from mid-May to mid-October, while exploration drilling can take place throughout the year, though is reduced in December and January due to cold and darkness.

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Equipment, fuel and dry goods are transported on the annual sealift by barge to Rankin Inlet via Hudson Bay. Ocean-going barges from Churchill, Manitoba or eastern Canadian ports can access the community from late June to early October. Churchill, which is approximately 470 kilometres south of Rankin Inlet, has a deep-water port facility and a year-round rail link to locations to the south.

In October 2013, the Company completed construction of a 23.8-kilometre-long all-weather gravel road linking Rankin Inlet with the project site. This road was constructed to support ongoing exploration activities at the Meliadine property and significantly reduces the transportation and logistical costs for exploration and development work.

Location Map of the Meliadine Project (as at December 31, 2016)

LOGO

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Facilities

Surface Plan of the Meliadine Project (as at December 31, 2016)

LOGO

The planned surface infrastructure is indicated on the surface plan map above and consists of modular structures for the dormitory, kitchen, assay laboratories and electrical rooms/mechanical modules. The administration office, maintenance shop and warehouse are combined in a pre-engineered building. The process plant, as well as the power plant, are a combination of standard structure buildings with prefabricated modules. The site map also indicates the planned mine portals, ventilation raises, open pits, waste dumps, ore pads, water management structures, attenuation pond and tailings dry stacks.

Mining Methods

The Company anticipates that mining at Meliadine will be carried out through twelve open pits and underground mining operations. It is estimated that approximately 5.5 million tonnes of ore will be extracted from surface mining and 17.4 million tonnes of ore will be extracted by underground mining over a 14-year mine life. It is expected that an additional 2.8 million tonnes of lower grade material from underground development and open pit mining (marginal ore) will be stockpiled for processing at the end of the mine life. Underground access is expected to be by decline, with long-hole mining expected. Each stope will be backfilled, with cemented pastefill used in primary stopes and dry rockfill for the secondary stopes. A conventional truck/shovel operation is anticipated for the open pits.

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Surface Facilities

Facilities at the Meliadine project include the exploration camp located on the shore of Meliadine Lake, approximately 2.3 kilometres east of the Tiriganiaq deposit. The self-contained camp consists of five wings of modular trailers that can accommodate up to 250 personnel and includes a kitchen facility, complete with diesel generators.

Power for the exploration camp is currently provided by diesel generators. Potable water for the exploration and operation camps is pumped from Meliadine Lake. Water for the underground operations and surface drill programs is pumped from Pump Lake.

The exploration camp has an incinerator on site to burn all flammable materials, such as camp and food wastes. Incinerator ashes, plastics and metal objects, along with all hazardous solid and liquid wastes are collected at the Meliadine project site and then transported to a waste management company in southern Canada.

Sewage has been treated through a Biodisk treatment system since the summer of 2010. Routine water sampling is conducted and reported on a monthly basis to the authorities. The Company is examining saline water treatment strategies.

An underground portal allowing access to an exploration ramp was built at the Tiriganiaq deposit in 2007 and 2008 in order to extract a bulk sample for study purposes. A waste rock and ore storage pad was built during excavation of the ramp and a sampling tower was installed for processing the bulk sample. There is a two-kilometre-long road between the Meliadine project exploration camp and the portal site. Another underground bulk sample of 4,600 tonnes of ore was taken from the Tiriganiaq deposit via this portal in 2011.

Pre-construction activities began in the summer of 2016, piling installation and camp construction began in August 2016 and dyke construction and installation of a semi-mobile batch plant commenced in November 2016.

Production and Mineral Recoveries

More than 39 metallurgical test programs have been conducted at the Meliadine project. Based on the results of these test programs, a conventional gold circuit has been recommended, comprising crushing, grinding, gravity separation and cyanide leaching, with a carbon-in-leach circuit (CIL), followed by cyanide destruction and filtration of the tailings for dry stacking.

Global gold recovery at the Meliadine project is estimated to be 96% over the current 14-year life of mine. The mine plan envisions processing an average rate of 3,365 tonnes of ore per day for the first three full years of production, and 5,600 tonnes of ore per day for the remainder of the life of mine, with an estimated plant availability of 92%.

Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters

Land and environmental management in the region of the Meliadine project is governed by the provisions of the NLCA. The Meliadine project is located on Inuit-owned land, where Inuit own both the sub-surface mineral rights (managed by NTI) and the surface land rights (managed by the KIA on behalf of Inuit beneficiaries under the provisions of the NLCA). Consequently, to explore and develop the project, the Company must obtain land use leases from the KIA. The Company has been granted a commercial lease by the KIA for exploration and underground development activity, a prospecting and land use lease for exploration and development activities, an exploration land use lease for exploration and drilling on the Inuit-owned lands of Meliadine East and a parcel drilling permit for drilling activity on Inuit-owned lands. A number of right-of-way leases covering road access to the Meliadine project property and esker quarrying on the Inuit-owned lands were also granted by the KIA.

Pursuant to the NLCA and the Nunavut Waters and Nunavut Surface Rights Tribunal Act requirements, the Company obtained several water use licences from the NWB, covering ongoing water use for its Meliadine project exploration camp, the underground bulk sampling program and for ongoing exploration drilling activities.

In 2011, the Company initiated the environmental assessment process for the Meliadine project with the objective of obtaining a project certificate from the Government of Canada for the construction, operation and ultimate decommissioning of the full project. The project certificate is required before obtaining the permits required to construct, operate and decommission a gold mine at Meliadine. In May 2011, the KIA referred the Meliadine project to the NIRB for screening under the NLCA. On May 4, 2011, the NIRB received the Meliadine project proposal from the Company. On June 8, 2011, the NIRB received a positive conformity determination from the Nunavut Planning Commission for the Meliadine project in relation to the Keewatin Regional Land Use Plan.

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The Company received a project certificate, which sets out the terms and conditions for the construction of the Meliadine mine, from the NIRB on February 26, 2015. An application for a Type A water licence from the NWB was submitted in 2015 and the licence was received in April 2016. A commercial production land use lease from the KIA is expected in 2017.

An Inuit Impact and Benefit Agreement for the Meliadine project (the "Meliadine IIBA") was signed with the KIA in July 2015. The Meliadine IIBA addresses protection of Inuit values, culture and language, protection of the land, water and wildlife, provides financial compensation to Inuit over the mine life and contains provision for training, employment and contracting. In order for the Company to maintain a social license to develop and operate the Meliadine project, the commitments included in the Meliadine IIBA are implemented and closely monitored by the Company. Moreover, the implementation of the Meliadine IIBA is managed by working groups with representatives from the Company and the KIA, and reviewed by an Implementation Committee represented by each party's senior representatives. These groups meet regularly throughout the year to monitor implementation processes and issues.

Capital Expenditures

Total capital expenditures at the Meliadine project in 2016 were $130.9 million, including capitalized surface and underground drilling, ramp development, permitting, camp operation, technical studies and surface earth works.

Capital expenditures of $355.8 million have been budgeted for the Meliadine project in 2017, focused on detailed engineering and procurement, construction of surface infrastructure, ramp development, underground drilling and camp operations.

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In 2016, internal studies were carried out to optimize the previous Meliadine mine plan that had been outlined in a NI 43-101 technical report dated February 11, 2015. These internal studies assessed various opportunities to improve the project economics. The following table sets out a summary of the key estimates and parameters of the Meliadine project.

Proven and probable mineral reserves   14.5 million tonnes of ore grading 7.32 g/t gold (3.4 million oz)  

Measured and indicated mineral resources   20.8 million tonnes grading 4.95 g/t gold (3.3 million oz)  

Inferred mineral resource   14.7 million tonnes grading 7.51 g/t gold (3.6 million oz)  

       

Estimated production over life of mine   5,315,000 oz  

       

Estimated average metallurgical recovery   Approximately 96%  

Estimated average annual gold production   Approximately 125,000 ounces based on 4 months of production (year 1)*  

    Approximately 375,000 ounces (year 2)  

    Approximately 360,000 ounces (year 3)  

    Approximately 405,000 ounces (years 4 – 14)  

       

Estimated average annual mill throughput   Approximately 377,000 tonnes based on 4 months of production (year 1)  

    Approximately 1,182,000 tonnes (year 2)  

    Approximately 1,307,000 tonnes (year 3)  

    Approximately 2,049,000 tonnes (years 4 – 14)  

       

Estimated mine life   Approximately 14 years  

Estimated initial capital costs to the first ounce produced   Approximately $900 million  

Estimated sustaining capital costs   Approximately $48 million per year  

Estimated reclamation costs   Approximately $49 million  

       

    Economic Assumptions:  

    $1,200 per ounce gold  

    US$/C$ exchange rate of $1.25  

    Statutory income tax rate: Approximately 26%  

    The Meliadine project is subject to a net profits royalty payable in accordance with the Northwest Territories and Nunavut Mining Regulations. The royalties are calculated using a graduated rate to a maximum of 13%  

*
Includes approximately 60,000 pre-production ounces

Development

In 2016, 3,795 metres of horizontal development and 198 metres of vertical development were completed at the Meliadine project. For 2017, the Company expects approximately 5,590 metres of horizontal development (including

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approximately 1,060 metres of total ramp development) and approximately 760 metres of vertical development to be completed.

Geology, Mineralization, Exploration and Drilling

Geology and Mineralization

Archean volcanic and sedimentary rocks of the Meliadine greenstone belt underlie the property, which is mainly covered by glacial overburden with deep-seated permafrost and is part of the Western Churchill supergroup in northern Canada. The rock layers have been folded, sheared and metamorphosed, and have been truncated by the Pyke Fault, a regional structure that extends the entire 80-kilometre length of the property.

The Pyke Fault appears to control gold mineralization on the Meliadine property. At the southern edge of the fault is a series of oxide iron formations that host the seven Meliadine project deposits currently known. The deposits consist of multiple lodes of mesothermal quartz-vein stockworks, laminated veins and sulphidized iron formation mineralization with strike lengths of up to three kilometres. The Upper Oxide iron formation hosts the Tiriganiaq and Wolf North zones. The two Lower Lean iron formations contain the F Zone, Pump, Wolf Main and Wesmeg deposits. The Normeg zone was discovered in 2011 on the eastern end of the Wesmeg zone, near Tiriganiaq. The Wolf (North and Main), F Zone, Pump and Wesmeg/Normeg deposits are all within five kilometres of Tiriganiaq. The Discovery deposit is 17 kilometres east southeast of Tiriganiaq and is hosted by the Upper Oxide iron formation. Each of these deposits has mineralization within 120 metres of surface, making them potentially mineable by open pit methods. They also have deeper ore that could potentially be mined with underground methods, which are currently being considered in various studies.

Two bulk samples have been extracted from the exploration ramp. The results confirmed the resource estimation model that has been developed for the two principal zones (Zones 1000 and 1100) at Tiriganiaq, and indicated approximately 6% more gold than had been predicted by the block model for these areas. The 2011 bulk sample program also confirmed the previous assessment of the Company's block model in terms of grade continuity, consistency and distribution, and the evaluation of related mining properties through geological mapping, underground chip, channel and muck sampling, and geotechnical observations.

Exploration and Drilling

The first mineral resources estimate at Meliadine was made by Strathcona Mineral Services in 2005 for then-owner Comaplex, and comprised indicated mineral resources of 2.5 million tonnes grading 10.8 grams of gold per tonne (containing 853,000 ounces of gold) and inferred mineral resources of 1.1 million tonnes grading 13.2 grams per tonne of gold (containing 486,000 ounces of gold), with all resources in the Tiriganiaq deposit. Following this, there were annual estimates gradually including new deposits, such as Discovery, F Zone, Pump and Wolf. The final mineral resources estimate made before the Company acquired the property was made by Snowden Mining Industry Consultants for Comaplex in January 2010 and it comprised measured and indicated mineral resources of 12.9 million tonnes grading 7.9 grams of gold per tonne (containing 3.3 million ounces of gold) and inferred mineral resources of 8.4 million tonnes grading 6.4 grams of gold per tonne (containing 1.7 million ounces of gold).

Proven and probable gold reserves at Meliadine in 2016 remained 3.42 million ounces of gold (14.5 million tonnes of ore grading 7.32 grams per tonne). Indicated mineral resources at Meliadine in 2016 remained 20.8 million tonnes of ore grading 4.95 grams of gold per tonne. Inferred mineral resources in 2016 remained 14.7 million tonnes of ore grading 7.51 grams of gold per tonne.

In 2016, the Company spent $0.5 million on 1,200 metres of exploration drilling at Meliadine. The 2017 plan includes spending $3.9 million on conversion drilling (25,900 metres) and $0.8 million on exploration drilling (5,000 metres) at Meliadine.

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Southern Business

Pinos Altos Mine

The Pinos Altos mine achieved commercial production in November 2009. It is located in the Sierra Madre gold belt, 285 kilometres west of the City of Chihuahua in the State of Chihuahua in northern Mexico. At December 31, 2016, the Pinos Altos mine was estimated to contain proven and probable mineral reserves of 1.4 million ounces of gold and 38.1 million ounces of silver comprised of 17.4 million tonnes of ore grading 2.55 grams of gold per tonne and 68.2 grams of silver per tonne. The Creston Mascota deposit at Pinos Altos achieved commercial production in the first quarter of 2011. At December 31, 2016, the Creston Mascota deposit was estimated to contain additional proven and probable mineral reserves of 0.1 million ounces of gold and 0.9 million ounces of silver comprised of 2.5 million tonnes of ore grading 1.28 grams of gold per tonne and 11.4 grams of silver per tonne. The Pinos Altos property is made up of two blocks: the Agnico Eagle Mexico Concessions (25 concessions) and the Pinos Altos Concessions (19 concessions).

Location Map of the Pinos Altos Mine (as at December 31, 2016)

LOGO

Approximately 47% of the current Pinos Altos mineral reserves, including 3% for the Creston Mascota deposit, are subject to a net smelter return royalty of 3.5% payable to Pinos Altos Explotación y Exploración S.A. de C.V. ("PAEyE") and the remaining 53% of the current mineral reserves and mineral resources at Pinos Altos are subject to a 2.5% net smelter return royalty payable to the Servicio Geológico Mexicano, a Mexican Federal Government agency. After 2029, this portion of the property will also be subject to a 3.5% net smelter return royalty payable to PAEyE.

The assets acquired by the Company from PAEyE and the Asociación de Pequeños Propietarios Forestales de Pinos Altos S de R.L. in 2008 included the right to use up to 400 hectares of land for mining installations for a period of 20 years after formal mining operations have been initiated. The Company also obtained sole ownership of the Agnico Eagle Mexico Concessions previously owned by Compania Minera La Parreña S.A. de C.V. During 2008, the Company and PAEyE entered into an agreement under which the Company acquired further surface rights for open pit mining operations and additional facilities. Infrastructure payments, surface rights payments and advance royalty payments totaling $35.5 million were made to PAEyE and the Asociación de Pequeños Propietarios Forestales de Pinos Altos S de R.L. in 2008 as a result of this agreement.

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Beginning in 2006, the Company has negotiated with various land owners from the region for the acquisition of 7,670 hectares of land contained within the Agnico Eagle Mexico and Pinos Altos Concessions. The agreements, other than the agreement with respect to the Bravo Zone, expire in either 2028 or 2036. The agreement with respect to the Bravo Zone expires in 2017. The agreements, including the agreement with respect to the Bravo Zone, also provide for further renewal at the Company's option. The acquisition of these surface rights for the geologically prospective lands within the district surrounding the Pinos Altos property will facilitate future exploration and mining development in these areas. The Pinos Altos mine is directly accessible by a paved interstate highway that links the cities of Chihuahua and Hermosillo.

In August 2007, the Company approved construction of a mine at Pinos Altos. The mine achieved commercial production in November 2009. In 2009, the Company decided to build a stand-alone heap leach operation at the Creston Mascota deposit at Pinos Altos. The first gold pour from the Creston Mascota deposit occurred on December 28, 2010 and commercial production from the Creston Mascota deposit was achieved in the first quarter of 2011.

The Company continues to evaluate opportunities to develop other mineral resources that have been identified in the Pinos Altos area as satellite operations.

Mining and Milling Facilities

Surface Plan of the Pinos Altos Mine (as at December 31, 2016)

LOGO

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Surface Plan of the Creston Mascota Deposit at Pinos Altos (as at December 31, 2016)

LOGO

Milling operations during 2016 at Pinos Altos processed an average of 5,415 tonnes of ore per day as compared to the designed rate of 4,000 tonnes per day. The underground mine at Pinos Altos produced an average of 3,074 tonnes of ore per day as compared to its designed rate of 3,000 tonnes per day. The open pit mines at Pinos Altos and the Creston Mascota deposit produced 15.3 million tonnes of ore, overburden and waste in 2016.

Mining Methods

The surface operations at the Pinos Altos mine use traditional open pit mining techniques with bench heights of seven metres and double benches on the footwall and single benching on the hanging wall. Mining is accomplished with front end loaders, trucks, track drills and various support equipment. Based upon geotechnical evaluations, the final pit slopes vary between 45 degrees and 50 degrees. Performance at the open pit mining operation at Pinos Altos during 2016 continues to indicate that the equipment, mining methods and personnel selected for the project are satisfactory for future production phases. 5.2 million tonnes of ore, overburden and waste were mined during 2016.

The underground mine, which commenced operations in the second quarter of 2010, uses the long hole sublevel stoping method to extract ore. The stope height is 30 metres and the nominal stope width is 15 metres. Ore is transported to the surface by shaft hoisting as well as by trucks via a ramp system. The paste backfill system and ventilation system were commissioned in the fourth quarter of 2010. During 2016, approximately 1.2 million tonnes of ore were produced from the

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underground portion of the mine, averaging 3,164 tonnes per day. The planned capacity of the underground mine is increasing from the original planned capacity of 3,000 tonnes of ore per day towards 4,500 tonnes of ore per day with the commissioning of a shaft in 2016 and the development of additional underground mineral reserves. The shaft hoisting capacity is expected to reduce the need for additional underground trucks required as the mine depth increases and is expected to continue to maintain mill feed rates at 4,500 tonnes of ore per day in future years as the open pit mines at Pinos Altos become depleted. Approximately 57 kilometres of total lateral development have been completed as of December 31, 2016.

Surface Facilities

The principal mineral processing facilities at the Pinos Altos mine were designed to process 4,000 tonnes of ore per day in a conventional process plant circuit which includes single stage crushing, grinding in a SAG and ball mill in closed loop, gravity separation followed by agitated leaching, counter-current decantation and metals recovery in the Merrill-Crowe process. Tailings are detoxified and filtered and then used for paste backfill in the underground mine or deposited as dry tailings in an engineered tailings impoundment area. The Pinos Altos mill processed an average of 5,415 tonnes of ore per day during 2016. Low grade ore at Pinos Altos is processed in a heap leach system designed to accommodate approximately five million tonnes of mineralized material over the life of the mine. The production from heap leach operations is expected to be relatively minor, contributing approximately 1% of total metal production planned for the remaining life of the mine (not including production from the Creston Mascota heap leach operation). In addition, during 2016, the Company approved the construction of a silver flotation plant, which is expected to increase silver recovery.

Other surface facilities at the Pinos Altos mine include: a headframe and hoist room, a heap leach pad, pond, liner and pumping system; administrative support offices; camp facilities; a laboratory; a process plant shop; a maintenance shop; a power generating station; surface power transmission lines and substations; an engineered tailings management system; and a warehouse.

A separate heap leach operation and ancillary support facilities were built at the Creston Mascota deposit, which is designed to process approximately 4,000 tonnes of ore per day in a three stage crushing, agglomeration and heap leach circuit with carbon adsorption. This project was commissioned in the latter part of 2010, with commercial production achieved in the first quarter of 2011. During 2016, a total of 2.0 million tonnes of ore was mined from the Creston Mascota deposit, averaging 5,520 tonnes per day. In the fourth quarter of 2016, work on the Phase IV leach pad expansion was completed with stacking of material expected to begin in the first quarter of 2017. Based on performance of the mine and process facilities at the Creston Mascota deposit to date, the equipment, mining methods and personnel are satisfactory for completion of the planned production phases.

Over the remaining life of the mine, recoveries of gold and silver in the milling circuit at Pinos Altos (other than from the Creston Mascota deposit) are expected to average approximately 93% and 43%, respectively. The Company anticipates precious metals recovery from low grade ore processed in the Pinos Altos heap leach facility will average 68% for gold and 12% for silver. Heap leach recoveries for ore from the Creston Mascota deposit are expected to average 63% for gold and 8% for silver.

Production and Mineral Recoveries

During 2016, the Pinos Altos mine, including the Creston Mascota deposit, had total payable production of 240,068 ounces of gold and approximately 2.7 million ounces of silver from the Pinos Altos mill and the heap leach pads at the Pinos Altos mine and the Creston Mascota deposit.

Of the total in 2016, the Pinos Altos mill had payable production of 183,576 ounces of gold and 2.4 million ounces of silver from 2.0 million tonnes of ore grading 3.0 grams of gold per tonne and 80.0 grams of silver per tonne. The production costs per ounce of gold produced at Pinos Altos in 2016 were $594. The total cash costs per ounce of gold produced at Pinos Altos in 2016 were $356 on a by-product basis and were $585 on a co-product basis and the processing facility averaged 5,415 tonnes of ore per day and operated 92.6% of available time. In the mill, gold recovery averaged 94.9% and silver recovery averaged 50%. The production costs per tonne at Pinos Altos were $51 and the minesite costs per tonne were $49 in 2016.

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The following table sets out the metal recoveries at the Pinos Altos mill in 2016.

    Head
Grade
  Overall
Metal
Recovery
  Payable
Production
 
   
Gold   3.0 g/t   94.9%   183,576 oz  

Silver   80.0 g/t   50%   2.4 million oz  

Of the 2016 total, the Pinos Altos heap leach operations had payable production of 9,196 ounces of gold and 89,425 ounces of silver from 278,000 tonnes of ore grading 0.9 grams of gold per tonne and 28.0 grams of silver per tonne.

The cumulative recovery for gold and silver on the heap leach pad at Pinos Altos are approximately 75% and 16%, respectively. Heap leach recovery is following the expected cumulative recovery curve and it is anticipated that the ultimate recovery of 68% for gold and 12% for silver will be achieved when leaching is completed.

Of the 2016 total, the heap leach operations at the Creston Mascota deposit had payable production of 47,296 ounces of gold and 201,243 ounces of silver from 2.1 million tonnes of ore grading 1.10 grams of gold per tonne and 12.0 grams of silver per tonne. The production costs per ounce of gold produced at the Creston Mascota deposit in 2016 were $578. The total cash costs per ounce of gold produced at the Creston Mascota deposit in 2016 were $516 on a by-product basis and were $588 on a co-product basis. The production costs per tonne at the Creston Mascota deposit were $13 and the minesite costs per tonne were $13 in 2016.

The cumulative metals recovery for gold and silver on the heap leach pad at the Creston Mascota deposit are approximately 60% and 14%, respectively. Heap leach recovery is following the expected cumulative recovery curve and it is anticipated that the ultimate recovery of 62% for gold and 11% for silver will be achieved when leaching is completed.

Production during 2017 at the Pinos Altos mine (excluding Creston Mascota) is expected to be approximately 170,000 ounces of gold and 2.6 million ounces of silver from 2.2 million tonnes of ore grading 2.52 grams of gold per tonne and 71.0 grams of silver per tonne, at estimated total cash costs per ounce of gold of approximately $474 on a by-product basis, with estimated gold recovery of 95.0% and silver recovery of 52.9%. Minesite costs per tonne of approximately $55 for milled ore are expected in 2017. The heap leach at the Creston Mascota deposit is expected to produce approximately 40,000 ounces of gold and 0.1 million ounces of silver from 2.0 million tonnes of ore grading 1.01 grams of gold per tonne and 11.5 grams of silver per tonne, at estimated total cash costs per ounce of gold of approximately $812 on a by-product basis, with estimated gold recovery of 61.8% and silver recovery of 13.8%. Minesite costs per tonne of approximately $17 for Creston Mascota heap leach ore are expected in 2017.

Environmental, Permitting and Social Matters

The Pinos Altos mine has received the necessary permit authorizations for construction and operation of a mine, including a Change of Land Use permit and an Environmental Impact Study approval from the applicable Mexican environmental agency. Pinos Altos uses the dry stack tailings technology to minimize the geotechnical and environmental risk that can be associated with the rainfall intensities and topographic relief in the Sierra Madre region of Mexico. Since 2015, tailings have been deposited in a tailings facility that was constructed in the mined out Oberon du Weber pit.

Following an audit process by an independent third party, the operations at both the Pinos Altos mine and the Creston Mascota deposit received the "Industria Limpia" certification from the Mexican environmental authorities. This certification is based on compliance with environmental requirements. The Pinos Altos mine has also received certification under the International Cyanide Management Code (the "Cyanide Code").

The Company has engaged the local communities in the area with hiring, local contracts, education support, infrastructure projects and medical support programs to ensure that the mine provides long-term benefits to the residents living and working in the region. Approximately 70% of the operating workforce at Pinos Altos are locally hired and 100% of the permanent workforce at the Company operations in Mexico are Mexican nationals.

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Capital Expenditures

Combined capital expenditures at the Pinos Altos mine and Creston Mascota deposit during 2016 were approximately $68.9 million, excluding capitalized drilling. Combined capital expenditures included sustaining capital for shaft construction and commissioning, underground equipment major components, silver flotation plant, Creston Mascota phase 4 leach pad and pond and Oberon de Weber tailings dam.

In 2017, the Company expects capital expenditures at Pinos Altos, including the Creston Mascota deposit, to be approximately $59.7 million, excluding capitalized drilling. Capital expenditures in 2017 will primarily be used for underground mine development, equipment purchases, construction of the silver flotation plant, paste back fill plant expansion and general sustaining activities.

Development

As of December 31, 2016, for the mine life to date, more than 132 million tonnes of ore, overburden and waste had been removed from the open pit mine at Pinos Altos and approximately 57 kilometres of lateral development had been completed in the underground mine. At the Creston Mascota deposit, approximately 54 million tonnes of ore, overburden, and waste had been removed from the open pit mine as of December 31, 2016.

The shaft sinking project that was initiated in 2012, with an original budget of $106 million, was completed in mid-2016 with a final cost of $96 million. This new shaft will facilitate improved matching of mining and mill capacity for 4,500 tonnes of ore and 1,500 tonnes of waste per day as the open pit mining operation winds down.

Geology, Mineralization, Exploration and Drilling

Geology

The Pinos Altos mine is in the northern part of the Sierra Madre geologic province, on the northeast margin of the Ocampo Caldera, which hosts many epithermal gold and silver occurrences, including the nearby Ocampo and Moris mines.

The property is underlain by Tertiary-age (less than 45 million years old) volcanic and intrusive rocks that have been disturbed by faulting. The volcanic rocks belong to the lower volcanic complex and the discordant overlying upper volcanic supergroup. The lower volcanic complex is represented on the property by the Navosaigame conglomerates (including thinly-bedded sandstone and siltstone) and the El Madrono volcanics (felsic tuffs and lavas intercalated with rhyolitic tuffs, sandy volcanoclastics and sediments). The upper volcanic group is made up of the Victoria ignimbrites (explosive felsic volcanics), the Frijolar andesites (massive to flow-banded, porphyritic flows) and the Buenavista ignimbrites (dacitic to rhyolitic pyroclastics).

Intermediate and felsic dykes as well as rhyolitic domes intrude all of these units. The Santo Nino andesite is a dyke that intrudes along the Santo Nino fault zone.

Structure on the property is dominated by a ten-kilometre by three-kilometre horst, a fault-uplifted block structure oriented west-northwest, that is bounded on the south by the south-dipping Santo Nino fault and on the north by the north-dipping Reyna de Plata fault. Quartz-gold vein deposits are emplaced along these faults and along transfer faults that splay outwards from the Santo Nino fault.

Mineralization

Gold and silver mineralization at the Pinos Altos mine consists of low sulphidation type epithermal-type hydrothermal veins, breccias and bodies. The Santo Nino structure outcrops over a distance of roughly six kilometres. It strikes at 60 degrees azimuth on its eastern portion and turns to strike roughly 90 degrees azimuth on its western fringe. The structure dips at 70 degrees towards the south. The four mineralized sectors hosted by the Santo Nino structure consist of discontinuous quartz rich lenses named from east to west: El Apache, Oberon de Weber, Santo Nino and Cerro Colorado.

The El Apache lens is the most weakly mineralized. The area hosts a weakly developed white quartz dominated breccia. Gold values are low and erratic over its roughly 750 metre strike length. Past drilling suggests that this zone is of limited extent at depth.

The Oberon de Weber lens has been followed on surface and by diamond drilling over an extent of roughly 500 metres. Shallow holes drilled by the Company show good continuity both in terms of grade and thickness over roughly 550 metres. From the previous drilling done by Penoles, continuity at depth appears to be erratic with a weakly defined western rake.

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The Santo Nino lens is the most vertically extensive of these lenses. It has been traced to a depth of approximately 750 metres below the surface. The vein is followed continuously on surface over a distance of 550 metres and discontinuously up to 650 metres. Beyond its western and eastern extents, the Santo Nino andesite is massive and only weakly altered. Gold grades found are systematically associated with green quartz brecciated andesite.

The Cerro Colorado lens is structurally more complex than the three described above. Near the surface, it is marked by a complex superposition of brittle faults with mineralized zones which are difficult to correlate from hole to hole. Its relation to the Santo Nino fault zone is not clearly defined. Two deeper holes drilled by the Company suggest better grade continuity is possible at depth.

The San Eligio zone is located approximately 250 metres north of Santo Nino. The host rock is brecciated Victoria Ignimbrite, occasionally with a stockwork style of mineralization. There is no andesite in this sector. Unlike the other lenses, the San Eligio lens dips towards the north. The lateral extent of the zone seems to be continuous for 950 metres. Its average width is five metres and never exceeds 15 metres. Surface mapping and prospecting has suggested that there is good potential for additional mineralization on strike and at depths below 150 metres. Visible gold has been seen in the drill core.

The Creston Mascota deposit is seven kilometres northwest of the Santo Nino deposit, and is similar, but dips shallowly to the west. The Creston Mascota deposit is approximately 1,000 metres long and four to 40 metres wide, and extends from surface to more than 200 metres depth.

Several other promising zones are associated with the horst feature in the northwest part of the property. The Cubiro deposit is a near-surface deposit located two kilometres west of the Creston Mascota deposit. Cubiro strikes northwest, has a steep dip and has been followed along strike for approximately 850 metres. Drilling has intersected significant gold and silver mineralization up to 30 metres in width. The Cubiro deposit is split by a fault that resulted in 200 metres of displacement to the west, as defined by drilling to date. The zone is still open to the southeast and possibly at depth.

The Sinter zone is 1,500 metres north-northeast of the Santo Nino zone and is part of the Reyna de Plata gold structure. The steeply dipping mineralization ranges from four to 35 metres in width and almost 900 metres long, with over 350 metres of vertical depth. Sinter is being evaluated for its open pit and underground mining potential.

Other identified mineral resources in the Pinos Altos region include the Bravo and Carola zones adjacent to the Creston Mascota deposit and the Reyna de la Plata prospect further to the east. Exploration efforts will be allocated to these zones as development continues at Pinos Altos and the Creston Mascota deposit.

Exploration and Drilling

In 2016, proven and probable mineral reserves at Pinos Altos (excluding Creston Mascota) decreased by approximately 35,000 ounces of gold and increased by 600,000 ounces of silver to 1.4 million ounces of gold and 38.1 million ounces of silver (17.4 million tonnes of ore grading 2.55 grams of gold per tonne and 68.15 grams of silver per tonne) after producing 183,576 ounces of gold (187 thousand ounces of in situ gold mined) and 2.4 million ounces of silver. The net decrease was a result of mine depletion as well as a change to the Santo Niño pit design. Indicated mineral resources at Pinos Altos increased by 2.8 million tonnes in 2016 to 14 million tonnes grading 1.62 grams of gold per tonne and 40.22 grams of silver per tonne due to new interpretations at the Cerro Colorado and Santo Niño deposits. Inferred mineral resources decreased by 3.4 million tonnes in 2016 to 9.2 million tonnes grading 1.28 grams of gold per tonne and 28.30 grams of silver per tonne.

In 2016, proven and probable mineral reserves at the Creston Mascota and Bravo deposits decreased by approximately 74,000 ounces of gold and 719,000 ounces of silver to 102,000 ounces of gold and 909,000 ounces of silver (2.5 million tonnes of ore grading 1.28 grams of gold per tonne and 11.35 grams of silver per tonne) after producing 47,296 ounces of gold (76,000 ounces of in situ gold mined) and 201,243 ounces of silver. The net decrease was a result of mine depletion. Indicated mineral resources at the Creston Mascota deposit increased by 28,000 tonnes in 2016 to 4.3 million tonnes grading 1.01 grams of gold per tonne and 16.98 grams of silver per tonne due to conversion of inferred mineral resources to indicated mineral resources at the Bravo deposit. The inferred mineral resources at the Creston Mascota deposit decreased by 2.9 million tonnes in 2016 to 1.3 million tonnes grading 0.72 grams of gold per tonne and 11.54 grams of silver per tonne. Drilling and evaluation will continue in 2017.

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In 2016, minesite exploration activities were primarily focused on conversion, infill and exploration of the mineral resources at the Creston Mascota, Bravo and Madroño deposits. A total of 31,263 metres of minesite exploration drilling, including 8,690 metres of infill drilling at Creston Mascota, 22,573 of exploration and step out drilling at the Madroño and Bravo deposits and 4,960 metres of definition (conversion) drilling, were completed.

In 2017, the Company expects to spend approximately $6.6 million on exploration at the Pinos Altos mine and the Creston Mascota deposit, including $0.5 million on 2,000 metres of conversion drilling and $6.1 million on 34,000 metres of exploration drilling.

La India Mine

Construction began at La India in September 2012 and commercial production was achieved on February 1, 2014. At December 31, 2016, the La India mine was estimated to contain proven and probable mineral reserves of 1.0 million ounces of gold and 3.7 million ounces of silver comprised of 44.0 million tonnes of ore grading 0.72 grams of gold per tonne and 2.6 grams of silver per tonne.

The La India property consists of 52 wholly-owned and 13 optioned mining concessions in the Mulatos Gold Belt in Sonora, Mexico. The La India property includes the Tarachi deposit and several other prospective targets in the Mulatos Gold Belt. At the Tarachi deposit, indicated mineral resources are 47.2 million tonnes grading 0.39 grams of gold per tonne and inferred mineral resources are 81.7 million tonnes grading 0.36 grams of gold per tonne. A preliminary metallurgical testing program on Tarachi composite samples has been completed and negotiations for land access are ongoing.

Location Map of the La India Mine (as at December 31, 2016)

GRAPHIC

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The Mulatos Gold Belt is part of the Sierra Madre gold and silver belt that also hosts the operating Mulatos gold mine immediately southeast of the La India property and the Pinos Altos mine and the Creston Mascota deposit 70 kilometres to the southeast.

The La India mine is located in the municipality of Sahuaripa, southeastern Sonora State, between the small rural towns of Tarachi and Matarachi. The closest major city with an international airport is Hermosillo, the capital of Sonora, located 210 kilometres west-northwest of the La India mine. Road travel from Hermosillo to the site takes approximately seven hours. Alternatively, the mine can be accessed by small aircraft. The power supply at the La India mine is provided by diesel generators.

The Company acquired the La India property in November 2011 as part of its acquisition of Grayd, which had explored the property since 2004 and had prepared a preliminary economic assessment of the project in December 2010 based on a June 2010 NI 43-101-compliant mineral resource estimate.

Infill drilling at La India from November 2011 to May 2012 allowed the Company to confirm and expand the mineral resources reported in the December 2010 preliminary economic assessment. In September 2012, following the completion of a feasibility study, the Company approved the construction of a mine at La India. The mine achieved commercial production in February 2014. The Company continues to evaluate opportunities to develop other mineral resources that have been identified in the La India area.

At the Tarachi deposit, the surface rights in the project area are owned by the Tarachi Ejido (agrarian community) and private parties. All measured, indicated and inferred mineral resources lie within privately owned or ejido possessed land. Surface access lease agreements have been executed with the property owners or possessors for approximately 50% of the identified target areas. The existing agreements permit exploration and drilling activities; if mining activity is contemplated following exploration in the area, then the Company will be required to negotiate further to acquire the surface rights necessary for project development.

Mining and Milling Facilities

Mining Methods

Operations at the La India mine use traditional open pit mining techniques with bench heights of six metres and utilize front end loaders, trucks, track drills and various support equipment. Based upon geotechnical evaluations, the final pit slopes vary between 46 degrees and 50 degrees.

Surface Facilities

The following surface plan details the mine layout showing pits and waste rock dump locations, roads, the leach pad and other infrastructure.

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Surface Plan of the La India Mine (as at December 31, 2016)

GRAPHIC

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Surface facilities at the La India mine include a three-stage ore crushing facility, a 35 million tonne capacity lined heap leach pad with process ponds and pumping system, a carbon adsorption plant, a laboratory, a process plant shop, a mining equipment maintenance shop, a generated power station, surface power transmission lines and substations, a warehouse, administrative support offices and camp facilities. The power for the facilities is supplied by diesel generators and water is supplied by a system of wells and catchment facilities. Septic discharges are managed in their respective leach fields.

Production and Mineral Recoveries

During 2016, the La India mine had payable production of 115,162 ounces of gold from approximately 5.8 million tonnes of ore stacked on the heap leach pad grading 0.81 grams of gold per tonne. The production costs per ounce of gold produced at La India in 2016 were $432. The total cash costs per ounce of gold produced at La India in 2016 were $395 on a by-product basis and were $468 on a co-product basis. The production costs per tonne at La India were $9 and the minesite costs per tonne were $9 in 2016. Stacking rates averaged 15,949 tonnes of ore per day.

The cumulative recovery for gold on the heap leach pad at La India is approximately 61%. Heap leach recovery is following the expected cumulative recovery curve and it is anticipated that the ultimate gold recovery of 68% will be achieved when leaching is completed. This projected ultimate recovery is lower than the recovery originally estimated in the feasibility report because of the addition of significant volumes of transitional material. This ore grade material was not included in the study but, following the completion of metallurgical test work which proved its economic benefit despite a lower recovery rate, has since been added to the mineral reserves.

The following table sets out the metal recoveries at La India in 2016.

    Head
Grade
  Cumulative
Metal
Recovery
  Payable
Production
 
   
Gold (including prior to commercial production)   0.81 g/t   61%   115,162 oz  

Gold production during 2017 at the La India mine is expected to be approximately 100,000 ounces from 5.3 million tonnes of ore grading 0.89 grams of gold per tonne, at estimated total cash costs per ounce of approximately $583 on a by-product basis, with estimated cumulative gold recovery of 66%. Minesite costs per tonne of approximately $11 are expected in 2017.

Environmental, Permitting and Social Matters

The La India mine is not located in an area with a special federal environmental protection designation. As of December 31, 2016, all permits necessary for the operation of the La India mine had been received.

The Company has engaged the local communities in the area with local hiring, contracts with local businesses, education support and medical support programs to ensure that the La India mine provides long term benefits to the residents living and working in the region. Approximately 50% of the operating workforce at La India is locally hired and 100% of the permanent workforce are Mexican nationals.

Capital Expenditures

Capital expenditures at the La India mine during 2016 were approximately $10.5 million, excluding capitalized drilling, which was spent on heap leach expansion and general sustaining activities. The Company expects capital expenditures to be approximately $7 million in 2017, excluding capitalized drilling. The capital expenditures in 2017 are to be used for heap leach expansion and general sustaining activities.

Development

As of December 31, 2016, for the mine life to date, more than 33 million tonnes of ore, overburden and waste had been removed from the open pit mine at La India.

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Agreements & Licences

The mining concessions for the La India mine and Tarachi deposit are controlled by an indirect, wholly-owned subsidiary of the Company by means of direct ownership and by five separate agreements whereby the Company can earn a 100% interest in certain concessions by making cash and share payments. Payment has been made in full for the claims that host all of the measured, indicated and inferred mineral resources. Certain concessions are subject to underlying net smelter return royalties of between 1% and 3%, certain of which may be purchased by the Company and could result in net smelter return royalties remaining of up to 2%.

For the Tarachi deposit, payments totaling $0.75 million have been made by the Company to earn a 100% interest in the relevant concessions. Certain concessions are subject to an underlying net smelter return royalty of between 1% and 3%, which may be partially purchased by the Company, and could result in net smelter return royalties remaining of up to 2%. In addition, in 2016 the Company acquired the La Chipriona, Los Pinos and Santa Clara claims.

The defined mineral reserve and mineral resource and all lands required for infrastructure for the La India mine are wholly-contained within three privately-held properties which the Company has acquired in order to permit exploration, construction and mine development activities.

Geology, Mineralization, Exploration and Drilling

Geology and Mineralization

The La India mine lies within the Sierra Madre Occidental ("SMO") province, an extensive Eocene to Miocene volcanic field extending from the United States-Mexico border to central Mexico. The La India mine lies within the western limits of the SMO in an area dominated by outcrops of andesite and dacitic tuffs, overlain by rhyolites and rhyolitic tuffs that were affected by large-scale north-northwest-striking normal faults and intruded by granodiorite and diorite stocks. Incised fluvial canyons cut the uppermost strata and expose the Lower Series volcanic strata.

The mine area is predominantly underlain by a volcanic sequence comprised of andesitic and felsic extrusive volcanic strata with interbedded epiclastic strata of similar composition. The mineral occurrences present in the mine area, and the deposit type being sought, are volcanic-hosted high-sulphidation epithermalhydrothermal gold, silver and porphyry-related gold deposits. Such deposits may be present as veins and/or disseminated deposits and/or breccias. The La India mine deposit area is one of several high-sulphidation epithermal mineralization centres recognized in the region.

Epithermal high-sulphidation mineralization at the La India mine developed as a cluster of gold zones (Main and North) aligned north-south within a spatially related zone of hydrothermal alteration in excess of 20 square kilometres in area. Gold mineralization is confined to the Late Eocene rocks within zones of intermediate and advanced argillitic alteration originally containing sulphides, and subsequently oxidized by supergene processes. The North and Main zones are within two kilometres of each other.

Surface outcrop mapping and drill-hole data so far indicate that the gold system at the Tarachi deposit is likely best classified as a gold porphyry deposit.

Exploration and Drilling

In 2016, proven and probable mineral reserves at La India increased by approximately 153,000 ounces of gold to 1.02 million ounces of gold (44 million tonnes of ore grading 0.72 grams of gold per tonne) after producing 115,162 ounces of gold (153,000 ounces of in situ gold mined). The net increase was a result of the addition of new oxide reserves and the recognition of a new style of low grade mineralization in the Main pit that is amenable to heap leaching, which more than offset the mine depletion. Measured and indicated mineral resources at the La India mine increased by 3.9 million tonnes in 2016 to 74.2 million tonnes grading 0.36 grams of gold per tonne, largely due to relogging, reinterpretation and new estimation domains. Inferred mineral resources increased by 1.8 million tonnes in 2016 to 92.6 million tonnes grading 0.38 grams of gold per tonne due to new estimation domains.

In 2016, the Company completed 35,760 metres of drilling through 326 diamond drill holes at the La India mine. This included 12,025 metres of minesite exploration drilling at a cost of $2.3 million at the El Realito, El Cochi and India Este zones and 23,735 metres of infill drilling at the Main and North zones at a cost of $3.7 million. In addition, 5,710 metres of definition (conversion) drilling was completed at the North and Main zones.

The Company expects to spend approximately $0.8 million on 5,000 metres of conversion drilling and $6.9 million on 31,000 metres of exploration drilling at the La India mine in 2017.

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Regional Exploration Activities

During 2016, the Company continued to actively explore in Quebec, Nunavut, Nevada, Finland, Sweden and Mexico. The Canadian regional exploration activities were focused on the Amaruq and Meliadine properties in Nunavut. In the United States, exploration activities during 2016 were concentrated on the West Pequop and Summit projects located in northeast Nevada. In Mexico, regional exploration was focused on the El Barqueno, La India and Pinos Altos properties. In Finland, regional exploration was focused to the north of the Kittila mine along the Kiistala fault, including the Kuotko deposit. In Sweden, the Company explored the Barsele and Solvik projects. Canadian Malartic Corporation focused exploration on the Amalgamated Kirkland and Upper Beaver projects near Kirkland Lake, Ontario and the Pandora property adjacent to the Lapa mine in Quebec, and the Partnership focused exploration on the Odyssey project next to the Canadian Malartic mine. At the LaRonde, Goldex, Lapa, Canadian Malartic, Meadowbank, Kittila, Pinos Altos (including the Creston Mascota deposit) and La India mines, the Company (or the Partnership, in the case of the Canadian Malartic mine) continued exploration programs around the mines. Most of the exploration budget was spent on drilling programs near mine infrastructure along previously recognized gold trends.

At the end of 2016, the Company's land holdings in Canada consisted of 79 projects comprised of 4,057 mineral titles covering an aggregate of 574,079 hectares (of this total in Canada, 11 projects comprised of 1,867 mineral titles covering an aggregate of 72,497 hectares are held as a 50% interest with Yamana, including the Canadian Malartic mine). Land holdings in the United States consisted of four properties comprised of 2,695 mineral titles covering an aggregate of 37,723 hectares. Land holdings in Finland consisted of four groups of properties comprised of 218 mineral titles covering an aggregate of 31,889 hectares. Land holdings in Sweden consisted of two projects comprised of 32 mineral titles covering an aggregate of 37,921 hectares. Land holdings in Mexico consisted of 18 projects comprised of 163 mining concession titles covering an aggregate of 210,865 hectares.

The total amount of expenditures incurred on regional exploration activities at the Company's exploration properties plus head office overhead and corporate development activities in 2016 was $147.0 million. This included drilling 1,022 holes for an aggregate of approximately 335 kilometres on 100%-owned properties. It also included the Company's 50% portion of the cost of drilling 192 holes for an aggregate of approximately 144 kilometres on Canadian Malartic Corporation exploration properties.

The budget for expenditures on regional exploration activities at the Company's exploration properties plus head office overhead, project evaluation and corporate development activities in 2017 is approximately $143.4 million, including approximately 437 kilometres of drilling on 100%-owned properties, and 50% of the cost of drilling 137 kilometres on Canadian Malartic Corporation exploration properties and at the Canadian Malartic mine. For further details of the components of the 2017 exploration budget, see the Company's news release dated February 15, 2017.

Mineral Reserves and Mineral Resources

Information on Mineral Reserves and Mineral Resources of the Company

The scientific and technical information set out in this AIF has been approved by the following "qualified persons" as defined by NI 43-101: mineral reserves and mineral resources (other than for the Canadian Malartic mine) – Daniel Doucet, Eng., Senior Corporate Director, Reserve Development; mineral reserves and mineral resources (for the Canadian Malartic mine) – Donald Gervais, P.Geo., Director of Technical Services at Canadian Malartic Corporation and Sylvie Lampron, P.Eng., Principal Engineer at Canadian Malartic Corporation; exploration – Guy Gosselin Eng., Vice-President, Exploration; environmental – Louise Grondin P.Eng., Senior Vice-President, Environment, Sustainable Development and People; mining operations, Southern Business – Carol Plummer, Eng., Vice President, Project Development, Southern Business; metallurgy – Paul Cousin, P.Eng., Vice-President, Metallurgy; mining operations, Kittila mine – Francis Brunet, P.Eng., Corporate Director Mining; mining operations, Nunavut – Dominique Girard, Eng., Vice-President, Nunavut Operations; and mining operations, Quebec mines – Christian Provencher, P.Eng., Vice-President, Canada. The Company's mineral reserves estimate was derived from internally generated data or geology reports.

Historically, mineral reserves and mineral resources for all properties were typically estimated using historic three-year average metals prices and foreign exchange rates in accordance with SEC guidelines. These guidelines require the use of prices that reflect current economic conditions at the time of mineral reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices. Given the current commodity price environment, the Company decided to use price assumptions that are below the three-year averages for its 2014, 2015 and 2016 mineral reserve and mineral resource estimates.

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The assumptions used for the 2016 mineral reserves and mineral resources estimate at all mines and advanced projects reported by the Company (other than the Meliadine project, the Canadian Malartic mine and the Upper Beaver project) were $1,150 per ounce gold, $16.50 per ounce silver, $0.95 per pound zinc, $2.15 per pound copper and exchange rates of C$1.20 per $1.00, 16.00 Mexican pesos per $1.00 and $1.15 per €1.00; provided, however, that due to the shorter remaining mine life for the Lapa and Meadowbank mines in Canada, and the Creston Mascota deposit and Santo Nino pit at the Pinos Altos mine in Mexico, the exchange rates used for the mineral reserve and mineral resource estimates at these properties were C$1.30 per $1.00 and 16.00 Mexican pesos per $1.00 (other assumptions unchanged). At the Meliadine project, the assumptions remained the same as at December 2015, which were $1,100 per ounce gold and an exchange rate of C$1.16 per $1.00. The assumptions used for the 2016 mineral reserves and mineral resources estimate at the Canadian Malartic mine and the Upper Beaver project were $1,200 per ounce gold and $2.75 per pound copper; a cut-off grade at the Canadian Malartic mine between 0.33 g/t and 0.37 g/t gold (depending on the deposit); a C$125/tonne net smelter return for the Upper Beaver project; and an exchange rate of C$1.25 per $1.00.

The assumptions used for the 2015 mineral reserves and mineral resources estimate at all mines and advanced projects reported by the Company (other than the Canadian Malartic mine) were $1,100 per ounce gold, $16.00 per ounce silver, $0.90 per pound zinc, $2.50 per pound copper, and exchange rates of C$1.16 per $1.00, $1.20 per €1.00 and 14.00 Mexican pesos per $1.00 for all mines and projects (other than the Lapa and Meadowbank mines and the Creston Mascota deposit and Santo Niño open pit at Pinos Altos). Due to shorter mine life, the assumptions used for the mineral reserve estimates at the short-life mines (the Lapa and Meadowbank mines and the Creston Mascota deposit and Santo Niño open pit) as of December 31, 2015, include the same metal price assumptions, and exchange rates of C$1.30 per $1.00 and 16.00 Mexican pesos per $1.00, respectively. The assumptions used for the 2015 mineral reserves and mineral resources estimate at the Canadian Malartic mine were $1,150 per ounce gold, a cut-off grade between 0.34 grams per tonne and 0.40 grams per tonne of gold (depending on the deposit) and an exchange rate of C$1.24 per $1.00.

The assumptions used for the 2014 mineral reserves and mineral resources estimate at all mines and advanced projects reported by the Company (other than the Canadian Malartic mine) were $1,150 per ounce gold, $18 per ounce silver, $1.00 per pound zinc, $3.00 per pound copper and exchange rates of C$1.08 per $1.00, 13.00 Mexican pesos per $1.00 and $1.30 per €1.00. The assumptions used for the 2014 mineral reserves and mineral resources estimate at the Canadian Malartic mine were $1,300 per ounce gold, a cut-off grade between 0.28 grams per tonne and 0.35 grams per tonne of gold (depending on the deposit) and an exchange rate of C$1.10 per $1.00. Other assumptions used for estimating 2015 and 2014 mineral reserve and mineral resource information may be found in the Company's annual filings in respect of the years ended December 31, 2015 and December 31, 2014, respectively.

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Set out below are the mineral reserve estimates as of December 31, 2016, as estimated in accordance with NI 43-101 (tonnages and contained gold quantities are rounded to the nearest thousand):


MINERAL RESERVES

OPERATIONS

   
   
   
   
   
   
   
   
   
   
   
   
   
        PROVEN   PROBABLE   PROVEN & PROBABLE            
       
           
GOLD   OWNERSHIP   000 tonnes   g/t   000 oz Au   000 tonnes   g/t   000 oz Au   000 tonnes   g/t   000 oz Au            

 
           
LaRonde (underground)   100%   5,833   4.91   921   11,758   5.64   2,132   17,591   5.40   3,053            
LaRonde Zone 5 (underground)   100%   2,836   2.12   194   3,429   2.08   230   6,265   2.10   423            
Canadian Malartic (open pit)   50%   25,560   0.95   785   76,274   1.13   2,764   101,834   1.08   3,548            
Goldex (underground)   100%   294   1.47   14   16,507   1.64   872   16,801   1.64   886            
Akasaba West (open pit)   100%         4,942   0.89   142   4,942   0.89   142            
Lapa (underground)   100%   259   4.58   38         259   4.58   38            
Meadowbank (open pit)   100%   1,704   1.75   96   6,515   2.94   615   8,219   2.69   711            
  Meliadine (open pit)       34   7.31   8   4,001   5.00   644   4,035   5.02   652            
  Meliadine (underground)             10,494   8.20   2,766   10,494   8.20   2,766            
Meliadine Total   100%   34   7.31   8   14,495   7.32   3,410   14,529   7.32   3,417            
Upper Beaver (underground)   50%         3,996   5.43   698   3,996   5.43   698            
Kittila (underground)   100%   1,148   4.19   155   28,907   4.65   4,325   30,055   4.64   4,479            
  Pinos Altos (open pit)       180   0.85   5   2,525   2.07   168   2,705   1.99   173            
  Pinos Altos (underground)       3,331   2.79   299   11,364   2.61   953   14,696   2.65   1,251            
Pinos Altos Total   100%   3,512   2.69   304   13,889   2.51   1,120   17,401   2.55   1,424            
Creston Mascota (open pit)   100%   65   0.94   2   2,426   1.29   100   2,491   1.28   102            
La India (open pit)   100%   213   0.61   4   43,756   0.72   1,016   43,969   0.72   1,020            
Total       41,458   1.89   2,520   226,895   2.39   17,423   268,353   2.31   19,943            
                                                     
SILVER   OWNERSHIP   000 tonnes   g/t   000 oz Ag   000 tonnes   g/t   000 oz Ag   000 tonnes   g/t   000 oz Ag            

 
           
LaRonde (underground)   100%   5,833   18.31   3,434   11,758   19.56   7,393   17,591   19.14   10,827            
  Pinos Altos (open pit)       180   67.77   393   2,525   59.81   4,856   2,705   60.34   5,249            
  Pinos Altos (underground)       3,331   75.26   8,061   11,364   67.92   24,817   14,696   69.59   32,878            
Pinos Altos Total   100%   3,512   74.88   8,454   13,889   66.45   29,673   17,401   68.15   38,127            
Creston Mascota (open pit)   100%   65   8.07   17   2,426   11.44   892   2,491   11.35   909            
La India (open pit)   100%   213   14.67   100   43,756   2.57   3,615   43,969   2.63   3,716            
Total           12,006       41,573       53,579            
                                                     
COPPER   OWNERSHIP   000 tonnes   %   tonnes Cu   000 tonnes   %   tonnes Cu   000 tonnes   %   tonnes Cu            

 
           
LaRonde (underground)   100%   5,833   0.24   13,736   11,758   0.24   28,589   17,591   0.24   42,325            
Akasaba West (open pit)   100%         4,942   0.50   24,851   4,942   0.50   24,851            
Upper Beaver (underground)   50%         3,996   0.25   9,990                        
Total           13,736       63,430       77,166            
                                                     
ZINC   OWNERSHIP   000 tonnes   %   tonnes Zn   000 tonnes   %   tonnes Zn   000 tonnes   %   tonnes Zn            

 
           
LaRonde (underground)   100%   5,833   0.41   23,706   11,758   1.10   128,864   17,591   0.87   152,569            
Total           23,706       128,864       152,569            
 

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MINERAL RESOURCES

OPERATIONS

   
   
   
   
   
   
   
   
   
   
   
   
   
        MEASURED   INDICATED   MEASURED AND INDICATED   INFERRED
       
GOLD   OWNERSHIP   000 tonnes   g/t   000 oz Au   000 tonnes   g/t   000 oz Au   000 tonnes   g/t   000 oz Au   000 tonnes   g/t   000 oz Au

 
LaRonde (underground)   100%         5,688   3.27   598   5,688   3.27   598   7,701   6.68   1,655
LaRonde Zone 5 (underground)   100%         8,897   2.49   712   8,897   2.49   712   2,873   5.28   488
Ellison (underground)   100%         653   3.25   68   653   3.25   68   2,346   3.41   257
Canadian Malartic (open pit)   50%   2,001   1.34   86   11,121   1.56   559   13,122   1.53   644   4,599   1.46   216
Odyssey (underground)   50%                     10,343   2.15   714
Goldex (underground)   100%   12,360   1.86   739   17,949   1.80   1,038   30,309   1.82   1,777   21,882   1.60   1,129
Akasaba West (open pit)   100%         2,484   0.66   53   2,484   0.66   53      
Lapa (underground)   100%   85   5.29   14   693   4.09   91   778   4.22   105   652   7.55   158
Zulapa (open pit)   100%                     391   3.14   39
Swanson (open pit)   100%         504   1.93   31   504   1.93   31      
Meadowbank (open pit)   100%   587   1.00   19   3,099   2.28   227   3,686   2.07   246   1,142   3.13   115
  Amaruq (open pit)             16,925   3.88   2,109   16,925   3.88   2,109   4,931   4.81   763
  Amaruq (underground)                         6,814   6.22   1,362
Amaruq Total   100%         16,925   3.88   2,109   16,925   3.88   2,109   11,745   5.63   2,125
  Meliadine (open pit)             7,867   4.24   1,072   7,867   4.24   1,072   1,054   5.35   181
  Meliadine (underground)             12,911   5.38   2,234   12,911   5.38   2,234   13,656   7.68   3,371
Meliadine Total   100%         20,778   4.95   3,306   20,778   4.95   3,306   14,710   7.51   3,552
Hammond Reef (open pit)   50%   82,831   0.70   1,862   21,377   0.57   389   104,208   0.67   2,251   251   0.74   6
Upper Beaver (underground)   50%         1,818   3.45   202   1,818   3.45   202   4,344   5.07   708
AK (underground)   50%         634   6.51   133   634   6.51   133   1,187   5.32   203
Anoki/McBean (underground)   50%         934   5.33   160   934   5.33   160   1,263   4.70   191
  Kittila (open pit)             229   3.41   25   229   3.41   25   373   3.89   47
  Kittila (underground)       1,607   2.45   127   18,885   2.95   1,794   20,492   2.91   1,920   10,686   4.06   1,395
Kittila Total   100%   1,607   2.45   127   19,114   2.96   1,819   20,721   2.92   1,946   11,059   4.05   1,442
Kuotko, Finland (open pit)   100%                     396   2.88   37
Kylmäkangas, Finland (underground)   100%                     1,896   4.11   250
  Barsele, Sweden (open pit)                                           4,057   1.02   133
  Barsele, Sweden (underground)                                           7,887   2.08   528
Barsele Total   55%                                       11,944   1.72   661
  Pinos Altos (open pit)             236   1.07   8   236   1.07   8   5,984   0.61   117
  Pinos Altos (underground)             13,751   1.63   721   13,751   1.63   721   3,241   2.52   262
Pinos Altos Total   100%         13,988   1.62   730   13,988   1.62   730   9,225   1.28   380
Creston Mascota (open pit)   100%         4,292   1.01   139   4,292   1.01   139   1,332   0.72   31
La India (open pit)   100%   11,127   0.24   85   63,081   0.39   783   74,208   0.36   869   92,631   0.38   1,132
El Barqueno (open pit)   100%         8,469   1.11   301   8,469   1.11   301   7,210   1.56   362
Total       110,598   0.82   2,933   222,497   1.88   13,446   333,095   1.53   16,378   221,119   2.23   15,850
                                                     
SILVER   OWNERSHIP   000 tonnes   g/t   000 oz Ag   000 tonnes   g/t   000 oz Ag   000 tonnes   g/t   000 oz Ag   000 tonnes   g/t   000 oz Ag

 
LaRonde (underground)   100%         5,688   20.51   3,751   5,688   20.51   3,751   7,701   14.48   3,584
Kylmäkangas, Finland (underground)   100%                     1,896   31.11   1,896
  Pinos Altos (open pit)             236   20.40   155   236   20.40   155   5,984   20.94   4,029
  Pinos Altos (underground)             13,751   40.57   17,935   13,751   40.57   17,935   3,241   41.87   4,363
Pinos Altos Total   100%         13,988   40.22   18,090   13,988   40.22   18,090   9,225   28.30   8,392
Creston Mascota (open pit)   100%         4,292   16.98   2,343   4,292   16.98   2,343   1,332   11.54   494
La India (open pit)   100%   11,127   2.37   847   63,081   0.70   1,421   74,208   0.95   2,267   92,631   0.39   1,153
El Barqueno (open pit)   100%         8,469   4.35   1,183   8,469   4.35   1,183   7,210   4.50   1,043
Total           847       26,787       27,634       16,561
                                                     
COPPER   OWNERSHIP   000 tonnes   %   tonnes Cu   000 tonnes   %   tonnes Cu   000 tonnes   %   tonnes Cu   000 tonnes   %   tonnes Cu

 
LaRonde (underground)   100%         5,688   0.21   11,676   5,688   0.21   11,676   7,701   0.25   19,589
Akasaba West (open pit)   100%         2,484   0.40   9,941   2,484   0.40   9,941      
Upper Beaver (underground)   50%         1,818   0.14   2,567   1,818   0.14   2,567   4,344   0.20   8,642
Total                 24,184       24,184       28,231
                                                     
ZINC   OWNERSHIP   000 tonnes   %   tonnes Zn   000 tonnes   %   tonnes Zn   000 tonnes   %   tonnes Zn   000 tonnes   %   tonnes Zn

 
LaRonde (underground)   100%         5,688   0.93   52,850   5,688   0.93   52,850   7,701   0.60   46,358
Total                 52,850       52,850       46,358

In the tables above and below setting out mineral reserve information about the Company's mineral projects, and elsewhere in this AIF, the total contained gold ounces stated do not include equivalent gold ounces for by-product metals contained in the mineral reserve. Mineral reserves are not a subset of mineral resources. Tonnage amounts and contained metal amounts presented in these tables have been rounded to the nearest thousand, so aggregate amounts may differ from column totals. The Canadian Malartic mine and Upper Beaver project mineral reserve and mineral resource estimates represent Agnico Eagle's 50% interest in the properties. For all mineral reserves and mineral resources other than inferred mineral resources and mineral reserves and mineral resources held by Canadian Malartic Corporation and the Partnership, the reported metal grades in the estimates reflect dilution after mining recovery. For the mineral reserves and mineral resources at the Canadian Malartic mine and the Upper Beaver project, the reported metal grades in the

74     AGNICO EAGLE
           ANNUAL INFORMATION FORM



estimates of the measured and indicated mineral resources do not reflect dilution after mining recovery. The mineral reserve and mineral resource figures presented in this AIF are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized.

The integrity and validity of the scientific and technical information in this AIF has been verified by Qualified Persons as defined by NI 43-101. This includes the sampling methods, quality control measures, security measures taken to ensure the validity and integrity of samples taken, assaying and analytical procedures and quality control measures and data verification procedures. The methods used by the Company follow the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Best Practice Guidelines for Exploration and for Estimation of Mineral Resources and Mineral Reserves and industry practices. Sample preparation and analyses are conducted by external laboratories that are independent of the Company.

The Company carries out mineral processing and metallurgical testing at each of its mines and exploration projects with mineral reserves and indicated mineral resources. The testing is done in accordance with internal Company protocols and good mineral processing practices. There are no known processing factors or deleterious elements that are expected to have a significant effect on the economic extraction, or potential economic extraction, of gold at the Company's mines or advanced exploration projects.

AGNICO EAGLE     75
ANNUAL INFORMATION FORM            


Mineral Reserves and Mineral Resources

Northern Business

LaRonde Mine Mineral Reserves and Mineral Resources

    As at December 31,
   
 
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
LaRonde Extension Orebody (below Level 245)              

  Proven mineral reserves – tonnes   5,354,000   2,845,000   3,600,000  

  Average grade – gold grams per tonne   5.16   4.43   4.03  

  Probable mineral reserves – tonnes   11,686,000   14,706,000   16,000,000  

  Average grade – gold grams per tonne   5.66   5.61   5.61  


LaRonde Orebody (above Level 245)

 

 

 

 

 

 

 

  Proven mineral reserves – tonnes   479,000   610,000   900,000  

  Average grade – gold grams per tonne   2.14   2.50   2.65  

  Probable mineral reserves – tonnes   71,000   59,000   100,000  

  Average grade – gold grams per tonne   1.97   1.77   1.84  

Total proven and probable mineral reserves – tonnes   17,591,000   18,220,000   20,532,000  

Average grade – gold grams per tonne   5.40   5.31   5.20  

Total contained gold ounces   3,053,000   3,109,000   3,432,000  

Notes:

(1)
The 2016 proven and probable mineral reserve estimates set out in the table above are based on a net smelter return cut-off value of the ore that varies between C$106 per tonne and C$118 per tonne depending on the deposit. The Company's historical metallurgical recovery rates at the LaRonde mine from January 1, 2011 to December 31, 2016 averaged 92.7% for gold, 86.2% for silver, 77.8% for zinc and 81.7% for copper. Since May 2013, when the precious metals circuit was upgraded to carbon-in-pulp technology, the metallurgical recovery rates to December 31, 2016 have averaged 94.8% for gold, 85.8% for silver, 71.5% for zinc, 84.7% for copper and 0% for lead (lead has not been recovered since May 2013). The historical metallurgical recovery rate for lead from January 1, 2011 to May 31, 2013 was 18.7%. The Company estimates that a $100 (9%) change in the gold price would result in an approximate 1% change in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the LaRonde mine contained indicated mineral resources of 5,688,000 tonnes grading 3.27 grams of gold per tonne and inferred mineral resources of 7,701,000 tonnes grading 6.68 grams of gold per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The following table sets out the reconciliation of mineral reserves (rounded to the nearest thousand tonnes) at the LaRonde mine by category at December 31, 2016 with those at December 31, 2015. Revision indicates additional mineral reserves converted from mineral resources or other categories of mineral reserves and mineral reserves added from exploration activities during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   3,455   14,765   18,220  

Processed in 2016   2,240     2,240  

Revision   4,618   (3,007 ) 1,611  

December 31, 2016   5,833   11,758   17,591  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the LaRonde mine may be found in the Technical Report on the 2005 LaRonde Mineral Resource & Mineral Reserve Estimate filed with Canadian securities regulatory authorities on SEDAR on March 23, 2005 and authored by Guy Gosselin, Eng.

76     AGNICO EAGLE
           ANNUAL INFORMATION FORM


Lapa Mine Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   259,000   444,000   832,000  

  Average grade – gold grams per tonne   4.58   5.49   5.87  

  Probable mineral reserves – tonnes       74,000  

  Average grade – gold grams per tonne       5.50  

Total proven and probable mineral reserves – tonnes   259,000   444,000   907,000  

Average grade – gold grams per tonne   4.58   5.49   5.84  

Total contained gold ounces   38,000   78,000   170,000  

Notes:

(1)
The 2016 proven and probable mineral reserve estimates set out in the table above were estimated using an assumed metallurgical gold recovery of 84.8% and a cut-off grade of 3.3 grams of gold per tonne, and. The operating cost per tonne estimate for the Lapa mine in 2016 was C$134.13. The Company estimates that a $100 (9%) increase or decrease in the gold price would result in an approximate 235% increase or 76% decrease, respectively, in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Lapa mine contained measured mineral resources of 85,000 tonnes grading 5.29 grams of gold per tonne, indicated mineral resources of 693,000 tonnes grading 4.09 grams of gold per tonne and inferred mineral resources of 652,000 tonnes grading 7.55 grams of gold per tonne. The mineral resources were estimated using an assumed metallurgical gold recovery of 73.9% and a cut-off grade of 2.8 grams of gold per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The following table sets out the reconciliation of mineral reserves (rounded to the nearest thousand tonnes) at the Lapa mine by category at December 31, 2016 with those at December 31, 2015. Revision indicates additional mineral reserves converted from mineral resources or other categories of mineral reserves and mineral reserves added from exploration activities during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   444     444  

Processed in 2016   593     593  

Revision   408     408  

December 31, 2016   259     259  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Lapa mine may be found in the Technical Report on the Lapa Gold Project, Cadillac Township, Quebec, Canada filed with Canadian securities regulatory authorities on SEDAR on June 8, 2006.

AGNICO EAGLE     77
ANNUAL INFORMATION FORM            


Goldex Mine Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   294,000   300,000   203,000  

  Average grade – gold grams per tonne   1.47   1.54   1.70  

  Probable mineral reserves – tonnes   16,507,000   12,644,000   6,893,000  

  Average grade – gold grams per tonne   1.64   1.61   1.49  

Total proven and probable mineral reserves – tonnes   16,801,000   12,944,000   7,096,000  

Average grade – gold grams per tonne   1.64   1.61   1.49  

Total contained gold ounces   886,000   668,000   340,000  

Notes:

(1)
The 2016 proven and probable mineral reserve estimates set out in the table above were estimated using an assumed metallurgical gold recovery of 88%. As of December 31, 2016, the operating costs per tonne were estimated to be C$38.18 for the E Zone and C$36.68 for the M Zone. The cut-off grade used for mineral reserves was 1.0 grams of gold per tonne. The Company estimates that a $100 (9%) change in the gold price would result in an approximate 1% change in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Goldex mine contained measured mineral resources of 12,360,000 tonnes grading 1.86 grams of gold per tonne, indicated mineral resources of 17,949,000 tonnes grading 1.80 grams of gold per tonne and inferred mineral resources of 21,882,000 tonnes grading 1.60 grams of gold per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The following table sets out the reconciliation of mineral reserves (rounded to the nearest thousand tonnes) at the Goldex mine by category at December 31, 2016 with those at December 31, 2015. Revision indicates additional mineral reserves converted from mineral resources or other categories of mineral reserves and mineral reserves added from exploration activities during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   300   12,644   12,944  

Processed in 2016   2,545     2,545  

Revision   2,539   3,863   6,402  

December 31, 2016   294   16,507   16,801  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Goldex mine may be found in the Technical Report on Production of the M and E Zones at Goldex Mine dated October 14, 2012 filed with the Canadian securities regulatory authorities on SEDAR on November 1, 2012, authored by Richard Genest, P.Geo., Eng., Jean-François Lagueux, Eng., François Robichaud, Eng. and Sylvain Boily, Eng.

78     AGNICO EAGLE
           ANNUAL INFORMATION FORM


Canadian Malartic Mineral Reserves and Mineral Resources (Agnico Eagle's 50% Interest)

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   25,560,000   27,446,000   24,969,000  

  Average grade – gold grams per tonne   0.95   0.97   0.92  

  Probable mineral reserves – tonnes   76,274,000   83,320,000   101,978,000  

  Average grade – gold grams per tonne   1.13   1.12   1.10  

Total proven and probable mineral reserves – tonnes   101,834,000   110,766,000   126,947,000  

Average grade – gold grams per tonne   1.08   1.08   1.06  

Total contained gold ounces   3,548,000   3,863,000   4,329,000  

Notes:

(1)
The Canadian Malartic property is owned by the Partnership, in which the Company holds an indirect 50% interest, with the remaining 50% interest held indirectly by Yamana. The 2016 proven and probable mineral reserves set out in the table above were estimated using an assumed metallurgical gold recovery of between 89% and 96.5% and a cut-off grade from 0.33 to 0.37 grams of gold per tonne, depending on the deposit. The operating cost per tonne estimate for the Canadian Malartic mine as of December 31, 2016 was C$9.67 per tonne for Canadian Malartic and the Barnat deposit and C$10.29 per tonne for the Jeffrey deposit. The Company estimates that a $120 (10%) increase in the gold price would result in an approximate 3% increase in mineral reserves, while a $120 (10%) decrease in the gold price would result in an approximate 4% decrease in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Canadian Malartic mine (Agnico Eagle's 50% interest) contained measured mineral resources of 2,001,000 tonnes grading 1.34 grams of gold per tonne, indicated mineral resources of 11,121,000 tonnes grading 1.56 grams of gold per tonne and inferred mineral resources of 14,941,000 tonnes grading 1.93 grams of gold per tonne (including the Odyssey Zone inferred mineral resources). Gold cut-off grades used for mineral resource estimates were fixed at 100% of the applicable mineral reserve cut-off grade in pit and 1.0 grams of gold per tonne for mineral resources below pit.

(3)
The following table sets out the reconciliation of mineral reserves (in nearest thousand tonnes) at the Canadian Malartic mine by category at December 31, 2016 with those at December 31, 2015, stating Agnico Eagle's 50% interest. Revision indicates additional mineral reserves converted from mineral resources during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   27,446   83,320   110,766  

Processed in 2016   9,821     9,821  

Revision   7,935   (7,046 ) 889  

December 31, 2016   25,560   76,274   101,834  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Canadian Malartic mine may be found in the Technical Report on the Mineral Resource and Mineral Reserve Estimates for the Canadian Malartic Property dated June 16, 2014, filed with Canadian securities regulatory authorities on SEDAR on August 13, 2014, authored by Donald Gervais, P. Geo., Christian Roy, Eng., Alain Thibault, Eng., Carl Pednault, Eng. and Daniel Doucet, Eng.

AGNICO EAGLE     79
ANNUAL INFORMATION FORM            


Kittila Mine Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   1,148,000   1,059,000   921,000  

  Average grade – gold grams per tonne   4.19   4.28   4.41  

  Probable mineral reserves – tonnes   28,907,000   27,136,000   27,614,000  

  Average grade – gold grams per tonne   4.65   4.82   4.95  

Total proven and probable mineral reserves – tonnes   30,055,000   28,195,000   28,535,000  

Average grade – gold grams per tonne   4.64   4.80   4.93  

Total contained gold ounces   4,479,000   4,353,000   4,524,000  

Notes:

(1)
The 2016 proven and probable mineral reserves set out in the table above were estimated using a metallurgical gold recovery of 86.1%. Gold cut-off grades used were between 2.7 grams per tonne and 2.9 grams per tonne, diluted), depending on the deposit, for underground mineral reserves. The open pit operating cost was estimated to be €49.55 per tonne at December 31, 2016, while the underground operating cost was estimated between €71.96 to €79.64 per tonne at December 31, 2016. The Company estimates that a $100 (9%) increase or decrease in the gold price would result in an approximate 11% increase or 6% decrease, respectively, in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Kittila mine contained measured mineral resources of 1,607,000 tonnes grading 2.45 grams of gold per tonne, indicated mineral resources of 19,114,000 tonnes grading 2.96 grams of gold per tonne and inferred mineral resources of 11,059,000 tonnes grading 4.05 grams of gold per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The following table sets out the reconciliation of mineral reserves (in nearest thousand tonnes) at the Kittila mine by category at December 31, 2016 with those at December 31, 2015. Revision indicates additional mineral reserves converted from mineral resources or other categories of mineral reserves and mineral reserves added from exploration activities during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   1,059   27,136   28,195  

Processed in 2016   1,667     1,667  

Revision   1,756   1,771   3,527  

December 31, 2016   1,148   28,907   30,055  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Kittila mine may be found in the Technical Report on the December 31, 2009, Mineral Resource and Mineral Reserve Estimate and the Suuri Extension Project, Kittila Mine, Finland, filed with the Canadian securities regulatory authorities on SEDAR on March 4, 2010, authored by Daniel Doucet, Eng., Dominique Girard, Eng., Louise Grondin, P.Eng., and Pierre Matte, Eng.

80     AGNICO EAGLE
           ANNUAL INFORMATION FORM


Meadowbank Mine Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   1,704,000   1,203,000   1,090,000  

  Average grade – gold grams per tonne   1.75   1.51   1.50  

  Probable mineral reserves – tonnes   6,515,000   9,586,000   10,705,000  

  Average grade – gold grams per tonne   2.94   2.87   3.24  

Total proven and probable mineral reserves – tonnes   8,219,000   10,789,000   11,795,000  

Average grade – gold grams per tonne   2.69   2.72   3.08  

Total contained gold ounces   711,000   943,000   1,168,000  

Notes:

(1)
The 2016 proven and probable mineral reserve estimates set out in the table above were estimated using a cut-off grade that used a metallurgical gold recovery of 90.5% or 95.5%, depending on the deposit. The cut-off grade used for mineral reserves varied from 1.2 grams of gold per tonne to 1.3 grams of gold per tonne, depending on the deposit, and is 1.26 to 1.15 grams of gold per tonne as a marginal cut-off grade, depending on the deposit. The operating costs used for the mineral reserve estimate as of December 31, 2016 varied between C$54.67 per tonne and C$55.58 per tonne, depending on the deposit, including an additional haulage cost of C$0.91 per tonne for Vault deposit mineral reserves. The Company estimates that a $100 (9%) increase or decrease in the gold price would result in an approximate 1% increase or 2% decrease, respectively, in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Meadowbank mine (not including the Amaruq deposit) contained measured mineral resources of 587,000 tonnes grading 1.00 grams of gold per tonne, indicated mineral resources of 3,099,000 tonnes grading 2.28 grams of gold per tonne and inferred mineral resources of 1,142,000 tonnes grading 3.13 grams of gold per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The following table sets out the reconciliation of mineral reserves (rounded to the nearest thousand tonnes) at the Meadowbank mine by category at December 31, 2016 with those at December 31, 2015. Revision indicates additional mineral reserves converted from mineral resources or other categories of mineral reserves, an update to mineral reserves based on changed mine plans, and mineral reserves added from exploration activities during 2016.
 
    Proven   Probable   Total  
   

 

 

 

 

 

 

 

 
December 31, 2015   1,203   9,586   10,789  

Processed in 2016   3,915     3,915  

Revision   4,416   (3,071 ) 1,345  

December 31, 2016   1,704   6,515   8,219  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Meadowbank mine may be found in the Technical Report on the Mineral Resources and Mineral Reserves at Meadowbank Gold Mine, Nunavut, Canada as at December 31, 2011 filed with Canadian securities regulatory authorities on SEDAR on March 23, 2012, authored by Marc Ruel, P.Geo., Alex Proulx, Eng., Pathies Nawej Muteb, Eng. and Larry Connell, P.Eng.

AGNICO EAGLE     81
ANNUAL INFORMATION FORM            


Meliadine Project Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold              

  Proven mineral reserves – tonnes   34,000   34,000   34,000  

  Average grade – gold grams per tonne   7.31   7.31   7.31  

  Probable mineral reserves – tonnes   14,495,000   14,495,000   13,910,000  

  Average grade – gold grams per tonne   7.32   7.32   7.44  

Total proven and probable mineral reserves – tonnes   14,529,000   14,529,000   13,944,000  

Average grade – gold grams per tonne   7.32   7.32   7.44  

Total contained gold ounces   3,417,000   3,417,000   3,335,000  

Notes:

(1)
The 2016 proven and probable mineral reserves set out in the table above were estimated using metallurgical gold recovery curves for the Tiriganiaq and Wesmeg deposits. The curves give a maximum recovery of 96.5% for Tiriganiaq and Wesmeg. For the Tiriganiaq and Wesmeg deposits, the cut-off grade used for the open pit mineral reserves was 2.50 grams of gold per tonne, undiluted (1.76 grams of gold per tonne, diluted), and the cut-off grade used to determine the underground mineral reserves was 6.07 grams of gold per tonne, undiluted (4.67 grams of gold per tonne, diluted). The estimated operating cost used for the mineral reserve estimate as of December 31, 2016 was C$81.97 per tonne for open pit and C$176.44 per tonne for underground. The Company estimates that a $100 (9%) increase or decrease in the gold price would result in an approximate 5% increase or 7% decrease, respectively, in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Meliadine project contained indicated mineral resources of 20,778,000 tonnes grading 4.95 grams of gold per tonne and inferred mineral resources of 14,710,000 tonnes grading 7.51 grams of gold per tonne. The 2016 mineral resources at the Tiriganiaq-Normeg-Wesmeg, F Zone, Pump, Discovery and Wolf deposits were estimated using a fixed metallurgical gold recovery of 91.1%, 91.0%, 86.9%, 93.5% and 94.3%, respectively, for open pit mineral resources, and 93.4%, 91.7%, 90.0%, 95.5% and 95.7%, respectively, for underground mineral resources. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade for underground resource estimates and at 100% of the applicable reserve marginal cut-off grade for open pit mineral resource estimates.

(3)
The breakdown of open pit and underground mineral reserves at the Meliadine project (with tonnage and contained ounces rounded to the nearest thousand) at December 31, 2016 is:
 
Category   Mining Method   Tonnes   Gold
Grade
(g/t)
  Contained
Gold
(oz)
 
   

 

 

 

 

 

 

 

 

 

 
Proven mineral reserves   Open pit stockpile   34,000   7.31   8,000  

Probable mineral reserves   Open pit   4,001,000   5.00   644,000  

Probable mineral reserves   Underground   10,494,000   8.20   2,766,000  

Total probable mineral reserves       14,495,000   7.32   3,410,000  

Total proven and probable mineral reserves       14,529,000   7.32   3,417,000  

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, expected payback period of capital, parameters and methods and other factors that may materially affect scientific and technical information presented in this AIF relating to the Meliadine project may be found in the Updated Technical Report on the Meliadine Gold Project, Nunavut, Canada dated February 11, 2015, filed with Canadian securities regulatory authorities on March 12, 2015, authored by Julie Larouche, P.Geo., Denis Caron, Eng., Larry Connell, P.Eng., Dany Laflamme, Eng., François Robichaud, Eng., François Petrucci, P.Eng. and Alexandre Proulx, Eng.

82     AGNICO EAGLE
           ANNUAL INFORMATION FORM


Southern Business

Pinos Altos Mine Mineral Reserves and Mineral Resources

    As at December 31,  
   
    2016   2015   2014  
   

 

 

 

 

 

 

 

 
Gold and Silver              
  Proven mineral reserves – tonnes   3,512,000   2,769,000   2,441,000  

  Average gold grade – grams per tonne   2.69   3.08   3.27  

  Average silver grade – grams per tonne   74.88   82.51   86.27  

  Probable mineral reserves – tonnes   13,889,000   12,967,000   15,788,000  

  Average gold grade – grams per tonne   2.51   2.84   2.97  

  Average silver grade – grams per tonne   66.45   72.40   78.63  

Total proven and probable mineral reserves – tonnes   17,401,000   15,736,000   18,230,000  

Average gold grade – grams per tonne   2.55   2.88   3.01  

Average silver grade – grams per tonne   68.15   74.18   79.65  

Total contained gold ounces   1,424,000   1,459,000   1,763,000  

Total contained silver ounces   38,127,000   37,531,000   46,682,000  

Notes:

(1)
The 2016 proven and probable mineral reserve estimates set out in the table above at the Pinos Altos mine (excluding the Creston Mascota deposit) are estimated based on a net smelter return cut-off value of the open pit ore between $8.22 per tonne and $26.03 per tonne, depending on the processing method, and a net smelter return cut-off value of the underground ore of $57.21 per tonne. The metallurgical gold recovery used in the reserve estimates varied between 74% and 96%, depending on the deposit and the processing method. The metallurgical silver recovery used in the reserve estimates varied between 16% and 90%, depending on the deposit and the processing method. The Company estimates that a $100 (9%) change in the gold price would result in an approximate 0.2% change in mineral reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2016, the Pinos Altos mine contained indicated mineral resources of 13,988,000 tonnes grading 1.62 grams of gold per tonne and 40.22 grams of silver per tonne and inferred mineral resources of 9,225,000 tonnes grading 1.28 grams of gold per tonne and 28.30 grams of silver per tonne. Gold cut-off grades used for mineral resource estimates were fixed at 75% of the applicable mineral reserve cut-off grade.

(3)
The breakdown of open pit and underground mineral reserves at the Pinos Altos mine (with tonnage and contained ounces rounded to the nearest thousand) at December 31, 2016 is:
 
Category   Mining Method   Tonnes   Gold
Grade
(g/t)
  Silver
Grade
(g/t)
  Contained
Gold
(oz)
  Contained
Silver
(oz)
 
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Proven mineral reserves