My colleagues and I are pleased to report another strong quarter with not only record free cash flow generated by our operations, but also record capital returns to our shareholders. Gold production of 856,000 ounces was, for the second consecutive quarter, above budget, with cash costs and all-in sustaining costs both within our guidance range. This quarter, we're reporting solid operations, excellent progress on our growth pipeline, continued exceptional exploration results, all with yet another quarter of record financials. For example, this quarter, I'm pleased to highlight that at Macassa, we had record skipped tons, record mill throughput, and the first processing of our AK ore at LZ5.

In and of itself, record mill throughput at half our mines represents substantial continuous operational improvement. Guy will spend some time going over some exciting holes that are both confirming and expanding our key mines and our organic growth projects. We're able to reinvest in our business to support the best organic growth in the industry. In the second quarter, we added over $350 million of cash to reach a record $3.5 billion of cash on hand.

All of this while delivering another record quarter of returns to our shareholders. Strong operational performance and disciplined cost management, combined with a favorable gold price environment to drive record free cash flow of over $1.3 billion for the quarter. We also delivered excellent financial results, generating adjusted net income of approximately $1.5 billion or $3.07 per share, and adjusted EBITDA of approximately $2.7 billion. Below our costs in the first quarter, below the midpoint of our guidance ranges, and hundreds of dollars below the industry average.

What went well
  • Record free cash flow of over $1.3 billion and record shareholder returns of $625 million (dividends plus $400 million of buybacks)
  • Gold production of 856,000 ounces, above budget for the second straight quarter, led by Detour Lake, KittilA and Fosterville
  • Total cash costs of $1,054/oz and AISC of $1,459/oz, both within guidance and below the first quarter
  • Record mill throughput at Detour, Macassa, Meliadine and KittilA (roughly half of total production); Meliadine averaged over 7,000 tpd vs a 6,500 target
  • Strongest balance sheet in company history: record $3.5 billion cash, ~$3.3 billion net cash, Fitch upgrade from BBB+ to A-
What went wrong
  • July 1 rock movement in the Barnat Pit wall (~1 million tons) makes 370,000 ounces inaccessible (60k in 2026, 115k each in 2027 and 2028)
  • 2026 production now expected toward the lower end of the 3.3-3.5 million ounce guidance range
  • Canadian Malartic cash-cost guidance raised for the second half, with slightly higher costs expected through 2027-2028 on lower production
  • A fatality on May 1 (Daniel Giroux) at Upper Beaver; three fatalities in the last year, which management called unacceptable
  • Ongoing labor/workforce and inflationary pressures (diesel, ~4% labor inflation) cited as challenges across operations

Guidance Changes

MetricPeriodCurrent guidance
2026 gold productionFY20263.3-3.5 million oz, toward lower end
Share of free cash flow returned to shareholdersFY2026~48% returned in H1; potential to exceed 40% for the year
Odyssey/Malartic underground development rateQ4 20262,000 m/month target

Performance Breakdown

MetricYoYNote
Fosterville development rate +14% Productivity initiatives started last year: improved ventilation, operator training/retraining, independent blasting
Ontario internal labor cost ~+4% Wage inflation; contractor costs showed no major increase
LZ5 autonomous trucking productivity +65% (first half) Better network communication, software, and 3D scanning technology cutting sequence stops from 1,700 to 700 per shift

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Growth pipelineTarget of increasing production 20%-30% over the next decadeReaffirmed 20%-30%, before the Finland consolidation; Hope Bay green-lit (400,000-450,000 oz/yr), Malartic and Detour moving toward 1 million oz each—
Finland platformKittilA, largest gold mine in Europe, ~17 years of operationConsolidated Rupert Resources, Aurion Resources and the Fingold JV (~$600 million cash); ~2,500 sq km land package and Ikkari project, targeting a 500,000 oz/yr platform—
Capital allocationBalanced: shareholder returns, growth investment, balance-sheet strengthH1: ~30% of operating cash flow to shareholders, ~40% to organic pipeline, ~15% to Finland M&A, ~15% to balance sheet—
SafetyPrior fatalities acknowledgedAccelerating critical-control work and strengthening supervision after three fatalities in the last year across three sites—

Q&A Summary

Can you quantify the volume and grade of Barnat material made inaccessible by the wall slip?
About 370,000 ounces are no longer accessible (60,000 in 2026, 115,000 in each of 2027 and 2028); roughly 300,000 ounces remain to be mined at an average grade around 1.1 g/t.
Are there offsets, such as adding low-grade material to the mine plan, to soften the Barnat impact?
Yes, the low-grade stockpile will be milled and parts of the pit re-accessed; the pit has already produced well above the original plan and is at the very end of its life, and the company has a long track record of recovering from such issues.
Can the strong Odyssey/East Gouldie and Artemis Zone results pull higher-grade ounces forward in the production profile?
The upper-eastern East Gouldie is a shallower higher-grade area close to infrastructure being pushed to reserve; internal zones near the shaft add optionality. Moving high-grade underground ore (~5 g) to displace stockpile (~0.5 g) offers flexibility, but it is very early.
Where does San NicolAs detailed engineering stand and what are the next permitting steps?
Engineering is at 45%; the JV is still working through the terms of the MIA/land-use approval before applying for supplementary permits (construction, explosives, possible water/power solutions), while advancing construction and operational readiness.
What are labor dynamics in Ontario, and any retention/attrition data?
Internal labor is running ~4% year-over-year; contractors show no major cost increase. Agnico cites the lowest turnover among peers (about half), a centralized recruitment hub, building permanent community housing, and successful recruiting from Western Canada.
With Malartic cash-cost guidance raised, how should we think about portfolio costs into 2027-2028?
Q2 cost performance was strong; a much stronger U.S. dollar, royalty benefit versus the $4,500 gold-price assumption, and conservative copper/silver by-product credits are helping. Malartic costs will be slightly higher on lower production in 2027-2028; it is premature to guide future years.
How material could Detour underground production be in 2028, and when is the mine-plan update?
Roughly 20,000-30,000 ounces in each of 2028 and 2029, with a Detour Underground update expected around mid-2027.
What inflation assumption are you using for 2027?
Early days, but ~3%-4% for labor and contractors (40%-50% of costs); diesel (about 7% of costs) is the biggest cost pressure for 2027 versus 2026, partly hedged for the back half of this year.
Can productivity and optimization fully offset inflation?
The objective is to offset as much as possible; over the last three years, with inflation averaging ~7% (or ~3%-4% excluding royalties), continuous improvement has offset almost half of it, and that remains the target.

More on Agnico Eagle Mines Ltd

Reported 2026-07-30 · figures from the Agnico Eagle Mines Ltd Q2 2026 earnings call.

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