Agnico Eagle outlines path to 1.3M–1.5M ounces production potential as project pipeline accelerates

Earnings Call Insights: Agnico Eagle Mines Limited (AEM) Q2 2025

Management View

CEO Ammar Al-Joundi opened the call by stating, “The message we’ll be sharing with you this morning is, frankly, the same positive message we’ve been sharing for the last several quarters. One, we continue to report record financial results, driven by strong and consistent operational performance. Two, we continue to strengthen the company, to strengthen the balance sheet and to return record amounts of cash flows to our owners and three, we continue to invest heavily in building the foundations of our future growth, and we’re excited to talk about that.” He emphasized record free cash flow of $1.3 billion, adjusted EBITDA of $1.9 billion, and adjusted net income at $1.94 per share. The company returned $200 million in dividends and $100 million in share buybacks, and repaid $550 million of debt.
Al-Joundi highlighted that gold production reached 866,000 ounces at peer-leading costs, noting, “As gold is up $400 this quarter, our cash costs are up a relatively modest $30 per ounce compared to Q1. This means that we’re delivering 93% of this remarkable gold price increase to our owners.” He described progress at key projects including the Odyssey mine, Goldex, Macassa, and Detour, and noted a 9% reduction in exploration cost per meter drilled.
CFO James R. Porter stated, “By delivering on our production targets and controlling costs, we continue to ensure that the benefit of margin expansion in a higher gold price environment accrues directly and indirectly to our shareholders through both direct shareholder returns and the strengthening of our balance sheet.” He reported record revenue of $2.9 billion, adjusted earnings of $976 million or $1.94 per share, and free cash flow of $1.3 billion. Porter also mentioned the company ended the quarter with net cash of almost $1 billion, after significantly deleveraging the balance sheet by $1.3 billion over the past 15 months.
EVP Dominique Girard noted successful operational performance, especially at LaRonde and Canadian Malartic, offsetting challenges in Nunavut. Girard also introduced a pilot for a new underground fleet management system, aiming for up to 40% productivity improvement. He highlighted that the Odyssey shaft sinking is ahead of schedule and the ore body now totals about 20 million ounces.
EVP Natasha Nella Dominica Vaz provided updates on Ontario, Australia, and Mexico, emphasizing record gold production at Macassa, strong mill throughput at Detour, and progress on the San Nicolas copper project. Vaz reported operational improvements, including internalizing truck maintenance at Detour for a $5 million annual cost saving.
EVP Guy Gosselin reported, “We currently have 120 diamond drill rig in operation on mine site and regional exploration…slightly ahead of the program with 670 kilometers of drilling completed with expenditures standing at about 9% below our budget.” He highlighted robust exploration results at Canadian Malartic, Detour, and Hope Bay, including a 53-gram over 8.4 meter intercept at Hope Bay.

Outlook

Porter confirmed, “For the full year, we are maintaining our cost guidance and expect cash costs to be within the guided range of $915 to $965 per ounce. All-in sustaining cost per ounce were higher than the previous quarter, primarily due to the increased cash costs and the timing of sustaining capital spend. We continue to expect to be within our guidance for the full year at between $1,250 and $1,300 per ounce.” Vaz indicated Detour is expected to finish the year at the lower end of production guidance due to ongoing low-grade mining in Q3, with grades expected to improve in Q4.

Financial Results

Record revenue of $2.9 billion, adjusted earnings of $976 million ($1.94 per share), and adjusted EBITDA of $1.9 billion were reported. Free cash flow more than doubled quarter-over-quarter, attributed to favorable working capital adjustments and accrued taxes payable. Gold production was 866,000 ounces at total cash costs of $933 per ounce. Porter noted, “If we exclude the impact of royalties on foreign exchange, our cash costs were actually lower than in the first quarter.”
The Abitibi platform in Quebec and Ontario produced over 1 million ounces at approximately $850 per ounce, with a realized operating margin of 73%. Net cash improved to almost $1 billion, and the company prepaid $510 million of long-term debt. Shareholder returns totaled approximately $300 million for the quarter.

Q&A

Fahad Tariq, Jefferies: Asked about buybacks versus dividends. Porter responded, “What we’ve been saying consistently over the past several years is that we’re targeting about 1/3 of our free cash flow being returned to shareholders. So if the gold price stays where it is, that total return to shareholders could get up to $1.3 billion, which implies a lot more activity in the share buyback in the second half of the year.”
Joshua Mark Wolfson, RBC: Inquired about free cash flow and tax deferrals. Porter explained, “If we look at our cash taxes for 2025, we paid about $600 million in the first half of the year and we plan to pay about $600 million in the second half of the year. So in around $1.2 billion for 2025 in cash taxes…at these gold prices in Q1 of 2026, we could have upwards of a $900 million catch-up payment in relation to 2025.”
Anita Soni, CIBC: Questioned the cost of deepening the first shaft at Odyssey. Girard replied, “Deeping the shaft #1 by 70 meters including doing a third loading station, which means all the infrastructure plus a crusher, we’re talking approximately USD 40 million to do that but it is a payback project.”
Tanya M. Jakusconek, Scotiabank: Queried about minimum cash balance. Porter answered, “At these gold prices, we could be well north of $2 billion, $2.5 billion in cash on the balance sheet by the end of this year. And I’m certainly comfortable at those levels.”
Daniel Edward Major, UBS: Asked about capital acceleration. Porter noted, “I think there will be opportunities for us to accelerate development of some of our projects. So that’s what we should be doing.”

Sentiment Analysis

Analyst tone was positive, focusing on capital returns, operational improvements, and project acceleration. Multiple questions sought clarity on buybacks, dividends, cost management, and project timelines, with no signs of skepticism or pressing negativity.
Management maintained a confident and upbeat outlook throughout, reiterating ongoing cost discipline, shareholder returns, and project progress. Al-Joundi and Porter both emphasized the company’s strong financial position and commitment to disciplined capital allocation.
Compared to the previous quarter, management’s sentiment remained highly confident and consistent, with even greater emphasis on accelerating project timelines and returning capital to shareholders. Analyst sentiment also grew more constructive, with questions showing increased interest in capital allocation and growth opportunities.

Quarter-over-Quarter Comparison

Guidance remains unchanged quarter-over-quarter, with continued focus on cost control and production targets. The second quarter saw higher cash costs primarily due to royalties and foreign exchange, but underlying costs were stable. Project updates indicate faster progress at Odyssey and further clarity on Detour and Upper Beaver timelines.
Analysts in both quarters focused on capital allocation, share buybacks, and operational improvements, but the current quarter saw more detailed questions about timing and scale of accelerated project investments.
Management tone remained disciplined and confident, with a stronger emphasis on leveraging high gold prices for both shareholder returns and balance sheet strength. Analyst tone grew more focused on forward-looking capital deployment.

Risks and Concerns

Management cited challenges in Nunavut due to extended Caribou migration, but stated both Meliadine and Meadowbank “remain on track to achieve this year’s guidance.”
Porter acknowledged the volatility in free cash flow due to the timing of tax payments, warning of a significant catch-up tax payment in Q1 2026.
Girard noted that productivity improvements from underground fleet management systems remain to be proven through pilots in 2025 and broader rollout in 2026.
Vaz cautioned that Detour’s production will be at the lower end of guidance due to continued mining in low-grade domains through Q3.

Final Takeaway

Agnico Eagle delivered another quarter of record financial results, driven by continued operational excellence, disciplined cost control, and robust gold prices. The company maintained guidance and advanced its key projects, with a project pipeline capable of adding 1.3 million to 1.5 million ounces of future production. Management signaled potential for accelerated capital spending, ongoing strong shareholder returns, and reinforced a strategy focused on leveraging high gold prices, operational improvements, and disciplined capital allocation to maximize shareholder value.

Read the full Earnings Call Transcript