Agnico Eagle Reports Fourth Quarter and Full Year 2016 Results - Meliadine and Amaruq Projects Approved for Development; Annual Gold Production Expected to Grow to 2.0 Million Ounces in 2020

Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars ("$" or "US$") unless otherwise noted)

TORONTO, Feb. 15, 2017 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle" or the "Company") today reported quarterly net income of $62.7 million, or net income of $0.28 per share for the fourth quarter of 2016.  This result includes impairment reversals of the Meadowbank mine and Meliadine project, net of tax, of $81.2 million ($0.36 per share), a non-cash foreign currency translation loss on deferred tax liabilities of $12.9 million ($0.06 per share), various mark-to-market adjustment losses of $9.4 million ($0.04 per share), non-recurring losses of $2.4 million ($0.01 per share) and non-cash foreign currency translation gains of $1.7 million ($0.01 per share).  Excluding these items would result in adjusted net income¹ of $4.5 million ($0.02 per share) for the fourth quarter of 2016.  In the fourth quarter of 2015, the Company reported a net loss of $15.5 million or $0.07 per share.

Not included in the fourth quarter of 2016 adjusted net income above are lower sales volume relative to total ounces produced, net of tax (approximately 30,620 ounces fewer), representing $13.1 million ($0.06 per share), lower realized gold and silver prices compared to average spot prices both 2% lower than the quarterly average, $5.7 million ($0.03 per share) and non-cash stock option expense of $4.2 million ($0.02 per share). 

Fourth quarter 2016 cash provided by operating activities was $120.6 million ($120.3 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $140.7 million in the fourth quarter of 2015 ($112.6 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in non-cash components of working capital during the current period was largely due a tax adjustment in the fourth quarter of 2015.

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¹ Adjusted net income is a Non-GAAP measure. For a discussion regarding the Company's use of non-GAAP measures, please see "Note Regarding Certain Measures of Performance".

"Continued strong operating results in the fourth quarter of 2016 allowed us to exceed our production forecast and beat our cost guidance for the fifth consecutive year and positions us to complete the development of our growth projects over the next two years", said Sean Boyd, Agnico Eagle's Chief Executive Officer.  "Our primary focus will be on developing and expanding our business in Nunavut as we complete the construction of a new mine at Meliadine and develop the Amaruq satellite deposit at Meadowbank.  These new operations, along with optimizations at existing mines, are expected to result in production growth from current levels to approximately 2.0 million ounces in 2020, along with a decline in unit costs", added Mr. Boyd.

Fourth quarter and full year 2016 highlights include:

• Continued Strong operational performance – Payable production² in 2016 was 1,662,888 ounces of gold on production costs per ounce of gold of $621, with total cash costs per ounce³ of $573, compared to guidance of 1,600,000 ounces at total cash costs per ounce of $600. All-in sustaining costs per ounce⁴ ("AISC") for 2016 were $824, compared to guidance of $860 per ounce
• 2016 gold reserves increased by 5.0% to 19.9 million ounces (268.4 million tonnes grading 2.31 grams per tonne ("g/t") gold) – Measured and indicated mineral resources increased by 9%, while inferred mineral resources decreased by 4% (largely due to conversion to higher confidence categories). The average gold reserve grade in 2016 was essentially unchanged from the previous year
• Amaruq and Meliadine approved for development – Given favourable project economics and the expected potential for extensions to the currently forecasted mine plans, the Amaruq satellite deposit at Meadowbank and the Meliadine project have been approved by the Company's Board of Directors. Both operations are expected to start production in third quarter of 2019; As such, production at Meliadine is now forecast to begin approximately one year earlier than previously anticipated
• New four year guidance; gold production expected to increase from current levels to 2.0 million ounces in 2020 with unit costs expected to decline – The production forecasts for 2017 and 2018 are unchanged from previous guidance of approximately 1.55 and 1.50 million ounces, respectively. Production in 2019 is forecast to be approximately 1.60 million ounces, while production in 2020 is expected to be approximately 2.0 million ounces. The Company is evaluating additional opportunities to increase production in 2018 and beyond
• Cost guidance for 2017 essentially unchanged from prior year's guidance – In 2017, total cash costs per ounce are forecast to be between $595 and $625 and AISC for 2017 are forecast to be between $850 and $900 per ounce. Total cash costs per ounce and AISC are expected to decline as production grows through 2020
• Exploration Continues to Add Value
  • Conversion drilling on the western portion of LaRonde 3 (the portion of the LaRonde mine at a depth below 3.1 kilometres) has encountered higher-grade mineralization - Recent intersections include 28.1 g/t gold over 9.3 metres and 13.8 g/t gold over 8.1 metres. These new high-grade intersections are now interpreted as being a distinct lens of massive sulphide mineralization from the main LaRonde 3 horizon. In 2016, the first mineral reserves were declared in the eastern portion of LaRonde 3, and additional inferred mineral resources were declared in the western portion of LaRonde 3. Studies are ongoing to evaluate the potential to mine below the currently planned 3.1 kilometre depth at LaRonde
  • Initial inferred mineral resources declared at Odyssey and Barsele - At the Odyssey property (50% owned), which adjoins the Canadian Malartic mine, inferred mineral resources are estimated to be 0.7 million ounces (10.3 million tonnes grading 2.15 g/t gold), while at the Barsele project in Sweden (55% owned), inferred mineral resources are estimated to be 0.7 million ounces (11.9 million tonnes grading 1.72 g/t gold). Both deposits appear to have bulk tonnage and underground potential, similar to Goldex and are being evaluated as potential future production opportunities. Further mineral resource growth is expected in 2017
• Improved financial flexibility – In 2016, net debt⁵ was reduced by $346 million, further strengthening the Company's investment grade balance sheet in preparation for the next phase of growth. At year-end 2016, Agnico Eagle had strong liquidity with $548 million in cash and cash equivalents and short term investments and $1.2 billion in undrawn credit lines 
• A quarterly dividend of $0.10 per share declared

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² Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company, whether such products are shipped during the period or held as inventory at the end of the period.
³ Total cash costs per ounce is a Non-GAAP measure and unless otherwise specified is reported on a by-product basis. For a reconciliation to production costs and for total cash costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".
⁴ All-in-sustaining costs per ounce is a Non-GAAP measure and unless otherwise specified is reported on a by-product basis. For a reconciliation to production costs and for all-in sustaining costs on a co-product basis, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".
⁵ Net debt is a Non-GAAP measure. For a reconciliation of net debt to the nearest IFRS equivalent, please see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".

Fourth Quarter and Full Year 2016 Financial and Production Highlights

In the fourth quarter of 2016, strong operational performance continued at the Company's mines.  Payable production in the fourth quarter of 2016 was 426,433 ounces of gold, compared to 422,328 ounces in the fourth quarter of 2015.  A detailed description of the production performance of each mine is set out below.

Production costs per ounce for the fourth quarter of 2016 were $598, which was higher than the $544 in the 2015 period.  Total cash costs per ounce for the fourth quarter of 2016 were $552, which was essentially unchanged from the $547 per ounce for the fourth quarter of 2015.  A detailed description of the cost performance of each mine is set out below.

For the full year 2016, the Company recorded net income of $158.8 million, or $0.71 per share.  In 2015, the Company recorded net income of $24.6 million, or $0.11 per share. The increase was primarily due to higher realized gold and silver prices (up 8% and 11%, respectively).

For the full year 2016, cash provided by operating activities was $778.6 million ($714.2 million before changes in non-cash components of working capital).  This represents a increase over 2015, when cash provided by operating activities totalled $616.2 million ($660.0 million before changes in non-cash components of working capital).  The increase was primarily due to the reason described above.

For the fifth consecutive year, Agnico Eagle has reported annual gold production in excess of annual guidance.  The Company's payable production for the full year 2016 was 1,662,888 ounces of gold, compared to guidance of 1,600,000 ounces.  In 2015, full year production was 1,671,340 ounces.  A detailed description of the production performance of each mine is set out below.

Production costs per ounce for the full year 2016 were $621, which was higher than the $596 in 2015.  Total cash costs per ounce for the full year 2016 were $573, below guidance of between $580 and $620.  In 2015, total cash costs per ounce were $567.  A detailed description of the cost performance of each mine is set out below.

AISC for 2016 was $824 per ounce, below guidance of between $840 and $880.  The lower AISC is primarily due to lower than forecast total cash costs per ounce in 2016 and higher production than forecast.

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

Cash and cash equivalents and short term investments decreased to $548.4 million at December 31, 2016, from the September 30, 2016 balance of $627.4 million.

The outstanding balance on the Company's credit facility remained nil at December 31, 2016.  This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

Total capital expenditures for the full year 2016 were $535 million, compared to guidance of $491 million.  The increase from guidance was primarily due to additional spending at Meliadine, including the purchase of long lead time equipment and material for the Meliadine project to prepare for the upcoming barge season.  The additional spending and work at the Meliadine site in 2016 has positioned the project for an expected start date of 2019, one year ahead of the previous schedule.

Quarterly Dividend Declared

Agnico Eagle's Board of Directors has declared a quarterly cash dividend of $0.10 per common share, payable on March 15, 2017 to shareholders of record as of March 1, 2017.  Agnico Eagle has now declared a cash dividend every year since 1983.

Expected Dividend Record and Payment Dates for 2017

*Declared

Dividend Reinvestment Plan

Please follow the link below for information on the Company's dividend reinvestment plan.  Dividend Reinvestment Plan

Conference Call Tomorrow

The Company's senior management will host a conference call on Thursday, February 16, 2017 at 11:00 AM (E.S.T.) to discuss the Company's fourth quarter and full-year financial and operating results.

Via Webcast:

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

Via Telephone:

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

Replay Archive:

Please dial 1-416-849-0833 or toll-free 1-855-859-2056, access code 50879928.  The conference call replay will expire on Thursday, March 16, 2017.

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

New Four Year Guidance Plan – Amaruq and Meliadine Projects Expected to Begin Production in 2019; Production Forecast to Increase to Approximately 2.0 Mozs in 2020

The Company is announcing its detailed production and cost guidance for 2017, mine by mine production forecasts for 2018 and 2019 and a consolidated production forecast for 2020.  Partly due to advancing the spending at Meliadine in the fourth quarter of 2016, the Company expects average annual production of approximately 1.55 million ounces of gold over the next three years with costs stable or lower than currently.  However, the production forecast has the potential to increase in 2019 depending on timing of the Amaruq permits and progress of development at the Amaruq satellite deposit at Meadowbank and the Meliadine project.  Production in 2020 is forecast to be approximately 2.0 million ounces of gold.

In 2020, the Company expects to have four cornerstone production assets (the LaRonde Complex, Canadian Malartic, Meliadine and the Meadowbank Complex which includes the Amaruq satellite deposit) each with annual production of approximately 250,000 to 400,000 ounces of gold.  Beyond 2020, the Company anticipates the Meadowbank Complex production levels to increase as gold grades mined are expected to rise at the Amaruq satellite deposit.  In addition, the Kittila deposit in Finland can also become a significant gold producer as a meaningful increase in production is possible as the mining rate is expected to grow as new sources of ore are developed underground.

Highlights from the new production and cost guidance for 2017 through 2020 include:

• In 2017 and 2018, payable gold production is expected to be approximately 1.55 and 1.50 million ounces of gold, respectively.  These forecasts are unchanged from the previous guidance announced in the February 2016 forecast.  The Company is evaluating additional opportunities to increase production in 2018 and beyond
  
  
• Total cash costs per ounce in 2017 are expected to be between $595 and $625 using a US$/C$ foreign exchange rate assumption of 1.28.  AISC for 2017 are expected to be between $850 and $900 per ounce.  In succeeding years, the Company expects total cash costs per ounce and AISC to be below the 2017 ranges
  
  
• Given favorable project economics and the expected potential for additional extensions to the currently forecast mine plans, the Amaruq satellite deposit at Meadowbank and the Meliadine project have both been approved for development.  Amaruq is expected to start up in the third quarter of 2019 (subject to receipt of final permits), and production at Meliadine is now forecast to begin a year earlier than previously expected (also in the third quarter of 2019).  With the potential start of production at the two Nunavut projects in 2019, full year guidance for 2019 is now expected to be approximately 1.60 million ounces of gold
  
  
• In 2020, consolidated production is forecast to be approximately 2.0 million ounces of gold

Following a brief two-year period of increased development capital spending, largely due to the one-year advancement of the Meliadine project, the Company is forecasting a return to free cash generation in 2019.  At current foreign exchange rate assumptions (1.28 US$/C$, 1.10 EUR/US$, 18.00 US$/MXP) total capital expenditures are forecast to be approximately $850 million in 2017, approximately $950 million in 2018 and approximately $500 million in 2019.  Annual sustaining capital expenditures (included in the above) for 2017 and beyond are expected to remain stable at approximately $300 million.

Funding for the development of the Amaruq satellite deposit at Meadowbank and the Meliadine project is expected to come from existing cash balances, internally generated cash and if needed, drawings on the Company's lines of credit.  The Company has significant debt capacity, as reflected by its investment grade credit rating. 

Additional Near-Term Production Potential (2018 to 2020)

The Company is evaluating several potential opportunities (none of which have yet been approved for construction) at a number of existing operations to build further value and enhance the production profile in 2018 through 2020.  These opportunities are summarized in the table below. 

Development Pipeline Expected to Provide Further Production Growth in 2021 and Beyond

Agnico Eagle has a strong pipeline of development projects that could provide further production growth in 2021 and beyond.  These opportunities are typically at an earlier stage than those outlined above.  A summary of the longer term opportunities are presented in the following table.

Four-Year Guidance Plan Outlines a Growing Production Profile with Stable Costs

Mine by mine production and cost guidance for 2017, mine by mine production forecasts for 2018 and 2019 and a consolidated production forecast for 2020 are presented below.  Opportunities to improve these forecasts are ongoing.

Currency and commodity assumptions used for 2017 cost estimates and sensitivities are presented in the table below:

The estimated production level in 2018 is currently forecast to be approximately 1.50 million ounces of gold, which is unchanged from the 1.50 million ounces in the February 2016 forecast.  The Company is currently evaluating potential opportunities to further optimize and improve production levels in 2018 and beyond (see discussion below for additional details).

With the start of production at the two Nunavut projects in 2019, full year guidance for 2019 is now expected to be approximately 1.60 million ounces of gold.

In 2020, consolidated production is forecast to be approximately 2.0 million ounces of gold.  In 2018 through 2020, the Company expects total cash costs per ounce and AISC to be below the 2017 ranges based on the currency and commodity assumptions used for 2017 as described above.

Depreciation Guidance

Agnico Eagle expects its 2017 depreciation and amortization expense to be between $580 and $610 million.

General & Administrative Cost Guidance

Agnico Eagle expects 2017 general and administration expense to be between $70 and $80 million, excluding share based compensation.  In 2017, share based compensation is expected to be between $25 and $35 million (including non-cash stock option expense of between $15 and $20 million), which is consistent with previous years.

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

Tax Guidance for 2017

For 2017, the effective tax rates are expected to be:

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

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

Updated Three Year Guidance Plan; Incorporating Initial Production from Meliadine and the Amaruq Satellite Deposit at Meadowbank

Since the prior three-year production guidance of February 10, 2016 ("Previous Guidance"), there have been several operating developments resulting in changes to the overall three-year production profile.  Descriptions of these changes are set out below.

Northern Business

ABITIBI REGION, QUEBEC

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⁶ Minesite costs per tonne is a non-GAAP measure. For a reconciliation of this measure to production costs as reported in the financial statements, see "Reconciliation of Non-GAAP Financial Performance Measures" below.  See also "Note Regarding Certain Measures of Performance".

At LaRonde, the slightly lower production guidance for 2017 and 2018 (as compared to Previous Guidance) is primarily due to changes in the mining sequence.  In 2017, approximately 87% of the ore is expected to come from the higher grade lower mine area (below the 248 level) compared to 89% in the Previous Guidance.  The year-over-year production forecasts through 2019 largely reflect an increase in grade closer to that of the average mineral reserves.

In 2003, the Company acquired the Bousquet gold property from Barrick Gold Corporation.  The property adjoins the LaRonde mining complex to the east and hosts the Bousquet Zone 5, which previous operators had partly exploited by open pit.  Given its proximity to the LaRonde complex, the Company has renamed the property LaRonde Zone 5.

LaRonde Zone 5 has been approved for development (subject to permitting approval).  Permits are expected to be received by mid-2018, with mining expected to commence shortly thereafter.  Please see below for additional details on LaRonde Zone 5.

At Canadian Malartic (in which Agnico Eagle has 50% ownership) guidance for 2017 and 2018 has been slightly increased due to a change in the life-of-mine plan.  The updated plan provides for earlier access to higher grade zones that are located deeper in the Canadian Malartic pit.

Under the current life of mine plan, Lapa is expected to operate until the end of the first quarter of 2017, with production coming from Zone Deep East and Zone 7 Deep.  The Company is evaluating opportunities to continue production into the second quarter of 2017.

At Goldex, production guidance in 2017 is in line with Previous Guidance.  Production guidance in 2018 has been lowered to reflect the transition from mining the M and E satellite zones and the start of production from the Deep 1 Zone.  Commissioning of the Deep 1 project remains on budget and schedule for early 2018.

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014.  Located less than 30 kilometres from Goldex, the Akasaba West deposit could create flexibility and synergies for the Company's operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing overall costs.  The permitting process is ongoing and the Company expects to begin sourcing open pit ore from Akasaba West in 2019.

NUNAVUT REGION

At Meadowbank, production guidance for 2018 has increased slightly over Previous Guidance due to a slight increase in mineral reserves at year-end 2016, and the mining of additional higher grade ore in the Portage pit.  At the Vault deposit, opportunities are being investigated to potentially extend production through year-end 2018.

In 2016, the Company completed an internal technical study on the Amaruq satellite deposit at Meadowbank.  Based on this study, the Company has approved the project for development pending the receipt of the required permits, which are currently expected to be received by the second quarter of 2018.  Production is currently forecast to begin in the third quarter of 2019 (approximately 4 to 5 months of production in 2019).  Additional details on the project (including operational parameters) are described below.

In 2016, internal studies were carried out to optimize the previous Meliadine mine plan that had been outlined in an updated National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") technical report dated February 11, 2015 (see Agnico Eagle news release of March 12, 2015).  These internal studies evaluated various opportunities to improve the project economics and the after-tax internal rate of return.

Based on the results of these internal studies, the Company's Board of Directors has approved the construction of the Meliadine project.  The mine is expected to begin operations in the third quarter of 2019 (approximately 4 months of production in 2019), which is approximately one year ahead of the previous schedule.  Additional details on the project (including operational parameters) are described below.

FINLAND

At Kittila, production guidance for 2017 and 2018 is unchanged from the Previous Guidance.  The increased production in 2019 is due to higher grades in the mine sequence.  The Company is carrying out studies to evaluate the economics of increasing throughput rates to 2.0 million tonnes per annum from the current rate of 1.6 million tonnes.  This increased rate could also be further supported by the development of the Rimpi and Sisar zones.

Southern Business

At Pinos Altos, production guidance for 2017 and 2018 is slightly below Previous Guidance, primarily due to changes in the mining sequence.  In 2016, exploration at the Cerro Colorado Zone outlined additional mineralization on the boundaries of the zone.  Further drilling will be carried out in 2017 to evaluate this potential.

At Creston Mascota, production guidance in 2018 is below Previous Guidance due to the winding down of mining activities under the current life-of-mine plan.  Recent exploration at Bravo and Madrono has yielded positive results and further drilling is planned for 2017.  This work could lead to the delineation of additional mineral reserves and mineral resources, which could extend the mine life at Creston Mascota. 

At La India, production guidance in 2017 and 2018 is slightly below Previous Guidance reflecting changes in the grade and mining sequence.  The 2016 exploration program resulted in a 18% increase in mineral reserves year-over-year and a 5% increase in measured and indicated mineral resources.  Step out drilling in 2016 at the nearby El Realito project also yielded encouraging results, and additional work is planned for 2017.

Amaruq Satellite Deposit – Gold Resources Continues to Expand, Road Construction in Progress

Agnico Eagle has a 100% interest in the Amaruq satellite deposit at Meadowbank, which sits on a large 114,761 hectare property, approximately 50 kilometres northwest of the Meadowbank mine.  A significant gold discovery was made on the property in 2013, and activities since that time have focused on the development of satellite mineralization to feed the existing Meadowbank mill.

At December 31, 2016, the Amaruq satellite deposit at Meadowbank contained an open pit indicated mineral resource of 2.1 million ounces (16.9 million tonnes grading 3.88 g/t gold); an open pit inferred mineral resource of 763,000 ounces (4.9 million tonnes grading 4.81 g/t gold); and an underground inferred mineral resource of 1.4 million ounces (6.8 million tonnes grading 6.22 g/t gold).  Further details on the mineral resources are presented in the mineral reserve and mineral resource section of this news release.

The indicated mineral resource grade declined from the previous inferred resource grade estimate primarily due to the inclusion of a dilution factor in the calculation of the indicated mineral resources, and the impact of a slightly lower cut-off grade (based on parameters from the internal technical study).  Deeper portions of the open pit deposit show higher mineral grades.  The underground inferred mineral resource grade has also slightly declined from the previous estimate given that it is now constrained by preliminary stope blocks.

All of the of the indicated mineral resources are contained in the Whale Tail open pit, while approximately 64% (490,000 ounces) of the open pit inferred mineral resources (2.9 million tonnes grading 5.23 g/t gold) are located in the V Zone.  The Whale Tail and V Zone deposits extend to depths of approximately 250 metres and 150 metres, respectively, and both pits are open for expansion.

The underground inferred mineral resources are located in the Whale Tail and V Zone deposits.  Mineralization in the Whale Tail deposit has been extended by drilling in two directions; along the east-plunging ore shoot to a depth of approximately 500 metres and locally as deep as 600 metres in the central portion of Whale Tail.  The V Zone has been traced to 542 metres below surface and remains open at depth.

In 2016, the Company completed an internal technical study on the Amaruq satellite deposit at Meadowbank.  Based on this study, the Company has approved the project for development pending the receipt of the required permits, which are currently expected to be received by the second quarter of 2018.

In the study, a conventional open pit mining operation is forecast to begin on the Whale Tail deposit in the third quarter of 2019.  This mining operation will utilize the existing infrastructure at the Meadowbank mine (mining equipment, mill, tailings, camp and airstrip).  Minimal infrastructure will be built at the Amaruq site (truck shop/warehouse, fuel storage and a small camp facility).  In addition, a new truck fleet will be required for hauling ore to the Meadowbank mill.

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

The initial plan calls for the production of approximately 2.0 million ounces of gold between 2019 and 2024, with pre-mining activities starting in 2018 at the Whale Tail deposit.  This represents less than 50 percent of the currently known mineral resource base.  All licenses and permits for Phase I (Whale Tail pit) are expected to be received by the third quarter of 2018.

Metallurgical recoveries are estimated to average approximately 93%, resulting in average annual gold production of approximately 369,000 ounces in years two through six.  The life of mine average total cash costs per ounce from the Amaruq satellite deposit at Meadowbank are expected to be approximately $770.  The life of mine average AISC is expected to be approximately $850 per ounce.  Detailed operating parameters for the project are set out in the table below.

Initial capital costs are estimated to be approximately $330 million, while total sustaining capital costs are estimated to be approximately $25 million per year.  Mine closure costs are estimated to be approximately $16 million.

The Amaruq satellite deposit extends the Meadowbank mine life which will allow additional time for the Company to develop and implement an exploration strategy to expand the Amaruq deposit and to evaluate additional opportunities on the property. 

Summary of the Amaruq Project Key Facts and Parameters

2016 Amaruq Work Program – Focus on Conversion and Exploration Drilling

In the fourth quarter of 2016, 12 holes (3,452 metres) were drilled at the Amaruq satellite deposit at Meadowbank.  This brought the full year total to 526 holes totaling 127,751 metres.  All of this drilling was included in the December 31, 2016 mineral resource estimates outlined above.

The 2016 drill program focused primarily on the conversion of mineral resources at Whale Tail and expansion of the IVR Zone.  Work at the IVR Zone successfully delineated a second source of open pit ore, now referred to as the V Zone.

At year-end 2016, construction on the 64 kilometre all-weather exploration road reached kilometre 27.5 as planned.  The permit for the Amaruq exploration ramp and bulk sample collection was received on December 1, 2016, approximately two months ahead of schedule.

2017 Amaruq Activities - Focus On Infill Drilling The V Zone And Finding Additional Near Surface Deposits

Of the initial $330 million capital cost estimate, approximately $73 million will be spent in 2017, and primarily includes completion of the all-weather exploration road, additional technical studies and the procurement of materials and equipment for the 2018 construction season.  This spending is included in the Meadowbank capital cost estimate for 2017.

The first phase of a planned 75,000-metre drill program (costing approximately $22 million) commenced in early February 2017.  The goals of this program are to:

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

The Company is working closely with the Nunavut Impact Review Board ("NIRB") and the Nunavut Water Board ("NWB") on the Whale Tail pit joint permitting process, which is progressing along the schedule and process outlined by NIRB in November 2016.  On January 27, 2017, NIRB and NWB announced the start of the project technical review, which will lead to public hearings taking place at the end of third quarter of 2017.  Approval for the project certificate and water license are expected in the third quarter of 2018.

The estimated capital budget for the Amaruq satellite deposit at Meadowbank in 2018 is approximately $160 million.  Work will be focused on site development (primarily dykes, and surface infrastructure) and pre-stripping activities ahead of the proposed commencement of mining in 2019.

Meliadine Project - First Production Forecast to Commence in the Third Quarter of 2019, One Year Ahead of Previous Forecast

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

At December 31, 2016, the Meliadine property was estimated to hold proven and probable mineral reserves of 3.4 million ounces (14.5 million tonnes grading 7.32 g/t gold), indicated mineral resources of 3.3 million ounces (20.8 million tonnes grading 4.95 g/t gold) and inferred mineral resources of 3.6 million ounces (14.7 million tonnes grading 7.51 g/t gold).  Further details on the Meliadine mineral resources are presented in the mineral reserve and mineral resource section of this news release.  In addition, there are numerous other known gold occurrences along the 80-kilometre-long greenstone belt that require further evaluation.

In 2016, internal studies were carried out to optimize the previous Meliadine mine plan that had been outlined in an updated NI 43-101 technical report dated February 11, 2015 (see Agnico Eagle news release of March 12, 2015).

These internal studies evaluated various opportunities to improve the project economics and the after-tax internal rate of return.  The studies looked at:

• The potential to extract and advance additional ounces of gold into the mine plan from the Tiriganiaq and Wesmeg/Normeg deposits, which could extend the mine life and increase annual production
• Optimization of the mine plan (accelerated access to higher grade areas)
• Improvements to operating costs and capital costs (rationalization of Phase 1 infrastructure)
• Improvement to procurement, logistical and construction schedules (to shorten the project construction timeline)

Based on the results of these internal studies, the Company's Board of Directors has approved the construction of the Meliadine project.  The mine is expected to begin operations in the third quarter of 2019, which is approximately one year ahead of the previous schedule.  The current mine plan will be focused on the Tiriganiaq and nearby Wesmeg mineralized zones that will be accessed from the Tiriganiaq underground infrastructure.

Over an estimated 14 year mine life, it is expected that approximately 5.3 million ounces of gold will be produced at Meliadine.  This represents approximately half of the currently known mineral reserve and mineral resource base.

The current mine plan outlines a phased approach to the development of the Meliadine operations.  The Phase 1 mill capacity is expected to be approximately 3,750 tpd, with ore being sourced entirely from underground in years one to four.  The mill capacity in Phase 2 is expected to increase to approximately 6,000 tpd, with ore being sourced from both the underground and open pits starting in year 5.

The ore zones will be mined using both transverse (approximately 60%) and longitudinal (approximately 40%) stoping methods.  The primary stopes will be filled with paste backfill, while secondary stopes will be back filled with cemented waste rock.  The mill will employ conventional carbon-in-leach processing technology.

Metallurgical recoveries are estimated to average approximately 96%, resulting in average annual gold production of approximately 400,000 ounces in years two through fourteen.  The life of mine average total cash costs per ounce at Meliadine are expected to be approximately $590.  The life of mine average AISC is expected to be approximately $720 per ounce.  Detailed operating parameters for the project are set out in the table below.

Initial capital costs are estimated at approximately $900 million, and consist of approximately $550 million for surface construction and approximately $350 million for underground construction and development, owners costs and drilling.  Sustaining capital costs are forecast to total approximately $48 million per year over the life of mine.  Mine closure costs are estimated to be approximately $49 million.

Summary of the Meliadine Project Key Facts and Parameters

2016 Meliadine Work Program – Laying the Groundwork for Future Production

In 2016, capital expenditures at Meliadine were approximately $131 million.  Work in 2016 included:

• Approximately 3,800 metres of underground development (approximately 25% more than scheduled).  This work included initial access to ore horizons on the 200 and 400 metre levels
• Approximately 6,900 metres of delineation drilling (about 30% of the stopes are fully delineated for 2019, and the grade and tonnage of these stopes has been confirmed)
• Mobilization of materials to facilitate the start of construction activities.  Piling installation and camp construction began in August, while dyke construction and installation of a semi-mobile batch plant commenced in November

At year-end 2016, approximately 55% of the engineering work was completed.  The target is to complete approximately 80% of the engineering work by the end of August 2017.

2017 Meliadine Work Program and Additional Opportunities to Create Value

The estimated capital budget for 2017 is approximately $360 million.  Key elements of this program include:

• 5,600 metres of underground development (including the start of a second ramp system from underground)
• Approximately 12,500 metres of conversion drilling and 14,000 metres of underground delineation drilling
• Completion of the camp complex in the second quarter of 2017
• Installation of underground ventilation and heating by the fourth quarter of 2017
• Completion of the fuel farm in Rankin Inlet and onsite in the fourth quarter of 2017
• Closing in of the process and power plant buildings by the end of 2017
• Construction of second ramp portal in the second to fourth quarters of 2017

The estimated capital budget for Meliadine in 2018 is approximately $380 million.

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

• Optimization of the current mine plan (advance Phase 2 pit implementation)
• Potential to optimize labour costs once the mine is in operation (via improved use of telecommunications)
• Minesite exploration upside through mineral resource conversion and expansion of known ore zones (most zones are open below a vertical depth of 450 metres)
• Potential for the discovery of new deposits along the 80 kilometer-long greenstone belt.  Regional exploration programs are expected to restart in 2017 and to recommence in earnest once the mine starts production in 2019

LaRonde Zone 5 Project Approved For Mining

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).  Permits are expected to be received by mid-2018 with mining expected to commence shortly thereafter.

The project will be mined from underground access using a longhole open stoping method with paste backfill.  All of the ore will be trucked to the surface before being trucked to the nearby LaRonde mill complex.  The ore will be treated at the Lapa circuit at the LaRonde mill, which will become available after the 2017 Lapa mine closure.

At December 31, 2016, LaRonde Zone 5 was estimated to contain mineral reserves of 423,000 ounces (6.3 million tonnes grading 2.10 g/t gold).  Indicated mineral resources were 712,000 ounces (8.9 million tonnes grading 2.49 g/t gold) and inferred mineral resources were 488,000 ounces (2.9 million tonnes grading 5.28 g/t gold).

Underground development began in 2016, and production is expected to commence in mid-2018, and continue through 2026 (approximately an 8 year mine life).  The daily mining rate will start at approximately 1,900 tpd and average approximately 2,000 tpd starting in 2021.  Average annual production is expected to be approximately 45,000 ounces per year at full capacity.

LaRonde Zone 5 gold recovery is estimated at 92% and the average minesite cost per tonne is estimated at approximately C$65.  The life of mine average total cash costs per ounce at LaRonde Zone 5 are expected to be approximately $784.  The life of mine average AISC is expected to be approximately $850 per ounce.

The total capital cost for the project is approximately $80 million, which is comprised of four phases; $14 million for a bulk sample (underway), $46 million for initial capital, $14 million in sustaining capital and $6 million in closure costs.

LaRonde Zone 5 permitting activities fall under the certificate of approval previously obtained for the production of a bulk sample.  The application for the LaRonde Zone 5 paste plant certificate of approval is currently under review by the Quebec Department of Sustainable Development, Environment and Fight against Climate Change and approval is expected in the second quarter of 2017.  The application for the certificate of approval for production at LaRonde Zone 5 is expected to be submitted in the coming months.

The current mining plan is based on the extraction of the current mineral reserves.  The Company is evaluating additional opportunities to create value.  These include:

• LaRonde Zone 5 is open at depth.  Material at depth could potentially be mined with additional trucks
• Additional material may be able to be treated at the LaRonde mill.  This would reduce the current mine life at LaRonde Zone 5, but increase the value of the project

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

Based on the Company's budget assumptions, the Company expects to fund this year's capital expenditures, which are estimated to total approximately $859 million, from operating cash flow and existing cash balances.

The estimated capital expenditures for 2017 include approximately $284 million of sustaining capital at the Company's operating mines and $553 million on development projects, as set out in the table below.  Additionally, approximately $22 million is estimated to be spent on capitalized exploration and approximately $103 million on expensed exploration and project evaluation.

2017 Exploration Program and Budget – Main Focus on Amaruq, New Zone at LaRonde 3, Barsele, the Sisar Zone at Kittila, Satellite Targets at Pinos Altos and La India, and El Barqueno

A large component of the 2017 exploration program will be focused on the Amaruq satellite deposit at Meadowbank in Nunavut, the LaRonde 3 deep deposit, the Barsele project in Sweden, the Sisar Zone at the Kittila mine in Finland, satellite targets at the Pinos Altos and La India mines in Mexico and the El Barqueno project in Jalisco State, Mexico.  The goal of these exploration programs is to delineate mineral reserves and mineral resources that can supplement the Company's existing production profile.

At the Amaruq satellite deposit at Meadowbank the first phase of a planned 75,000-metre drill program (costing approximately $21.9 million) commenced in early February 2017.  The goals of this program are to:

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

At the LaRonde 3 deposit, approximately 28,000 metres of drilling is expected for both conversion and exploration drilling.  Exploration expenditures in 2017 are expected to total approximately $3.6 million.

At Barsele, approximately 18,200 metres of drilling (at a budget of $8.8 million) will be carried out with a focus to expand the mineral resources along strike and at depth, and test the gap between the Central and Avan zones.

At Kittila, approximately $7.9 million will be spent on further deep drilling at Kittila (which includes the Sisar Zone).  The goal of this program is to expand the mineral resources in the Northern part of the property and demonstrate the economic potential of the Sisar Zone as a new mining horizon at Kittila.

Approximately 45,000 metres of additional drilling is expected to be completed by the end of 2017 at the El Barqueno project, principally at the Socorro, Mortero, Carmen, Tierra Blanca, Cuauhtémoc, Peña de Oro, Peña Blanca, San Diego, El Rayo, El Camino, and Cebollas prospects and in the Tecolote-Tortuga areas within the south area of the El Barqueno project.  Exploration expenditures in 2017 are expected to total approximately $16.8 million.

2017 Global Exploration program and budget including expenditures and metres of drilling

Numbers in table have been rounded and therefore totals may differ slightly from the addition of the numbers.
*For the Canadian Malartic operations, in which Agnico Eagle holds a 50% indirect interest, the expenses in this table represent 50% of the total expenses, but the metres represent 100% of the metres of drilling.

Gold Reserves Increase by 0.9M Ounces to Approximately 19.9M Ounces, Successful Conversion at Key Operations and Development Projects

At year-end 2016, the Company's proven and probable mineral reserves (net of 2016 production) totaled 268 million tonnes of ore grading 2.31 g/t gold, containing approximately 19.9 million ounces of gold.  This is an increase of approximately 0.9 million ounces of gold (5%) compared with a year earlier.  The increase in the Company's mineral reserves is largely the result of new internal economic studies at several operations, the successful conversion of measured and indicated mineral resources to mineral reserves at several operations and development projects, partially offset by the 1,662,888 ounces of payable gold production in 2016 (1,874,000 ounces of in-situ gold mined).  The Company's overall mineral reserve gold grade is essentially unchanged at 2.31 g/t from 2.37 g/t, despite slightly lower cut-off grades at each operation which was the result of reduced costs at several operations and a small increase in the assumed gold price as well as changes to foreign exchange rate assumptions used for the estimates.  Agnico Eagle has one of the highest mineral reserve grades among its North American peers.

Highlights from the December 31, 2016 Mineral Reserve Statement include:

• At LaRonde Zone 5, mineral reserves of 423,000 ounces of gold based on a internal study; at LaRonde, 200,000 ounces of gold in mineral reserves declared below Level 311
• At Kittila, conversion drilling in Sisar and Rimpi zones added 338,000 ounces of gold in mineral reserves, before Kittila production of 202,508 ounces of gold
• At Goldex, mineral reserves increased by 33% (218,000 ounces of gold) in addition to production of 120,704 ounces, as a result of conversion drilling in Deep 1 Zone
• At La India, mineral reserves increased by 18% (153,000 ounces of gold) in addition to production of 115,162 ounces of gold, due to successful conversion in the Main Zone extension
• Initial mineral reserves at Upper Beaver containing 698,000 ounces of gold converted from indicated mineral resources (reflecting Agnico Eagle's 50% portion) based on an internal technical study

The Company's year-end 2016 gold reserves are set out below:

Amounts presented in the table and in this news release have been rounded to the nearest thousand.  See "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2016)" set out at the end of this news release for more details, including the economic parameters used in generating the December 2016 mineral reserve estimates.

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

Assumptions  used for the December 2016 mineral reserves estimate at all mines and advanced projects reported by the Company

*The Canadian Malartic mine uses a cut-off grade between 0.33 g/t and 0.37 g/t gold (depending on the deposit)
**The Upper Beaver project has a C$125/tonne net smelter return (NSR)

The above metal price assumptions are below the three-year historic gold and silver price averages (from January 1, 2014 to December 31, 2016) of approximately $1,225 per ounce and $17.53 per ounce, respectively.  The mineral resources at all properties are estimated using 75% of the cut-off grades used to estimate the mineral reserves.

The increase in the Company's mineral reserves is largely the result of new internal economic studies at several operations, the successful conversion of measured and indicated mineral resources to mineral reserves at several operations and development projects.  The Upper Beaver project in the Kirkland Lake area of Ontario (all numbers shown for Upper Beaver reflect Agnico Eagle's 50% ownership in the project.) declared initial probable mineral reserves of 698,000 ounces (4.0 million tonnes grading 5.43 g/t gold and 0.25% copper).  At the LaRonde Zone 5, mineral reserves of 423,000 ounces (6.3 million tonnes grading 2.10 g/t gold) have been converted from indicated mineral resources.  A small decline of 56,000 ounces of gold in mineral reserves was experienced at the LaRonde mine, mainly due to gold production of 305,788 ounces (320,000 ounces of in-situ gold mined), largely offset by the results of conversion drilling on the mineral resources below Level 311 where 200,000 ounces of gold was added in mineral reserves in three levels (a total of 90 metres) below this depth (3,110 metres depth).  These are the first mineral reserves declared below Level 311 at LaRonde.

Conversion drilling was also successful in increasing mineral reserves, notably at three operating mines where conversion more than offset the gold that was mined during 2016.  At the Goldex mine, 336,000 ounces of gold were converted to mineral reserves in the Deep 1 Zone, while gold production from the M and E satellite zones totalled 120,704 ounces of gold (131,000 ounces in-situ gold mined).  The result was a 33% increase in mineral reserves at the Goldex mine.  Conversion drilling mainly in the Sisar Zone, as well as the Rimpi Zone, at the Kittila mine added 338,000 ounces of gold in mineral reserves, while production totalled 202,508 ounces of gold (236,000 ounces in-situ gold mined).  These are the initial mineral reserves in the Sisar Zone, where initial inferred mineral resources were declared one year ago.  At the La India mine, conversion drilling in the Main Zone extension resulted in an additional 193,400 ounces of gold in mineral reserves while gold production amounted to 115,162 ounces (152,000 ounces in-situ gold mined).  The mineral reserves increased by 18% (153,000 ounces gold) as a result.

A reduction in the cut-off grade because of changing estimation parameters was the third factor that resulted in increased mineral reserves, which had a particularly positive impact on the minerals reserves at the Kittila and La India mines.

The Canadian Malartic mine (all numbers shown for Canadian Malartic reflect Agnico Eagle's 50% ownership in the mine) experienced a decline in mineral reserves that essentially corresponds to the gold mined in 2016.  The mineral reserves decreased by 314,000 ounces of gold, explained by 2016 gold production of 292,514 ounces (328,000 ounces of in-situ gold mined).  The decrease in the mineral reserves at the Meadowbank mine by gold production of 312,214 ounces (340,000 ounces in-situ gold mined) in 2016 was partially offset by the addition of 67,000 ounces of gold in mineral reserves from a new study into an extension of the Portage and Vault pits.  Similarly, at the Lapa mine, gold production of 73,930 ounces (88,000 ounces in-situ gold mined) was partially offset by a new economic study that added mineral reserves of 38,000 ounces of gold, which is expected to extend the mine life into the first quarter of 2017.

The gold reserves at the Pinos Altos mine and its satellite Creston Mascota operation declined due to gold production of 192,772 ounces and 47,296 ounces, respectively (202,000 ounces and 76,000 ounces, respectively, of in-situ gold mined).  The Pinos Altos mine depletion was largely offset by an addition of mineral reserves due to conversion drilling in the Cerro Colorado and Santo Nino underground mineral resources as well as the reduced cut-off grade, balanced by a reduction in mineral reserves due to new modelling parameters that affected the Santo Nino pit design.

It is the Company's goal to maintain its global mineral reserves at approximately 10 to 15 times its annual gold production rate.  The current mineral reserves are within this range when compared to the Company's projected annual 2017 production guidance.

In addition to gold, Agnico Eagle's proven and probable mineral reserves include by-product metals of approximately 54 million ounces of silver at the Pinos Altos, LaRonde, La India and Creston Mascota mines (81.5 million tonnes grading an average of 20.5 g/t silver), plus 153,000 tonnes of zinc and 42,000 tonnes of copper at the LaRonde mine (17.6 million tonnes grading 0.87% zinc and 0.24% copper), 25,000 tonnes of copper at the Akasaba West project (4.9 million tonnes grading 0.50% copper) and 10,000 tonnes of copper at the Upper Beaver project (4.0 million tonnes grading 0.25% copper).

At a gold price of $1,250 per ounce (leaving all other assumptions unchanged), there would be an approximate 5.3% increase in the gold contained in proven and probable mineral reserves.  Conversely, using a gold price of $1,050 (leaving all other assumptions unchanged), there would be an estimated 5.0% decrease in the gold contained in proven and probable mineral reserves.  For the Meliadine project, the sensitivity was calculated using a $100 variation in the assumed price of $1,100 per ounce gold; for the Canadian Malartic mine only, the sensitivity was calculated using a 10% variation in the assumed price of $1,200 per ounce gold.

Measured and Indicated Mineral Resources Increase by 1.3M Ounces Gold and Inferred Mineral Resources Decrease by 0.7M Ounces Gold Due to Conversion

Highlights from the December 31, 2016 Mineral Resource Statement include:

• At the Amaruq satellite deposit at Meadowbank, initial indicated mineral resources of 2.1 million ounces of gold at open pit depths, resulting in a decrease in inferred mineral resources to 2.1 million ounces of gold mainly at depth
• At the Odyssey property, initial inferred mineral resources of 714,000 ounces of gold (reflecting Agnico Eagle's 50% interest)
• At the Barsele project in Sweden, initial inferred mineral resources of 661,000 ounces of gold (reflecting Agnico Eagle's 55% interest)
• At the El Barqueno project in Mexico, initial indicated mineral resources of 301,000 ounces of gold and 1.2 million ounces of silver, while inferred mineral resources decreased to 362,000 ounces of gold and 1.0 million ounces of silver; which includes initial inferred mineral resources at Olmeca mineral deposit

The Company's measured and indicated mineral resources now total approximately 333 million tonnes grading 1.53 g/t gold, or 16.4 million ounces of gold.  This represents approximately a 9% increase in ounces of gold (1.3 million ounces), an 8% increase in tonnage (24 million tonnes) and essentially no change in grade compared with the December 2015 measured and indicated mineral resource (see the February 10, 2016 news release for comparison).

Most of the additions in the measured and indicated mineral resources were reported from the Company's development and advanced exploration projects.  At the Amaruq satellite deposit at Meadowbank, initial indicated mineral resources of 2.1 million ounces (16.9 million tonnes grading 3.88 g/t gold) were reported at open pit depths, almost all in the Whale Tail deposit.  Conversion drilling led to an initial indicated mineral resource estimate of 301,000 ounces of gold and 1.2 million ounces of silver (8.5 million tonnes grading 1.11 g/t gold and 4.35 g/t silver) at the El Barqueno project.  Different options are being studied for optimizing the potential processing costs and gold recovery.  Studies at the Kirkland Lake properties allowed for the validation of estimates by previous owners: the Anoki/McBean project (all numbers shown for Anoki/McBean reflect Agnico Eagle's 50% ownership in the project) has a new indicated mineral resource estimate of 160,000 ounces (0.9 million tonnes grading 5.33 g/t gold).

Successful conversion to mineral reserves resulted in decreases in measured and indicated mineral resources, particularly at LaRonde Zone 5, the LaRonde mine below Level 311 and the Goldex mine's Deep 1 Zone.

At the Meadowbank mine, the measured and indicated mineral resources decreased by 475,000 ounces due to a combination of successful conversion of 67,000 ounces of gold to mineral reserves in the Portage and Vault pit extensions, as well as the removal of former underground indicated mineral resources in the Goose mineral deposit.

The Company's inferred mineral resources now total 221 million tonnes grading 2.23 g/t, or approximately 15.9 million ounces of gold.  This represents an approximate 4% decrease in ounces of gold (0.7 million ounces), a 4% decrease in tonnage (8.5 million tonnes) and essentially no change in grade compared with the December 2015 inferred mineral resources (see the Company's February 10, 2016 news release for comparison).

Recent work by the Company on newly acquired properties to validate mineral resource estimates by previous owners had a large positive impact on the inferred mineral resources.  The Barsele project (all numbers shown for Barsele reflect Agnico Eagle's 55% interest in the project) reported initial inferred mineral resources of 661,000 ounces (11.9 million tonnes grading 1.72 g/t gold), mostly at depth.  The North and South Odyssey zones declared initial inferred mineral resources of 714,000 ounces (10.3 million tonnes grading 2.15 g/t gold) at depth, the result of exploration drilling in 2016.  Studies at the Anoki/McBean project near Kirkland Lake have resulted in new inferred mineral resources of 191,000 ounces (1.3 million tonnes grading 4.70 g/t gold).  These numbers reflect Agnico Eagle's 50% ownership of the Odyssey property and the Kirkland Lake properties.

While successful exploration drilling increased the inferred mineral reserves at some properties, that was more than offset, overall, by the successful conversion of those mineral resources to indicated mineral resources.  An example is the Amaruq satellite deposit at Meadowbank, where the inferred mineral resources decreased by approximately 1.2 million ounces to 2.1 million ounces (11.7 million tonnes grading 5.63 g/t gold), mainly at depth in the Whale Tail deposit (38%) and IVR Zone (26%), and the rest at open pit depths in the Whale Tail deposit (13%) and the IVR Zone (23%).  A decrease of 209,000 ounces of gold at the El Barqueno project was due to the successful conversion to indicated mineral resources offset by exploration drilling success, leaving inferred mineral resources of 362,000 ounces of gold and 1.0 million ounces of silver (7.2 million tonnes grading 1.56 g/t gold and 4.50 g/t silver); this includes initial inferred mineral resources of 135,000 ounces of gold at the Olmeca mineral deposit.  Successful exploration drilling at the LaRonde mine below Level 311 added inferred mineral resources of 463,000 ounces of gold to the inferred mineral resources below Level 311; the mine's inferred mineral resources now total 1.7 million ounces (7.7 million tonnes grading 6.68 g/t gold, 14.48 g/t silver, 0.25% copper and 0.60% zinc).

New modelling parameters have resulted in a 327,000 ounce of gold decrease in inferred mineral resources at the Meadowbank mine to 115,000 ounces (1.1 million tonnes grading 3.13 g/t gold) due to the removal of inferred mineral resources in the underground portion of the Goose deposit.

The distribution of mineral resources by property is set out in the following table.  For full details including tonnage and grade, see the "Detailed Mineral Reserve and Mineral Resource Data (as at December 31, 2016)" below.

December 31, 2016 Mineral Resources

NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

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

LaRonde Mine – Higher Grades From Lower Mine Drive Record Quarterly Production; Drilling Indicates Potential Higher Gold Grades at LaRonde 3

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

Production costs per tonne in the fourth quarter of 2016 increased when compared to the prior-year period due to higher underground and mill maintenance costs and the timing of unsold concentrate inventory.  Production costs per ounce in the fourth quarter of 2016 increased when compared to the prior-year period due to the reasons described above.

Minesite costs per tonne in the fourth quarter of 2016 increased when compared to the prior-year period due to higher underground and mill maintenance costs.  Total cash costs per ounce in the fourth quarter of 2016 decreased when compared to the prior-year period due to higher gold production from the lower mine and higher by-product metal revenues.

Production costs per tonne for the full year 2016 increased when compared to the prior-year period due to increased underground and mill maintenance costs and timing of unsold concentrate inventory.  Production costs per ounce for the full year 2016 decreased due to higher gold production from the lower mine.

Minesite costs per tonne for the full year 2016 increased when compared to the prior-year period due to higher underground and mill maintenance costs.  Total cash costs per ounce for the full year 2016 decreased when compared to the prior-year period due to higher gold production from the higher grade lower mine and higher by-product metal revenues.  In 2016, the LaRonde mine produced approximately 4,687 tonnes of zinc (34% more than in 2015), 1.0 million ounces of silver (8% more than in 2015) and 4,416 tonnes of copper (11% less than in 2015).

At the LaRonde 3 project, studies are continuing to assess the potential to extend the mineral reserve base and carry out mining activities between the 311 level (a depth of 3.1 kilometres) and the 371 level (a depth of 3.7 kilometres).

In 2016, infill drilling successfully upgraded portions of the LaRonde 3 mineral resource base.  In the eastern portion of the deposit, mineral reserves of approximately 200,000 ounces (1.2 million tonnes grading 5.15 g/t gold) have been delineated to the 320 level.  Indicated mineral resources have been outlined to the 340 level, while inferred mineral resources extend to the 370 level.  The western portion of the deposit is entirely inferred mineral resources that extend to the 370 level.

An infill drill program is continuing from the 311 to the 371 levels, with a focus on the western portion of the deposit where recent drilling has encountered higher-grade mineralization between the 311 and 340 levels.  Highlights include: 28.1 g/t gold over 9.3 metres in hole LR-290-056A and 13.8 g/t gold over 8.1 metres in hole LR-290-061.

These new high-grade intersections are now interpreted as being a distinct lens of massive sulphide mineralization from the main LaRonde 3 horizon.  In 2016, the first mineral reserves were declared in the eastern portion of LaRonde 3 and additional inferred mineral resources were declared in the western portion of LaRonde 3.  Further drilling is being carried out to assess this new potential and the vertical extent of the mineralization.  Studies are ongoing to evaluate the potential to mine below the currently planned 3.1 kilometres at LaRonde

Selected recent drill results and the collar coordinates are set out in the table below.  Pierce points for all of these holes are shown on the LaRonde Composite Longitudinal Section.  All intercepts reported for the LaRonde mine show capped grades over estimated true widths.

Recent exploration and infill drill results from LaRonde 3 (below Level 311)

* Holes at LaRonde 3 use a capping factor of 80 g/t gold and 1,000 g/t silver.  None of the silver values in this table were capped

LaRonde 3 exploration drill collar coordinates

* Coordinate System UTM Nad 83 Zone 17

[LaRonde Mine Composite Longitudinal Section]

Canadian Malartic Mine – Record Annual Production and Mill Throughput

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

Production costs per tonne in the fourth quarter of 2016 increased when compared to the prior-year period due to the use of additional contractors to maximize stripping activities in the north part of the pit to access higher grades.  Production costs per ounce in the fourth quarter of 2016 increased when compared to the prior-year period due to lower production and the reasons described above.

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

Production costs per tonne for the full year 2016 increased when compared to the prior-year period due to unplanned maintenance on the leach tank, ball mill and crusher components in the process plant and additional stripping costs.  In addition, extra contractors were employed to maximize stripping activities in the north part of the pit to access higher grades.  Production costs per ounce for the full year 2016 increased when compared to the prior-year period due to the reasons described above.

Minesite costs per tonne for the full year 2016 increased when compared to the prior-year period due to higher throughput levels and unplanned maintenance on the leach tank, ball mill and crusher components in the process plant.  In addition, extra contractors were employed to maximize stripping activities in the north part of the pit to access higher grades and increased royalty costs as a result of the higher production levels.  Total cash costs per ounce for the full year 2016 increased when compared to the prior-year period due to the reasons described above.

At the Canadian Malartic mine, exploration programs are ongoing to evaluate a number of near pit/underground targets.  In addition, the Partnership continues to explore the Odyssey property, which is located to the east of the Canadian Malartic open pit.  Both of these opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.

Following the Quebec Bureau des Audiences Publiques sur l'Environnement ("BAPE") public hearings in June and July 2016, permitting of the Canadian Malartic extension project and Highway 117 deviation reached an important milestone with the issue of the BAPE report on October 5, 2016.  The BAPE report concluded that the project is acceptable and provides several recommendations intended to enhance social acceptability.

Since 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 impacts caused by the activities at the Canadian Malartic mine.  Implementation of the recommendations in the Good Neighbour Guide began on September 1, 2016.  As of November 30, 2016, which was the end of the claim period for citizens of Malartic to request compensation for the period from June 2013 through June 2016, approximately 94% of Malartic citizens had registered for the program.

The next step in the permitting process is for the Minister of Sustainable Development, Environment and the Fight against Climate Change to review the report and present his decision to Cabinet for approval.  No date for the approval has been set, but the Company anticipates that this may occur in the first half of 2017.  Production activities at Barnat are currently forecast to begin in late 2018, depending on the timing of the start of construction of the road deviation.

Initial Mineral Resource declared at Odyssey

The Odyssey property lies on the east side of the Canadian Malartic property, approximately 1.5 kilometres east of the current limit of the Canadian Malartic open pit.

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

During 2016, a total of 155 holes (119,396 metres) were completed at the Odyssey property.  The 2016 results have been incorporated with previous work to estimate an initial mineral resource for the Odyssey property (inclusive of the North and South zones).  Inferred mineral resources (on a 100% basis) are estimated at 1.43 million ounces (20.7 million tonnes grading 2.15 g/t gold).  Further details on mineral resources at the Odyssey property are presented in the mineral reserve and mineral resource section of this news release.

The inferred mineral resource does not include drill results from internal zones that extend from the Odyssey North Zone.  Drilling carried out to date suggests that these internal zones could increase mineral resources and enhance the economics of the project by adding higher grade ounces that would require minimal additional infrastructure to access.

Recent drilling on the internal zones returned several significant intersections including: 3.10 g/t gold over 91.5 metres in hole ODY11-5055, 4.24 g/t gold over 12.5 metres in hole ODY16-5099 and 3.23 g/t gold over 10.5 metres in hole ODY16-5105.  Selected recent drill results and the collar coordinates are set out in the table below.  All intercepts reported for the Odyssey property show capped grades over core lengths.  In the first half of 2017, drilling activities at the Odyssey property will focus on further defining these internal zones and expanding the mineral resources in Odyssey North and South.

Recent exploration drill results from the Internal Lode at Odyssey

* Holes at the Odyssey prospect use a capping factor of 20 g/t gold.
** True thickness not determined; these values are core length.

Odyssey prospect exploration drill collar coordinates of selected holes

* Coordinate System UTM Nad 83 zone 17

[Odyssey Prospect – Local Geology Map]

Canadian Malartic Corporation

In addition to the Partnership, each of Agnico Eagle and Yamana have an indirect 50% interest in Canadian Malartic Corporation ("CMC"), which holds a portfolio of exploration properties that includes properties in the Kirkland Lake area of Ontario and the Pandora property in the Abitibi region of Quebec.

At the Pandora property, 23 diamond drill holes (15,767 metres) were completed in 2016, with a focus on the western portion of the property.  A supplemental program consisting of three holes (3,000 metres) is underway.  Additional exploration work at the Pandora property will depend on the results from the 2017 supplemental program.

At Kirkland Lake, an internal technical study was completed in 2016, which allowed a total of 1.4 million ounces of gold and 10,000 tonnes of copper to be classified as mineral reserves (8.0 million tonnes grading 5.43 g/t gold and 0.25% copper) (on a 100% basis).  Mineral resources were also expanded at the Anoki and McBean deposits.

The 2017 exploration program will consist of 25,750 metres of drilling at an estimated cost of C$7.3 million (on a 100% basis).  Drilling activities will be focused on regional targets around the Upper Beaver project and elsewhere in the camp and depth extensions of the Amalgamated Kirkland mineral resource.

Lapa – Strong 2016 Performance, Additional Production Forecast in 2017

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

Production costs per tonne in the fourth quarter of 2016 increased when compared to the prior-year period due to higher costs associated with development work in the new zones that had been previously excluded from the mine plan and the timing of unsold inventory.  Production costs per ounce in the fourth quarter of 2016 increased when compared to the prior-year period due to lower production and the reasons described above.

Minesite costs per tonne in the fourth quarter of 2016 increased when compared to the prior-year period due to higher costs associated with development work in the new zones that had been previously excluded from the mine plan.  Total cash costs per ounce in the fourth quarter of 2016 increased when compared to the prior-year period due to lower production and the reasons described above.