Agnico Eagle Mines Ltd (AEM) 2009 Q1 法說會逐字稿

Good morning, everybody. We are prepared to begin. Ladies and gentlemen, welcome to the Annual and Special Meeting of Shareholders of Agnico-Eagle Mines Limited. My name is Jim Nasso. I'm the Chairman of the Board. [spoken in French].

We like to follow our custom and greet the various people in the jurisdictions in which we serve in their respective languages, and that will be Finnish, Swedish, Spanish, and Inutituk. So Pertti Voutilainen, from our Finnish director from Finland, who will do it in Swedish and Finnish.

[spoken in Swedish and Finnish].

Thank you, Pertti. Tim Haldane in Spanish.

[spoken in Spanish]

Thank you, Tim. And we're honored to have here this morning the [MLA] from Baker Lake, Moses Apaluktuq, and he will do the greeting in Inutituk. Moses?

[spoken in Inutituk].

Thank you, Moses. We will proceed with these formalities, which is the usual thing we do each year. We will make them as brief as we possibly can. I think we have a ballot this morning and we will deal with that as we go along. But word for word in accordance with the advice we get from our general counsel, Mr. Laing, I will begin in accordance with the bylaws of the Corporation, I will preside as chairman of this meeting. Mr. Greg Laing, General Counselor Senior Vice President, Legal and Corporate Secretary of the Corporation, will act as secretary of the meeting. And with the consent of the meeting, Shirley Tom and Irene [Zelna] of Computershare Trust Company of Canada, the Corporation's registrar and transfer agents, will act as scrutineers. Shirley, could you please stand so you will be known when you are known to the folks when you pass out the ballots, wherever you are? Okay. There she is back there. Okay. Thank you.

Before we begin the meeting, I would like to introduce the head table my fellow directors. The head table and my fellow directors. With me at the head table is Sean Boyd, our Chief Executive Officer. Ebe Scherkus, President and Chief Operating Officer and Director of the Corporation. Sean is a director as well by the way. And Greg Laing, General Counsel, Senior Vice President, Legal and Corporate Secretary.

Now my fellow directors that are sitting at the table here, beginning with -- and would you kindly stand as I call your name? Dr. Leanne Baker; Doug Beaumont; Wes Davis; David Garofalo, who is also our Senior Vice President of Finance and Chief Financial Officer and, by the way, the Chief Financial, the top CFO in all of Canada, as was acknowledged by Caldwell Partners at a large dinner we had the other day. Congratulations, David. And Bernie Kraft, a long-standing director, Bernie; Mel Leiderman; Merfyn Roberts, from jolly old England; Howard Stockford; Pertti Voutilainen; and where is Cliff Davis here? We've done him. Okay.

Also in the front row are other members of senior management. Would you kindly stand when your name is called? Don Allan, Senior Vice President of Corporate Development. Alain Blackburn, Senior Vice President of Exploration. Tim Haldane, Senior Vice President of Latin America. Daniel Racine, Senior Vice President of Operations. Jean Robitaille, Senior Vice President of Technical Services. Picklu Datta, Vice President and Controller. Paul-Henri Girard, Vice President of Canada. Patrice Gilbert, Vice President of Human Resources. Louise Grondin, Vice President of the Environment and Sustainable Development, better known as Mother Earth. Ingmar Haga, Vice President of Europe. Marc Legault, Vice President of Project Developments. Claudio Mancuso, Vice President, Treasurer. David Smith, Vice President of Investor Relations.

Notice of Meeting. I confirm that I have received the sworn affidavit of an officer of Computershare Trust Company of Canada, stating that the notice of the meeting, the management proxy circular and a form of proxy have been sent to each shareholder, each director of the auditors of Agnico-Eagle. The affidavit as to such mailing has been signed by Computershare Trust Company of Canada. I direct the Secretary of the meeting to keep a copy of the affidavit with the minutes of the meeting.

With the consent of the meeting, I will dispense with the reading of the Notice of the Meeting. Scrutineer's Report on Attendance. The secretary of the meeting has advised me that we have received the scrutineer's report, which indicates the number of shares voted by proxy against the appointment of auditors, the amendment to the employee share purchase plan, and the amendment to the bylaws of the Corporation is less than 5% of all the votes that might be cast at this meeting. Additionally, the scrutineer's report indicates that the number of shares withheld from voting by proxy for the election of each of the directors standing for election is less than 5% of all the votes that might be cast at the meeting for each director. Therefore, a vote by show of hands on these matters would be in order with respect to the amendment to the stock option plan. A ballot will be taken. And that is the quorum.

The scrutineers have also advised me that prior to the meeting, proxies were received from holders of a sufficient number of shares that constitute a quorum. I therefore declare the meeting to be regularly called and properly constituted for the transaction of business. I directed the forum report of the scrutineers the annex to the minutes of this meeting as a schedule.

The auditor report and financial statements. The first item of business is the presentation of the audited financial statements of Agnico-Eagle Mines for the year ended December 31, 2008. And the auditor's report on these financial statements, both of which have been previously sent to the shareholders of the Corporation. If anyone did not receive these financial statements, additional copies are available here. I now place before the meeting the audited financial statements of Agnico-Eagle Mines for the fiscal year ended December 31, 2008 and the audited report on these financial statements. Questions regarding these statements will be entertained at the end of the meeting.

The amendment to the stock option plan. Because of the need for a ballot, we will alter the order of business. Items that set out in the agenda to begin with the amendment to the stock option plan. Therefore, the next item of formal business to consider at this meeting is the approval of an amendment of the Corporation's stock option plan as more fully described on pages 10 and 11 of and in the Appendix B to the management proxy circular. May I have an appropriate motion?

I move (technical difficulty) approving the amendment to the Corporation stock option plan as set out in Appendix B to the management proxy circular dated March 25, 2009, approved.

May I have a seconder of the motion, please?

It is necessary to vote by ballot on this resolution. And I therefore direct that a ballot be taken. My ballot will reflect the wishes of those shareholders who have named me as a proxy. I would ask registered shareholders and proxy holders to identify themselves by raising their hands and direct the scrutineers to contribute the ballots to these entitled to vote. It will just take a minute to get organized and then we will carry on. Shirley, could you please distribute the ballots and would you indicate whether you are a shareholder or not by raising your hand and she will present you with a ballot. And we will carry on and we will take the later.

The election of directors. The next item of business is the election of directors. All registered shareholders and proxy holders have been provided with a ballot for use in this motion. You should record your vote in respect of this motion by marking an X in the box entitled for the motion or against the motion as the case may be and by signing and printing your name in the spaces indicated on the ballot. Once you have completed your ballot, would you kindly hold it in the air for the scrutineers to collect?

While the ballots are being collected and tabulated, we will continue with the formal part of the meeting, and we will announce the results in a few minutes.

Election of directors is the next item on the agenda -- is the election of directors of the Corporation. Articles of the Corporation provide for a minimum of five and a maximum of 12 directors. The Board of Directors has determined that the total number of directors to be elected at this meeting is 12. I now declare the meeting open for nominations. May I have nominations please?

Mr. Chairman, I would like to nominate as director of Agnico-Eagle Mines Limited Dr. Leanne Baker, Douglas Beaumont, Sean Boyd, Cliff Davis, David Garofalo, Bernard Kraft, Mel Leiderman, James Nasso, Merfyn Roberts, Ebe Scherkus, Howard Stockford and Pertti Voutilainen. All those named in the management proxy circular. I move that they be elected directors of the Corporation to hold office until the next annual shareholders meeting following this meeting or until their respective successors are elected or appointed.

Thank you, Don Allan. May I have a second of the motion? Thank you. Are there any further nominations? As there are no further nominations, I declare the nominations closed. Since the number of nominees is the same as the number of vacant positions available to be filled, I now declare that those persons nominated have been duly elected by acclimation as directors of Agnico-Eagle Mines Limited. Under the Board of Directors majority voting policy in an uncontested election of directors, any nominee that receives a greater number of votes withheld than votes for election will tender his or her resignation to the Chairman following the meeting.

The scrutineers have advised me that proxies were received from holders of a sufficient number of shares that each of the nominees for director received more votes for than the possible numbers of votes withheld. And accordingly, none of the directors will be required to tender his or her resignation under the majority voting policy.

Appointment of the auditors. The next item of business is the appointment of auditors for Agnico-Eagle Mines for the current year. It is proposed that Ernst & Young [Verdi accountants] be appointed as the auditors of the Corporation to hold office until the next Annual Meeting of shareholders of the Corporation or until their successors are apppointed and that the auditor's remuneration be fixed by the Board of Directors of the Corporation.

May I have an appropriate motion? May I have a second of the motion? Thank you. You have heard the motion which has been seconded. Is there any discussion? As there is no discussion I will now ask the meeting if it is ready to vote on the motion. All those in favor, please signify it by raising your hand. Contrary, if any? Motion carried.

Amendments. The next item, amendment to the employee share purchase plan. The next item of formal business to consider at this meeting is the approval of an amendment of the Corporation's employee share purchase plan as more fully described on pages 9 and 10 of appendix B to the management proxy circular. May I have an appropriate motion, please?

(inaudible) employee share purchase plan as set out in Appendix B to the management proxy circular dated March 25, 2009, approved.

Do I have a seconder of the motion?

I second the motion.

Thank you, Howard. You've heard the motion which has been seconded. Is there any discussion? As there is no discussion, I will now ask the meeting if it is ready to vote on the motion. All those in favor please signify by raising your hand. Opposed? Contrary, if any? Vote hands. I declare the motion (technical difficulty).

Amendment to the bylaws. The next item of formal business to consider at this meeting, the confirmation of an amendment of the Corporation's bylaws as more fully described in pages 11 and 12 and in Appendix F to the management proxy circular. May I have an appropriate motion?

I move that the resolution confirming the amendment to the Corporation's bylaws as set out in Appendix F, the management proxy circular dated March 25, 2009, confirmed.

Do I have a seconder of that motion?

(Inaudible question - microphone inaccessible)

You have heard the motion which has been seconded. Is there any discussion? As there is no discussion, I will now ask the meeting if it is ready to vote on the motion and those in favor please signify by raising your hand. Contrary, if any? I declare the motion carried.

With respect to respect to the ballot conducted earlier, the scrutineers report will be (technical difficulty) that the resolution relating to the amendment to the stock option plan has been duly carried by a majority of the vote cast accordingly. I declare the resolution carried. If any shareholder is interested in the exact number of votes cast in favor of or against the resolution, he or she may obtain particulars after the meeting by contacting the Secretary.

At this point, I would like to terminate the meeting. Is there any further business? If there isn't, I would ask for a termination. May I have a motion please?

I so move.

May I have a seconder?

(Inaudible question - microphone inaccessible)

All those in favor of the resolution, please signify by raising your hand. Contrary? Motion carried.

I declare that the formal portion of this meeting is now terminated before we move to the presentation of management.

We have something that we have instituted a couple of years ago, and it is the Paul Penna award, and this is the second year, as I said, for community service. Mr. Penna was the founder of Agnico-Eagle Mines. Without Mr. Penna's [great] courage and all his efforts we wouldn't be here today. So this is in his honor, and he was well noted for his philanthropy and concern for the well-being of his employees and the betterment of the communities in which we operate. And by the way, that's a large part of our lives. I'll speak to that later.

The Paul Penna Award is awarded to Agnico-Eagle employees who best exemplifies the philosophies of our founder, Paul Penna. Through community involvement, dedication and hard work, Paul Penna left an enormous impact on the communities he was part of and helped change the lives of many people, one person at a time.

This award has been established to ensure that his values continue to play a major part in the identity of Agnico-Eagle as a company as well as allow the legacy of Paul -- Mr. Penna to live on through the positive initiatives laid forth by our employees. As we have this, winners of the Second Annual Paul Penna award, they are in alphabetical order -- and could you please stand? [Alan Morris], and Francois Petrucci, better known as Francesco. Where are they? Thank you. I will call you forward in a minute.

Alan Morris has continually proven that he is a true ambassador for the Agnico-Eagle company culture and Paul Penna's community spirit. Through his mentorship of our junior geologists, his leadership role in our health and safety programs, as well as his public relations efforts in our primary area of exploration, Alan maintains active roles in the Spring Creek High School Booster Club and serves as a judge for speech and debate tournaments, is a member of the parent advocacy group for educational excellence, which assists underprivileged children with scholarship opportunities for higher education and has been a pack leader for the Cub Scouts of America. Additionally, for the last 30 years, he has held leadership positions in the Geologic Society of Nevada, the Elko chapter, both the secretary and treasurer, and has continued his participation as a field trip guide for the annual mine tour. He is a long supporter of Society of Economic Geologists, the Hickok-Redford Fund, which offers study grants for geology students, which projects in high altitude or high-altitude areas and was established to memorialize tragic deaths of two geologic explorers in an Alaskan avalanche. Alan has also been a squadron commander of the air search and rescue team for the Elko Civil Air Patrol and a Geographic Information Systems instructor at Great Basin Junior College.

Alan's generosity extends beyond the geologic community in supporting the activities of his family members. Each year, Alan, his wife Lynn and his son, David, adopt a family for Christmas, providing a meal and gifts for each member of the family. [Awarded] them through the friends and service, helping local families and organizations. Alan, would you please come forward (technical difficulty)? Well-done.

The second recipient of this award, Francois Petrucci, a resident of [Rue en Nuranda], an employee of Agnico-Eagle since 2005, is currently the engineering discipline leader in the technical services division based in the Abitibi. Since 2000, Francois has been a member of the Resources Action Parents, a committee established by Rue en Nuranda, who commissioned to set up conferences related to the art of being a parent. Mr. Petrucci gives conferences throughout the Abitibi School District on this topic.

In 2005, Francois became a member of the [Choral Ensemble Milar], and was a key organizing member for its 25th anniversary in 2008. According to the president of the Choral Ensemble Milar, Francois played a major role in the organization of this 25th anniversary event and was praised for the fact that he is super motivated, works very hard and has great people skills. Francois is noted for always giving his best in the accomplishment of his work.

Francois is also involved with the various school committees and was member of the Council of establishment of the [Iberville] Polyvalente between the years 2002 and 2005. Francois was the president of the Rue en Nuranda School of Judo. Francois is now offering his knowledge to the students of mining technique at the Abitibi [Demescimane Deja] at the request of Agnico-Eagle, as there has been a shortage of professors.

Both Alan and Francois fully exemplify the Paul Penna spirit of giving and paying it forward for the less fortunate in their communities, instilling excitement for the industry that has supported them throughout their respective careers and as supporters and advocates for education opportunities. Francois, would you come forward to accept the reward?

[spoken in foreign language].

Thank you. I prepared a half an hour speech there, but I think I can short it out by just thank you and thank you to Agnico-Eagle.

Just a quick message for Jim here. I mean three years ago when you came aboard, (inaudible) but my girlfriend's birthday and you kindly offered her a flower, so thank you very much. Today, it is my older son is getting 18 years old, so it's going to cost you a lot more today I guess.

Here comes the best and the interesting part of the meeting, some remarks from our fabulous Chief Executive Officer, Mr. Boyd.

Greg wants me to do this Safe Harbor. Greg is up her to keep us out of trouble. He says do the Safe Harbor.

We will get to the Safe Harbor in a minute. It's just after this slide, but I wanted to welcome everybody. This is -- we were thinking back and before I joined Agnico in 1985, I was an auditor with Clarkson Gordon, who worked on the Agnico account, so this is my 27th annual meeting, so time certainly flies. We see some people that were there as well, back 27 years ago.

So this company is all about sort of culture, how we treat people, how we go about building mines and it hasn't changed over many, many years. And Jim made reference to it with the Paul Penna award. Paul Penna used to live in this hotel, so this was the center of action for his mining endeavors for many, many years, so it's appropriate that we continue to give out an award in honor of Paul's memory and Paul's spirit. And as Jim says, without Paul and his guidance, we wouldn't be here. And we'll talk about that in a minute when we sort of give you a sense of our strategy and what we're trying to do. But today, we certainly want to talk about strategy. We want to talk about our projects. We want to talk about the good things. We want to talk about things that are presenting some challenges for us that we will fix and get over and continue to move on. The major message though is that the big picture is very much intact. Growth is very much intact. And in this industry, which the industry is finding it difficult to grow, it's really about growth and it's about quality growth, which is really what Agnico is all about and will continue to be as we move the Company forward. Is that enough Safe Harbor? Two Safe Harbor -- we have got two Safe Harbor statements now.

Here's a quote. This quote was from Agnico-Eagle's 1999 annual report. This quote is more apt today than it even was 10 years ago. But this shows you how we, as a board and as a management team, think about gold, which translates into how we think about our business. And this quote was in an annual report which was basically against hedging. And we included an article in that report from John Hathaway called the Folly of Hedging. And did that turn out to be right. And so gold hasn't changed. Gold is still simple. It's still money. It's still one of the best portfolio diversifies out there. It's still one of the best servers of wealth. You can't print it. Gold hasn't changed. People's perception of gold has begun to change. And that's why we're seeing higher prices. And that's why we will continue to see higher prices. The dynamics of the market have changed dramatically. People say well, jewelry demand is off; yes it is. Jewelry demand moves and adjusts to different price levels. But when you look at it, investment demand has more than made up for the loss in jewelry demand.

In the first quarter of this year, we had record amounts going into the gold ETF. And the gold ETF is only a third of the bar and coin market, which has also seen tremendous growth. More recently, we've seen the People's Bank of China start to buy gold or announce that they've been buying gold over the last six years. That's critically important as we move forward because that sends a signal to investors and the market -- it sends a signal to other central banks, that if the Chinese feel a need to protect their central bank reserves by positioning themselves in gold, then maybe others should look to do the same.

And even with a 76% increase in the Chinese banks' gold position in the last six years, the actual percentage of gold as a percentage of the reserves has gone down to 1.6%. So there's still a lot of room there for the Bank of China to continue to increase their exposure to gold. So there's a whole different dynamic here in the gold space. At the end of the day, when you look at the financial uncertainty, the economic uncertainty, which is unlikely to go away anytime soon, I think you are well positioned with gold.

Whether we get into an inflationary period or whether we struggle here in a deflationary period, gold is a great insurance policy, always has been. Things have not changed. But as we say, the perception has changed. And you can do a lot worse than be in gold.

In fact, if you look at during a period of massive wealth destruction that we saw late last year, gold did its job. It preserved value and it provided liquidity for those people that were holding gold. So we firmly believe in gold. We have never, ever, as you know, sold an ounce forward. So our commitment has been true over many, many years, and we have tried to build our Company in a very simple, straightforward fashion to match characteristics and the attributes of gold.

And this is also from the 1999 annual report. Things don't change. We are very consistent with how we approach our business, how we look at our business and how we want to do things as a management team and as a board. And these are still our goals. It's based on quality and growth. It's not based on being the biggest. It's based on being the best quality within a good industry. And I think we've been able to achieve that.

The current five-year program that we've been working on has been transformational. As you know, we transformed the company from a regionally focused single-asset company to a multi-mine international company. That hasn't been easy. We have had our challenges. We have had our bumps in the road. We continue to have some challenges, but we will get those solved, as we always have. It's a matter of focus, we have the right people, and we will just continue to move the Company forward.

The next phase of growth, the next five-year plan, we very much look forward to because we will be running less. We will be thinking more, and that's where we have created our best value if you look back at our history. And we wouldn't be here -- we do things a little bit sort of out of the ordinary for a gold company. The Temagami mine was -- the construction decision was made there when the feasibility study suggested that we needed a lot higher gold price. Also as well, we can't wait for the gold price. We're going to build it, and the gold price will be there. And without that type of vision, we wouldn't be here. So it was that vision which led Ebe to ask us for $20 million in 1990. That $20 million found us 8 million ounces.

We were drilling holes down at 9,000 feet and people say well, what are you doing that for? Why do you need that information? Well, we want to know; we want to know for planning purposes. So that was part of the program that found the extra 8 million or 9 million ounces.

We've got news for you. We've got a hole underway right now that has targeted an area 4 kilometers below surface. [Lane] is directing that program. Again, people say well why are you going to bother? We want to know. Some of our best holes are down at 3 kilometers. This deposit likely does not stop. We probably won't be here when we're mining at those levels, but the next generation of management will be there, and it's a quality asset. So we think a little bit out of the box, and that has paid tremendous dividends for us as we move forward. So not a big change in our strategy.

And we're at the tail end of this transformational five-year phase, but what that's allowed us to do is dramatically increase output at record production in the quarter. We will double our output this year versus last year. We will double it again in 2010 versus the 2009 level. Our reserves continue to grow. They grow through consistent exploration. We've got a target at the end of 2010 to be at the 20 million to 21 million ounce level from the existing projects. We've got definite targets to do that. What's unique about this reserve base is it's chunky, it's sizable. It's not spread out all over the world. We don't have 20 deposits. We have six, and they are wide open. They're surrounded by large land packages. We have got an exploration team working those deposits that have been with us for over 20 years, and have a tremendous track record. That is a big part of our success.

Our niches, we're pretty good at identifying early-stage opportunities that have the potential to grow. And if you look at our acquisitions in Kittila, in Mexico at Pinos Altos, and (technical difficulty) at Meadowbank, since acquisition, the reserves and resources of those projects have grown almost 905. And again, these deposits are wide open. They will continue to grow as we gain better access, we gain better knowledge and we increase the budgets to a team that has had a great track record of adding ounces.

Costs are important. On a cost per ton basis, we're hitting our targets in Quebec. That's a low-cost jurisdiction. That's our foundation. That's our anchor. Our forecast is that we can still, as we move forward, be in the lowest quartile of cash costs in the industry because half of our assets are in that low-cost jurisdiction where we have operated for (technical difficulty). So that will continue to be our base and our foundation.

And in terms of financial position, we added significantly to our balance sheet late last year. As you see in the quarter, our cash flow was $50 million. So when you look at our cash, our available credit, our cash flow, we have what we need to build the current pipeline of projects.

Here is a summary of the quarter compared to the quarter in 2008 and the full-year estimate. We did downgrade the estimate from 590,000 to now a range of 550,000 to 575,000. That was principally based on Kittila, and we will talk about those when we get to the Kittila slide. We feel we can get Kittila sorted out this quarter and support that range of 550,000 to 575,000. Our cash cost estimate ticks up a bit from 325,000 to 340,000 because we're dealing with a smaller number of projected ounces.

But again, LaRonde continues to generate good, steady output. Goldex is working fine. A year ago we were standing here and we were stumbling a bit with the hoist system at Goldex. We said we would fix it. We fixed it. There's a mine right now that is generating daily profits of over $200,000, a deposit that people said would never become a mine. Due to the skill of our people and our patience, our senior team and our Board, we will able to build that mine. So that goes back to Paul Penna's philosophy, mines are made, they are not found. And Goldex is certainly a good example of that. That's the anchor.

Lapa, we start producing gold and pouring gold in the next few days. We have already had the gravity circuit up and running. It's nuggety gold. There's visible gold in the core. About 80% of the drill holes have visible gold. And we will see in the slide we're seeing higher grades. It's early. We certainly have to run that through the mill. But the base of production is very solid.

As we said, it generates very good cash flows. We're generating roughly $50 million a quarter. $48.8 million, and that will just ramp up as we move forward. Mines are starting each quarter now for the next several quarters.

Financial position, $200 million in cash. We have capacity under our credit facilities to borrow another $130 million. And we have common shares outstanding fully diluted of 170. So we've been very good over many, many years of trying to keep the count of shares outstanding down while we add quality deposits and expand those deposits and add value through explorations. That formula works very well.

Growth is something that we don't see a lot in this industry. We've gotten lucky in terms of making the right acquisitions at the right time, but we have growth, and we have very dramatic growth in 2009 and 2010. And as you know, we're working on additional expansion studies at four of our six projects. We feel with those internal opportunities that we can continue to show growth beyond 2010 and 2011. And that's something that the industry has had a challenge in doing. So we don't need to make acquisitions to grow, not that we are not looking.

We are built and we are suited to build deposits, to have a pipeline of deposits. A foundation for the next phase of growth will be the internal growth opportunities. We will talk a little bit about that as we go forward.

Reserves are a key part of the story. They've grown steadily over many years and will continue to grow as we drill our wide-open deposits. And as we said in the beginning, one of the key components of this reserve base is the fact that several of them are over 5 million ounces.

We've done a little bit of work over the last little while and our IR team has identified about 41, 5 plus million ounce deposits that are currently in operation. And as we build our deposits and continue to explore, we may be in the fortunate position of owning three or four. Five plus million ounce reserve properties that are in production. And that would put us in a very enviable position in an industry that is lacking large quality deposits.

We always focus on per-share. We've tried to keep that float down over many years, but not only have we been able to provide good growth in reserves per share, because we have grown our reserves almost 14 times while our float has grown about three times over a 10-year period, we are growing our production per share. And that will also translate into growth in cash flow per share.

Big picture is still very much intact. 2010, looking out about 1.2 million ounces. This is just based on the current plan, the current construction plan at the existing deposits. It's not based on any of the studies that we have underway now. In fact, we've completed one. It's been filed. That's the Creston Mascota study in Mexico, and that's a positive rate of return. We have not made a decision on that one yet. We expect the Goldex study to be done soon, and that will show also a positive rate of return. So we will have some decisions to make as we move through 2009 and get these studies in on positioning this company to continue that growth trajectory beyond 2010 and 2011.

Big CapEx spend is behind us. It was fortunate for us that we made a decision to build these deposits back in '05 and '06 because now they're going into production at a much higher gold price. But we were building a big part of this construction or we were conducting a big part of this construction at the peak of prices for things like oil and steel. So infrastructure costs a lot. And that was certainly reflected in 2008 when we spent almost $900 million. As we move forward, we are seeing a moderation in some of those costs at most of the projects. We also have some cost pressures, as you saw in the release, at Meadowbank due simply to logistics.

Meadowbank, you don't see the immediate impact right away of a lower oil price because we had to buy the oil we are using now a year ago, and we were paying $1.20 a liter. We are currently purchasing diesel fuel now at prices in the low $0.60, which will start to impact us the second half of 2009 and 2010. We'll be looking to lock in oil for a much longer period.

But the big CapEx spend is behind us as we build these projects, so net free cash flow will increase. And it will see a dramatic jump next year as our CapEx moves down about $150 million.

Quality is something we've been focused at rather than just size. We've been focused on quality. There's a simple formula for us. We like to own things 100%. We like to move them forward at our pace. We like to drill them aggressively. We like to develop them aggressively. And we can only do that if we feel if we own them 100%, but they are also in pro-mining regions, in regions where there is a permitting regime that you can understand and that you can work with the permitting regime and with the local population and get their support and move these projects forward.

In many cases, if you look at something like Meadowbank, two years ago, they were just tents on site. And right now we've got, in terms of people and contractors there, six, we're going to have over the summer over 600 people, a heavy construction period, so it's been a dramatic change. And you can't do that unless you are in a region that is supportive of mining. We see that in all the regions we're in.

And we've put some notations up on the slide above the Fraser Institute rankings for these jurisdictions. And again, number one is Quebec. So we are blessed to have half of our assets in the number one-ranked mining jurisdiction in the world in terms of mineral policy and (technical difficulty).

LaRonde. It's the anchor. It continues to perform extremely well quarter after quarter after quarter. The mine manager, Christian Provencher, is here, and he's done an amazing job of keeping this engine going. And he is keeping it going while a lot of his good people are being extracted and taken to our other projects. So it's not been an easy job, but it's a testament to the quality of the team there and the quality of the asset. It generates great production at very good cash costs. It's meeting its target. It's going deeper. And that's not easy to do. And that project is on schedule, and it's on budget. And we will finish the shaft sinking this year. And we will start to produce ore there beginning in 2011.

So again, people said several years ago you are never going to be able to mine at those depths. Well, we're almost there. We've got great ground conditions. We're not seeing any issues with respect to dilution. And that will be a flagship for us for many, many years. There's still 5 million ounces of reserves there. We've mined 4 million. There's another million in resource. This is a world-class deposit that will likely mine out at the end of the day at over 10 million ounces. And as we mentioned earlier, we currently are drilling a hole that is targeted to hit 4 kilometers below surface along that (technical difficulty).

Goldex, again, a great story. We had an investment in it since 1971. It took us 37 years to get it into production, producing at the design rates, making us good, solid money. The reserve base continues to grow. We replaced reserves last year. We continue to drill it. We feel that we can continue to drill the reserve base. There's another 900,000 ounces or so in resource, so this will be a long-life mine for us just on the western edge of the town of Eldor. We are looking to expand this, and we have a study which would see the minimum time tonnage rise from about 6,900 tonnes a day to over 8,000 tonnes a day, and hopefully we can do better.

I think the experience of our people on the processing side is always to build facilities that allow us to increase the headroom for little investment as we go forward. So I think this will certainly be the case.

Kittila in Finland, we've got a longer commissioning period. We've extended it into the second quarter. As you know in reading a press release, we've had some challenges on the metallurgy side. What that is is just an issue of trying to get the parameters right. And there is no activation of the carbon before it goes into the autoclave. So this is happening in the autoclave. During our test work, we were getting recoveries of 89%. There were suggestions that you could have this issue as a result. We did build a flotation circuit, which is in place. We did build some flexibility into the autoclave, where we can adjust the acid and the oxygen parameters on a very wide range to allow us to get the right mix. And that's what we're working on right now. We've got some of the top people in the business working on that, and we will get this fixed. This will run, and this will be a very big deposit, and this will be a steady producer of ours for many, many years to come.

Suggested mime life here based on reserve and resource would be about 40 years. And this continues to grow. We have drilled it down to 1100 meters. It's wide open. We've got some recent intersections that suggest the deposit will get bigger. This one will be likely our biggest deposit and a strong contributor. We've got most of our -- the single largest exploration budget is at this property, where we are spending $16 million out of a total budget of a little over $50 million in 2009. We've got nine drills going on this (technical difficulty).

A little bit more on the commissioning side. Mechanically, a big part of our challenge was getting everything mechanically working so that we could start to work on the metallurgical side and commission the pressure oxidation circuits. So we got behind a little bit on construction, had the issues on the freezing ore, so we couldn't get up to steady tonnage there to start to fine-tune the metallurgical side. So Jean Robitaille and his team weren't able to get at it early enough so that we could get things sorted out in Q1. We will get it sorted out in Q2. We have identified the issues. We have identified the potential solutions. Those are being systematically done as we speak step-by-step. We've already had some indications that things are getting better there right now.

We fully anticipate that we will be up to design capacity over the life of that mine, recovery rate, which was in the feasibility, of a minimum of eighty-(technical difficulty).

Lapa, we talked about it. There's a picture of the gravity circuit. That one is on schedule. In fact, in our production profile, we weren't anticipating any ounces (technical difficulty). So we will be pouring gold there in the next -- over the next few days. Certainly early next week is the target.

We're seeing, as we said in the press release, higher grades. We are seeing grades in the first three stokes, where we expect that a little over eight grams, we're getting a little over 12 grams. That's early. We still have to confirm that, but -- by putting things through the mill. But that deposit has been characterized by having very high-grade intercepts, in certain parts of the deposit. So there may be a positive nugget effect. We won't know until we get a couple of quarters of milling of the ore underway. We continue to explore it, but we have to go deeper there.

But we have had some results that we announced and was announced by a junior maritime property, Midland Exploration. And that's just down the trend as you move towards [Melardic]. And we're getting some interesting results. So there's still a lot of exploration on that trend along that highway between Cadillac and (technical difficulty).

Pinos Altos, on schedule for production, expected in the third quarter. That deposit had a significant growth in reserves last year. As a result, we're looking at a couple of things there. We're looking at a potential expansion by building the satellite deposit at Creston Mascota. The study is done. It's a positive study. So we will be considering that as we move forward in 2009. As we have drilled around the main Santa Nino structure, we are getting good results near surface. So, it's early, but that one certainly is pointing to the possibility of being able to expand output at some point down the road along that mainline horizon.

So again, we are actively drilling that. We have got a top-notch team there in Mexico that has a lot of experience building mines in Mexico, and they've kept that project on time, on budget.

In terms of exploration of focus, it is also a major focus for us. We've got a very large land package there, and we are just getting access, increasing knowledge to new areas, building roads, getting permits to go into new areas. We think this one is going to be able to grow.

At Meadowbank, it's a large gold deposit. It's one that will also continue to grow. We had some issues in the quarter on CapEx increasing. It increased on the construction side, $60 million US. A lot of that is from really logistics and moving people. We're having to move more people, more equipment; it's more costly to do that. Things are getting easier as we go forward in terms of having an airstrip in place, but there's still some logistics and these are some of the challenges in dealing with the ports in the area. We certainly need some improvement. Have got some solutions for those.

But, we feel here that even with the increase in CapEx, the IRR is still better than the IRR we had when we made the production decision here. And with a land package of over 40,000 hectares, we feel that this one will be a 5 plus million ounce deposit on reserves. And it does have the potential to grow. So we're looking at expansion potential here from 8500 tonnes a day to 10,000 tonnes a day and that study will be done in the third quarter.

So in terms of upcoming news, it really revolves around these expansion studies. As we've said, Pinos Altos is done. Goldex is almost done. Those are being done internally by our technical service group. Certainly results on the first two are positive.

Meadowbank, the expectation is that we can increase that throughput there and generate a high rate of return on the incremental investment. The biggest expansion opportunity though is in Finland. And that would require a large mine shaft. So that's a program that could take four years to five years versus the other two or other three programs could take one to two years from production decision. So that's the news that will be coming out as we continue to build the projects. We will be looking at potential expansion.

So if you look at what we've been able to do in the transformational phase of growing the Company, we have not just grown to be bigger, but we have grown to be better, better quality, possibility to continue that growth. And if you look at the period from 2003, where we were heavily reliant on LaRonde as a single asset, and we had some issues there and we paid for it. And we knew at that point that we had to get busy and start to diversify the revenue stream.

Our share price is up over that five-year period 300%. So not only have we been able to grow the Company, we've been able to grow it in a way that has generated substantial value for our shareholders. So the next five-year phase, as we say to ourselves, we can continue to add significant value and not have to run as hard as we've been running over the last four to five years. We can pull back a bit. We can think.

We can get into the situation where we were back in the early '90s. Once we built LaRonde and we built what we thought was a million, 1.5 million-ounce deposit, it's going to turn out to be [10]. We're not saying that these other deposits are going to grow that dramatically, but they are all wide open. They all haven't been fully delineated. We own them 100%. They are all surrounded by large land packages. Once we can get to the point very shortly when they are all built, we will then sit back with all of that 20 plus years of experience and look at how we can optimize them, look how we can maximize the asset by growing the reserve base and then building additional infrastructure to increase output.

That will allow us to increase cash flow. One of the things we always have loved to do, pay a dividend. We hope to increase that as we go forward. We have a great track record of doing that. 27 years of (technical difficulty). Not easy to do in any business. Harder to do in the goal business though. We look to continue to do that as we go forward.

So I'm going to turn it over to Jim, and he's got a couple of comments on the corporate social responsibility side. And then we'd be happy to take questions. I think Ebe is just chomping at the bit there to hear some of the questions. Those of you who are listening in, obviously you can't ask questions. Hopefully, all of your questions will be asked here in the hall. If they are not, please give us a call after the meeting, and we will be glad to help answer your questions. Thank you very much.

Thanks very much, Sean. Are there any questions? Hazel has the microphone. Just raise your hand, and he will provide you with the microphone. There you go. Hazel, there's a gentleman here.

Hi, my name is [Paul Dernin]. I went to the Barrick meeting yesterday and their production fell each year, '06, '07, '08. Since yours will double in '09 and '10, how soon until you're a bigger mine than them?

We are bigger in spirit right now.

(technical difficulty) the whole question. (multiple speakers) want to be bigger than them. (technical difficulty) we're in that good niche where (technical difficulty) perfect niche to grow this company (technical difficulty) five to 10 years (technical difficulty) do it steadily. I think that's one of the challenges. When you get too big in this industry, nature has not just not left enough good deposits out there to continue to grow 5 million to 8 million ounce(technical difficulty) annual production. So we're fortunate to be in the right position.

Our focus has never been to get caught up in a race to (technical difficulty) always been focused trying to work within our skill set, our abilities, focus more (technical difficulty)

Okay, just one more quick question and then I will pass the mic. I see that the cash costs per ounce have gone up from a negative number up to quite high. What percent of that increase is due to collapsing zinc, copper and the other metals prices? I'm sure a component of that is in there in the new price.

I'll just make a comment and maybe Ebe wants to make a comment. I would say almost all of it because if you look at our cost per tonne performance at LaRonde, it's been very steady and right on target. It's increased a little bit each year due to increases in (technical difficulty) rates. But cost performance at LaRonde (technical difficulty) second to none. So really on a per ounce basis, (technical difficulty) the impact of foreign exchange and zinc, those two key variables are the biggest difference.

Okay zinc, copper and nickel, all three?

Silver, silver, silver. (technical difficulty)

You don't have any nickel, do you?

No, we don't. The LaRonde mine and also the Goldex mine, when those two mines operate that 7200 tonnes and achieve their cost targets of $25 a tonne, at Goldex and the $72 a tonne at LaRonde, they both make a lot of money for us. And as LaRonde has proven for the last six years, it has been a consistent performer. And as Sean mentioned earlier, last year this time, we were in the commissioning phase and 10 months later, Goldex is now running at steady-state, and that's also what we expect to have happen at our other operations.

Any other questions?

Just a question short and simple. Are you planning to have a stock split down the road? Stock split?

(technical difficulty) plans for a stock split.

Thank you.

Anything else? Anyone else? Okay, I guess that closes the floor to questions.

As Sean mentioned, I just want to speak briefly, and it won't be long, to share some of our experiences we as a Board have had when we travel to the various regions. We're great mine builders, we're mine finders, mine builders and great mine operators. And as that, we've dealt with numbers for so many days now, I want to touch on the human side of what we see and what we do. And I will cite a few examples.

In Mexico, we have approximately at 1.800 people on site, maybe as many as 1100. And 60% of those employees come from the founding peoples, the [ahidos] that are presently there. We make our strongest efforts to hire people that are in the particular jurisdiction in which we work.

I asked Jim Haldane, who you heard from earlier, our Senior Vice President of Latin America. I said to Tim, when I get down there, I'd like to take a trip with one of those large mining trucks having been an old construction worker. I would like to take it for a tour, one of these 100-tonne mining trucks. So I met the boss and I met the driver, and the driver was a young lady. So I get in the truck with her, a young lady from Mexico who, by the way, ladies, they are better drivers than men because they are easier on the equipment. At any rate, in our conversation, here was a single mother of four, 32 years old, never really had a job. And she had children from 16 to age 6. And now she has a steady job. She's in the throes of building a house for her family, and this is some of the things we see.

Right down the camp we built, we use local help. They built a beautiful camp. We visited their guesthouse. They make the bricks by hand. They harvest the wood. The only thing, and the local blacksmith makes the hinges. And it's a beautiful guesthouse and I think it came out to about $37 US a square foot.

So that's the kind of things that we enjoy seeing and of course the local people enjoy being participants in. We afford them opportunities where they're bereft of opportunities. And it's our intention to empower them in any way we can, from providing educational opportunities. We've contributed to the school. We have eye exams for all the kids. We provide glasses and on it goes from jurisdiction to jurisdiction.

The one I really liked, and I may end with this one, is Nunavut. And for us Canadians, I had to read a little bit about Nunavut when I first got there. And I hope I have my facts right, Moses. I hope that it represents -- and not many Canadians know about this wonderful region and the wonderful people that are there. It represents a third of the landmass of Canada. Baker Lake, coincidentally, is the geographical center of Canada. And the people that we have encountered in that region, they're just lovely. They are -- they're stoic, they have quiet dignity, and they've been very supportive of our efforts.

The one, and in that case, and this is the part I'd read and I hope I have right, they don't have tribes and they don't have chiefs, but the elders play a large part in that community. They are respected and listened to. And it plays a little part of my tale here.

We built a road from Baker Lake to the mine site; it's about 110 kilometers over the tundra -- quite an effort at quite a cost. So we were going to officially open the road. And our local minister -- their local minister went up and invited all the folks -- we emptied the old folks home out. We provided buses and up they came. And Ebe was with me. Where's the picture? I'd like to show that slide, Dave, of the -- there's none there?

Anyway, there's a slide of us on the bridge in the tundra. It was a beautiful day. It was in June. The air was fresh. It was so fresh you could chew it. And you could see forever. So out come these beautiful people and they were dressed in the traditional regalia. They had their furs and different colorful things, and we arrived at the bridge. And the premier of the region was there, the representative that we signed a water agreement with later. The mayor was there, Ebe and myself. There it is. There's the picture on the screen there. You see the four or five of us there.

So, and I must say that every meeting we attend, whether it's a municipal council in Baker Lake, there are six churches, and it's a dry place, as well, I should mention. But every meeting we attend, I was very impressed, we opened it with a prayer in Inutituk. And when we closed a meeting, we closed it with a prayer. And that particular day, we're standing there, and I believe the CBC were there with their camera, and they opened the particular event with a prayer and then a hymn. And they had a drum to accompany the singing of this hymn in Inutituk. I tell you, it was really -- it raised the hair on the back of my neck, it was so moving. But we spoke and that's where my life changed.

He didn't really know me that well, but I was introduced as an elder. And from that point on, I thought, gee, I come back here to the city and I'm just another old guy, but up there they respect you and they pay you heed. Because after dinner, we had a dinner later. We had a great feast later, and the premier, who stood beside me normally. We got up, and they said dinner is being served. And I said Mr. Premier, please, he said oh, no. Elders first. So that was it.

At any rate, we went through the process. We cut the ribbon, and then we crossed the bridge. And once again, another hymn. I felt like I was in a movie. It was absolutely -- it was one of the highlights -- it was a day I'll remember the rest of my life. I was deeply moved and deeply touched. But that's the kind of things you see.

And wherever we go, whether it's Mexico or there, because of the opportunities we provide, we wind up creating the beginnings of a middle class. And people with the economic benefits wind up doing the things we do here.

And the last example is the milk. With the economics being changed in that community, all of a sudden, the northern store, the man that runs the store said gee, the milk section is empty. People were buying milk for their children and it's very expensive. It might be, and I'm going from memory, CAD8 or CAD9 for a liter of milk. It's very expensive. So the milk section is empty, but there's another side of the coin.

The Inuit love their children just as much as we do or anybody else does. And you see a similarity wherever we travel. We are the same all over the world. And they represent -- they acknowledged our efforts. They acknowledge the good things we try to do down to the laptop computers we provided to the high school. They're learning engineering. They're visiting our mine. We would like to turn out some people that are of a professional category. That's our goal. It's not going to happen overnight, but it will take time, but we are not going to stop working towards that goal.

That's all I have to say. And hopefully we leave some things of permanence in these areas where we serve. We will be there in some places for 40, 50 years because we've been in business here for 50 years.

With that, I would like to invite everyone to lunch. It's a pleasure. We thank you all for coming. It's always a nice thing to see people interested in the things we do and our investors as well. We thank them for the confidence they have in us. Lunch is served next door, and thank you for coming.