Agnico Eagle Mines Ltd
TSX:AEM
Earnings Call Analysis
Q4-2023 Analysis
Agnico Eagle Mines Ltd
The company achieved a historical milestone in 2023, marking not only the safest year in its 66-year tenure but also setting new quarterly and annual records for gold production. Driven by their two powerhouse mines—Detour and Canadian Malartic—the fourth quarter saw them produce an impressive 903,000 ounces, and for the full year, they reached the upper end of their production guidance at 3.44 million ounces of gold. Despite inflationary pressures, their vigilant cost control measures allowed them to report total cash costs of $865 per ounce—right at the midpoint of their guidance—and all-in sustaining costs of $1,179 per ounce, comfortably within the forecasted range. In Nunavut, they successfully improved operational efficiency, reducing costs by approximately $100 an ounce for 2024, which facilitated the extension of the life of the Amaruq deposit from 2026 to 2028, adding half a million ounces of production.
Despite a net loss per share of $0.77 in the fourth quarter due to noncash impairment charges related to Macassa and Pinos Altos, the adjusted net income per share was a robust $0.57, marking a 50% increase relative to the previous year. Macassa's impairment, amounting to roughly $600 million, reflected goodwill write-downs recognized at the time of acquisition and predictions regarding future production, costs, and reserve replacements not fully captured in the impairment model. Meanwhile, Pinos Altos suffered a smaller impairment around $70 million, partly due to a strengthened Mexican peso.
The company praised its unique collaborative culture and operational synergies which resulted in superior performance. In Quebec, over 1 million ounces were produced at a cash cost of $850, yielding an operating margin of over $1 billion. And with the Odyssey project, they are set to convert 5.2 million ounces into reserves while maintaining high productivity and exploring additional zones like East Gouldie. An aggressive drilling plan for the Malartic Goldfield mine could potentially forge a new stream of ounces for the company. In Nunavut, the Phase 2 construction at Meliadine is advancing on schedule and on budget, aiming to sustain an 800,000-ounce production platform. Meadowbank's life is expected to continue through 2028 with plans to tap into additional ounces from various sources.
Ontario operations showcased a strong financial year, contributing over $1 billion to the operating margins with industry-leading costs. Continuous improvement initiatives at Macassa and efforts to advance mill throughput at Detour highlighted the company's philosophy of enhancing asset value. Macassa integrated the AK and Near Surface deposits into their production profile, with an expectation of increased production. Detour looks forward to achieving a mill throughput rate of 28 million tonnes a year by the second half of 2024, with ambitions potentially exceeding 29 million tonnes by the end of 2026. Updates on the Detour underground study are imminent, promising further insights into resource exploitation and enhancement.
The company's exploration efforts have identified a significant underground resource at Detour, totaling 1.56 million ounces, and are considering the development of an exploration ramp for better resource definition. Besides confirming a 10% increase in mineral reserves per share and a 26% annual growth in inferred resources, they have also successfully integrated additional ounces from positive reconciliation at Amaruq into their estimations. This focus on exploration and development enhances the company's opportunities for future growth and sustains its stronghold in the gold industry.
A driving factor behind the company's success is its commitment to fiscal conservatism. By focusing on per share metrics and optimizing cash flow, they aim for the best risk-adjusted returns on capital. With pride in their operational expertise and risk management, the company emphasizes efficiency and value creation over merely pursuing scale. As a leader in Canadian gold production and with a footprint in unique regions like Nunavut, they capitalize on these strengths to enhance shareholder value and secure robust financial performance.
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Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Fourth Quarter and Full Year 2023 Conference Call. [Operator Instructions]
Mr. Ammar Al-Joundi, you may begin your conference.
Thank you, operator and good morning, everyone. First, let me say thank you again for joining us this morning. It's always great to have our owners and our friends and analysts joining us. This morning, in particular, my colleagues and I are excited to talk to you about our fourth quarter and full year results. The results, as you will hear, are very strong.
But while these results are strong and we're going to talk about them, we're more excited to talk about our future. Not just our guidance for 2024 and '25 and '26 but the next several years. And importantly, we'll talk a little bit about some of the key projects that will propel Agnico Eagle forward. It will propel us forward by delivering more value per share at mines that, importantly, we already operate in regions we've been in for decades and with people and teams already in place.
We'll go through a number of slides this morning and you'll hear from a number of our most senior executives about the business and how it's going. But really, the message we want to leave with you is a simple message. It's a message of stability, of consistency and of quality. Quality of the projects, quality of the assets and the quality of our people. It's a message hopefully that you'll walk away thinking and appreciating that Agnico has built a unique position in this industry, with some of the largest, longest life gold mines in the world, operating in the safest jurisdictions with great exploration potential -- continuing great exploration potential, great operating results and great projects. It's a company with 66-year history of fiscal prudence, capital discipline and per share focus.
Before I jump in, I would suggest and note that there are forward-looking statements and if I might ask, operator, if we can jump to Slide 5. Perfect. Thank you.
So in discussing our fourth quarter and full year 2023 highlights. So for 2023 highlights and full year, 4 important milestones and achievements. One, record gold production, best ever in the quarter, best ever for a full year. That's impressive for any company. It's especially impressive, I think, for a company that's been around for 66 years. Two, record cash from operations. Best ever in a quarter, best ever in a year. Three, record mineral reserves, up 10% to almost 54 million ounces. So it shows not only are the operations doing well but the reinvestment into the business and into the future is doing well. And then four, most proud of all, the best annual safety performance in the company's history.
I've had the pleasure of talking about solid safety performance on a number of these calls. You know we're passionate about it. I'll say it again, there's nothing more important, nothing more important than keeping our people safe, our communities safe and the environment safe. And I want to say a special thank you to all of our employees who are listening in, not only for taking the responsibility to keep yourself safe but the responsibility to keep your colleagues and coworkers safe.
And then we'll also talk about the future. We'll talk about our guidance, solid 3-year production guidance with industry-leading costs. And we're going to talk about -- again, we're most excited about the projects that we have in place that we think will add significant value. And we'll talk about some of the guidance that we're going to give, more clarity on that towards the middle of the year.
Next page, please. So these results, which we're very proud of, are clearly a function of the assets we have but really, none of this could happen without the quality of the people that we have. We talked about safety. It's impressive enough on its own, a 35% reduction versus what were already aggressive targets. But really interesting is that every single operation, everyone met or exceeded their safety targets last year. It's also about an engaged workforce, a happy workforce. In 2023, we continued to improve the results of internal surveys with regards to employee satisfaction. We had 80% of employees fill out the survey. That's exceptional. And almost 80% of our employees said Agnico Eagle was a great place to work, not a good place to work, a great place to work.
Agnico Eagle was recognized in Forbes list of Canada's 50 best employers. We're doing more training. We have more indigenous employees and colleagues and we have lower turnover. It's not just the assets, it's not just the regions, it's the people that we think give Agnico Eagle a tangible competitive example. And I'll give you one of my favorite real life examples of Agnico. When you go underground at Agnico and you're talking to a young capable person and they tell you that their uncle and father worked at Agnico and they tell you that one of their grandparents worked at Agnico, you don't get that everywhere.
Next page, please. So looking forward, 2024 to 2026 production outlook, really 2 words, steady, reliable. Our guidance for 2024 is exactly what we said it would be. Our cost guidance between $875 to $925 is up a little bit from what we were able to do in 2023 but it's only 4%. And we're hoping to, just like we did in 2023, do the best we can and we have a track record of being able to do that. Our 2025 guidance remains the same at 3.4 million to 3.6 million ounces, same guidance that we gave last year and 2026 shows steady production. Again, steady, again, reliable.
Next slide, please. So I've got 2 more slides. So this page, I want to talk about where we are on the consolidation of our Abitibi platform, including not only 2 of the world's 10 largest -- 2 of the 10 largest gold mines in the world with Detour and Malartic but also where we are on consolidating sort of the Cadillac fault and Upper Beaver and Wasamac and Amalgamated Kirkland, et cetera.
At Detour Lake -- and Natasha will go through this in more detail, it is already -- while competing, frankly, with Malartic to be the largest gold mine in Canada, it's good. We've got both of them competing with each other. Mine life past 2050, it is a great ore body. Guy will talk about the exploration success we've continued to have. Natasha will talk about how we take advantage of that by increasing the mill, by looking at underground. And we are aiming to provide more specific guidance by midyear. And that guidance really is going to be about what's the next step. And the next step, if all goes well and we're still doing our analysis, would be, what you would expect potentially looking to put in exploration ramps, to be able to possibly take some bulk samples, confirm great continuity, confirm ground conditions. The kind of things that you would expect a professional mine company to do when they have such a great asset as that.
With Canadian Malartic, Dominique will talk about that, 3 items there: one, continue to focus on building and optimizing the underground, putting in the shaft, how the mining is going, Dominique will talk about. We're ahead of schedule on development. We're getting positive tonnage reconciliation with the internal zones. Everything is going well. But Dominique also talk a little bit about where we are early but where we are on looking at the second shaft and three, the work that we're doing to look at filling the mill, as mill capacity becomes available later this decade.
And the third item that you see at the bottom of this page, is something actually we're really quite proud of. And I'm going to start with probably the smallest one Amalgamated Kirkland and Near Surface. So Amalgamated Kirkland, the reason we're particularly proud to talk about that is, if you go back 2 years, when we did the merger and we talked about synergies and we all know that we have delivered roughly double the G&A synergies that we talked about. What we specifically talked about some low-hanging fruit, including Amalgamated Kirkland. And we said, look, this is within tens of meters from existing Macassa infrastructure.
If we can access that at very low capital and produce maybe 25,000 or 40,000 ounces a year, that's just a simple example of how you create value through synergies and through consolidation. I'm proud to say that it's already now Amalgamated Kirkland and Near Surface, it's in our mine plans. There's going to be 19,000 ounces in 2024, 35,000 ounces in '25, 50,000 ounces in 2026. Again, I'm going back 2 years but we promised you we would talk about that and deliver and it's a pleasure to be able to point that out.
At Upper Beaver, it's a long-life, high-quality asset, very low cost. We're continuing to do the work there. We will be giving an update towards the midyear. And again, it will be about next steps. Do we put in an exploration ramp or an exploration shaft to continue to move that project forward. Again, we'll give guidance towards the middle of the year. And then Wasamac, we're making progress on that. I think most of you know that when we acquired the Canadian assets of Yamana, really, we were primarily focused naturally on Malartic and Wasamac, good assets but we weren't convinced that the plan that Yamana had would meet our hurdle rates. I'm pleased to say that the work we're doing -- and our engineers have done something kind of unique in the gold mining space, they've looked at a smaller project that gets a better return on capital. And so we've made some progress on that. We'll give more guidance. That's probably something in early '25 that we would talk about. But again, making good progress on that.
Next page, please. And then in Nunavut, very proud of the team at Meadowbank, added 500,000 ounces of production, extended the mine life for 2 years. Dominique is excited about extending it further but we're not going to talk about that right now. This is a mine that's got the infrastructure in place, low risk, very well done by the team. And then Hope Bay, Guy will talk about some of the exploration results that are very promising there.
And so before I turn it over, at a very high level, very proud of the team for the results in 2023, solid guidance and good progress on some excellent projects leveraging off existing infrastructure in places we're already comfortable with.
And with that, I'll turn it over to our CFO, Jamie Porter.
Thank you, Ammar and good morning, everyone.
As Ammar mentioned, 2023 was a record year on a number of fronts. We had the safest year in the company's 66-year history and record quarterly and full year gold production. This excellent safety and operating performance led to very strong financial results. We generated an operating margin of $979 million in the fourth quarter, which was driven by our 2 largest mines, Detour and Canadian Malartic. Gold production in the fourth quarter was a new quarterly record at 903,000 ounces and for the full year, we hit the very top end of our production guidance of 3.44 million ounces. We were also very pleased to report that we achieved our cost guidance with our total cash costs for the year coming in at the exact midpoint of our guidance of $865 per ounce and our all-in sustaining costs of $1,179 per ounce, well within our guided range.
We are proud of the work our teams have done on controlling costs in what's been an inflationary environment over the past several years and on the team's focus on continuous improvement. A tangible example of this focus on cost is in Nunavut, where cost optimization efforts are driving costs lower by about $100 an ounce in 2024. This has helped enable us to extend the life of the Amaruq deposit as Ammar just alluded to, from 2026 to 2028 adding 500,000 ounces of production.
If we move on to Slide 12. If we look at our financial highlights, record gold production drove record operating cash flow for both the fourth quarter and the full year. While we recorded a net loss per share of $0.77 in the fourth quarter, this was driven by noncash impairment charges related to Macassa and Pinos Altos. On an adjusted basis, net income per share was $0.57 in the fourth quarter, which represents a 50% increase relative to the prior year period.
I want to briefly touch on the impairment charges that were recorded in the quarter. Macassa, we recognized the net of tax impairment charge of approximately $600 million, primarily reflecting the write-down of goodwill that was recognized at the time of acquisition, back in early 2022. Macassa had an excellent performance in 2023 in terms of production, cost control and reserve replacement. And this is a mine that has produced over 6 million ounces in its 100-year history. We see tremendous exploration upside. We see production increasing by 50% over the next 3 years and the potential to continue to replace reserves for years to come. However, we are not able to recognize all of this value in an impairment model. And this, combined with higher costs and capital estimates that were assumed back in 2022 led to the impairment charge.
At Pinos Altos, we recognized a net of tax impairment charge of approximately $70 million, reflecting higher expected operating capital costs in part related to the strength in the Mexican peso over the last year. Despite these accounting charges, the business remains very strong. We generated a record $300 million of free cash flow in the fourth quarter and that's after investing nearly $0.5 billion in capital and exploration spending. We continue to pay a strong quarterly dividend and repaid $100 million of debt in the quarter.
For the full 2023 year, we generated $947 million of free cash flow, declared dividends of approximately $800 million and continued to demonstrate our commitment to delivering strong returns to shareholders. At current gold prices, we expect to continue to reinvest approximately 2/3 of our cash flow into sustaining and growing our business, exploring to find more ounces and 1/3 of our cash flow into delivering returns to shareholders and continuing to strengthen our balance sheet.
We move on to Slide 13. I'm pleased to report that we were able to continue to strengthen our balance sheet in the fourth quarter. We repaid the outstanding balance on our credit facility and reduced our net debt position to approximately $1.5 billion. We've also recently significantly improved our overall liquidity. Earlier this week, we closed a new upsized revolving credit facility in the amount of $2 billion. This new facility reflects Agnico's size and scale and investment-grade status. It provides us with additional financial flexibility and we were very pleased to have had strong support from our many banking partners. We do have increased debt maturities in 2025 and we'll look to refinance or repay those from excess cash at the appropriate time.
Overall, the balance sheet remains very strong and we're constantly working to make it stronger, improving our liquidity and overall financial flexibility.
With that, I'll turn the call over to Dom, who will provide an overview of our Quebec and Nunavut operations.
Thank you, Jamie. Good morning, everyone. So in the coming slides, I'm going to cover the 2 regions in Canada, on my side, Quebec and Nunavut. And Natasha will follow with the other regions. But maybe before going to those highlights, Ammar, I would just like to add something or to build on what you mentioned about why and why -- I think why we're in that position right now. There's the aspect of the people, there is the aspect of the region where we are. But there's also a secret ingredient. It's a bit personal but I strongly believe in that, which is the how we do stuff. How we work all together here at the corporate office with Natasha, Jamie, under your leadership, Ammar, Carol, Jean and Guy. I think this is what makes the difference. This is what I felt when I started in 1998, at LaRonde. And again, 26 years after under your leadership, Ammar, this is what we're doing. And when you go at site, you still feel that same thing where we're in Toronto office, we work together. And this is why the result we are today, here they are talking by themselves.
So on that, I will move to the Quebec region. So we produced over 1 million ounces at a cash cost of $850, generating an operating margin of over $1 billion. So I'm very proud and thank you for the team to control the costs and to continue to optimize the business and to leverage on all the synergy. So Quebec is a well-established platform. And you're going to see in the coming slides, this is just the beginning. We're going to keep growing that one. When you think about that, within 100 kilometers, we have 3 mines and a very enormous geological potential.
Maybe before going to the Odyssey project, I'd just like to highlight that Canada Malartic is going to be the biggest mine in Canada in 2024. Natasha, you're going to win the biggest open pit. But Canadian Malartic is going to be back the first -- biggest mine. And in the coming slides, you're going to see, we're going to move 2 of the biggest underground mines and maybe with Phase 2, potentially the biggest mine again. But let's talk about that.
Next slide. So the Odyssey project, it is the Phase 1 of the underground. We've lend out the study, which is 20 years life of mine at [ 550 ] ounces per year. This is the PEA that we released. And more recently, we updated the PFS, where we are about to turn 5.2 million ounces into reserve. The highlight of the project, Odyssey South ramp-up is going well. I would say, it's done. We are right now producing 3,500 tonnes per day, which is going to bring approximately [ 80 ] ounces per year in the coming 2 years. You could see on the map the ramp. So we're going to reach the top of the East Gouldie deposit, which is the red zone. We're going to be there in a couple of weeks. And the team is now looking for opportunity, how could we start to mine that zone at the top and to bring ounces potentially in '26. So we don't have the clear detail yet but the team are working on that. Ammar mentioned about that we are in advance on the ramp. And one of the reason of that, again, is back to the synergy and how we were able to transfer the knowledge and to be fast on the automation. So right now, during the shift, during the crew change, we are able to operate remotely the mine from the surfaces and this is giving us between 10% and 20% improvement. That was not into the plan and this is why we're better than the plan. Other good news, the internal zone, which is in between the -- this is South at the top and the Odyssey North at the bottom in the purple-ish color, we still see some upside coming from those zones and more tonnes at the same rate. So that's a good news. It is very -- I understand it is very complicated to bring them into the model. We're trying. But again, it's a good news for operation when we're there, there's more than the model. On the shaft sinking, we saw a very great improvement, December, January. So congratulations to the team. We're heading in the right direction and the surface construction 65% completed. Before I'm going to the next slide, which is -- I'm going to talk more about Phase 2 about this thing, I'd just like to highlight on that one. On this one, we see we're looking west and you see 2 zones. The East Gouldie, which is in the sediment deposit and there is the Odyssey South -- North, which is at the border between the sedimentary rock and the volcanic rock. But there is another one, more on the north, which is at the contact of the volcanic and other type of rock. So I stole a slide from Guy's presentation because I'm excited about. So I will talk about it. And if you have questions, Guy could help me. But next slide, you could see now we're looking north. On that slide, in the middle -- right in the middle, you see the East Gouldie. The orange part is what we transferred to reserve, the 5.2 million ounces. So this zone continue to increase as we are infilling it and doing more drilling. So this is one part that could be Phase 2. If we continue to grow that reserve and potentially have a second shaft close to that one and bring more tonnes to the mill, that's an option. There is no clear view or clear plan at this stage because we continue -- need to continue to drill. But the team is already planning where that shaft is going to be and planning all the infrastructure that we need to build to make sure that we're going to have a good room, a good spot for that shaft. More to come but we still need to continue to drill. But also what's exciting, if we step out a bit, you could see the 16.5 kilometer strike length that we have. Now we're -- again, we're looking north and there's 3 zones, mineral origin in that, there is the Odyssey -- sorry, the East Gouldie in orange. In the middle at approximately 600, 700 meters, there is the Odyssey South. And you could see on the right also the purple one, that zone continue, I don't know, 5 kilometers on the west. And there's another zone, which was the Malartic Goldfield mine in the past, which is also there. So there is currently no drilling occurring there but we're going to come back, I would say, in the next 2 years. We're looking to have an aggressive plan to drill that. And this could be a game changer to bring -- if we find something to bring ounces to Canadian Malartic. So back in the days, the Goldfield mine has mined 9 million tonnes at 6 grams per tonne, 1.7 million ounces. That was in 1939, 1965. So now we're going to -- going back there. We're going to drill around that and see if we could bring something into the plan. Next slide. So for the Nunavut business, again, great work to the team. And we will just like also to highlight [indiscernible] is here with us in the room. It is very good work to optimize at Meliadine and at Meadowbank to improve the best productivity and costs. And this allowed us to look to expand Meadowbank. It's part of that to be more efficient. So we added 500,000 ounces into the plan for ounces coming in '26, '27, '28. Those ounces are coming from better reconciliation, which has involved more tonnes, a pushback at the IVR pit and also more mining from underground. Guy is going to talk more about that one. And maybe the other aspect is the Meliadine, we're doing currently the Phase 2 construction. You see the Meliadine picture in the middle. This is going on budget, on time. This is a good news. And the vision here in Nunavut is to maintain a platform of 800,000 ounces. This is what we produce. If you look to the full year 2023, in 2024, we're going to bring that around more 860,000 ounces with more ounces coming from Meadowbank. As we mentioned in the past, more deep we go into the open pit, the grade is higher and then supplemented with the underground mine or higher grade ore. This is where the ounces are going to come. But Meadowbank, we see it ending now in 2028. That's a very good news. We continue to work to extend that. This is the first goal and what could, in my mind be very, very interesting. Guy is going to talk about something we see also at Amaruq. But the other project that is coming into play is the Hope Bay one. And again, I will let Guy more talk about what we see. This Nunavut is high-risk region but it's also a high-reward region. And on the risk side, I need to say I'm very comfortable because we're mining there since 17 years. We've built Meliadine, [ $1.2 million ] project. We did it on cost, 6 months in advance. And now we will be doing Phase 2 of Meliadine at a time, which is not easy and we're still on time and on cost. So I'm confident that the team is going to work on a study at Amaruq, which is going to be a solid one and it's going to fly. So on that, I will now pass it to Natasha, who will discuss the remaining of the business.
Perfect. Thanks, Dom, and good morning, everyone. I'll start with the operations in Ontario. We had a strong year and solid performance at both of our operations. As you can see on this slide, we generated over $1 billion in operating margins in 2023 with industry-leading costs. Now at both of our operations, Macassa and Detour, we're focused -- we're constantly focused on optimizing our assets through a number of continuous improvement initiatives. It's just part of the -- our DNA. And I'll give you a few examples of that. And I'll start with Macassa. So one of the big initiatives here at Macassa are the productivity gains that we were able to sustain in 2023. We first started that with the commissioning of #4 shaft. And then later in the year, we upgraded the ventilation system. And these gains together have resulted in a production -- in production coming up just above the top end of guidance. So congratulations to the team on that. Now in terms of creating further value at Macassa, we have now integrated the AK and the Near Surface deposits into the production profile. And as Ammar mentioned, at the time of the merger, we identified AK as a near-term opportunity to surface value. And so again, here, we're very, very proud of the team for the work that they've done to realize this potential. Now just staying in the Kirkland Lake area for a minute, I just wanted to touch on Upper Beaver. There's an internal assessment that's underway and it's considering either an exploration shaft or an exploration ramp to further convert and also explore the deeper portions of the deposit. Now moving to Detour. As I've mentioned before, this site has a track record of delivering on improvement initiatives. Our current focus, as you know, is the continuing -- it's continuing to advance the mill optimization efforts. We now expect to reach the mill throughput rate of 28 million tonnes a year. Later in the second half of this year, 2024, which, again, I'm very, very proud of the team to be able to say this is, is 1 year, 1 year earlier than anticipated. In addition to that, we're also -- we believe that we have a better understanding of the potential to reach a mill throughput of now 29 million tonnes a year. And we believe that we can do this in a time line that could be as early as the end of 2026. And now -- and we'll continue to work on this but we're also looking to do better. And Ammar mentioned it but we're in the early stages of it but we're evaluating the potential to go beyond 29 million tonnes a year. That could be a 30 million tonnes, that could be a 32 million tonnes a year. Now just touching on the Detour underground study. It's advancing and we'll provide an update later on in the year. Now moving to the next slide, Slide 19. I followed Dom's cue and I swiped a slide from Guy, sorry Guy but it's a good slide. It provides a little bit more color on the ongoing exploration efforts at Detour. So at the end of this year, we declared an initial underground inferred resource of close to 22 million tonnes at an average grade of [ 2.23 ]. So it totals about 1.56 million ounces. And on the image below, you can see where that resource sits. It's a darker relish gray, maybe greenish, which is just below and to the west of the blue resource pit shelf. This is the area that we're currently evaluating in the underground study. It's the darker blue area but also the resource as a whole. On the lower image, you can also see -- barely see a purple line, a faint purple line and that is the potential location of an exploration ramp to get closer to the resource and being in a pretty good position to better define it. And then over and above that, we are still making progress outside that resource area. We're continuing to drill the Western part and we see a cluster of good drill holes, about 900 meters or so west of the resource pit. Now moving on to the -- on to Slide 20. I'll touch on the other assets very quickly, starting with Finland. Here at Kittila, the operating permit was restored to 2 million tonnes a year, at the end of October 2023. And now having completed the mill expansion, the shaft project, the environmental upgrades, the mine is realizing its potential and generating strong cash flows. We're also seeing some positive -- sorry, positive exploration results extending the deposit, not just at depth but also Near Surface. Now moving to Australia. Fosterville, it continues to generate strong cash flow despite decreasing grades. The team is working on securing a long-term production level of somewhere in the range of 175,000 to 200,000 ounces per year and we expect to have preliminary results of that later on this year. Not too long ago, Fosterville was a site that generated before exploration expenditures that generated close to AUD 1 billion in cash flow a year for 3 consecutive years. So yes, we believe in the site. We believe in our team there. We believe in the exploration potential to find the next high-grade deposit and Guy will discuss that later on in the presentation. Lastly, Mexico. La India, successfully and sadly completed mining activities in Q4 2023 and is now producing from the residual leaching activities this year Pinos Altos, it's a mature site with stable production and a great team and our efforts are transitioning more and more now to the San Nicolas project. And then just before I pass the call over to Guy, I just want to echo what Ammar said and what Dom said. We just want to commend the sites, all the operating sites for an incredible year. There were many challenges that we encountered but we overcame them as a team. We overcame them safely. So thank you for your hard work. Thank you for your commitment to continually strive for improvements in all aspects of our business. So with that, I'll pass it over to Guy.
Thank you, Natasha. Good morning, everybody. Starting with the year-end reserve and resources statement at Page 21. It's been a very good year in terms of mineral reserve replacement. You can see the building block and highlighted the different categories on the upper left-hand corner of that slide. But more importantly, like mentioned by Ammar in the introduction comments, increasing the number of mineral reserves per share again. So we've been successful at doing it, adding this year 10%. So 5 million ounces in addition to the reserve, seeing resources being stable in the measured and indicated category and growing inferred by 26% year-over-year. We've been adjusting our gold price assumption to $1,400 but that was mostly to reflect on the long-term structured cost of our business. And none of that resulted in the lowering of the cutoff grade. As a matter of fact, the grade of our reserves are 2% up year-over-year. So we're not only adding reserves, we're also improving the quality with a grade that is higher. And you can also see in the lower left corner, the waterfall that explains the various block from mining depletion, addition of East Gouldie with 5.17 million ounces. The acquisition of the other half of Canadian Malartic and our 50% interest in San Nicolas, plus the contribution of each of the other mine that is well illustrated in that waterfall graph. Moving to specific projects, like mentioned by Natasha, it's been a great year in Macassa and a great year from a production standpoint and a very great year in terms of reserve replacement in addition. So not only we managed to replace the 235,000 ounces that were mined in situ. But on the top of that, we've added an additional [ 224,000 ]. So there's been a net -- a significant net growth of the total mineral reserves at Macassa. And very pleased to see the evolution at the AK Zone closer to surface, not only the reserve -- mineral reserves have grown to 160,000 ounces in that shallow portion of the deposit but the grade is significantly up compared to last year. Now we are adding 160,000 ounces at 6.7 gram and whereas last year, our [indiscernible] that was 5.2 gram. So good quality, relatively high-grade ore, very close surface that will provide a lot of optionality as well described both by Ammar and Natasha. Moving on Slide 23. Amaruq, just to pile on what Dominique mentioned, it's been a great year from an operations standpoint that the metric we've seen from a cost and production were outstanding. And we continue to see the benefit of a very positive reconciliation. So as we are entering into the central portion of the deposit, we continue to see this year 22% more ounces than predicted by our block model. We've managed to integrate some of that into our assumption, adjusting the model, addressing some of the capping parameter, which is a component of the extension of the life of mine. And as we are also adding time and extending the life of mine, we continue to investigate at depth where the deposit remains open and we continue to be quite pleased with some good results now reaching close to 1 kilometer but are faced with some great, good high-grade hits with good thickness. So opening up some opportunity to further extend the life of mine above and beyond what we are mentioning. Moving to Slide 24. At Hope Bay, the focus shift from investigating Doris last in 2022 to investigating in the Madrid area and we're in an area that we'd like when we were evaluating the project is that extension of Madrid towards the south in the Patch 7. And we continue to see excellent results, one of the best drill hole that we've ever seen on the project, 16.3 grams over 28 meter at not even 400 meter below surface. That area is not yet drilled wide enough to make it inferred resources. And it -- but it is exactly what we are currently addressing, infilling that area. And we've been aggressively ramping up, drilling quickly after new year, when our high [indiscernible] was good enough so that we can safely reaccess that portion under the -- from [ ice-based ] drilling. And we are aggressively drilling in that area that we think will move the needle to bring the project to a successful decision in the future. And last but not least, moving to Fosterville on Page 25. We've seen through the year a continuation of good results in the Robbins Hill area and now to a certain extent as well in the Lower Phoenix within the cardinal plate. That led to a complete replacement of reserves. Obviously, the grade, as was discussed, is going down because we are completing the depletion of the Swan Zone. But we were quite pleased to see a full replacement with the reserve that now stand at around 6.1 gram and we are currently working to address the mine plan with the idea of optimizing the production profile of the operation with that 6-gram per tonne material. And on that, I will return back to Ammar for some closing remarks.
Well, thank you, everyone and we've covered a lot. But I'll just finish on the next slide, please, on what we're all about. We are trying to build a high-quality business. We think there's a lot of opportunity. We don't care about absolute size. We care about value and value per share for our shareholders and doing it the right way in the communities we operate. We want a low risk business in the best jurisdictions. We define the best jurisdictions, at least for Agnico Eagle, as having the best geologic potential for multiple mines and having the political stability to operate multiple mines and to keep things simple. We want to focus on -- quality for us includes the best ESG that we can possibly do. Not only is it the right thing to do but it's an essential thing to do. If your strategy is, I want to be in a region for multiple decades and build multiple mines, you better be welcome in that region and you better treat the people and the communities and the environment the right way. We want to continue to have disciplined capital investment and disciplined capital investment is largely about knowledge. And so when we make investments, we like to do them in areas we know, with partners that we know, with teams that we know. We think we are uniquely positioned in the industry. We're in good regions that have multiple decades, in some cases, a century of proven mineral potential. We produce more gold in Canada than the next 8 companies combined. That gives us the advantage as you would expect from that. And we have unique mining experience in Nunavut. And then finally and importantly, we've always been a company that has focused on fiscal conservatism. We focus on per share metrics. We focus on optimizing cash flow and we focus on trying to get the best return, the best risk-adjusted return on capital by leveraging existing assets, where we can. And I think what you've heard this morning, there's an abundance of opportunity to do that. So with that, operator, thank you and I'll -- we'll turn it over to questions.
[Operator Instructions] Your first question comes from Josh Wolfson from RBC Capital Markets.
First question I had was on Amaruq and the mine life extension. It looks like the reserves didn't really change here aside from depletion. And I'm wondering, was this an adjustment of the existing mine plan? Or what's sort of behind the extension there? And I think the 0.5 million ounces that were defined as sort of being added to it.
Yes. If you do the math -- Josh, it's Guy, if you do the math, you remove what we mined last year and with the addition of the high grading, we've seen the positive reconciliation that contributes to a portion of those ounces addition. So we did not completely deplete what we -- what was mined. And that extension of 500,000 ounces was completed after the reserve exercise. So some of those ounces may show up while we're going to be doing the next reserve update. And some of them are also, I would say, slightly lower grade material that still will generate a lot of cash flow but maybe that won't not all meet the trigger to become reserve.
Okay. Got it. So it's not reflected in the reserve. Maybe perhaps along the same lines, the Detour initial underground resource at 1.5 million ounces, I'm assuming there's a larger opportunity here. I guess I'm just wondering, is this resource going to be the basis for the June update? Or should we expect the potential for additional drilling or a resource update with that release?
There will be a few aspects to really answer your question. That, as you saw, is resources that we've declared is outside of the resource pit. What we're going to be providing you with some more clarity is on that blue, let's say, resources pit. So this year, we've basically haven't touched for the year-end reserves and resources statement. We haven't touched the reserve pit and the resource pit. We just provide some clarity on what's outside of the pit. What we're going to be aiming to provide is some more clarity on the trade-off between what's in the resources pit, the light blue or what could be mined by underground more profitably into the underground plan we're thinking about.
Okay. Got it. And then final one, just on San Nicolas, following some of the comments we've seen out of Mexico on open pit mining, should we still think about that kind of 2027 time frame as a target for production? Or is that likely going to be deferred a bit?
Josh, it's Ammar here. With regards to the proposed changes to the constitution with regards to open pit, it would be a constitutional change. It would require 2/3 of the vote. There's an election coming up very soon. And so it's, our view is, the whole thing is in flux. And I'll just give you an example. In theory, if there's no open pit mining, that also applies to aggregates. So you can't mine for gravel, you can't mine for sand. That means you can't build roads, you can't build buildings. So it's not unusual to sort of see these things just before an election. We have very good relationships with the governments and we're optimistic that -- the mining industry is a big industry in Mexico. With regards to -- does it affect timing? I don't think so at this point. We are -- to be sure, though, we are still working on the plan and I think we would give more guidance with specific reference to timing as that becomes available.
Your next question comes from Ralph [indiscernible].
Ammar, can I get some context around the positive tonnage reconciliation from the internal zones at Malartic? How much of a contribution was it in 2023? Is there anything in the model in the 2024 guidance? And should we be thinking about this 52,000 tonne per day assumption as a relatively low bar for throughput?
Well, if I start by commenting on your question about the reconciliation, what we've seen so far this year when mining the Odyssey South, we're mining the internal zone that is adjacent. So when looking at the stope that we're mining this year, we managed to add 1 ore and it's something like 40% more tonnes by adding that material adjacent and that turned out to be at the same grade globally. So it's been kind of adding 40% more tonnes, 40% more ounces. But now we are integrating some of that into our reserves and resources estimates. As a matter of fact, this year, we've been integrating almost -- we've seen a growth in Odyssey South by 57% due to those additions and growth through the resources. So we are baking that positive reconciliation, addition of tonne in our model as we are moving forward but we can expect that some additional tonne will also show up.
Got you. Very helpful. Natasha, I see that there was a power outage in Q4. And I was just wondering if this relates back to the transformer because it still sounds very confident that the power situation is in very good shape ahead of this 28 million tonnes scenario brought forward. And I'm just thinking about what are some of the outstanding issues as we think about that optimization waterfall chart that showed that ultimate 30 million-tonne run rate?
Ralph, so the power outage that you speak of at Detour, which is a minor one. But -- and we recovered from that fairly quickly. With respect to the getting to 28 million tonnes a year, we have a number of initiatives but we can group that into like maybe 5 main ones. And that's just factors in onetime improvement. So we have all the major infrastructure in place. We're just tweaking the system right now. For example, the [ refeed ] system, we're just making it -- allowing it to operate better in the winter months and just modifying some of the screening configurations so that it can take on more capacity, those kind of things.
Your next question comes from Anita Soni from CIBC World Markets.
I just have a couple of modeling questions right now. How much of the AK deposit -- sorry, the Akasaba deposit is the tonnage at Goldex? And how -- like how will that play out for the next -- like it looks -- my assumption is this is about 10%. And does that just sort of stay at that 10% level until it's run out? Or -- if you could give us some color on that, would be great.
Anita, Dominique speaking. The plan is to have 1,000 tonnes per day coming from Akasaba and 7,000 tonnes per day coming from Goldex.
And until Akasaba is run out, right?
Yes. Yes, we can probably call 4 or 5 years.
Okay. And so for that reason, then the cost -- I mean, the cost increase that you -- in terms of unit cost, that should -- I mean what portion of that is related to the Akasaba or and how long should we be using those kinds of unit cost?
That's a good question. And it's not just only Akasaba, there's different elements into play. As we are going from Deep 1 to Deep 2 at Goldex, it is changing the cost structure. As well as we're mining more of the South Zone, which is higher cost tonnes but higher grade tonnes overall, there the costs are increasing. It's mainly related to that.
Okay. And then similarly a similar question for Macassa. And the proportion of what you would see from the AK deposits?
Anita, so with the AK deposit, we're going to be doing a bulk sample this year, sending that to the LZ pit but we're going to be ramping -- LZ mill, sorry. And then we're going to be ramping up to about 500 tonnes per day on average for the AK deposit. And then Macassa the -- in terms of the underground potential, I would say, probably 1,550 tonnes per day, the mill capacity, yes and that is peak probably 1650 tonnes.
And your next question comes from Greg Barnes from TD Securities.
Ammar, can you talk a little bit about how you see the production profile evolving beyond 2026? You're sustaining 3.5 million ounces roughly through that time frame. Then what does it look like beyond that?
Greg, we don't give specific guidance beyond 3 years. People have asked us why don't we. What I would say is, I think while some others have given much longer-term guidance and we didn't. I think we're the ones who are actually growing production and some of the other people aren't. So the best way to answer that is -- and Greg, you know our assets pretty well. We have good assets. We are reinvesting in those assets. We're getting good exploration results. So we're pretty confident about our -- we've increased reserves by 10%. So without giving guidance or any number, I would say we're quite confident that we're going to continue to be able to run a very good business.
Okay. Secondary, you talked about in the press release higher or increased throughput rates, I think, at Hope Bay. I know you've set the bar, roughly 300,000 to 350,000 ounces a year because that's what's economic in the North. But what kind of size are you thinking about above and beyond that as far as, Bay going forward?
Dominique speaking. Greg, the teams are doing the trade-offs about the tonnage. There's 2 aspects into it. First is how could we use as much as we can the current infrastructure and to minimize the CapEx. So this is bringing us to a certain tonnage. Then how could we expand from those infrastructure and to bring it to higher tonnage. I will say -- I see Hope Bay as a Meliadine project in terms of 6, 7 gram per tonne. If we could bring it also at the tonnage of Meliadine, 5000, 6,000 tonnes per day, that could be interesting. That might be the sweet spot but we're still doing trade-offs.
Your next question comes from Carey MacRury from Canaccord Genuity.
A lot of -- some of your peers have made -- are chasing growth in copper. Just wondering how you guys think about copper and more broadly base metal exposure?
Well, I mean, I think copper has got a great future, frankly. I think the world is transitioning. I think -- we think the world is transitioning to towards electric versus fossil fuels and copper will play a role there. We are quite excited about the potential at San Nicolas. As you recall, Carey, we didn't do San Nicolas because it was copper. We did it because it makes a lot of money in a region we want to be in, with a partner we want to be with. But certainly, we like copper. And we are a gold company but our job is to make money for our shareholders in a responsible way.
Okay. So that leads to my second question. I mean, you talked about obviously having a regional focus in good jurisdictions. You're obviously the biggest player in Canada by a long shot. But in the long term, are you looking at other jurisdictions to grow into? Or how do you think about international diversification?
We are open to international diversification. I mean Australia, it's probably between Australia and Canada, is what's the best place in the world to mine. So we are open to very good mining regions. We're in 4 countries, 5 regions. Is it impossible to go to a 6? No, it's not impossible. But it would have to meet the criteria of the geologic potential first and foremost, followed by a view on political stability to actually be able to make 10-, 20-year investments. So we are a gold company. We are very strong in the jurisdictions we operate in. This year -- the next few years, really, we're going to focus on what we've got and optimizing what we've got. We think we've got a great platform to build from. But if there's an opportunity that makes sense to create more value per share for our shareholders, we're going to look at it.
Your next question comes from John Tumazos from John Tumazos Very Independent Research.
Congratulations on 900,000 ounces, was almost as much as Barrick made in the quarter, you're getting big. There were a couple of places in the press release and exploration release where the prose and the numbers that I was trying to -- the numbers in the release were kind of hard to put together consistently or reconcile. Let me just ask about Fosterville, with the 2025 guidance is a midpoint of 150,000 ounces output and that seems like 700,000 tonnes milled, 7 grams, 94% recovery. The reserve is 6.1 grams, which is a little lower than 7 grams. And then the prose of the presentation talks about 175,000 to 200,000 ounces. Is the 175,000 to 200,000 ounces, the average of '24 and '25 guidance, or are you looking forward beyond 2026, expecting that you're going to hit something a little better than 6 grams just reported in reserve?
John, I'll -- I don't know, you want me to take it, Natasha? Okay. Yes, the 175,000 to 200,000 ounces is looking forward beyond that time frame. I mean, you're exactly right. Those are the numbers that we gave. And we are -- Fosterville is a great asset, great people. We are looking at sort of a long-term steady state 175,000 to 200,000 ounces. That's kind of what we're working on. And you may say, well, look, that's only a 175,000 to 200,000 ounces, why are you guys in Australia? The answer is, we don't have proof but we think there's more than one very high grade zone to be found there. Maybe it's not a Swan. Maybe it's half of Swan or maybe it's a 2x Swan. But it generates a lot of cash flow. And so if you're us, what do you do, you position the mine to operate well, to operate consistently between 175,000 to 200,000 ounces, if you think you can have that steady and really give you the opportunity to find that next Swan Zone. Guy, did you want to jump in?
John, if you look at in detail because when we do the life of mine like that, we do the stope by stope exercise. So there will be some variation. So yes, the average is 6 grams, but you can assume that some year will be at 7 grams, some year will be at 5 grams, depending on the mining sequence averaging 6 grams for the rest of the life of mine according to what we have. But it's not going to be stable at 6 grams over time. It's going to fluctuate because there's still some pockets of higher grade mineralization in the system that are smaller than this one but it's all about sequencing the extraction of the 6 grams.
If we were to kind of just jump through in the discussions related to Hope Bay, the inferred resource at Hope Bay rose by 158,000 ounces. The reserve stayed the same. We should interpret from your good drill results and a good qualitative narrative that the inferred resource and the reserves are going to increase a lot more than 158,000 ounces when you get more infill drilling and more data, I presume.
Exactly, you're right. There has been some small portion that have reached inferred resources specification. But also, we are, I would say, making sure that the -- for example, the dilution assumption. So we've been also adjusting the model to -- so we've -- there's been some pluses and minuses. And you're right, the bottom line is net 170,000 ounces with a mixture of removing some of the lower grain material, addition of a more realistic dilution. We haven't touched a reserve as well as you described. And you're right, with the additional drilling, we're going to see in the Madrid, we're expecting those ounces to show up later on in '24 and '25.
And you talked about the ramp. It honestly getting closer to the top of the East Gouldie deposit, if I understood that correctly. So in the second and third quarter, you'll be able to visual or you expect to inspect the rock confidence and continuity of the very top of the East Gouldie Zone, which would put you in a position to add reserves at the end of 2024 or 2025, from those visual inspections different than the part of the reserve where you added from drilling last night. Is that fair?
It's fair, especially because there's still the reserve, as you can see in the long section goes basically from 800 meter down to -- 800 meter to 1.8 kilometer below surface. And there's still 300 meter of inferred resources at the top. So that access on the top of the ore body, as you described, allow us to enter, open up the deposit. But also will provide a better position for infill drilling from much closer in the upper part -- upper and eastern part of the ore body where we see some quick wins to potential reserve addition. And also, if you put that in the bigger scheme of things, if you look back at the PEA that we produce with 9 million ounces, we are expecting that the rest of the ounces that were not converted this year in reserve will show up progressively over the next couple, 4, 5 years.
Nothing better than being able to see and touch the rock.
Yes, I agree with you. We can't wait.
Your next question comes from Tanya Jakusconek from Scotiabank.
Congrats on a good quarter. Can I ask on just the guidance for 2024 as we look for the year throughout the year? Can I just ask about how we see production developing quarter-on-quarter? Are we similar to last year where it was generally equally distributed? Or should there be something else that we should be aware of?
Tanya, so we're expecting it to be relatively equal through the year.
Okay. I like that. Never liked those strong Q4s. Okay. That's good. And then Guy and Dominique, can I ask, on Slide 23, I know we talked a little bit about the additional 500,000 ounces at Amaruq to extend the mine life, just looking at the longitudinal to kind of see where you would have added those additional ounces. And then just maybe talk a little bit and I know, Ammar, you said you don't want to really talk about extending beyond 2028 but I'm trying to get an idea of where else could we see the potential extension beyond 2028 to try and bridge that gap before, let's say, Hope Bay comes in because I'm trying to understand whether we can use any of the workforce and/or equipment and/or other from Amaruq to Hope Bay to help with the CapEx.
Want to give you first part of the answer to your question. So about the -- where those 500,000 ounces will come from? They're going to come -- we see from 3 major things. As we continue to see the positive reconciliation with more tonnes, better grade that were integrated in the model, so that will potentially represent up to maybe a 1/4 of the ounces added will come from that. And that positive reconciliation in the IVR pit that sits on the right-hand side of that long section, we see kind of some very nice grade reconciliation in that part. So the -- one of the extension of the mine contribution is the pushback we're contemplating on the IVR pit.
And out of those will also by default, allow us to continue to mine on the ground. So for the [ third fold ] is continue mining additional stope that with the previous life of mine when the pits were deleted, we were not able to continue mining underground. So now we're going to be able to extend the underground, get some more stope that were good grade, good quality but that were not making sense on their own without an extension of the open pit. So with the contribution of those 3 that leads to the addition of 0.5 million ounces. And maybe Dominique, do you want to comment?
Yes, Tanya, the mix. Just on that, our goal is really to extend Meadowbank and keep Meadowbank running. Now the equipment we could reuse and the workforce, there's different [indiscernible] of it that could be the genset, the HPGR, the compressor pumps, different type of equipment. The thing is, we don't know where they're going to go. Is it going to Upper Beaver, Detour underground, Wasamac or Hope Bay, all those options exist. Same thing with the workforce. We're going to be ramping up, obviously, at the time, Detour also have a lot of good position open. It might be [indiscernible], might be Hope Bay too but it's all opportunities.
Okay. So there's lots of ability to use that equipment and people as you look out to the end of the decade.
Yes.
Okay. And just maybe a question for you, Ammar, if I could ask on just the non-gold component. You mentioned you like copper. Obviously, San Nicolas is your first venture into sort of a copper asset. I saw some other smaller investments in non-gold are being made. Should we be thinking that, that part of your strategy is investing in some of these junior non-gold equities for 2024? Is that a strategy that's in place? Or are you looking to further grow with more developed upfront or producing copper assets?
Well, Tanya, I think -- so first of all, we are pretty focused on the gold projects that we have in our backyard that are least risk and the highest return on capital. Now we've been around for 66 years. We're 98% gold right now. I would say that 60 years in the future, are we still going to be 98% gold? We'll probably have other metals. The difference with us is, we're not going to -- and I'm not knocking this on anybody else but we are not going to a jurisdiction we know nothing about to chase a particular type of metal. Our strategy is simple. We try to be the best in the regions we can be. And if we have a competitive advantage in an area we operate and a non-gold asset becomes available, where we have a competitive advantage, we would look at it. And so, of course, we would look at copper. We've done a couple of other small things people know about. But we're not going to a different jurisdiction with a different metal.
Okay. So it would be in jurisdictions you're at, looking at where you could add value?
And only if it makes good return for our shareholders. I know that's self-evident. But we're not -- for example, we're not setting a target that we're going to be x amount of copper because, frankly, that means you're chasing something. We're just going to be open to good opportunities. Now, to your point, we've had a long history of very early-stage investments. 9 out of 10 don't end up meeting our criteria, we end up doing just fine. But yes, you could expect us to keep our eyes and ears open for opportunities in the areas we operate.
Your next question comes from Jackie Przybylowski from BMO.
Congratulations on the quarter. I think I just wanted to ask, I know a lot of things have been asked already but I just wanted to ask for maybe a little bit more color on what we can expect with the update later in the first half of 2024 on the Abitibi optimization. I know you've talked about studies at Detour and Upper Beaver and Wasamac, is there also going to be some discussions to integrate the entire district together? And maybe are we going to get some kind of information about mill optimization or infrastructure, transportation, anything like that as well? If you could just maybe tell us what we should be expecting, that would be helpful.
I think -- well, I'll be clear. We're going to give some more guidance on where we are and the next steps on Detour. We're going to give more guidance on where we are and next steps on Upper Beaver. We are doing the work on transportation options. But really, the best way to think about those is within the context of those projects, we are going to be giving more updates on next steps at Wasamac but probably not until the start of next year. We are, of course, we are talking to everybody within a certain distance of and they're talking to us with then a certain distance of Malartic, with regards to future opportunities at the mill there. So there's a lot going on. You're right. There's a lot of potential. But what you can expect middle of the year is really more focused on Detour and Upper Beaver.
And maybe that sort of answers my follow-up question a little bit. But we've heard a lot of talk about how much capacity you have with the maybe different mills and absolutely with your expertise and your people in the region. Is there any thoughts or -- I mean is there anything you can maybe comment on now about acquisition or maybe adding additional properties? Do you see a need to add additional properties to your portfolio in the Abitibi? Or are you going to start with what you've got first?
Well, clearly, we're focused on what we've got. But with the question on acquisitions, maybe we're going to be focused more on return on capital. If somebody's got a project that they want to build and it gets a better return for them to use our mill and it's a better return on capital than us acquiring the person, we would do that. A simple example, I would rather put no additional capital and make $50 million a year than put in $100 million of capital to make $60 million a year. I know that sounds self-evident but we're going to look at the specific opportunities but with a real focus on return on capital. And that could mean acquisitions but it could also mean that some people who have good projects decide they want to use our mill.
Got it. Maybe one more follow-up, if I can. Just to follow up on some of the other themes in the call on base metals. I know you've recently made an investment in Canada Nickel and it is in the -- it's at least regionally sitting in a similar jurisdiction. Is there any synergies with Canada Nickel besides personnel and sort of just expertise in the region? Would any of your facilities suit that operation if it were to be built?
Yes. I mean I -- our view on Canada Nickel is that it is -- I hope I don't upset my ex-CFO by saying that it's a very long-term perspective that they're taking. I don't see anything imminent there. So certainly, certainly, we're not talking to them about providing people or developing anything. It's a vision that they have. It's a large relatively low-grade ore body that -- and they have an interesting vision. And so I think it's better to think, Jackie, really, this is just a very early stage investment on our part. It's a big asset in our backyard, big option on nickel. But really, it's the Canada Nickel team running this, not Agnico.
And your next question comes from Martin Pradier from Veritas Investment Research.
When I look at the cost increase, your guidance talks about a 4% year-over-year increase. Now there are some assets where you see a increase in volumes like Canadian Malartic and your cost increased 12%. Macassa, the cost increased 17% with higher volume. And Kittila, the cost increased 10% on flat volumes. If you can provide some color on why in some of them, you have higher volumes and have much higher cost?
Yes. It's Jamie here. It's really a function of sequencing -- mine sequencing across our operations that you're going to have periods where tonnage is flat but costs are on a per ounce basis are higher or lower, just given the grade profile of the individual asset. But overall, when you look at our costs, I mean, we saw inflation running around 6% year-over-year. And our job as management is to try to do better than that through a higher denominator and through constantly focusing on optimizing our costs. And I think we've delivered that with a 4% increase in our cash cost and all-in sustaining cost guidance.
Okay. But you cannot provide much color on any of those Canadian Malartic, Macassa, Kittila? What is driving that much higher?
Yes, we can reach out offline and then walk through that on an asset-by-asset basis. But with 11 operating mines, it's hard to provide a generalized answer.
And there are no further questions at this time. I will turn the call back over to Mr. Ammar Al-Joundi for closing remarks.
Thank you, operator and thank you, everyone, for joining us yet again and we wish you all a happy weekend. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining and you may now disconnect your lines. Thank you.